Carrizo Oil closes JV deal in US with RIL subsidiary

Nasdaq-listed Carrizo Oil & Gas has concluded the joint venture deal it had announced earlier with a subsidiary of Reliance Industries, the company said in a statement today.

The JV concerns prospecting in the Marcellus Shale for natural gas in the region of Pennsylvania in the US. Marcellus Shale is a geological formation found in the eastern states, considered rich in natural gas.

The JV with Reliance entailed the latter buying a 20 per cent stake in 52,200 acres in Pennsylvania at $65 million, the Houstan-based company said. Reliance has already paid $11.4 million in cash to Carrizo, with $1.7 million more expected later this year. In addition, Reliance will pay an expected $52 million of Carrizo's share of future drilling, completion, and seismic costs.

Even as Carrizo closes this deal, its exisitng JV partner, Avista, has sold its entire interest in the same property to Reliance for $327 million. Carrizo said it expected to get $44 million in cash from Avista, following the sale of its acres to Reliance.

The Carrizo-Avista Capital joint venture will continue to hold interests on 140,000 acres, mostly in West Virginia and New York, the company said.