Millennium Post

Oil PSUs make first big purchase in American fields

Oil PSUs make first big  purchase in American fields
Oil India Limited (OIL) and Indian Oil Corporation (IOCL) have together acquired a stake in Carrizo’s liquid rich shale assets in the Niobrara basin in Colorado, USA through their wholly owned US subsidiaries.

This is their first ever upstream acquisition in the USA and the two public sector companies on Thursday executed definitive agreements with Carrizo, a company based in Houston, Texas to enter into a joint venture. Under the terms of the deal, OIL and IOCL will acquire 30 per cent (OIL – 20 per cent, IOCL 10 per cent) in the Niobrara asset via their respective subsidiaries. Carrizo has 61,500 gross acres in the basin out of which the OIL – IOCL consortium will have 18,450 acres, spread across three counties in Texas.

At the press conference held in the capital city, Indian Oil’s chairman, R S Butola said ‘The Carizzo stake is another step in our journey to emerge as an integrated energy company. Our various diversifications in petrochemicals and gas business have not only made a notable impact by garnering a significant share of the market but are also poised to emerge as a potent and vibrant feature of the company’s profile in the future. 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. The learning and technology exposure that will accrue in this field would stand us in good stead in the future,’ added Butola.

The total investment for the two companies would be around USD 82.5 million providing the companies an entry into the early stage of an unconventional play in a well-known producing basin. The deal also provides both the companies a platform for additional acquisitions in North America.

OIL’s chairman and managing director, S K Srivastava said, ‘This acquisition is in line with our corporate strategy of diversification. We have earmarked 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 such as the US, UK, Canada and Australia. This acquisition will also help us gain experience in the technology and operations of shale and tight oil fields and use its findings to implement the same in India,’ he said.

Carrizo Oil & Gas, Inc. is a Houston-based NASDAQ listed energy company actively engaged in the   exploration, development, exploitation, and production of oil and natural gas primarily in the US.

The company has assets in the Eagle Ford Shale in South Texas, the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions.

Carrizo is also actively developing its oil discovery known as the Huntington Field in the UK North Sea. Carrizo controls significant prospective acreage blocks and utilises advanced drilling and completion technology along with sophisticated 3-D seismic techniques to identify potential oil and gas drilling opportunities and to optimise reserve recovery.
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