GAIL paid $95M for a slice of Texas shale in 2011 — and is selling it for a fraction

In September 2011, GAIL (India) bought a 20% interest in Nasdaq-listed Carrizo Oil & Gas's Eagle Ford shale acreage in Texas for $95 million — an upfront payment of $63.7 million plus a $31.3 million carry tied to future drilling — with the partners agreeing to spend around $300 million over five years to develop the asset.

Fourteen years later, the state-owned gas utility has floated a tender to sell its entire holding, with bids due by February 14, 2025 and the transaction effective January 1, 2025. GAIL's own evaluation puts the position's net present value at $26.36 million. 'We are not making much money there because of the low gas prices in the US,' a company source said at India Energy Week.

The venture's footing shifted under GAIL: Callon acquired Carrizo in 2020, then sold the Eagle Ford assets on to Texas American Resources ($100 million, October 2021) and Ridgemar ($655 million, effective January 2023), leaving GAIL a non-operated 20% interest across 92 wells.

GAIL is the last mover in an Indian retreat from US shale: Reliance Industries ended its decade-long shale venture in 2021, and Oil India sold its 20% of a Colorado Niobrara asset for $25 million in 2022 — an asset it had bought into for $82.5 million jointly with IndianOil in 2012.

Bought 20% of Carrizo's Eagle Ford acreage for $95M in 2011, plus a share of a $300M development plan; the exit tender pegs its value at $26.4M.

Indian majors bought US shale assets in 2011-2012, near the peak of the shale land rush, and US gas prices then spent most of the decade well below the levels those entry prices implied.

GAIL's position was a non-operated minority interest, so it carried the commodity exposure without controlling how or where capital was deployed.

Two rounds of partner churn — Carrizo into Callon, then Callon's exit via sales to TARC and Ridgemar — left GAIL anchored to operators it had not chosen.

The exit follows a pattern: Reliance and Oil India made the same call in 2021-2022, each selling out of the same play at a loss relative to entry.

A commodity bet can be sunk by the price environment rather than the asset: Indian majors bought US shale at the peak of 2011 enthusiasm and all exited at the bottom of the gas cycle.

Bids for the Eagle Ford position — 92 producing wells generating about $820,000 a month, plus 48 undeveloped drilling locations — were due by February 14, 2025. With GAIL's exit, none of India's big energy investors remain in US shale.