Reliance enters Eagle Ford venture with Pioneer, Newpek

By OGJ editors
HOUSTON, June 24
-- A subsidiary of Reliance Industries Ltd. (RIL), Mumbai, has entered a joint venture with Pioneer Natural Resources Co., Dallas, and a partner in a $1.35-billion deal that will support the drilling of 356 horizontal wells/year in the Eagle Ford shale play of South Texas through 2013.

Pioneer said the JV will finance a program it announced earlier that calls for the drilling of 26 horizontal wells in the play from now through December, 70 wells in 2011, 120 wells in 2012, and 140 wells in 2013.

Pioneer said it would have 7 rigs drilling in the play by the end of 2010, 10 by the end of 2011, and 14 by yearend 2012. It reported earlier this year that it was pursuing a JV deal (OGJ, May 10, 2010, Newsletter).

The transaction includes current production of 28 MMcfd of gas equivalent from five horizontal wells. Pioneer expects to start production from a sixth horizontal well late in the third quarter.

The operator has five rigs at work in the play in Live Oak, Karnes, and DeWitt counties. It has three wells awaiting completion and expected to be brought on stream in the fourth quarter after central gathering facilities are finished.

Pioneer said it is buying new fracture stimulation equipment to support the drilling program. The fleet is to be operational by the second quarter of 2011.

The deal
RIL will acquire 45% of interests in the acreage now held by Pioneer and Newpek LLC, a subsidiary of ALFA SAB de CV.

It will pay the companies a total of $1.315 billion for a net interest of 118,000 acres to be held by RIL Eagleford Upstream LP. The total includes combined initial payments of $263 million and deferred payments of $1.052 billion to carry 75% of future Pioneer and Newpek capital costs.

After the transactions, the new JV will have a net working interest in 91% of 289,000 gross acres. The JV interests will be Pioneer 46%, Reliance 45%, and Newpek 9%.

Pioneer will serve as development operator, but RIL said it expects to become operator in some areas.

Pioneer has 6 years in which to use the drilling carry, subject to extension. RIL has the right to perform certain drilling and completion work beginning in 2011, using one rig at first and as many as four rigs under the current drilling ramp-up schedule.

Pioneer will continue to increase Eagle Ford leasehold. RIL has the option to acquire a 45% interest in new acreage.

RIL cited Pioneer estimates that the existing acreage will support drilling of more than 1,750 wells with a net resource potential to the JV of about 10 tcf of gas equivalent.

RIL also agreed to pay Pioneer $46 million for a 49.9% interest in a new midstream JV to serve gathering needs of the Eagle Ford project. The interest will be held by Reliance Eagleford Midstream LLC. Pioneer will be operator, with the partners having equal governing rights.

Related Articles

BHI: US oil rig count rises for first time in 30 weeks

07/02/2015 A sudden 12-unit jump in oil-directed rigs during the abbreviated week ended July 2 represented their first rise since Dec. 5, 2014, and helped lif...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

BHP, Woodside move to decommission Stybarrow field

07/01/2015 BHP Billiton Ltd. and Woodside Petroleum Ltd. have started preparations for decommissioning of the Stybarrow group of oil fields in production lice...

Tullow Oil provides production update on Jubilee, other fields

07/01/2015 Tullow Oil PLC reported that gross production for the Jubilee field offshore Ghana averaged 105,000 b/d in this year’s first half, up from 102,000 ...

Statoil to suspend Scarabeo 5 drilling rig

07/01/2015 Due to overcapacity in its rig portfolio, Statoil ASA said it has decided to suspend Saipem’s Scarabeo 5 dynamically position drilling rig after it...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...

USGS: Water usage for fracturing varies widely across shale plays

07/01/2015 The volume of water required to hydraulically fracture wells varies widely across the country, according to the first national analysis and map of ...

Forum extends study of subsea integrity

06/30/2015

Work by an industry forum called SURF IM Network, which studies oil and gas subsea integrity management, has been extended by 3 years.

White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected