Item 1.01
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Entry into a Material Definitive Agreement.
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On June 29, 2017, Carrizo
Oil & Gas, Inc. (the Company) and its wholly owned subsidiaries Bandelier Pipeline Holding, LLC, Carrizo (Eagle Ford) LLC, Carrizo (Marcellus) LLC, Carrizo (Marcellus) WV LLC, Carrizo (Niobrara) LLC, Carrizo (Permian) LLC,
Carrizo (Utica) LLC, Carrizo Marcellus Holding Inc., CLLR, Inc., Hondo Pipeline, Inc. and Mescalero Pipeline, LLC, (collectively, the Subsidiary Guarantors) entered into an Underwriting Agreement (the Underwriting Agreement)
with Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters (the Underwriters), pursuant to which the Company agreed to sell $250.0 million
aggregate principal amount of the Companys 8.25% Senior Notes due 2025 (the Senior Notes) pursuant to the Companys registration statement on Form
S-3
(File
No. 333-198459).
The Underwriting Agreement contains customary representations and warranties of
the parties and indemnification and contribution provisions under which the Company and the Subsidiary Guarantors, on one hand, and the Underwriters, on the other, have agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
Certain of the Underwriters and their respective affiliates have from time to
time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and its affiliates, in the ordinary course of business for which they have received and would receive
customary compensation. Certain of the Underwriters, or one or more of their respective affiliates, are lenders under the revolving credit facility and, as a result, may receive a portion of the net proceeds from the offering.
The Company intends to use the net proceeds from the offering to fund a portion of the purchase price for the previously disclosed acquisition
of approximately 16,488 net acres located in the Delaware Basin in Reeves and Ward Counties, Texas (the Pending Acquisition) and for general corporate purposes. Pending the closing of the Pending Acquisition, the Company intends to use
the net proceeds from the offering to reduce borrowings under its revolving credit facility, including to repay the borrowings used for the $75.0 million deposit on the purchase price for the Pending Acquisition. The Company intends to use net
proceeds from the offering not used to pay the purchase price for the Pending Acquisition for general corporate purposes, including to fund future potential acquisitions or a portion of its 2017 and 2018 capital expenditure plans. If the Pending
Acquisition is not consummated, the Company intends to use the net proceeds to partially fund the mandatory redemption of the Senior Notes. The offering is expected to close on July 14, 2017, subject to customary conditions.
The offering is not conditioned upon the completion of the Pending Acquisition, but if the Pending Acquisition is not consummated by
October 28, 2017 (the date that is 122 days after the date of execution of the purchase agreement for the Pending Acquisition) or if the purchase agreement for the Pending Acquisition is terminated at any time prior to the consummation of the
Pending Acquisition, the Company will be required to redeem the Senior Notes then outstanding in cash at a redemption price equal to the initial offering price, plus accrued and unpaid interest to, but not including, the date of redemption.
Additionally, if the Company determines it is reasonably likely that the Pending Acquisition will not close on or prior to October 28, 2017, or the purchase agreement for the Pending Acquisition will be terminated at any time prior to the
consummation of the Pending Acquisition, the Company may, at its option, redeem the Senior Notes then outstanding in cash at a redemption price equal to the initial offering price, plus accrued and unpaid interest to, but not including, the date of
redemption.
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the agreement, which is attached as Exhibit 1.1 to this report and incorporated by reference herein.
Statements in this report,
including but not limited to those relating to the closing of the offering, use of proceeds, sales by the Underwriters, consummation of the Pending Acquisition and other statements that are not historical facts, are forward looking statements that
are based on current expectations. Although the Company
2
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 satisfaction of closing conditions to the Underwriting Agreement, satisfaction of closing conditions to the purchase agreement for the Pending Acquisition, failure of the Pending
Acquisition to close, integration and other risks of acquisitions, actions by the Underwriters, actions by the seller in the Pending Acquisition, market conditions, risks regarding financing, capital needs and other risks described in the prospectus
relating to the offering and the Companys Form
10-K
for the year ended December 31, 2016 and its other filings with the Securities and Exchange Commission.