RIL to buy 60% in US shale gas JV for $392 mn

183737 Investors following Reliance. Share this News with them.

0

Like this story, share it with millions of investors on M3

RIL to buy 60% in US shale gas JV for $392 mn

Reliance Industries Limited's (RIL) arm in the US, Reliance Marcellus II has signed definitive transaction agreements to enter into a Marcellus Shale joint venture with United States based Carrizo Oil & Gas.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ See latest News about Reliance See previous management interviews See what other Experts & Brokerages are saying about Reliance

Reliance Industries' (RIL) arm in the US, Reliance Marcellus II has signed definitive transaction agreements to enter into a Marcellus Shale joint venture with United States based Carrizo Oil & Gas.

Under the proposed transaction, Reliance will acquire a 60% interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in a 50:50 joint venture between Carrizo and ACP II Marcellus LLC, an affiliate of Avista Capital Partners.

Pursuant to the transaction, Reliance will acquire 100% of Avista's interest and 20% of Carrizo's interests in the joint venture. Upon completion of the transaction, Reliance and Carrizo will own 60% and 40% interests, respectively, in a newly formed joint venture between the companies.

Reliance will pay a total consideration of USD 392 million, comprising of USD 340 million of cash and USD 52 million of drilling carry obligations. The drilling carry obligations will provide for 75% of Carrizo's share of development costs over an anticipated two year development program.

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% interest will represent approximately 62,600 net acres.

This acreage is expected to support the drilling of approximately 1,000 wells over the next 10 years.

The transaction allows for additional growth in the development acreage, at pre-agreed terms.

Carrizo will serve as the development operator for the joint venture and 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 anticipated to close by mid-September 2010.