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GAIL (India) Ltd
In September 2011, public sector GAIL
(India) Ltd formed an unincorporated
joint venture with Carrizo Oil & Gas,
Inc., a listed company based in Houston,
Texas, USA, to acquire 20 per cent interest
in Carrizo's offered acreage in Eagle Ford
Shale. The JV will have over 20,000 gross
acres. GAIL formed a wholly-owned subsidiary,
GAIL Global (USA), Inc., in Texas,
to acquire the shale gas assets. Carrizo
will continue to function as the operator
for the joint venture. The asset is currently
producing from eight wells and the overall
future development would comprise
around 130 wells. The transaction is valued
at $95 million.
Through this transaction, GAIL plans to
augment its technical knowhow in shale
gas (Carrizo has agreed to partner GAIL in
opportunities in unconventional gas in
India as well as third countries); achieve
transfer of knowledge via a working interest
position and from secondees to Carrizo;
gain foothold in North America for
exploring other opportunities; and provide
early revenue generation as the asset
is producing in nature.
Oil India Ltd
Oil India Ltd, another public sector company,
hopes to buy shale gas assets
worth up to $200 million and is reportedly
scouting for potential acquisitions in
USA and Australia. OIL is holding talks
with a US company for a 25 per cent
stake in an acreage in Texas, media
reports said.
In September 2011, OIL CMD N.M.
Borah had announced that the company
had undertaken a strategic project to
assess the resource potential of shale
gas/tight gas in the operational areas in
Assam-Arakan and Rajasthan basins.
Reliance Industries
Reliance Industries, the country's biggest
gas producer, has reportedly spent $3.5
billion on three shale gas projects in the
United States.
RIL-Chevron: RIL, through its subsidiary, Reliance Marcellus LLC, entered into a joint venture with Atlas energy, Inc. (now owned by Chevron corporation) under which Reliance acquired a 40 per cent interest in Atlas' core Marcellus shale acreage position. The acquisition cost of participating interest in consisting of $339 million of upfront payment and an additional payment of $1.36 billion under a carry arrangement for 75 per cent of Atlas's capital costs over an anticipated seven-and-a-half year development programme.
Reliance becomes a partner in approximately
300,000 net acres of undeveloped
leasehold in the core area of the
Marcellus shale in southwestern Pennsylvania.
The acreage will support the
drilling of over 3,000 wells with a net
resource potential of approximately 13.3
TCFe (5.3 TCFe net to Reliance).
While Atlas will serve as the development
operator for the joint venture,
Reliance is expected to begin acting as
development operator in certain regions in
coming years as part of the joint venture.
RIL-Pioneer: Reliance Eagle Ford
Upstream LP, a subsidiary of RIL,
entered into a joint venture with Pioneer
Natural Resources Company
under which Reliance acquired a 45
per cent interest in Pioneer's core
Eagle Ford shale acreage position in
two separate transactions. Pioneer and
Newpek LLC, Pioneer's existing partner
in Eagle Ford, simultaneously conveyed
45 per cent of their respective
interests in the Eagle Ford to Reliance.
Newpek owned an approximate 16 per
cent non-operated interest in Pioneer's
core Eagle Ford shale acreage. Following
the transaction, Pioneer, Reliance
and Newpek own 46 per cent, 45 per
cent and 9 per cent of the joint venture
interests, respectively.
The joint venture has an approximate
net working interest of 91 per
cent in 289,000 gross acres implying
263,000 net acres. Reliance paid
$1.315 billion for its implied share of
118,000 net acres. This upstream
transaction consideration included
combined upfront cash payments of
$263 million and additional $1.052
billion capital costs under a carry
arrangement for 75 per cent of Pioneer's
and Newpek's capital costs over
an anticipated four years.
The joint venture's leasehold, which is
largely undeveloped, is located in the
core area of the Eagle Ford shale in
south Texas. Low operating costs, significant
liquids content (70 per cent of the
acreage lies within the condensate window)
and excellent access to services in
the region combine to make the Eagle
Ford one of the most economically
attractive unconventional resources in
North America. Pioneer believes the
acreage will support the drilling of over
1,750 wells with a net resource potential
to the joint venture of approximately 10
TCFe (4.5 TCFe net to RIL).
The joint venture plans to increase
the current drilling programme to
approximately 140 wells per year
within three years. Also included in
the transaction is current production
of 28 MMCFe/d (11 MMCFe/d net to
Reliance) from five currently active
horizontal wells. While Pioneer will
serve as the development operator for
the upstream joint venture, Reliance is
expected to begin acting as development
operator in certain areas in coming
years as part of the joint venture.
Reliance Eagle Ford Midstream LLC
paid $46 million to acquire a 49.9 per cent
membership interest in the joint venture.
Pioneer and Reliance will have equal governing
rights in the joint venture and Pioneer
will serve as operator.
RIL-Carrizo: RIL, through its subsidiary,
Reliance Marcellus II, LLC,
entered into a joint venture with Carrizo
Oil & Gas, Inc. Under the transaction,
Reliance acquired a 60 per cent interest
in Marcellus shale acreage in Central
and Northeast Pennsylvania that was
held in a 50:50 joint venture between
Carrizo and ACP II Marcellus LLC, an
affiliate of Avista Capital Partners. Pursuant
to the transaction, Reliance
acquired 100 per cent of Avista's interest
and 20 per cent of Carrizo's interests in
the joint venture.
Reliance and Carrizo own 60 per
cent and 40 per cent interests, respectively,
in a newly formed joint venture
between the companies. Reliance
agreed to a total consideration of $392
million, comprising $340 million of
initial payment and $52 million of
drilling carry obligations. The drilling
carry obligations will provide for 75
per cent of Carrizo's share of development
costs over an anticipated two
year development programme.
The joint venture will have approximately
104,400 net acres of undeveloped
leasehold in the core area of the
Marcellus shale in central and northeast
Pennsylvania, of which Reliance's
60 per cent interest will represent
approximately 62,600 net acres. This
acreage is expected to support the
drilling of approximately 1,000 wells
over the next 10 years, with a net
resource potential of about 3.4 TCFe
(2.0 TCFe net to Reliance).
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