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.

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 (trillion cubic feet equivalents). 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, RIL said.

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.

The transaction is expected to close by mid-September 2010.

"Reliance is excited about the opportunity to further expand presence in the Marcellus Shale in the United States. We are pleased to establish a long-term partnership with Carrizo, which has demonstrated operating expertise in the shale plays.

The proposed joint venture will supplement strengths achieved through our recent joint ventures and further expands our footprint in North American shale gas operations," Walter Van de Vijver, president, international E&P business, Reliance Industries, said.

Jefferies & Company Inc acted as lead financial advisor and Vinson & Elkins LLP acted as legal counsel to Reliance. BNP Paribas and Credit Agricole Corporate and Investment Bank provided strategic advise to RIL in respect of this investment.