Reliance, Pioneer Sell Stake in US Shale Pipeline JV

Pioneer Natural Resources Company and Reliance Industries have sold their Eagle Ford shale midstream (EFS Midstream) business for $2.15 billion to Enterprise Products Partners.

Pioneer owns 50.1 percent of the midstream business and Reliance owns the remaining 49.9 percent.

The purchase price will be paid by Enterprise in two installments: $1.15 billion at closing, which is expected to occur early in the third quarter of 2015, and $1 billion twelve months after closing.

Pioneer’s share of the net sale proceeds, before normal closing adjustments, is expected to be $500 million at closing and $500 million one year later. Enterprise will pay Reliance approximately $574 million in cash at closing and make the final payment of $499 million in cash on or before the first anniversary of the closing date.

The EFS Midstream business was formed in 2010 to construct facilities to provide gathering and handling services for condensate and gas produced from wells in the Eagle Ford Shale. The EFS Midstream system currently consists of 10 central gathering plants and approximately 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. These services are provided for the Eagle Ford Shale upstream joint development operated by Pioneer (Pioneer - 46 percent, Reliance - 45 percent and Newpek LLC - 9 percent) and for various third parties.

Besides Eagle Ford, RIL has two more shale ventures in the US — a 40 per cent stake in Chevron’s Marcellus shale acreage and a 60 per cent interest in Carrizo Oil and Gas Inc’s Marcellus shale acreage in Central and Northeast Pennsylvania.