Reliance, Carrizo Enter Joint Venture

Reliance Industries has signed definitive transaction agreements to enter into a Marcellus Shale joint venture with Carrizo Oil & Gas.

Under the contract Reliance will acquire a 60% interest in Marcellus Shale acreage in central and north-east Pennsylvania currently held in a 50:50 joint venture between Carrizo and ACP II Marcellus, an affiliate of Avista Capital Partners.

Reliance will acquire 100% of Avista’s interest and 20% of Carrizo’s interests in the joint venture.

Once the transaction is complete Reliance will own 60% and Carrizo the remaining 40% interest.

Reliance will pay a total consideration of $392m of drilling carry obligations that will provide 75% of Carrizo’s share of development costs over an anticipated two-year development programme.

The joint venture will have about 104,400 net acres of undeveloped leasehold in the core area of the Marcellus Shale, of which Reliance’s interest will be about 62,600 net acres.