RIL to sell 49.9% stake in US joint venture
NEW DELHI: Reliance Industries is looking to sell its 49.9% stake in a US joint venture that owns a 460 miles pipeline network for transportation of shale oil and gas.
RIL, as well as its partner Pioneer Natural Resources Co, are seeking a buyer for their stakes in Eagle Ford Midstream venture as they focus on shale oil production.
“Pioneer Natural Resources today announced that the company is pursuing the divestment of its 50.1% share of the Eagle Ford Shale Midstream business.
RIL, through its subsidiary Reliance Holding USA Inc. had acquired 49.9% stake in EFS Midstream LLC in June 2010. Current investments in EFS Midstream LLC is $208 million.
The Midstream system consists of 10 gathering plants and about 460 miles of pipelines. The system gathers and separates produced condensate from produced gas. It also stabilises the condensate, where necessary, and treats the gas.
It is projected to generate $100 million in cash flow next year. Pioneer is the operator of the business.
The sale “would allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp assets in the Permian Basin of West Texas,” Pioneer chairman and chief executive officer Scott Sheffield said.
Pioneer, however, said it has no plans to sell its stake in the Eagle Ford shale oil and gas producing assets.
The US firm holds 46% stake in the upstream venture where RIL has 45% and Newpek LLC the remaining 9%.
It is being speculated that RIL may be looking at selling this stake as well. RIL, which bought 45% interest in Pioneer Natural Resources Co’s Eagle Ford shale formation of south Texas for $1.3 billion, is working with Citigroup Inc and Bank of America Merrill Lynch to find a buyer.
When the news of this stake sale came last month, its spokesperson had said, “Reliance constantly strives to identify means to create additional value for its shareholders” but declined to comment on the specific sale.