In a first purchase of shale gas assets abroad, two State-owned oil companies — Oil India Ltd. (OIL) and Indian Oil Corporation (IOC) — on Thursday announced jointly buying 30 per cent stake in Houston-based Carrizo Oil and Gas’s Niobrara shale oil and gas assets in Colorado for $82.5 million (about Rs.428 crore).

Both companies will make an upfront payment of $41.25 million to Carrizo and pay a similar amount for future drilling costs on behalf of the U.S. firm, OIL Director (Finance) T. K. Ananth Kumar told journalists here. OIL will acquire 20 per cent and IOC will get 10 per cent in the Denver-Julesburg basin in Colorado, which produces both natural gas and liquids. Carrizo, which holds 61,500 gross acres in the Niobrara basin, currently produces 1,850 barrels of oil-equivalent per day, of which 30 per cent would now accrue to OIL-IOC combine. “Our share of peak production, which is estimated to be reached in 3-4 years, will be 3,700 barrels of oil-equivalent a day,” Nripendra Kumar Bharali, Director (Human Resources and Business Development) at OIL said.

The joint venture would spend $230 million over the next 3-4 years on the shale property. OIL-IOC paid about $3,000 per acre for the 18,450 acre spread over three counties in Texas. “This compares very favourably with other acquisitions in the basin,” Mr. Kumar remarked. OIL-IOC now joins Reliance Industries Ltd. (RIL) and GAIL India in race for securing shale gas assets in the U.S.

Mr. Kumar said OIL, which has earmarked Rs.7,000 crore for overseas acquisitions this year, is in talks for acquisition of conventional oil and gas as well as unconventional shale assets in the U.S., Canada and some African nations. “We are going to close few more deals in the coming months. We are taking this investment as a stepping stone. We want to take more and more opportunities,” he added. OIL plans to raise close to $100 million in foreign loans by year end to part-fund the Carrizo stake buy. “Today, U.S. dollar loans can be raised at less than 5 per cent interest rate as compared to about 11 per cent rate for domestic loans,’’ headed.

OIL Chairman and Managing Director, S. K. Srivastava, said the company had earmarked its financial reserves for acquisitions and new opportunities to bolster its overseas portfolio and were keen on joint ventures in countries with geo-political stability. “This acquisition will also give us first hand exposure to operations of shale/tight oil and gas fields and technologies deployed for the same,” he added.