Fund buys Carrizo-RIL Marcellus interests

An affiliate of BKV Oil & Gas Capital Partners LP, Denver, has agreed to acquire Marcellus shale producing interests operated by Carrizo Oil & Gas Inc., Houston, in separate deals with Carrizo and Reliance Industries Ltd., Mumbai.

An affiliate of BKV Oil & Gas Capital Partners LP, Denver, has agreed to acquire Marcellus shale producing interests operated by Carrizo Oil & Gas Inc., Houston, in separate deals with Carrizo and Reliance Industries Ltd., Mumbai.

BKV is a Kalnin Ventures LLC fund in which the sole investor is Banpu PCL, a Thai coal mining and power generation company.

The properties are in Susquehanna, Wyoming, and Clearfield counties of northeastern and central Pennsylvania.

They include 112 wells, 98 of which are producing, 11 are drilled and uncompleted, and 3 are temporarily abandoned. Gross production is an estimated 100 MMcfd of natural gas.

RIL farmed into the properties in 2010 by purchasing the interest held by Carrizo’s former partner and part of the operator’s interest, acquiring a total stake of 60% (OGJ Online, Aug. 5, 2010).

RIL will receive $126 million and contingent payments possibly totaling $11.25 million, depending on gas prices over the next 3 years.

Carrizo will receive $84 million and contingent payments of as much as $7.5 million.

Carrizo is exiting the Marcellus shale and several other plays to concentrate on the Eagle Ford shale and Delaware basin.

RIL’s Reliance Holding USA Inc. retains nonoperating interests in southwestern Pennsylvania and the Eagle Ford play. President and Chief Executive Officer Walter Van de Vijver called the sale to BKV Chelsea LLC “opportunistic.”

The transaction is BKV Oil & Gas Capital’s fifth acquisition in 2 years in the northeast part of the Marcellus play. The Carrizo-RIL properties will be its first to operate.

Through BKV, Kalnin Ventures has invested $417 million in the Marcellus play. After the latest transaction, it will have interests in 355 active wells and produce a net 160 MMcfd of gas.

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