GAIL acquires shale gas assets in US

Posted By:

GAIL acquires shale gas assets in US
India's biggest gas transportation firm GAIL acquired its first shale gas asset in the US.

In its BSE filing the company said, "GAIL Global will acquire a 20% interest in Carrizo's Eagle Ford Shale acreage position." GAIL global is a wholly owned subsidiary set up by GAIL on September 28, 2011.

The agreement over the joint venture was made between GAIL global and the NASDAQ listed Carrizo Oil & Gas Inc, a company based in Houston, Texas.

BC Tripathi GAIL chairman & managing director said, "We believe that this transaction with Carrizo comes at an opportune time."

The joint venture will have 20,200 gross acres, out of which GAIL subsidiary would have 4,040 net acres spread over four counties in Texas.

The partners in total will spend approximately $300 million over a period of next five years to develop the asset. The company in its statement said, "This includes upfront cash payment of $63.7 million and a carry amount of $31.3 million linked to Carrizo's future drilling and development costs."

Investments will be made through GAIL Global. An additional 139 wells will be drilled by the JV in the acreage. Carrizo will continue to function as the operator for the joint venture.

This JV will also include the eight wells in the acreage. These wells are producing 2,350 net barrels of oil equivalent per day, with a 20% share in GAIL will get 470 barrels.

"Keeping in view the prospect of Indian shale gas bidding rounds opening within a couple of years, this experience will hopefully help GAIL develop necessary skill-sets for shale gas exploitation. Under the arrangement, GAIL shall be sending secondees to Carrizo to work on the Eagle Ford assets and GAIL and Carrizo shall also work together in exploring shale gas opportunities in India and other countries outside of US," Tripathi added.

VIEW: The management has made the move in the right direction, as it will give them the exposure in the long-term and perhaps help them to tap in the possible shale gas reserve in the country.

On the momentum side, currently there is downward trend.

Read more about: gail, oil and gas, shale gas, bse, nse, wells, technology
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

Thousands of Goodreturn readers receive our evening newsletter.
Have you subscribed?