India’s Reliance Industries found a new partner in the Marcellus with the recently announced JV with Carrizo Oil & Gas, Inc. The agreement is such that Reliance will acquire a 20% interest in approximately 52,200 net Carrizo acres in Pennsylvania for $65 million. Reliance will pay $13 million in cash and $52 million in drilling carry. This acreage is half of an existing JV that Carrizo is in with Avista Capital Partners for a total of roughly 104,400 gross acres. At the same time Reliance is also acquiring 100% of the remaining 52,200 acres from Avista for $327 million and of the $327 million Carrizo will receive $44 million as a contingency of the standing Carrizo/Avista JV agreement. Ultimately, the Carrizo/Reliance JV will consist of a 40/60 interest split of 104,400 Marcellus acres.
“We are extremely pleased to be able to announce this agreement with Reliance and the benefit from the sale of Avista’s Pennsylvania Marcellus interests,” states S.P. “Chip” Johnson IV, President and CEO of Carrizo. “This transaction provides the capital to execute a more aggressive development drilling program in Pennsylvania than we would be able to pursue otherwise.”
The JV is the second Marcellus deal Reliance has made in the play this year. In April, Reliance announced a partnership with Atlas Energy for a 40% stake in approximately 300K net acres in the Marcellus for $1.7 billion paying $340 million cash and $1.36 billion in drilling carry (see Atlas JV with Reliance in Marcellus). Reliance also bought into the Eagle Ford for $1.15 billion earlier this year and is rumored to be pursuing Quicksilver Resources for a possible acquisition.
To learn more visit the Marcellus A&D folder in the Unconventional Updates in DI’s DNA.
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