Linus Unah – Fourth Estate Contributor
Houston, TX, United States (4E) – Carrizo Oil & Gas Inc. has announced that it would acquire Delaware Basin properties from ExL Petroleum Management LLC, a portfolio company of Quantum Energy Partners, for $648 million in cash.
The Houston-based energy company said the acquisition includes 23,656 gross (16,488 net) acres located in the core of the Delaware Basin in Reeves and Ward counties, Texas with offset operators including Anadarko, Centennial, Devon, Noble, and PDC.
The deal, which is subject to customary closing adjustments, has high degree of operational control with 95 percent of net acreage operated as well as 70 percent average working interest across the acreage.
Current net production of the properties of about 8,000 barrel of oil equivalent per day, of which comprising 48 percent oil and 67 percent liquids.
Acquisition is expected to be add to the company’s earnings, cash flow, and net asset value metrics, and has an effective date of May 1.
“With this acquisition, we believe we have assembled core positions with a deep inventory of future drilling locations in two of the highest-return plays in North America, the Eagle Ford Shale and Delaware Basin,” said S.P. “Chip” Johnson, IV, Carrizo’s President and chief executive officer.
“Our plan going forward is to focus our efforts on these two regions and, as a result, we have elected to begin a monetization process for our non-core assets and expect to use the proceeds from these dispositions for debt reduction.”
Citigroup served as financial advisor to Carrizo for this acquisition, while Baker Botts LLP served as legal advisor. RBC Capital Markets acted as exclusive financial advisor to ExL.
Carrizo plans to finance the acquisition through potential capital markets transactions, which may include equity or debt offerings, and the preferred stock offering.
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