Tuesday, August 31, 2010

Reliance Industries Enters Third U.S. Shale JV

This news is about three weeks old, but in the fog of the arrival of a new baby, I neglected to note that India's Reliance Industries agreed to a joint venture deal with Texas-based Carrizo Oil and Gas for its Marcellus Shale acreage.  I had previously cited speculation in Indian newspapers that Reliance was looking at Quicksilver Resources, but that obviously didn't happen.

Under the terms of the deal, Reliance will pay $392 million for 60% of the JV that will control Carrizo's 62,600 acres in central and northeast Pennsylvania.  The price implies a valuation of $6,258 per acre, which is considerably less some other recent international JVs in the Marcellus Shale, including Reliance's $14,167 per acre deal for a JV with Atlas Energy and Mitsui's $11,100 per acre for a JV with Anadarko.

This is the third U.S. shale gas deal in the course of a few months for Reliance.  The company's international E&P company is now being headed by Walter Van de Vijver, who is the former CEO of Royal Dutch Shell.  Speculation is that Reliance is using the joint ventures as a learning mechanism with the intent of bringing shale extraction techniques back to India in expectation of the Indian government leasing land prospective for shale gas in the next year.

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