In its third shale gas acquisition in the US, Mukesh Ambani-led Reliance Industries Ltd (RIL) on Thursday announced the acquisition of 60 per cent stake in Marcellus shale-gas acreages held by Carrizo Oil and Gas Inc and its partner for $392 million (Rs 1,842 crore).
RIL will pay $340 million (Rs 1,598 crore) in cash to acquire the 60 per cent stake. The remaining $52 million (Rs 244 crore) would be for Carrizo’s drilling cost in the Marcellus shale-gas areas of central and northeast Pennsylvania, a company statement said.
Following the acquisition, RIL has already invested close to Rs 16,134 crore ($3.5 billion) in acquiring shale gas assets in the US in less than six months. Flush with revenues from its Krishna -Godavari (K-G)-D6 field back home, RIL, sitting on cash reserves of close to Rs 22,000 crore has been on the lookout of acquisitions in the US.
In April, RIL inked a deal with Atlas Energy to acquire a 40 per cent interest in Atlas Energy’s 3,00,000- acres shale gas property for $1.7 billion (Rs 7,990 crore). Within three months it announced its second shale deal to acquire 45 per cent in Pioneer’s Eagle Ford asset for $1.4 billion (Rs 6,392 crore).
Shale gas is emerging as one of the hottest investment destinations in the energy sector. Shale gas extraction involves tapping natural gas trapped between layers of shale rock, similar to the extraction of gas from between coal seams.
“The company’s subsidiary, Reliance Marcellus II has signed definitive transaction agreements to enter into a Marcellus Shale joint venture with US’ Carrizo,” the company said.
The Marcellus Shale is a giant rock formation underlying Pennsylvania, New York and other states. Shale has been known to contain natural gas, which is not worth extracting with conventional technology.
“Carrizo will serve as the development operator for the joint venture and RIL has the option to act as a development operator in certain regions,” the statement said.
The transaction is expected to close by mid-September.