Shale Gas Production To Enable RIL Record $ 1 Billion Profit By FY15

Thanks to the strong shale Gas production at RIL (Reliance Industries Limited), the company expects a profit of $ 1 billion by FY15. The conglomerate’s first half figure and analysis stand as a testament to the same, ensuring that the company’s operating profit ( earnings before interest, tax, depreciation and amortization)  can touch the $ 1 billion milestone by 2014- 2015. This figure is equivalent to the 12.5% of the company’s total Ebitda last fiscal that would account for a colossal return of around 20% a year from the time it has  invested.

For  its  partnership  in  US shale  gas assets, RIL had engaged in a joint venture with three companies i.e. Pioneer, Chevron and Cazziro  where the assets were chipped in for the purpose of production , since last year with the products being sold in the markets of Pennsylvania  and Texas. At the annual general meeting on June 8, Mukesh Ambani, Chairman mentioned that the net sales are projected to increase tenfold to nearly 300 bcfe (billion cubic feet equivalent) in the next five years. According to analysts, the company has infused around $ 5 billion in their assets and poised to record revenue of $ 400 million, by the end of 2012-2013.

With respect to the three shale gas joint ventures in the US, RIL ‘s revenue accounted to $ 235 million and an Ebitda of $ 198 billion in the first half of the fiscal. Analysts at international brokerage, Vijay Jaisingh and Rajesh Sethia opined that the shale gas might churn out revenue of $ 355 million in Ebitda for this entire year.

Shale gas is the gas trapped in rocks that has failed to escape and pass through the earth’s crust. With the life expectancy that is 25 times higher than that of other naturally available gas in oil and gas wells, it entails a high amount of exploration over large tracts along with an enormous amount of water to wash out the water. This increase in profit owing to the shale gas production has paved way for positive sentiments in the stock market for the company.