Wednesday, June 16, 2010

Reliance Still Interested in Shale

India's Reliance Industries, which recently struck a joint venture agreement with Atlas Energy in the Marcellus Shale, is interested in making a similar deal in the Eagle Ford Shale by partnering with Dallas-based Pioneer Natural Resources Co., which has 310,000 acres under lease in the play (view Financial Times; Business Week articles).  No deal has been announced yet, but discussions are underway.

This potential deal verifies a few trends that have been evident for the past couple of years: 1) international players are very interested in learning shale extraction techniques and are willing to pay up for the tutorial; 2) big producers are better at buying into shale plays once they have been proven rather than being the "first mover;" and 3) it takes lots of upfront capital to develop a shale play.

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