RIL, Pioneer Close Sale of Eagle Ford Shale Midstream Business

Pioneer Natural Resources and Reliance Industries have closed the sale of their Eagle Ford Shale (EFS) Midstream business.

The midstream business has been sold to an affiliate of Enterprise Products Partners for $2.15 billion, the two companies announced earlier this week.

Pioneer owned 50.1 percent of EFS Midstream and Reliance owned the remaining 49.9 percent.

Pioneer and Reliance will also benefit from fee reductions under existing downstream processing and transportation contracts with Enterprise in exchange for extending the contracts’ terms to 20 years and dedicating additional Eagle Ford Shale volumes to Enterprise. The reduced fees are expected to benefit Pioneer and Reliance over the original terms of the downstream contracts by approximately $200 million on a net present value basis at 10 percent. These reduced fees will primarily be reflected as improvements in future realized prices. Enterprise has also agreed to spend $270 million over the next ten years on new facilities, connections and expansions to support the continuing development of the Eagle Ford Shale resource.

The purchase price for the EFS Midstream business will be paid by Enterprise in two installments: $1.15 billion was paid at closing, before normal closing adjustments, and approximately $1 billion will be paid twelve months after closing. After retiring the debt of EFS Midstream of approximately $125 million, Pioneer’s share of the net sale proceeds is $530 million at closing and approximately $500 million one year later.