HOUSTON (Dow Jones Newswires), June 22, 2010
Reliance agreed to buy 45% of Pioneer Natural Resources' acreage in the Eagle Ford natural-gas shale for $1.35 billion, a source familiar with the deal said Tuesday.
Dallas-based Pioneer has about 310,000 acres in the south Texas gas field, where the company had successfully drilled five wells as of May.
The move means that Reliance is doubling down on North America's fast-growing shale-gas business. In April, the conglomerate agreed to buy a stake of Atlas Energy's Marcellus Shale acreage for $1.7 billion. The Marcellus Shale is a giant rock formation underlying Pennsylvania, New York and other states.
In recent years North American independent gas producers have learned how to crack the tight rock formations known as shale using streams of water and chemicals. The development fueled an unprecedented boom in U.S. gas production, and lured international companies such as Reliance, Total and Statoil. Investment from these companies helps independents like Pioneer keep drilling despite restricted cashflow from low natural-gas prices.
The Eagle Ford Shale is an oil- and natural-gas-bearing rock formation that has recently been the site of frenzied development. The area is rich with gas, and has drawn the attention of some profit-seeking producers who aim to expand their output of oil and natural-gas liquids.
Earlier this year, BP said it had acquired a stake in the field from privately-held Lewis Energy. Chesapeake is looking for a partner to jointly develop its 500,000 acres in the Eagle Ford.
Copyright (c) 2010 Dow Jones & Company, Inc.
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