Carrizo to sell remaining Barnett assetsSeptember 5, 2013
A. Lee Graham
Carrizo Oil & Gas Inc. of Houston plans to sell its remaining Barnett Shale properties, as well as other non-core assets in East Texas and the Marcellus Shale.
"This is a bittersweet day for Carrizo, as the Barnett Shale started the company's transformation into an unconventional resource player back in 2003,” said president and CEO S.P. “Chip” Johnson IV, commenting in a news release.
The Barnett sale is part of the company’s plan to sell certain non-core assets, including all of its interest in the Camp Hill Field in East Texas and certain undeveloped acreage in the Marcellus Shale, for about $268 million, including aggregate cash proceeds totaling about $250.4 million.
The transactions are subject to customary closing conditions and purchase price adjustments, as well as the assumption from buyers of certain liabilities and contractual commitments.
Carrizo said it plans to use net proceeds from the sale transactions to repay borrowings under its revolving credit facility, as well as fund part of its remaining 2013 capital expenditures program, largely in the Eagle Ford Shale.
The Barnett Shale divestiture includes about 9,000 net acres primarily in Southeast Tarrant County with year-end 2012 proved reserves of 303.5 billion cubic feet. Current net production from the assets is about 44 million cubic feet per day.
Closing of the transaction is expected by late October, with an effective date of July 1, 2013. Acting as the company’s financial adviser in the transaction was Evercore Partners, with Baker Botts acting as outside legal counsel.
The Camp Hill divestiture includes year-end 2012 proved reserves totaling about 1 million barrels. It also has an effective date of July 1, 2013 and is expected to close shortly. The Marcellus Shale divestiture mainly includes 2,850 net undeveloped acres in non-core areas of the play and is expected to close in the fourth quarter.
“While we've had a great run in the [Barnett] play, and worked with some great partners, we believe the sale of these assets is a natural step in our continued shift towards premier oil and liquids-rich plays,” Johnson said.
Cash proceeds from the divestitures are expected to improve the company’s balance sheet metrics and should “more than cover” its remaining spending gap for the year, Johnson said.
Carrizo Oil & Gas Inc. develops and produces oil and gas from resource plays in the United States. More information is available at www.crzo.net.