RIL sells stake in US pipeline venture for $1 billion

NEW DELHI: Mukesh Ambani's Reliance Industries Ltd has sold its entire 49.9% interest in a US shale oil and gas pipeline joint venture to New York-listed Enterprise Products Partners for more than $1 billion in an all-cash deal.

Reliance and Pioneer Natural Resources Co, its partner in the US shale gas business, sold Eagle Ford (EFS) Midstream venture to Enterprise Products Partners for $2.15 billion. Eagle Ford (EFS) Midstream owns a 460-mile pipeline network. Pioneer held 50.1% in the venture.

NEW DELHI: Mukesh Ambani's Reliance Industries Ltd has sold its entire 49.9% interest in a US shale oil and gas pipeline joint venture to New York-listed Enterprise Products Partners for more than $1 billion in an all-cash deal.

Reliance and Pioneer Natural Resources Co, its partner in the US shale gas business, sold Eagle Ford (EFS) Midstream venture to Enterprise Products Partners for $2.15 billion. Eagle Ford (EFS) Midstream owns a 460-mile pipeline network. Pioneer held 50.1% in the venture.

The transaction, under which Reliance Holding USA Inc, a subsidiary of RIL, signed definitive agreement for the sale of its entire holding in EFS Midstream LLC to an affiliate of Enterprise Products Partners LP, is to close by the third quarter of 2015.

EFS had debt of $170 million as on March 31, and hence RIL's share of the first tranche proceeds will be reduced by around $85 million. Since the venture's inception, RIL has made an investment of $208 million in EFS and received distributions of $75 million since 2013.

EFS had debt of $170 million as on March 31, and hence RIL's share of the first tranche proceeds will be reduced by around $85 million. Since the venture's inception, RIL has made an investment of $208 million in EFS and received distributions of $75 million since 2013.

"In addition to the aggregate acquisition consideration being paid to Reliance and Pioneer proportionate to their respective ownership interests in EFS, Enterprise has agreed to spend $270 million over the next 10 years on new facilities, connections and expansion projects," the statement said.

An Enterprise statement said the purchase price will be paid in two installments, with the first of $1.15 billion paid at closing and the final installment of $1 billion paid no later than the first anniversary of the closing date.

EFS Midstream venture was formed in 2010 to construct, own and operate facilities providing gas gathering, treating, and transportation services in the Eagle Ford Shale in south Texas.

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 stabilizes the condensate, where necessary, and treats the gas produced from the Eagle Ford upstream joint venture operated by Pioneer with stake of 46%.

RIL holds 45% interest in the Eagle Ford upstream joint venture and the remaining 9% is with Newpek LLC.

The Eagle Ford assets, spread over 230,000 acres, have become more attractive after the US commerce department, in June last year, gave Pioneer permission to export a type of ultralight oil known as condensate produced from the region.

Besides Eagle Ford, RIL has two more shale ventures in the US - 40% stake in Chevron's Marcellus shale acreage and a 60% interest in Carrizo Oil and Gas Inc's Marcellus shale acreage in central and northeast Pennsylvania.

Under the terms of the agreements, Pioneer and Reliance can use EFS Midstream for moving condensate and gas for 20 years on fee-based arrangement.