GAIL gets US shale assets for $95 mn
In its first acquisition of an US energy asset, state-run gas utility GAIL (India) Ltd on Thursday announced the acquisition of a 20% stake in a shale gas area operated by Houston based firm-Carrizo Oil and Gas Inc for $95.0 (Rs 30 crore) million.business Updated: Sep 29, 2011 23:15 IST
In its first acquisition of an US energy asset, state-run gas utility GAIL (India) Ltd on Thursday announced the acquisition of a 20% stake in a shale gas area operated by Houston based firm-Carrizo Oil and Gas Inc for $95.0 (Rs 30 crore) million.
Reliance Industries Ltd since last year acquired three shale gas prospects in the US for $3.4 billion (Rs 15,300 crore).
Shale gas is natural gas trapped under rocks and has become an increasingly important source of natural gas in the US over the past decade.
GAIL will pay $63.7 million in cash to Carrizo and bear $31.3 million of the Houston-based firm's future costs to develop the area in the Eagle Ford deposits in Texas, the companies said in separate statements.
GAIL, through its wholly-owned US subsidiary GAIL Global (USA), formed in September, will invest $300 million (Rs 1,350 crore) over the next five years in the Eagle Ford assets.
The joint-venture will have 20,200 gross acres, out of which the GAIL subsidiary will have 4,040 net acres spread over four counties in Texas.
GAIL "will consider expanding its business portfolio in the North American market by pursuing various upstream and midstream opportunities, including LNG exports to India,"said BC Tripathi, CMD, GAIL.
GAIL will get a net 4,040 acres in La Salle County, according to Carrizo's statement. The agreement includes a 20% share in eight wells that produce about 2,350 barrels of oil-equivalent a day.
"We believe that this transaction with Carrizo comes at an opportune time," Tripathi said. "Under the arrangement, GAIL shall be sending secondees to Carrizo to work on the Eagle Ford assets and GAIL and Carrizo shall also work together in exploring shale gas opportunities in India and other countries outside of the US."
"This transaction represents a major step in GAIL's efforts to establish its presence in North America," he added.