RIL completes deal to buy 60% stake in U.S. firm

The Mukesh Ambani-led Reliance Industries has announced the completion of its deal to acquire a 60 per cent stake in the Marcellus Shale gas asset in the United States. File Photo: AP  

Mukesh Ambani-led Reliance Industries Limited (RIL) announced on Sunday the completion of its deal to acquire a 60 per cent stake in the U.S.-based Marcellus Shale gas asset for $392 million.

RIL had announced on August 5 that it would buy its third shale gas asset in the United States. Its subsidiary, Reliance Marcellus II LLC, had signed a definitive transaction agreement to enter into a Marcellus Shale joint venture with the U.S.-based Carrizo.

Carrizo Oil & Gas Inc on Saturday announced that the company closed its previously announced joint venture transaction in the Marcellus Shale with a subsidiary of Reliance Industries Limited.

In connection with the joint venture, Reliance acquired a 20 per cent interest in approximately 52,200 net Carrizo acres in Pennsylvania considered highly prospective for Marcellus Shale natural gas at a purchase price of $65 million.

Reliance paid $11.4 million in cash to Carrizo at closing with $1.7 million more expected later this year.

In addition, Reliance will pay an expected $52 million of Carrizo's share of future drilling, completion, and seismic costs (“development carry”). The joint venture agreement is effective immediately. Simultaneous with the closing of this transaction, an affiliate of Carrizo's already existing joint venture partner, Avista Capital Partners (“Avista”), closed on the sale its entire interest in the same properties to Reliance for about $327 million.

Under the terms of Carrizo's current joint venture agreement with Avista, Carrizo expects to receive approximately $44 million in cash from Avista based on the sale of Avista's approximately 52,200 net acres.

The amounts to be received by Avista and Carrizo are subject to adjustment, pending completion of land title work.

The new Carrizo/Reliance joint venture agreement covers approximately 1,04,400 gross acres in northern and central Pennsylvania.

Under the terms of the agreement, Carrizo retains a 40 per cent working interest in the acreage and Reliance owns 60 per cent.

In addition to funding its own share of future development obligations, Reliance will fund 75 per cent of Carrizo's portion of these costs over the next two years or until the earlier full utilisation of the $52 million development carry, subject to certain conditions and extensions.

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Printable version | Jul 31, 2021 11:29:04 AM |

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