Reliance Industries will invest USD 1.36 billion in the US shale gas assets of Pioneer Natural Resources, its second such investment in as many months as it builds business beyond the Indian energy sector.
Under the agreement, India'a largest listed company will make a cash payment of USD 263 million for a 45% stake in US firm Pioneer's Eagle Ford shale acreage in south Texas. Reliance said it will also contribute USD 1.052 billion towards drilling costs over four years.
The deal is expected to close within five business days, Pioneer said in a separate statement.
"Reliance has lot of cash and as an investor I would like to see them investing more on getting access to resources like these," said Taina Erajuuri, portfolio manager at FIM India, which owns about USD 150 million worth of Indian shares in Helsinki.
"It's a step in the right direction for Reliance," she said.
Jal Irani of Macquarie said the Pioneer acquisition is done at a price which is cheaper than expected. "Shale gas is a cost competitive alternative to conventional gas."
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