Source: Carrizo Oil & Gas
Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) has entered into a definitive agreement to sell substantially all of its Barnett Shale Tier 1 properties to KKR Natural Resources, the partnership formed between an affiliate of Kohlberg Kravis Roberts & Co. L.P. and Premier Natural Resources, for $104 million.
This sale is expected to close in mid-May and is subject to customary closing conditions and purchase price adjustments.
The approximately 13,000 acres being sold include 75 gross (58.5 net) wells currently producing at an approximate gross rate of 15.7 MMcfe per day (8.3 MMcfed net). Estimated proved reserves associated with the divested properties amount to 122.4 Bcfe, 55% of which are proved undeveloped, as determined by Carrizo's third party engineers at year-end 2010.
The Company intends to use the net proceeds from this sale to repay borrowings under its revolving credit facility. The Company expects to use the resulting additional capacity under its revolving credit facility to fund, in part, its 2011 capital expenditure plan, and for general corporate purposes.
Carrizo President and CEO S. P. "Chip" Johnson, IV commented on the sale, "Our plan to focus our Barnett Shale development drilling on our Core properties in Tarrant County and our success in the initial development of our liquids-rich Eagle Ford Shale and Niobrara resource plays made our Tier 1 Barnett property a candidate for divestiture. We had a number of strong indications of interest in this quality gas asset and are pleased to be able to announce this sale to KKR. The resulting increase in liquidity generated by the sale of these properties will give us the flexibility to increase our investment in liquids-rich resource plays should the opportunity appear."