Current CRZO Stock Info

$181 million acquisition funded through public offering

Carrizo Oil & Gas (ticker: CRZO) announced that it will purchase 15,000 acres of Eagle Ford Shale properties in LaSalle, Frio, and McMullen counties, Texas, from an affiliate of Sanchez Energy (ticker: SN) for $181 million. The bolt-on acquisition includes an estimated net production during September of approximately 3.1 MBOEPD (61% oil) from 93 net wells, according to a company press release put out Monday.

Following the closing of the deal, Carrizo will hold over 100,000 net acres in the Eagle Ford, concentrated in LaSalle, McMullen, and Atacosa counties. Based on the company’s current development spacing assumptions, the added acreage will increase CRZO’s drilling inventory in the Eagle Ford by approximately 1,100 net locations.

The company’s production during the third quarter reached 40.8 MBOEPD, up 13% year-over-year. Production exceeded the high-end of company expectations primarily due to Carrizo’s Eagle Ford and Delaware Basin assets, the company said.

Based on the $181 million price tag, Carrizo spent roughly $58,387.10 per flowing BOE, or $12,066.67 per acre on its new Eagle Ford assets.

S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented, “We are pleased to announce this bolt-on acquisition in the Eagle Ford Shale, as it increases our acreage position in the play by more than 15% and expands our core inventory in it by approximately 10%, with additional upside possible from a combination of infill drilling and multi-zone development.”

To finance the acquisition, Carrizo is offering 6,000,000 shares of its common stock, and has granted the deal’s underwriters an option to purchase up to 900,000 additional shares. The equity offering was upsized from an initial 5,000,000 share offering. Carrizo expects gross proceeds from the deal of approximately $225.0 million, it said in a press release.

Pending use for the Eagle Ford acquisition, CRZO intends to use the net proceeds “temporarily to reduce borrowings under its revolving credit facility.” Any remaining money from the offering will be used for general corporate purposes, including future potential acquisitions or a portion of its 2016 and 2017 capital expenditure plans.

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