Governmetn-run oil companies Oil India and IndianOil (IOC) are set to complete acquisition of 30% stake in Houston-based Carrizo Oil and Gas Niobrara shale asset in Colorado for $82.5 million making their foray into the US market that has already seen investment by few Indian oil and gas companies.
As per the terms of the acquisition, Oil India will pick up 20% and IndianOil 10% in Carrizo?s Niobrara Denver-Julesburd Basin that has a huge deposit of hydrocarbon.
The companies would invest $82.5 million that includes an upfront cash payment of $41.25 million. The remaining $41.25 million would be paid based on future drilling and development costs.
?We have guidance of R7,000 crore for acquisition for this financial year. We are working on many deals and have lot of opportunities in hand. We are hopeful to meet our target,? Ananth Kumar, director finance said in the press conference organised to announce the deal. Carrizo holds 61,500 gross acres in the Niobrara basin, of which the Oil India-IndianOil consortium will have 18,450 acres, spread over three counties in Texas.
Oil India and IndianOil will also receive a 30% interest in Carrizo?s existing production of about 1,850 barrels of oil-equivalent a day from 24 gross wells, it said.
?We have earmarked part of our reserves for acquisitions and new opportunities to bolster our overseas portfolio and were keen on joint ventures in countries with geo-political stability,? Oil India chairman SK Srivastava told reporters.
The government has also decided to divest 10% of its stake in Oil India. Kumar said, ?market condition is good for follow-on-public issue and the company will select three bankers on October 17 and finance ministry will then decide on the road map.?
Last year, state gas utility GAIL India acquired a 20% stake in Carrizo?s Eagle Ford shale acreage.