TNN reported that state run gas utility GAIL has become the first public sector entity and the second Indian firm after Mr Mukesh Ambani's RIL to acquire shale gas assets abroad. The company announced a deal with US based Carrizo Oil & Gas Inc for acquiring a 20% interest in the latter's Eagle Ford Shale acreage.

The deal will involve an estimated investment of USD 300 million over the next five years. This includes an upfront cash payment of USD 63.7 million and a carry amount of USD 31.3 million linked to Carrizo's future drilling and development costs.

GAIL will make the acquisition through its wholly owned US subsidiary, GAIL Global (USA), formed on September 26th 2011. The subsidiary will fund a major part of the investments in Eagle Ford Shale out of its earnings.

Mr BC Tripathi chairman of GAIL said that "It will be GAIL's endeavor to broad base its relationship with Carrizo. This transaction represents a major step in GAIL's efforts to establish its presence in North America. As the next logical step, GAIL Global (USA) Inc will consider expanding its business portfolio in the North American market by pursuing upstream and midstream opportunities, including LNG export to India."

Mr Tripathi, who participated in the deal signing program in the US through video conferencing from Delhi, is previously on record saying the company could spend up to USD 2 billion or so in acquisitions. GAIL director (marketing) Mr Prabhat Singh headed the team to the US. The acquisition is aimed to give GAIL competence to bid for shale gas assets in India as and when they come up for auctions.