Pioneer Seeks to Sell Eagle Ford Venture With RelianceMark Chediak
Pioneer Natural Resources Co. is seeking a buyer for its Eagle Ford Midstream venture with India’s Reliance Industries Ltd. as it focuses on shale oil production.
The two companies will sell their stakes in a joint process, the Dallas-based independent oil and gas producer said in a statement yesterday. Pioneer owns 50.1 percent of the pipeline and crude-processing unit.
The sale “would allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp assets in the Permian Basin of West Texas,” Pioneer Chairman and Chief Executive Officer Scott Sheffield said in the statement.
Reliance also was exploring the sale of its 45 percent stake in production assets in the Eagle Ford that it co-owns with Pioneer and Newpek LLC, people familiar with the matter said last month. Pioneer said in its statement yesterday that it has no plans to sell its share of those production assets.
The Midstream system consists of 10 gathering plants and about 460 miles of pipelines. It’s forecast to generate $100 million in cash flow next year, the company said. The joint venture was created in 2010.
Pipeline and processing assets generally trade at 9 to 12 times cash flow, Morningstar Inc. analyst Jason Stevens said, declining to offer a valuation on Pioneer’s stake. That would value Pioneer’s interest at as much as $1.2 billion, based on the cash-flow estimate for 2015.
Interest in so-called midstream assets has increased amid the boom in U.S. shale production. Last month, Shell Midstream Partners LP, the pipeline partnership backed by Royal Dutch Shell Plc, raised $920 million in an initial public offering.
Separately, Pioneer said third-quarter net income rose to $374 million, or $2.58 a share, from $91 million, or $0.65, a year earlier.