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Home / Companies / News /  Reliance to sell US’ Marcellus shale gas assets for $250 mn

MUMBAI : Reliance Industries Ltd (RIL) has agreed to sell its entire stake in certain upstream assets in the Marcellus shale gas asset in south-western Pennsylvania in the US for $250 million amid a weakness in the global hydrocarbon market.

The assets, controlled by RIL’s wholly-owned unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US based energy company engaged in hydrocarbon exploration and pipeline transport, will be sold to Northern Oil and Gas (NOG) Inc.

The $250 million deal comprises cash and warrants that entitle RIL to buy 3.25 million common shares of NOG at a price of $14.00 per common share over the next seven years, RIL said in a release.

“A purchase and sale agreement has been signed between Reliance Marcellus and NOG on 3 February 2021 for this sale and the transaction is subject to customary terms and conditions of closing," the company said.

RIL had in 2017 sold the first of its shale gas business, 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.

RIL bought stakes in three upstream oil exploration joint ventures with Chevron, Pioneer Natural Resource, and Carrizo Oil and Gas, and a midstream joint venture with Pioneer between 2010 and 2013. Midstream refers to the processing, storing, transporting and marketing of hydrocarbons.

In June 2015, however, the company sold its Eagle Ford midstream joint venture with Pioneer Natural Resources in the US for $1 billion.

RIL had spent $46 million in acquiring a 49.9% stake in Eagle Ford and invested a further $208 million.

Till 2014, RIL remained bullish on the shale gas segment. However, the drop in crude oil prices since late 2014 hit valuations of oil and gas assets. Shale gas blocks have suffered far more than conventional oil and gas blocks as they are economically viable only when prices are above a certain threshold.

In the December quarter, RIL booked an exceptional item of 121 crore as the net impact of impairment on US shale assets and recognition of corresponding deferred tax assets.

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