Oil India, IOC buy stake in U.S. shale assets for $82.5 million
State-run firms Oil India Ltd and Indian Oil Corp have jointly bought a 30 percent stake in Houston-based Carrizo Oil & Gas's Niobrara shale asset in Colorado for $82.5 million, the companies said in a statement.
The deal marks the first investment by the two state companies in shale assets in the United States, where booming shale gas output has caused prices to plummet and may push the U.S. government to consider exports to energy-hungry Asia.
Oil India will acquire 20 percent and Indian Oil Corp will get 10 percent in Carrizo's Niobrara basin acreage assets through their respective subsidiaries.
"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 S.K. Srivastava told reporters.
India, the world's fourth-largest oil importer, imports about 80 percent its crude needs, and has been scouting for oil and gas assets overseas to satisfy rising local demand and to feed its expanding refining capacity.
The total investment by the two companies would be around $82.5 million, including an upfront cash payment of $41.25 million and a carry amount of $41.25 million, linked to Carrizo's future drilling and development cost, the companies said in a statement.
Oil India may raise $100 million in foreign loans by December to part fund the deal, its finance director said.
As part of the transaction, Oil India and IOC will also receive a 30 percent interest in Carrizo's existing production of about 1,850 barrels of oil-equivalent a day from 24 gross wells, it said.
Carrizo holds 61,500 gross acres in the Niobrara basin, of which the Oil India-IOC consortium will have 18,450 acres, spread over three counties in Texas.
Oil India, whose assets in India's northeast account for its entire crude oil production and the bulk of gas production, has been aggressively scouting for overseas assets in discovered and producing assets overseas.
The company, along with Indian Oil Corp, the country's biggest fuel retailer, holds stakes in oil and gas blocks in various countries including Venezuela, Libya, Gabon, Iran, Yemen and Nigeria.
India's largest listed company, Reliance Industries , holds stakes in three shale gas joint ventures in the United States, including one with Carrizo in the Marcellus shale acreage in Pennsylvania.
State gas utility GAIL India acquired a 20 percent stake in Carrizo's Eagle Ford shale acreage last year.
Shares in Oil India closed up 2.3 percent in a strong Mumbai market . Indian Oil shares ended up 2.4 percent.
(Reporting by Nidhi Verma,; Writing by Prashant Mehra,; Editing by Anand Basu and Clarence Fernandez)