Billionaire Mukesh Ambani, chairman of India’s Reliance Industries made another acquisition in the Marcellus shale natural gas fields of Pennsylvania today. Reliance is pledging $392 million for nearly 63,000 acres controlled by Carrizo Oil & Gas.
India's Ambani Grabs More US Shale Gas - Forbes (blog)
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As discussed in our recent article on the Marcellus the play is in the midst of a consolidation trend. Shell has been the biggest buyer this year, paying $4.7 billion for East Resources. More deals will come. Yet there’s a good reason why the biggest Marcellus acreage holders, like Range Resource, Chesapeake Energy, and Chief Oil & Gas (owned by billionaire Trevor Rees-Jones) won’t be happy about Ambani’s new deal. The price Reliance is paying Carrizo comes out to just $6,300 an acre; that’s well less than the $14,000 paid in the Atlas deal. Why the disparity? Could be Ambani is getting smarter. But a lot of it has to do with the terms of the deal. With Atlas, Reliance paid $340 million cash up front, with the balance of $1.36 billion going to cover future drilling costs. With Carrizo, it’s $340 million upfront and just $52 million to cover drilling. Cash now is always worth more than cash later.India's Ambani Grabs More US Shale Gas - Forbes (blog)
