Billionaire contemplating the sale of US shale assets

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Getty Images

Mumbai-based Reliance Industries Ltd. billionaire leader Mukesh Ambani is heavily considering a large sale of some assets. The sale of its shale gas investments located in the United States is being weighed due to a difference of opinion of its value. The sale of its holdings is said to take place because the value of its assets is not being fully realized in the current market. The last annual earnings report stated that the unconventional gas venture’s investment was estimated to be more than $8 billion.

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Due to the steady decline in natural gas prices, Reliance saw their shale assets earnings fall in accordance to the current marketplace. This energy company that owns and operates one of the world’s largest oil refinery complexes now has the opportunity to shift its capital from the sale of its shale towards more promising ventures. Although the decision to sell has not been officially declared, it is the understanding of those with the knowledge that Reliance will not be looking to offer their assets at a discounted rate. Since the gas market does not currently show signs of improvement, it might be the right time for such a sale.

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Reliance may be exploring the sale of their shale assets because they have seen the losses experienced by others such as BHP Billiton Ltd. Reliance has yet comment on the speculations that have been made by experts in their industry. The Mumbai-based company, which has a value in the market of $51 billion, has ownership in several projects, which include the following:

•    45% in Pioneer Natural Resources Co. in the Texas Eagle Ford formation
•    40% in Chevron Corp. venture in Marcellus shale located in Pennsylvania
•    60% in Carrizo Oil & Gas Inc. project also in Pennsylvania

There was a recent strategic sale from Reliance Industries Ltd.’s, which came from their partner, Pioneer Natural Resources. The company sold a Texas pipeline and processing company to Enterprise Products Partners LP. This sale when completed was estimated to be $2.15 billion.



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