Reliance Industries Enters Into A Jv With Carrizo Oil & Gas

Reliance Industries Limited (RIL) today announced that its subsidiary

, Reliance Marcellus II, LLC, has signed definitive transaction agreements to enter into a Marcellus Shale joint venture with United States based Carrizo Oil & Gas, Inc. (NASDAQ: CRZO).

Under the proposed transaction, Reliance will acquire a 60% interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in a 5050 joint venture between Carrizo and ACP II Marcellus LLC, an affiliate of Avista Capital Partners. Pursuant to the transaction, Reliance will acquire 100% of Avistas interest and 20% of Carrizos interests in the joint venture. Upon completion of the transaction, Reliance and Carrizo will own 60% and 40% interests, respectively, in a newly formed joint venture between the companies.

Reliance will pay a total consideration of $392 million, comprising of $340 million of cash and $52 million of drilling carry obligations. The drilling carry obligations will provide for 75% of Carrizos share of development costs over an anticipated two year development program. The joint venture will have approximately 104,400 net acres of undeveloped leasehold in the core area of the Marcellus Shale in Central and Northeast Pennsylvania, of which Reliances 60% interest will represent approximately 62,600 net acres. This acreage is expected to support the drilling of approximately 1,000 wells over the next 10 years, with a net resource potential of about 3.4 Tcfe (2.0 Tcfe net to Reliance). The transaction allows for additional growth in the development acreage, at preagreed terms.

Carrizo will serve as the development operator for the joint venture and Reliance has the option to act as a development operator in certain regions in the coming years as part of the joint venture. The transaction is anticipated to close by midSeptember 2010. Commenting on the joint venture, Mr. Walter Van de Vijver, President, International E&P Business, Reliance Industries said, Reliance is excited about the opportunity to further expand presence in the Marcellus Shale in the United States. We are pleased to establish a longterm partnership with Carrizo, which has demonstrated operating expertise in the shale plays. The proposed joint venture will supplement strengths achieved through our recent joint ventures and further expands our footprint in North American shale gas operations.

Jefferies & Company, Inc. acted as lead financial advisor and Vinson & Elkins LLP acted as legal counsel to Reliance. BNP Paribas and Credit Agricole Corporate and Investment Bank provided strategic advise to RIL in respect of this investment.

by: Chintan Shah

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