Reliance Industries Plans to Cut US Shale Gas Capital Expenditure by 30%

India’s Reliance Industries (RIL) has decided cut its guidance for capital expenditure plans for the shale gas segment, according to Deccan Herald newspaper.

The company, in a presentation, said the guidance for 2016 financial year has been lowered by 30 percent to $860 million.

Overall capital expenditure during the fourth quarter for the shale gas segment stood at $234 million and the cumulative investment across all joint ventures was at $8.1 billion, RIL said in its quarterly results statement.

“Given the weak commodity price environment, Reliance’s shale gas business is focused on ‘capital preservation’, by moderating activity levels, reducing service costs and improving efficiencies. Ensuring profitable development and retaining optionality through high grading acreages and improving netbacks will be the key challenges going forward. Challenged market outlook would most likely curtail near-term growth, but long term outlook for the business remains promising,” the company stated.

RIL is a partner in the shale resource base of Marcellus and Eagle Ford Shale gas plays in the US through its three joint ventures with Chevron, Pioneer and Carrizo.

Pioneer JV’s gross production averaged at 735Mmcfe/d while production at Chevron JV grew 7 percent sequentially to 392 Mmcfe/d in the fourth quarter. At Carrizo JV, market conditions forced temporary curtailment in production, based on JV decision to flow wells at an operationally optimal level, which led to a 36 percent sequential drop in production rates to 101 Mmcfe/d during the quarter, RIL said.