Oil India Indian Oil Buy 30% Stake in Carrizo’s Shale Asset

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Oil India Indian Oil Buy 30% Stake in Carrizo’s Shale Asset

Public sector companies Oil India Ltd and Indian Oil Corporation Ltd on Thursday jointly announced acquisition of 30 per cent stake in Houston – based Carrizo Oil & Gas Inc’s liquid rich shale assets in Colorado. The asset is located in Denver – Julesburd Basin.

The companies would invest $82.5 million that includes an upfront cash payment of $41.25 million. Remaining $41.25 million would be paid based on future drilling and development costs. Currently, the assets produce 1,850 – 2,000 barrels of oil & oil equivalent ( BOE ). The Indian companies would get 600 – 700 BOE as their share.

The asset portfolio comprises 69 per cent of crude oil, 17 percent of gas and remaining are rich liquid. This is OIL and IOC’s first shale gas acquisition in the US. OIL will have 20 per cent stake, while IOC would have 10 per cent stake. BMO Capital Markets is the lead banker for the deal. Thompson & Knight LLP is the legal counsel, while E&Y and Halliburton acted as tax, accounting and technical due diligence.

For Carrizo, the Oil India – Indian Oil venture is not the first Indian company with whom it will be doing business. Last year, GAIL ( India ) had acquired 20 per cent in Carrizo’s Eagle Ford shale acreage. Carrizo Oil also has a joint venture with Reliance Industries Ltd ( RIL ) for the Marcellus shale acreage in northern and central Pennsylvania. Currently, the companies will not be able to bring the hydrocarbon from the asset to India. Exports to India would depend on whether the US decides to keep India outside the purview of free trade area / non – FTA framework.

Carrizo is a Houston – based energy company actively engaged in the exploration, development, exploitation, and production of oil and natural gas, primarily in the Eagle Ford Shale in South Texas, the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, the Utica Shale in Eastern Ohio, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions. Carrizo is also actively developing its oil discovery known as the Huntington Field in the UK North Sea.

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