SOURCE: Carrizo Oil & Gas, Inc.

Carrizo Oil & Gas, Inc.

February 01, 2011 06:30 ET

Carrizo Oil & Gas, Inc. Completes a New Credit Facility and a New Project Finance Arrangement for Its North Sea Huntington Development

HOUSTON, TX--(Marketwire - February 1, 2011) - Carrizo Oil & Gas (NASDAQ: CRZO) today announced the closing of a new $750 million secured revolving credit facility with a five-year term ("Credit Facility"). The current borrowing base limit under the Credit Facility is $350 million. At closing, the Company borrowed $112 million under the Credit Facility to pay off the outstanding debt and accrued interest under its prior secured revolving credit facility, to pay fees in connection with the Credit Facility and for other general business purposes.

Carrizo believes that the Credit Facility overall provides more financial flexibility than the prior credit facility, including the latitude to hedge a higher percentage of proved developed reserves and higher Total Debt to EBITDA coverage ratios through the first half of 2012. In addition, the Credit Facility expands the Company's ability to enter into project financing arrangements such as the one to fund the Company's North Sea Huntington development described below.

BNP Paribas served as the sole book runner and lead arranger for the Credit Facility in the nine-bank syndication and also serves as the administrative agent under the Credit Facility.

Carrizo has also completed a financing arrangement for its share of the North Sea Huntington development by entering into a limited recourse project financing agreement in a two-bank club deal with BNP Paribas and Societe Generale in which its wholly-owned subsidiary, Carrizo UK Huntington Ltd., is the borrower. The Huntington Credit Facility will fund a substantial portion of Company's share of costs and certain potential future costs associated with the Huntington development project. It includes a borrowing base limited term loan facility providing up to $55 million of Carrizo's total estimated future development costs of approximately $71 million and also includes a contingent $6.5 million cost overrun facility and a contingent $22.5 million letter of credit facility.

Carrizo currently expects to fund the remainder of its equity share of the Huntington development costs and to cover other costs related to the Huntington Credit Facility, including arrangement fees and other fees and expenses, with an equity contribution of approximately $22 million to its wholly-owned subsidiary, Carrizo UK Huntington Ltd., during the first quarter of 2011. Development drilling in the Huntington Field is currently expected to commence in March and first oil production is projected to start in early 2012.

"The syndication of our new revolving Credit Facility was well over-subscribed and included two new institutions along with seven banks from the prior credit facility, which speaks highly of Carrizo's credit strength," said Paul F. Boling, Vice President and Chief Financial Officer. "Furthermore, the completion of our new Credit Facility, along with the Huntington Facility, completes a significant chapter in the Company's capital structure that started in the fourth quarter of 2010 with the issuance of $400 million of 8.625% Senior Unsecured Notes due 2018, the retirement of $300 million of the Company's unsecured convertible notes and the secondary equity offering which raised $115 million. With our significant financial flexibility and credit strength, Carrizo is now positioned to enter a new phase of growth, including our new domestic developments in the Eagle Ford, Niobrara and Marcellus Shales."

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 Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, the Eagle Ford Shale in South Texas, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions. 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 development costs, costs and funding relating to the Huntington development, new production, new growth, domestic developments, production mix, drilling, future development plans, ability to borrow, credit strength, financing and timing, 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 results of Huntington activities, results of wells and production testing, regulatory approvals and requirements, performance of rig operators and gathering systems, actions by industry partners, government agencies and lenders, 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, evaluation of the Company by financing sources, weather and other risks described in Carrizo's Form 10-K for the year ended December 31, 2009 and its other filings with the Securities and Exchange Commission.

Contact Information

  • Contact:
    Carrizo Oil & Gas, Inc.
    Richard Hunter
    Vice President of Investor Relations
    Paul F. Boling
    Chief Financial Officer
    (713) 328-1000