India’s Reliance Industries Ltd. announced its exit from U.S. shale with the divestiture of its Eagle Ford Shale position to privately held Ensign Natural Resources LLC.
Ensign on Nov. 8 agreed to acquire the Eagle Ford assets of Reliance Eagleford Upstream Holding LP, a step-down subsidiary of Reliance Industries, for an undisclosed amount. The deal is set to increase Ensign’s current ownership to 100% in the leases and wells it acquired from Pioneer Natural Resources Co. and Newpek LLC.
“We are excited to complete the puzzle with the acquisition of Reliance’s interest and now operate one of the premier assets in the basin,” Brett Pennington, president and CEO of Ensign, commented in a company release
The Reliance acquisition includes approximately 62,000 net acres in Bee, DeWitt, Karnes and Live Oak counties in South Texas and current net production of roughly 18,000 boe/d. The sale is “at a consideration higher than current carrying value of the assets,” according to a separate release by Reliance.
Based in Houston, Ensign was formed in 2017 in partnership with Warburg Pincus, a global growth investor. The company also secured an equity commitment from the Kayne Private Energy Income Funds platform as part of the acquisition in 2019 of Pioneer’s Eagle Ford assets.
Ensign would later build onto its Eagle Ford position another acquisition last year from Newpek, an affiliate by Mexican conglomerate Alfa which said it had transferred all of its assets in Texas to Ensign and Reliance in exchange for a complete cancellation of its obligations.
Post the Reliance acquisition, Ensign will own and operate 130,000 acres in the core of the Eagle Ford with current production approaching 40,000 boe/d, making it one of the premier private operators in the basin, the company release said.
“Through our efforts over the last three years,” Pennington continued, “we have created an asset that generates significant free cash flow and has a deep inventory of highly economic well locations in the core of the Eagle Ford Shale. ... We look forward to future development of the asset and working closely with our service providers and landowners as we continue to grow the business in a safe and efficient manner.”
Sidley Austin LLP provided legal counsel to Ensign for the transaction and Citigroup Global Markets Inc. arranged financing for the acquisition. Citigroup Global Markets Inc. was financial advisor to Reliance and Gibson, Dunn & Crutcher LLP served as its legal counsel. The Gibson Dunn team was led by partner Michael P. Darden and included partner Jonathan Whalen and associates Graham Valenta, Zain Hassan and Adri Langemeier.
With the transaction, Reliance, India’s largest private sector company ran by the country’s richest man Mukhesh Ambani, said it has divested all its shale gas assets and has exited from the shale gas business in North America.
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