(EnergyAsia, October 11 2012, Thursday) — India has made its first tentative venture into the booming US shale gas business with two state-owned firms jointly acquiring a 30% stake in a Colorado asset for US$82.5 million.

Oil India Ltd (OIL) will own the larger 20% stake and Indian Oil Corp (IOC) the remaining 10% in the Niobrara shale in Texas state controlled by Houston-based Carrizo Oil & Gas.

The Indian companies said they have paid up half the amount in cash, and will pay the rest on conditions linked to Carrizo’s drilling performance and development costs.

“The investment provides the companies an entry into the early stage of an unconventional play in a well known producing basin. The transaction also provides the two companies with a platform for additional acquisitions in North America,” the two companies said in a joint statement.

OIL’s chairman and managing director, S.K. Srivastava, said:

“This acquisition is in line with our corporate strategy of diversification. We have earmarked part of our financial reserves for acquisitions and new opportunities to bolster our overseas portfolio and were keen on joint ventures in countries with geopolitical stability such as the US, UK, Canada and Australia.

“This acquisition will also help us gain experience in the technology and operations of shale / tight oil fields and use its findings to implement the same in India.”

IOC’s chairman, R.S. Butola, said:

“The Carizzo stake is another step in our journey to emerge as an integrated energy company. Our various diversifications in petrochemicals and gas business have not only made a notable impact by garnering a significant share of the market but are also poised to emerge as a potent and vibrant feature of the company’s profile in the future.

“While our E&P plans have been relatively low key so far, with the shale asset in the Niobrara basin we should gain momentum in this space. The learning and technology exposure that will accrue in this field would stand us in good stead in the future.”

Nasdaq-listed Carrizo Oil & Gas Inc is engaged in the exploration, development, exploitation, and production of oil and natural gas primarily in the US. It has assets in the Eagle Ford and Barnett shales in Texas, the Marcellus shale in Appalachia, the Niobrara Formation in Colorado, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions. Carrizo is also actively developing its oil discovery known as the Huntington Field in the UK North Sea.