Reliance Industries closes Marcellus shale asset sale for $126 million

Mumbai: Reliance Marcellus II LLC, a subsidiary of Reliance Holding USA Inc. and Reliance Industries Ltd (RIL), has closed the sale of its interest in upstream Marcellus shale assets in north-eastern and central Pennsylvania for $126 million, the company said in a press statement on Friday.

The assets are currently operated by Carrizo Oil and Gas Inc. and are being sold to BKV Chelsea LLC, an affiliate of Kalnin Ventures LLC.

The transaction closed on 21 November. Reliance had announced the impending sale on 6 October.

“Additionally, under the definitive documents, a contingent amount of up to $11.25 million may be paid to Reliance between years 2018 to 2020 based on certain gas price thresholds being achieved,” RIL said.

The Carrizo-operated acreage was one of the three upstream assets in the US in which Reliance had a stake. The assets produce mainly gas and are located in Susquehanna, Wyoming and Clearfield counties of Pennsylvania.

In 2010, RIL had bought a 60% stake in the assets for $392 million.

A drop in crude oil prices has hit the valuations of oil and gas assets. Shale gas blocks have suffered far more than traditional oil and gas blocks as they are economically viable only when prices are above a certain threshold.

Reliance had in June 2015 sold its Eagle Ford (EFS) Midstream joint venture with Pioneer Natural Resources in the US. RIL had spent $46 million in acquiring the 49.9% stake in EFS and invested another $208 million over the years. RIL realized $1 billion from the sale of EFS Midstream.

In June 2010, RIL had invested in the US shale gas business, where it bought a 45% stake in the Eagle Ford shale gas fields, owned by Pioneer, for $1.3 billion. As part of the deal, RIL received a 49.9% stake in the venture.

Reliance Industries Limited (RIL)