Reliance Industries Ltd. (RIL) is studying shale-gas assets in Canada after agreeing to spend $3.4 billion to acquire and develop reserves in Pennsylvania and Texas last year, a person with direct knowledge of the plan said.
The Mumbai-based energy explorer and refiner controlled by Indian billionaire Mukesh Ambani may also use part of its $16 billion cash reserves to invest in clean energy ventures, the person said, asking not to be identified because the plans are private. The person declined to elaborate.
Encana Corp. (ECA) and Cenovus Energy Inc. (CVE) are among Canadian companies seeking partners to help develop their gas and oil resources. Adding reserves of natural gas trapped in shale rock may help Reliance, India’s biggest company by market value, offset a drop in output of the fuel at home that has led to a 27 percent slump in its shares this year.
“How they transform themselves into a global oil and gas producer will determine their growth,” said Alok Deshpande, an analyst at Elara Securities Ltd. in Mumbai, who has a “reduce” rating on Reliance shares. “Money won’t be a problem.”
Tushar Pania, a spokesman for Reliance, declined to comment on acquisitions or the use of the company’s cash, when reached by telephone today.
Reliance declined 0.9 percent to 779 rupees at 1:31 p.m. in Mumbai trading, heading for its lowest close since Aug. 29. The benchmark Sensitive Index dropped 0.8 percent.
Reliance was India’s most acquisitive company by number of deals last year, according to data compiled by Bloomberg. The company paid $946 million to acquire shale-gas assets in the U.S. from three companies and to spend $2.5 billion on the fields on behalf of its partners.
Expanding Deals Team
The company plans to expand its mergers and acquisitions team after hiring Navin Wadhwani from Rothschild to head the group, the person said. Reliance also plans to hire Tony Fountain, who quit as chief executive officer of the U.K. Nuclear Decommissioning Authority this month, to head its refining and marketing division, the person said.
Fountain was BP Plc’s vice president of marketing and refining before he moved to the nuclear authority and was U.K.’s highest paid civil servant last year, earning 680,000 pounds ($1 million), the London-based Times reported Sept. 21
Encana, Canada’s biggest natural-gas producer, said July 21 it’s looking for partners to help it develop reserves in British Columbia and Alberta. In June, PetroChina Co. walked away from a C$5.4 billion ($5.3 billion) purchase of a 50-percent stake in Encana’s Cutbank Ridge assets.
Cenovus, Canada’s fifth-largest energy company, is discussing partnership opportunities with companies from Asia, the U.S. and Canada for a deal worth “billions” of dollars, Chief Executive Officer Brian Ferguson said April 27.
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