Reliance Eagleford Upstream Holding, LP (REUHLP), a wholly-owned step-down subsidiary of Reliance Industries Limited (RIL), has uncovered its interest in specific upstream assets in the Eagleford shale play of Texas, USA to Ensign Operating III, LLC (Ensign), a Delaware limited liability company.
“With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America,” RIL said in a press statement.
For this sale, an acquisition and sale deal has been approved between REUHLP and Ensign on November 5, 2021. The sale is at a considerably higher than the prevailing carrying value of the assets, RIL said. This February, RIL traded its whole stake in the Marcellus shale gas asset in south-western Pennsylvania in the US for $250 million.
The assets, managed by RIL’s wholly-owned unit Reliance Marcellus LLC and administered by EQT Corporation, a US-based energy company involved in hydrocarbon exploration and pipeline transportation, were sold to Northern Oil and Gas (NOG) Inc.
RIL had acquired stakes in three upstream oil exploration joint investments with Chevron, Pioneer Natural Resource, and Carrizo Oil and Gas, and a midstream joint enterprise (midstream indicates the processing, storing, transporting and selling of hydrocarbons) with Pioneer between 2010 and 2013 as the company were bullish on the shale gas segment.
However, the decline in crude oil prices since late 2014 hit valuations of oil and gas assets wherein shale gas blocks suffered far more than conventional oil and gas blocks as they are economically viable only when prices are above a certain threshold. In June 2015, the company sold its Eagle Ford midstream joint investment with Pioneer Natural Resources in the US for $1 billion. RIL had paid $46 million, obtaining a 49.9% stake in Eagle Ford, and funded a further $208 million.
In 2017 RIL sold the front of its shale gas industry, upstream Marcellus shale gas assets in northeastern and central Pennsylvania, for $126 million. The Mumbai-based firm had in 2010 bought a 60% stake in the assets for $392 million.