Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) today
announced that it has agreed to acquire Eagle Ford Shale properties
from an affiliate of Sanchez Energy Corporation for $181 million in
cash, subject to customary closing adjustments. Additionally,
Carrizo is providing estimated third quarter production.
Acquisition Highlights
- Approximately 15,000 net bolt-on acres located
primarily in the core volatile oil window of the Eagle Ford Shale
in LaSalle, Frio, and McMullen counties, TX
- Estimated net production during September of
approximately 3,100 Boe/d (61% oil) from 112 gross (93 net)
wells
- Net proved reserves, based on the Company’s internal
estimates, of 14.5 MMBoe (71% oil, 56% developed)
- Approximately 80 net de-risked drilling locations based
on a single layer development in the Lower Eagle Ford Shale, with
additional upside potential from stagger-stack development, infill
drilling, and additional zones
- Acreage is 100% operated with no additional drilling
requirements
On October 24, 2016, Carrizo signed a purchase
and sale agreement to acquire approximately 15,000 net acres
located primarily in the volatile oil window of the Eagle Ford
Shale. Following the closing of the transaction, Carrizo will hold
over 100,000 net acres in the Eagle Ford Shale, concentrated in
LaSalle, McMullen, and Atascosa counties. Based on the Company’s
current development spacing assumptions, which include only a
single layer within the Lower Eagle Ford Shale, the acquisition
increases Carrizo’s drilling inventory in the play to approximately
1,100 net locations.
The transaction has an effective date of June 1,
2016, and is currently expected to close by mid-December, 2016.
Carrizo plans to fund the acquisition with the proceeds from a
separately-announced equity financing.
S.P. “Chip” Johnson, IV, Carrizo’s President and
CEO, commented, “We are pleased to announce this bolt-on
acquisition in the Eagle Ford Shale, as it increases our acreage
position in the play by more than 15% and expands our Core
inventory in it by approximately 10%, with additional upside
possible from a combination of infill drilling and multi-zone
development. A number of the acquired properties are also
contiguous with our Core acreage position, which should allow us to
capitalize on efficiencies such as the ability to drill longer
lateral wells from our existing leasehold. In addition to the
increased inventory and potential operational efficiencies, we also
believe the transaction is accretive on a variety of financial
metrics, including cash flow and earnings per share.”
Third Quarter 2016 Update
Estimated production volumes during the third
quarter of 2016 were 3,750 MBoe, or 40,762 Boe/d, an increase of
13% versus the third quarter of 2015. The year-over-year production
growth was driven by strong results from the Company’s Eagle Ford
Shale and Delaware Basin assets, as well as a lower level of
voluntary curtailments in its Marcellus Shale assets. Oil
production during the third quarter of 2016 averaged 24,488 Bbls/d,
while natural gas and NGL production averaged 69,262 Mcf/d and
4,730 Bbls/d, respectively. Estimated third quarter of 2016
production exceeded the high end of Company guidance due primarily
to stronger-than-expected performance from the Company’s Eagle Ford
Shale and Delaware Basin assets as well as lower-than-planned
levels of voluntary curtailments in its Marcellus Shale assets.
Hedging Update
Since June 30, 2016, Carrizo has added crude oil
hedges for the second half of 2017. For the third and fourth
quarters of 2017, the Company added swaps covering 6,000 Bbls/d and
3,000 Bbls/d of crude oil at average fixed prices of $54.15/Bbl and
$55.01/Bbl, respectively. For 2017, Carrizo now has swaps covering
an average of approximately 8,200 Bbls/d of crude oil at an average
fixed price of $51.30/Bbl.
Additionally, the Company recently added natural
gas hedges for 2017. For the full year of 2017, Carrizo added swaps
covering 20,000 MMBtu/d of natural gas at an average fixed price of
$3.30/MMBtu.
Carrizo Oil & Gas, Inc. is a Houston-based
energy company actively engaged in the exploration, development,
and production of oil and gas from resource plays located in the
United States. Our current operations are principally focused in
proven, producing oil and gas plays primarily in the Eagle Ford
Shale in South Texas, the Delaware Basin in West Texas, the
Niobrara Formation in Colorado, the Utica Shale in Ohio, and the
Marcellus Shale in Pennsylvania.
Statements in this release that are not
historical facts, including but not limited to those related to
capital requirements, capital expenditure and other spending plans,
economical basis of wells or inventory, rig program, effect of
transactions offsetting hedge positions, production, average well
returns, the acquisition of Eagle Ford Shale properties from
Sanchez Energy Corporation (including timing, purchase price,
consummation, financing, benefits upside, efficiencies and other
effects thereof), the estimated production results and financial
performance of such properties, effects of transactions, targeted
ratios and other metrics, the ability to acquire additional
acreage, midstream infrastructure availability and capacity,
timing, levels of and potential production, downspacing, crude oil
production potential and growth, oil and gas prices, drilling and
completion activities, drilling inventory, including timing
thereof, resource potential, well costs, breakeven prices,
production mix, development plans, growth, midstream matters, use
of proceeds, hedging activity, the ability to maintain a sound
financial position, the Company’s or management’s intentions,
beliefs, expectations, hopes, projections, assessment of risks,
estimations, plans or predictions for the future, results of the
Company’s strategies, expected income tax rates and other
statements that are not historical facts are forward-looking
statements that are based on current expectations. Although the
Company believes that its expectations are based on reasonable
assumptions, it can give no assurance that these expectations will
prove correct. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
include assumptions regarding well costs, estimated recoveries,
pricing and other factors affecting average well returns, results
of wells and testing, failure of actual production to meet
expectations or estimations, performance of rig operators, spacing
test results, availability of gathering systems, costs of oilfield
services, actions by governmental authorities, joint venture
partners, industry partners, lenders and other third parties,
actions by purchasers or sellers of properties, satisfaction of
closing conditions and failure of the acquisition to close,
purchase price adjustment, integration and effects of acquisitions,
market and other conditions, risks regarding financing, capital
need, availability of well connects, capital needs and uses,
commodity price changes, effects of the global economy on
exploration activity, results of and dependence on exploratory
drilling activities, operating risks, right-of-way and other land
issues, availability of capital and equipment, weather, and other
risks described in the Company’s Form 10-K for the year ended
December 31, 2015 and its other filings with the U.S. Securities
and Exchange Commission. There can be no assurance any transaction
described in this press release will occur on the terms or timing
described, or at all.
Source: Carrizo Oil & Gas, Inc
Jeffrey P. Hayden, CFA, VP - Investor Relations
(713) 328-1044
Kim Pinyopusarerk, Manager - Investor Relations
(713) 358-6430
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