Thursday, June 24, 2010
Dallas-based Pioneer Natural Resources announces $1.15 billion Eagle Ford Shale joint venture with Reliance Industries
Reliance will pay $266 million in cash to Pioneer at closing and will pay an additional $879 million to carry Pioneer’s share of future drilling costs.
DALLAS Pioneer Natural Resources Company today announced a joint venture agreement with a wholly-owned U.S. subsidiary of Reliance Industries Limited. Under the agreement, Pioneer will sell a 45% interest in approximately 212,000 net acres leased by the company in the Eagle Ford Shale play for a total price of $1.15 billion.
Reliance will pay $266 million in cash to Pioneer at closing and will pay an additional $879 million to carry Pioneer’s share of future drilling costs. Reliance will also participate with Pioneer in the development of midstream assets in the Eagle Ford Shale as a 49.9% partner.
Under the agreement, Reliance acquires 95,300 net acres of leasehold held by Pioneer. Pioneer retains an average 42% working interest in the acreage and Reliance receives an average 41% working interest, with other working interest owners continuing to hold the remaining 17% working interest. Pioneer will, however, continue as operator.
Pioneer and Reliance have agreed to a joint venture development plan which forecasts the drilling of 26 horizontal Eagle Ford Shale wells during June through December 2010, increasing to 70 wells in 2011, 120 wells in 2012, and 140 wells in 2013. This plan is consistent with an accelerated development program previously announced by Pioneer (7 rigs by year-end 2010, 10 rigs by year-end 2011, and 14 rigs by year-end 2012) and will allow the joint venture to retain its acreage position.
Scott Sheffield, chairman and CEO, stated, “We are very excited to partner with Reliance, a global energy industry leader, and pleased that they share our confidence in the development potential of Pioneer’s large, liquids-rich acreage position in the Eagle Ford Shale. Our joint development plan will add significant production and reserves for Pioneer while enhancing shareholder value.”
“We had originally forecasted total company production growth at 10+% per year over the 2011 through 2013 period, while continuing our commitment to spend within cash flow. This strong growth was primarily attributable to our significant drilling ramp up in the Spraberry field. With the addition of the ramp up in Eagle Ford Shale drilling, we now expect production growth over this same period to be 15+% per year, while still spending within cash flow. Cash flow is forecasted to substantially increase from $1.2 billion in 2010 to $2.0 billion in 2013 assuming current NYMEX strip prices and taking into account the company’s attractive oil and gas derivatives for 2010 through 2013.”
Pioneer Natural Resources Company is a large independent oil and gas exploration and production company, headquartered in Dallas, with operations primarily in the United States.
Source: Pioneer Natural Resources