Closing of the Devon Acquisition
On
October 17, 2018, Carrizo (Permian) LLC (Carrizo Permian) a wholly-owned subsidiary of the Company completed the closing (the Closing) of the transactions (the Devon Acquisition) described in the purchase and
sale agreement (the Devon Purchase Agreement) with Devon. At the Closing, Carrizo Permian purchased approximately 10,600 gross (9,600 net) acres located in the Delaware Basin in Reeves and Ward Counties, Texas (the Devon
Properties). The Devon Purchase Agreement provided for an agreed upon price of $215.0 million, subject to purchase price adjustments, which is related to the net cash flows from an April 1, 2018 effective date to the
closing date, as well as title and other customary adjustments. At the Closing, the Company paid $183.4 million in cash, less the $21.5 million performance deposit that the Company had previously paid in connection with the signing of the Devon
Purchase Agreement, and certain preliminary purchase price adjustments. The final purchase price will be subject to post-closing adjustments.
As previously disclosed, under one of the Companys existing joint operating agreements (the JOA) covering acreage in the
vicinity of the Devon Properties, the other party to the JOA has a right to purchase a 20% interest in approximately 83% of the total acres within the properties subject to the Devon Purchase Agreement at a price based on the Companys cost to
acquire such properties. This right will be exercisable for a
30-day
period after the Company delivers a specified notice to the other party. Such exercise right will expire in the fourth quarter. To the
extent that the other party exercises its right to make such purchase, our interests in the Devon Properties will be reduced.
Redemption of 7.50%
Senior Notes due 2020
On October 18, 2018, the Company delivered a notice of redemption to the trustee for the Notes to call for
redemption on November 19, 2018 (the Redemption Date) $130.0 million aggregate principal amount of the outstanding Notes, representing 100% of the aggregate principal amount of the outstanding Notes. The Company instructed the
trustee to provide notice of such redemption to the holders of the Notes on October 18, 2018 in accordance with the terms of the indenture governing such Notes. The Notes will be redeemed at a redemption price of 100.000% of the principal
amount thereof plus accrued and unpaid interest on the Notes to be redeemed to the Redemption Date. The Companys obligation to redeem the Notes on the Redemption Date and pay the redemption price plus accrued and unpaid interest thereon is
conditioned upon and subject to there being made available to the Company under its revolving credit facility a commitment amount of at least $1.1 billion at the Redemption Date (the Condition). Satisfaction of the Condition may be
waived by the Company in its sole discretion. If the Condition has not been satisfied or waived on or before December 17, 2018, the notice of redemption shall be automatically revoked and of no further effect.
The redemption is expected to be funded primarily with borrowings under the revolving credit facility. The current borrowing base under the
revolving credit facility is $1.0 billion, with an elected commitment amount of $900.0 million. Based on the Companys reserve estimates prepared in connection with its Fall 2018 redetermination, which are based on bank pricing, cost
and other assumptions, Carrizo expects the Fall 2018 redetermination to result in an increased borrowing base supporting an elected amount of at least $1.1 billion. These assumptions and other matters may change materially. Additionally, the
borrowing base amount is subject to considerable discretion by the banks. The amount the Company is able to borrow is subject to compliance with the financial covenants and other provisions of the credit agreement governing the revolving credit
facility.
This report shall not constitute a notice of redemption with respect to or an offer to purchase or sell (or the solicitation of
an offer to purchase or sell) any securities.
Statements in this report that are not historical facts, including but not limited to those
relating to the Companys ability to realize integration or any other expected benefits or effects of any acquisition, including the number of acres of the acquired properties that are retained, capital requirements, the proposed redemption,
proceeds to be used for the redemption, increase in borrowing base, interest savings, use of additional liquidity 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 the failure to realize the anticipated benefits of the acquisition, whether the banks under the Companys revolving credit facility increase the aggregate commitment in an amount sufficient to allow for the satisfaction of
the Condition, the Companys decision to waive satisfaction of the Condition, borrowing base determinations and availability under our revolving credit facility, evaluations of the Company by lenders under our revolving credit facility, market
conditions, integration and other acquisition risks, exercise of third party purchase rights under area of mutual interest provisions under joint operating agreement, midstream agreement provisions,