State-run Oil India, nation's second largest explorer, is in advanced stages of discussion with Carrizo Oil and Gas Inc to acquire stake in Niobrara Shale in North Eastern Colorado.
This buy will make Oil India third such player to hold shale gas acreages in the US. Persons aware of the development said two Indian companies-- Oil India and GAIL had bid for stake in the shale plays. A Chinese private equity player was also in race for the same.
A senior Oil India executive said, "We are in advanced stage of discussions and will be announcing the deal soon." He did not give details of the deal. Given shale gas prices in the US have slumped due to increase in production in recent years, analysts said the price at which Oil India enters the shale gas play, is important. Houston-based Carrizo Oil & Gas Inc is an independent energy company engaged in shale plays in the US and UK. Its operations span across--- the Barnett, Eagle Ford, Marcellus and Niobrara shale plays.
"Carrizo is in discussions with a number of companies concerning the formation of various structures of business relationships, acquisitions, and divestitures, involving a variety of oil and gas assets as a normal course of business. These discussions, prior to the announcement of a formal agreement, are confidential between the parties," said Richard Hunter, Vice President, Investor Relations, Carrizo Oil & Gas in a email.
The company on its website says, "...In April of 2010 we announced the initiation of oil focused horizontal development programs in the Eagle Ford Shale in South Texas where we have accumulated 41,000 net acres and in the Niobrara Shale in North Eastern Colorado where we have accumulated 62,000 net acres. We have experienced impressive results in both these areas with 100% drilling success and strong early production."
State-run GAIL, India's biggest gas transportation firm, acquired 20% stake at Carrizo’s Eagle Ford shale acreage in south Texas last September.
The acquisition was GAIL's first shale gas asset in the US with an investment of $95 million. Gail and its partners are expected to invest up to $300m in total over the next five years at the field. Gail acquired stake through its wholly owned subsidiary GAIL Global (USA) Inc.
Similarly, Mukesh Ambani promoted Reliance Industries (RIL) holds 45% stake in Eagle Ford and 60% stake in a Marcellus shale gasfield through a joint venture with Carrizo.
Reliance’s shale gas business in America comprises three upstream joint ventures with Chevron, Pioneer Natural Resource and Carrizo Oil & Gas, and a midstream joint venture with Pioneer. Aggregate investments since the inception of these JVs stood at Rs 22,000 crore ($4 billion) as at the end of the first quarter of this financial year.
