New Delhi: Oil India Ltd (OIL) and Indian Oil Corp. Ltd (IOC) have jointly agreed to buy a 30% stake in US-based Carrizo Oil and Gas Inc.’s shale assets in Colarado, the companies said on Thursday.
The two Indian companies will invest $82.5 million, including an upfront cash payment of $41.25 million. The remaining $41.25 million will be paid based on future drilling and development costs, the companies said in a statement.
Carrizo is a Houston-based oil and natural gas exploration and production company.
This is OIL’s and IOC’s first shale gas acquisition in the US. OIL will own a 20% stake and IOC 10% in the assets.
The assets, located in the Denver-Julesburg basin, produce 1,850-2,000 barrels of oil and oil equivalent (BOE). The Indian companies will get 600-700 BOE as their combined share.
The asset has 69% crude oil and 17% gas, and the rest is rich liquid.
OIL’s chairman and managing director S.K. Srivastava said the acquisition is part of the company’s plan to expand overseas.
“We have embarked part of our financial reserves for acquisitions and new opportunities to bolster our overseas portfolio and were keen on joint ventures in countries with geopolitical stability,” he said. “This acquisition will also give us first hand exposure to operations of shale/tight oil and gas fields and technologies deployed for the same.”
IOC chairman R.S. Butola said the acquisition will help the refiner gain momentum in exploration and production activities. “While our E&P plans have been relatively low key so far, with the shale asset in the Niobrara basin we should gain momentum in this space,” Butola said.