Reliance in new 60:40 shale gas joint venture in US
05 Aug 2010
Reliance Industries Ltd (RIL) has acquired a 60 per cent stake in a Marcellus Shale acreage in Central and Northeast Pennsylvania from US-based Carrizo Oil & Gas Inc, for around $392 million - its third such acquisition so far this year.
Reliance Marcellus II, LLC, RIL's US subsidiary, signed the agreements with Carrizo Oil & Gas Inc and ACP II Marcellus LLC, an affiliate of Avista Capital Partners, to acquire the stake in the Marcellus shale acreage.
The Marcellus shale acreage is currently held in a 50-50 joint venture between Carrizo and ACP II Marcellus LLC, an affiliate of Avista Capital Partners.
Reliance will acquire 100 per cent of Avista's interest and 20 per cent of Carrizo's interests in the joint venture and upon completion of the transaction, Reliance will own 60 per cent and Carrizo the remaining 40 per cent of a newly-formed joint venture, RIL said in a release.
Reliance will pay a total consideration of $392 million, comprising of $340 million of cash and $52 million of drilling carry obligations. The drilling carry obligations will provide for 75 per cent of Carrizo's share of development costs over an anticipated two-year development programme, RIL said.
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 Reliance's 60 per cent interest will represent approximately 62,600 net acres.