Reliance Unit To Sell Upstream Assets In Pennsylvania, U.S. For $126 Million

A Reliance Industries Ltd. subsidiary in the U.S. has agreed to sell one of its upstream assets in the country's largest natural gas producing region, the Marcellus shale play.

Reliance Marcellus II LLC. signed an agreement to divest its assets in north-eastern and central Pennsylvania for $126 million, it said in a media statement. The assets were sold to BKV Chelsea, an affiliate of Kalnin Ventures, the statement added. The assests were being operated by Carrizo Oil & Gas Inc.

Reliance could also recieve an up to $11.25 million more if natural gas prices exceed certain thresholds in the next three years. Reliance Marcellus II is a subsidiary of Reliance Holding USA and Reliance Industries Ltd.

The transaction is an “opportunistic sale” of developed upstream Marcellus shale assets and marks the end of a 7-year partnership with Carrizo, said Walter Van De Vijver, president and chief executive of Reliance Holding USA. “We will continue to actively manage the remainder of our U.S. shale resources,” he added.

Reliance will still have two upstream assets in the U.S. The first in the Marcellus shale play through its “non-operated position with Chevron in southwestern Pennsylvania” and the other in the Eagle Ford basin through its “non-operated position with Pioneer in Texas”, the release stated.

The deal is expected to close by the end of the September-December quarter. Citigroup Global Markets acted as the financial advisor to Reliance.

Ahead of the announcement, shares of Reliance Industries closed 1.53 percent higher, while the benchmark BSE Sensex gained 0.7 percent.