Reliance Marcellus II, the US arm of   Reliance Industries' (RIL) has signed definitive transaction deal which enables them to enter into a joint venture with Carrizo Oil & Gas, based in the US.

Reliance, under the proposed transaction will be able to acquire sixty percent interest in Marcellus Shale land located in Central and Northeast Pennsylvania that at present is held in a fifty- fifty joint venture between ACP II Marcellus LLC and Carrizo. ACP II Marcellus LLC is a partner of Avista Capital Partners.  

While pursuing the joint venture, Reliance will take over hundred percent of Avista’s interest and twenty percent of Carrizo’s interest in the venture. After the transaction is completed, under the newly formed JV Company, Reliance will own sixty percent and Carrizo will own forty percent of interests.

Reliance has to pay in the tune of three hundred and ninety two million USD ,out of which three hundred and forty million dollars have to be given in cash and the rest fifty two million is to given on cost of carrying out the drilling. Carrizo’s seventy-five percent share of development cost will go for carrying out the drilling over a period of two years.  

The joint venture will hold one-lac four thousand and four hundred acres of undeveloped land in the heart of Marcellus Shale, which is located in northeast and central Pennsylvania. Reliance will have sixty two thousand six hundred acres of acreage by the virtue of owning sixty percent of interest in the JV.   

From the acreage, it is expected that within the next ten years approximately one thousand wells can be drilled. For the JV, Carrizo will be the development operator while Reliance will be development operator in some region.