Friday, March 18, 2011

Reliance may buy more US Shale assets, after BP Deal Doubles Cash

Reliance Industries, which has struck three shale gas joint ventures with U.S. firms this year, may make a full buyout next as the cash-rich firm builds the knowledge it needs to run such operations.
Reliance has received about 20 to 25 pitches from investment bankers for shale assets with potential targets include Fort Worth, Texas-headquartered Quicksilver Resources Inc, Denver, Colorado-based Enduring Resources and companies with assets in the Horn River shale formation in Canada.

Major US Shale Assets on the market
Heading
SubRegion
Value Range ($m)
Chesapeake to sell 20% interest in Marcellus Shale
Marcellus
>$1,000
Chief Oil & Gas put up for sale
Marcellus
>$1,000
Seneca seeks JV partner for Marcellus assets
Marcellus
>$1,000
Anadarko seeks JV partner for Eagle Ford assets
Eagle Ford
>$1,000
EOG offers Marcellus acreage
Marcellus
$500 - $1,000
SM Energy considers options for Eagle Ford acreage
Eagle Ford
$500 - $1,000


Why US Shale?
Shale gas accounts for between 15 percent and 20 percent of U.S. gas production, but is expected to quadruple in coming years, touching off a scramble among producers large and small for access to resources. Reliance's overseas ambitions, and is looking to invest in new areas such as shale gas to expand the firm's businesses beyond petrochemicals, refining, oil and natural gas exploration, and retail.
Reliance to generate free cash flow of $18 billion by 2014, giving it plenty of firepower for investment.  Reliance’s India asset sale of $7.2 billion to BP is seen as part the cash generation.

Done Deals
Heading
Deal Value ($MM)
$/Acre
Reliance and Carrizo form Marcellus JV
392
6,258
Reliance and Pioneer form Eagle Ford JV
1,315
11,111
Atlas and Reliance jointly acquire Marcellus acreage
191.9
4,532
Atlas and Reliance form Marcellus JV
1,699
14,158

Probable target
A firm on Reliance's radar may be Houston, Texas-based EOG Resources, which said in early August it plans to sell about 180,000 acres in U.S. shale plays -- underground rock formations that hold reserves of oil and natural gas.



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