Oil India, the India government-owned oil explorer, will hold a 20 percent stake while the country’s biggest fuel retailer, Indian Oil Corporation, will have a 10 percent stake in the partnership through respective subsidiaries.
"We have earmarked part of our reserves for acquisitions and new opportunities to bolster our overseas portfolio and were keen on joint ventures in countries with geo-political stability," Oil India Chairman S.K. Srivastava told reporters.
India is a major importer of crude and depends on imports to meet 80 percent of its domestic oil requirements. Indian companies are entering into partnerships with foreign explorers to meet the increasing demand. Huge reserves of shale gas in the U.S. and the surplus production in the past decade have led to a fall in gas prices in the country, forcing the government to consider exports to energy-starved Asian economies like India and China.
GAIL, another state-run company, acquired a 20 percent stake in Carrizo’s Eagle Ford shale acreage last year while Reliance Industries Ltd (RIL) also has a joint venture with Carrizo Oil for the Marcellus shale acreage in northern and central Pennsylvania and in two other Shale gas projects in the U.S., Businessline reported.
The two companies will invest around $82.5 million in the deal in which $41.25 million will be upfront cash payment while another $41.25 million will be linked to Carrizo's future drilling and development costs, according to Reuters.
Oil India may raise $100 million in foreign loans by December to partly fund the deal, its finance director said, according to the report.
In addition to this, Oil India and IOC will also receive a 30 percent interest in Carrizo's existing production of about 1,850 barrels of oil equivalent a day from 24 gross wells as part of the deal, it said in the statement.
Following the announcement, stocks of Oil India closed up 2.3 percent and Indian Oil shares ended up 2.4 percent on the BSE Sensex Thursday.