Reliance might sell U.S. shale assets if the prices remain depressed

Dices cubes with the words SELL BUY
Source: DollarPhotoClub

Mumbai-based Reliance Industries Ltd, which operates the world’s largest oil refinery, and which had invested over $8 billion in gas joint ventures in the U.S. by March-end, is contemplating the sale of the company’s investments in shale gas in the United States due to falling prices – a source close to the company said.

The company hasn’t made a final decision to sell, and – according to another anonymous source – Reliance isn’t willing to part with the assets at a depressed price, but if the sale is decided it will be the second divestiture of assets this month after Reliance, along with partner Pioneer Natural Resources, sold a pipeline in Texas for $2.15 billion.

Reliance owns 45 percent stake in a project owned by Pioneer Natural Resources in Texas, and 40 of a venture controlled by Chevron Corp. in Pennsylvania. It jointly owns another project along with Carrizo Oil & Gas Inc., also in Pennsylvania. It also produces gas in India, from the KG-D6 basin, in partnership with BP Plc.

If the company does decide to sell the holdings, it will be as a part of a strategic review of its assets, as it believes their worth isn’t fully reflected in its market value – an anonymous source told Bloomberg.

“If you are not a big player in upstream, then it makes sense for you to divest from those resources,” Abhishek Kumar, a London-based senior analyst at Interfax Energy’s Global Gas Analytics, told Bloomberg.

“From the longer-term perspective, it’s possible that Reliance expects prices of oil and natural gas liquids to remain low, which can be a reason for them to consider a sale of the shale assets.”

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