Oil India exits US shale business, sells 20% stake for $25m
OIL and Indian Oil Corporation (IOC) had jointly purchased in October 2012 a 30% stake in the Niobrara shale asset of Carrizo Oil & Gas, based in Houston, Colorado, for 82.5 million USD.
Representative image. News18
New Delhi: State-owned Oil India Ltd (OIL) has pulled out of a US shale oil venture, selling its 20% stake to its partner for $25m – the second exit by an Indian company from the sector American shale in two months.
“Oil India (USA) Inc (wholly owned subsidiary of OIL), has divested its entire interest in the Niobrara shale asset, USA,” a company regulatory filing reads, adding that the consideration received was $25 million.
OIL and Indian Oil Corporation (IOC) had jointly purchased a 30% stake in the Niobrara shale asset of Houston, Colo.-based Carrizo Oil & Gas in October 2012 for $82.5 million.
While OIL had acquired 20%, IOC purchased 10% of the Niobrara Basin assets from Carrizo through their respective subsidiaries.
The total investment of $82.5 million included an upfront cash payment of $41.25 million and a book value of $41.25 million, related to Carrizo’s future drilling and development costs.
The stake was sold to Verdad Resources LLC, which is the operator of the asset.
OIL originally acquired the 20% interest in the liquid-rich shale asset in the Denver-Julesburg Basin from Carrizo Oil & Gas, Inc. Carrizo sold its entire interest in the asset to Niobrara to Verdad Resources LLC in January 2018. As a result, Verdad became the new operator of the asset. Haimo Oil & Gas owns the remaining 10% of the project.
OIL’s move follows Reliance Industries Ltd’s exit from US shale, which has not been attractive for generating returns.
In November last year, Reliance said its wholly owned subsidiary Reliance Eagleford Upstream Holding, LP had signed an agreement with Ensign Operating III, LLC to divest its interest in the upstream assets of the Eagleford shale play. in Texas.
With this, Reliance divested all of its shale gas assets and exited the North American shale gas business. The company previously divested its entire stake in the Marcellus shale blocks.
Gas utility GAIL (India) Ltd continues to hold a 20% stake in Carrizo’s Eagle Ford shale acreage, which it acquired in 2011.
OIL, in the filing, said its subsidiary Oil India (USA) Inc reported net profit of $279,000 on revenue of $4.27 million in the fiscal year ended March 31, 2021.
When in 2012 IOC and IOC purchased a stake in Niobrara, they were to receive a 30% interest in Carrizo’s production of approximately 1,850 barrels of oil equivalent per day from 24 gross wells.
Carrizo held 61,500 gross acres in the Niobrara Basin, of which the Oil India-IOC consortium owned 18,450 acres, spread across three Texas counties.
In addition to its participation in wells operated by Carrizo/Verdad, OIL USA has also participated in wells drilled by other operators in the region, such as Noble Energy, Whiting Oil and Gas, Mallards, Bison energy, etc. OIL’s net production was approximately 415 barrels of oil equivalent.
OIL, whose assets in the northeast account for all of its crude oil production and the bulk of gas production, has actively sought assets overseas over the past decade.
As a result, it acquired interests in oil and gas exploration and production assets from Venezuela to Russia. It continues to hold these assets.
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