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Reliance Industries sells US shale block for $126 million

Firm has invested $9 bn in the three shale assets; transaction to be completed in the third quarter of FY18

Shine Jacob  |  New Delhi 

Reliance Industries
RIL had acquired the shale assets in 2010 for $392 million

The Mukesh Ambani-led Ltd (RIL) on Friday announced sale of its stake in one of its three shale gas blocks in the US, at Marcellus, where it was having a joint venture with Carrizo Oil and Gas, Inc, for $126 million. 

"The assets, which are currently operated by Carrizo Oil and Gas, Inc, were sold to BKV Chelsea, LLC, an affiliate of Kalnin Ventures LLC, for a consideration of $126 million, subject to customary closing terms and conditions," the company said in a statement. has, so far, invested $9 billion in three US shale assets. However, the company was getting negative returns from its assets owing to lower crude oil prices, which made shale production unviable.

holds 60 per cent in shale. 

According to the company, Reliance could receive payments of up to $11.25 million based on natural gas prices exceeding certain thresholds over the next three years. The block was held by Reliance II, a subsidiary of Reliance Holding USA, Inc. 

The transaction is likely to close by the end of the third quarter of FY18, with April 1, 2017, as the effective date, the statement added. A purchase and sale agreement was signed on Thursday between Reliance and

Walter Van de Vijver, president and chief executive of Reliance Holding USA, Inc, said, "This transaction represents an opportunistic sale of developed upstream assets and ends a successful partnership of seven years with Carrizo in a joint sale. We will continue to actively manage the remainder of our US shale resources." 

took Rs 3,261-crore impairment charge related to shale assets in 2015-16. It had three production ventures with Chevron Corp, Pioneer Natural Resources, and Carrizo Oil and Gas, Inc. In June 2015, it sold its EFS Midstream JV with Pioneer Natural Resource, realising Rs 3,684 crore.

had acquired the shale assets in 2010 for $392 million. It included full stake of Avista and 20 per cent of Carrizo joint venture. The assets produce mainly gas and are located in Susquehanna, Wyoming and Clearfield Counties of

"Reliance remains invested in the shale play via its non-operated position with Chevron in southwestern and in the play via its non-operated position with Pioneer in Texas," the statement said.

First Published: Sat, October 07 2017. 01:07 IST