Petrol Stop - Reliance not finished with shale asset buys in US

Reliance not finished with shale asset buys in US

Tuesday, 07 September 2010

07 Sept 2010;economictimes.indiatimes.com:MUMBAI: Mukesh Ambani’s Reliance Industries, which has struck three shale gas joint ventures with US 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, Reliance chief financial officer Alok Agarwal said recently. Bankers say potential targets include Fort Worth, Texas-headquartered Quicksilver Resources, Denver , Colorado-based Enduring Resources and companies with assets in the Horn River shale formation in Canada. Another firm on Reliance’s radar may be Houston, Texas-based EOG Resources, which said in early August it plans to sell about 1,80,000 acres in US shale plays underground rock formations that hold reserves of oil and natural gas. Shale gas accounts for between 15% and 20% of US gas production, but is expected to quadruple in coming years, touching off a scramble among producers large and small for access to resources. Mr Ambani, the world’s fourth richest man according to Forbes magazine, has made no secret of 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. He could face competition from other firms, including Royal Dutch Shell, Total and Mitsui, which have done shale gas deals previously, and those that have not bought a shale asset yet such as Chevron and Encana. Reliance is expected to generate free cash flow of $18 billion between this year and the fiscal year that ends in March 2014, giving it plenty of firepower for investment. The company has raised a war chest of $2 billion by selling stock over the past year, and a top credit rating means financing will be easily available if needed, bankers say. Last month, the company said it would acquire a 60% in a joint venture with Carrizo Oil & Gas at the booming Marcellus Shale region in the US, following similar deals with US firms Atlas Energy and Pioneer Natural Resources earlier in the year.