RIL acquires majority stake in Carrizo Oil & Gas shale

Sep 13, 2010 02:00 AM

Reliance Industries Ltd (RIL) said that it has completed its deal to acquire a 60-% stake in a Marcellus Shale acreage in Central and Northeast Pennsylvania from US-based Carrizo Oil & Gas.
On 5 August, RIL, India's largest private sector oil and gas exploration company made its third shale gas asset acquisition in the US through its US subsidiary Reliance Marcellus II by acquiring the stake in the Marcellus shale acreage from Houston-based Carrizo and ACP II Marcellus, an affiliate of Avista Capital Partners for around $ 392 mm.

Carrizo also announced that it has closed its previously announced joint venture transaction with Reliance Marcellus II.
Under the deal announced in July, RIL will acquire 100 % of Avista's interest and 20 % of Carrizo's interests in the joint venture and upon completion of the transaction, RIL will own 60 % and Carrizo the remaining 40 % of a newly-formed joint venture. The joint venture will have approximately 104,400 net acres of undeveloped leasehold in the core area of the Marcellus Shale in Central and Northeast Pennsylvania, of which RIL's 60 % interest will represent approximately 62,600 net acres.

This acreage is expected to support the drilling of around 1,000 wells over the next 10 years, with a net resource potential of about 3.4 tcfe. Reliance will have a share of 2.0 tcfe net in the production. The transaction allows for additional growth in the development acreage, at pre-agreed terms.
Carrizo will serve as the development operator for the joint venture while Reliance has the option to act as a development operator in certain regions in the coming years as part of the joint venture.

RIL, the largest private sector company in India with a current market capitalisation of over $ 71 bn had acquired 120,000 Marcellus Shale net acres from Atlas Energy in April for $ 1.7 bn.
It followed this up in June by acquiring the shale gas assets in the Eagle Ford gas field in Texas from Pioneer Natural Resources for $ 1.15 bn.

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