India’s Reliance Industries Ltd. has agreed to divest its entire stake in 64,000 net acres in the Appalachian Basin, continuing its exodus from unconventional oil and natural gas assets in the United States. 

Northern Oil and Gas Inc. (NOG) agreed to acquire the nonoperated stake from Reliance Marcellus LLC in exchange for $175 million and 3.25 million warrants to purchase its common stock at a price of $14.00/share.

EQT Corp., which acquired the properties in a broader deal last year when it bought Chevron Corp.’s Appalachian portfolio in Pennsylvania and West Virginia, would operate the assets. 

The assets are expected to produce 100-110 MMcfe/d this year, and consist of 102.2 net producing wells, another 22.6 wells in process and 231 net undrilled locations in the core of the Marcellus and Utica shale plays, NOG said. The deal gives NOG entry to the Appalachian Basin and complements its stakes in 183,000 acres in the Williston and Permian basins. The company primarily invests in nonoperated minority working and mineral interests. 

“Our cash purchase price for these assets only ascribes value for producing wells and the large inventory of wells-in-process, with significant upside value on the undeveloped properties,” said NOG COO Adam Dirlam. “The joint venture (JV) structure allows Northern significant input and clarity on the development plans for these assets on a multiyear basis.” 

NOG plans to finance the transaction with a combination of equity and debt. The deal is expected to close in April. 

For Reliance, a conglomerate with businesses in the petrochemical, retail and digital services sectors to name a few, the sale is another indication of its shift away from U.S. unconventionals as it focuses more closely on consumer-driven businesses. 

The company last sold natural gas assets in central and northeastern Pennsylvania in 2017 to energy investment firm Kalnin Ventures LLC. It also divested Eagle Ford Shale midstream assets it held with Pioneer Natural Resources Co. in 2015. The company still has an upstream JV with Ensign Natural Resources LLC in the Eagle Ford. 

However, in its third quarter fiscal earnings report issued last month, Reliance said the JVs in the Marcellus and Eagle Ford had reduced activity given “the current weak macro environment.” Reliance cited the impact of low commodity prices in impairments the company’s U.S. subsidiaries took on those assets.