SOURCE: Carrizo Oil & Gas, Inc.
HOUSTON, TX--(Marketwire - Oct 4, 2012) - Carrizo Oil & Gas, Inc. (NASDAQ: CRZO) announced today that it has entered into a joint venture agreement with subsidiaries of OIL India Ltd. and Indian Oil Corporation Ltd., both international energy companies based in Delhi, India. Pursuant to the agreement, OIL and Indian Oil Corp. have together acquired an undivided 30% non-operated interest in substantially all of Carrizo's assets and operations prospective for Niobrara Formation oil development located primarily in Weld and Adams Counties, Colorado for approximately $82.5 million. Included in the transaction is the sale of approximately 18,100 net mineral acres and approximately 555 Boe/day (75% oil) of production from 24 gross currently producing Carrizo operated wells.
Under the terms of the joint venture, Carrizo is receiving $41.25 million in cash and an additional $41.25 million in the form of a drilling carry that will be applied to fund a portion of Carrizo's share of future Niobrara development costs. The carry is anticipated to be fully utilized by early 2014. The transaction has an effective date of October 1, 2012 and is subject to customary post-closing adjustments, consents and indemnities.
Carrizo's President and CEO, S.P. "Chip" Johnson, IV, commented, "We are pleased to announce this joint venture and relationship with Oil India Ltd. and Indian Oil Corporation. We plan to apply the cash portion of the transaction to help fund our remaining 2012 capital expenditures and the drilling carry will allow the addition of a second drilling rig in the Niobrara in early 2013. We estimate that the acceleration in development activity net to Carrizo from the additional rig will offset our future lower working interest and will result in an increase in Niobrara oil production net to our shareholder's interests over the course of 2013 compared to our pre-JV internal estimates."
Gulf Coast Sale
Carrizo announced today that it has completed the divestiture of substantially all of its legacy producing properties along the onshore Gulf of Mexico located primarily in Texas and Louisiana for approximately $19.5 million cash consideration, subject to customary post-closing adjustments, consents and indemnities. Effective date for the transaction was July 1, 2012. Net production from the sold properties is approximately 120 bbls/day of oil/condensate and 5,000 mcf/day of high BTU gas.
Carrizo Oil & Gas, Inc. is a Houston-based energy company actively engaged in the exploration, development, exploitation, and production of oil and natural gas primarily in the Eagle Ford Shale in South Texas, the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, and the Niobrara Formation in Colorado. Carrizo is also actively developing its oil discovery known as the Huntington Field in the UK North Sea. Carrizo controls significant prospective acreage blocks and utilizes advanced drilling and completion technology along with sophisticated 3-D seismic techniques to identify potential oil and gas drilling opportunities and to optimize reserve recovery.
Statements in this news release that are not historical facts, including but not limited to those related to timing of closing, benefits of any of the transactions described, purchase price, capital expenditures, use of proceeds, use of carry, timing and levels of production, production mix, development plans, use of proceeds, oil and gas sales, 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, timing of completion and drilling of wells, and other statements that are not historical facts are forward-looking statements that are based on current expectations. Although Carrizo 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 failure of closing conditions to be satisfied, the risk of the drilling carry not being utilized, completion of possible acreage acquisitions, title defects and other purchase price adjustments and indemnities, results of wells, performance of rig operators and gathering systems, actions by governmental authorities, joint venture partners, purchasers, industry partners, lenders and other third parties, market and other conditions, availability of well connects, capital needs and uses, commodity price changes, 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 Carrizo's Form 10-K for the year ended December 31, 2011 and its other filings with the Securities and Exchange Commission.