OREANDA-NEWS. October 12, 2012. Oil India Limited (OIL) and Indian Oil Corporation (IOCL) have jointly acquired a stake in Carrizo’s liquid rich shale assets in the Niobrara basin in Colorado, USA through their wholly owned US subsidiaries. Their first ever upstream acquisition in the USA, the two Public Sector companies today executed definitive agreements with Carrizo, a company based in Houston, Texas to enter into a joint venture. Under the terms of the deal, OIL and IOCL will acquire 30% (OIL – 20%, IOCL: 10%) in the Niobrara asset via their respective subsidiaries. Carrizo has 61,500 gross acres in the basin out of which the OIL – IOCL consortium will have 18,450 acres, spread across three counties in Texas.

The total investment for the two companies would be around USD 82.5 Million, including an upfront cash payment of USD 41.25 Million and a subsequent USD 41.25 Million which is linked to Carrizo’s future drilling and development costs The investment provides the companies an entry into the early stage of an unconventional play in a well known producing basin. The transaction also provides the two companies with a platform for additional acquisitions in North America.

OIL’s Chairman & Managing Director, Mr. S.K. Srivastava said "This acquisition is in line with our corporate strategy of diversification. We have earmarked part of our financial reserves for acquisitions and new opportunities to bolster our overseas portfolio and were keen on joint ventures in countries with geopolitical stability such as the US, UK, Canada and Australia. This acquisition will also help us gain experience in the technology and operations of shale / tight oil fields and use its findings to implement the same in India", he said.

IndianOil’s Chairman, Mr. R.S.Butola said "The Carizzo stake is another step in our journey to emerge as an integrated energy company. Our various diversifications in petrochemicals and gas business have not only made a notable impact by garnering a significant share of the market but are also poised to emerge as a potent and vibrant feature of the company’s profile in the future. While our E&P plans have been relatively low key so far, with the shale asset in the Niobrara basin we should gain momentum in this space. The learning and technology exposure that will accrue in this field would stand us in good stead in the future", added Mr. Butola.