CRZO

[dan_s]

HOUSTON, Oct. 27, 2014 (GLOBE NEWSWIRE) -- Carrizo Oil & Gas, Inc. (CRZO) today announced that it has completed the acquisition of additional leasehold and producing interests in the Eagle Ford Shale from Eagle Ford Minerals, LLC ("EFM"), for $250 million in cash, subject to a closing adjustment credit of $7 million, as well as an update to its third quarter guidance.

Eagle Ford Shale Acquisition Highlights
• 6,820 net acres located primarily in LaSalle, Atascosa, and McMullen Counties, TX; the acreage is 100% operated by Carrizo
• Net production of approximately 2,670 Boe/d (85% oil) in the third quarter of 2014 from 81 gross (20.1 net) wells
• Net proved reserves, based on Carrizo's internal estimates, of 16.7 MMBoe (82% oil, 34% developed)
• Adds approximately 93 net undeveloped Eagle Ford Shale drilling locations based on Carrizo's current development plan

The acquisition represents an approximate 25% working interest in certain Eagle Ford Shale properties that were already operated by Carrizo. Following the closing of the transaction, Carrizo holds an approximate 100% working interest in these assets. The acquired properties are in three main project areas (RPG, Irvin Ranch, and Pena) which are centrally located in the most prospective portion of the Eagle Ford Shale's volatile oil window and represent some of the highest EUR's and IRR's of all of Carrizo's Eagle Ford Shale portfolio. Third quarter net production from the acquired properties was 2,260 Bbls/d and 2,457 Mcfe/d.

[dan_s]

S.P. "Chip" Johnson, IV, Carrizo's President and CEO, commented, "While Carrizo has not historically been active in the acquisition of producing properties, we felt this was a perfect deal for the Company. The acquisition adds an incremental 25% working interest in three of our four highest-return areas within the Eagle Ford Shale, and adds a significant amount of undrilled potential in addition to the existing production. We believe the purchase price is very attractive based on the market value of producing and non-producing assets in the area, and expect the acquisition to be immediately accretive on a variety of financial metrics, including cash flow and earnings per share."

I am updating the CRZO forecast model and will post it under the Sweet 16 Tab this afternoon. - Dan

[dan_s]

Based on today's press release, I have updated my forecast model for CRZO. You can find it under the Sweet 16 Tab. [Log on, click on S-16 tab, click on CRZO logo.]

My Fair Value Estimate increases by $1.00 to $82.25/share, compared to First Call's Price Target of $70.62.

CRZO is primarily an Eagle Ford company with a growing 2nd core area in the Permian Basin.
What I like most about the company is that it has lots of running room with some very good acreage, especially in the Eagle Ford. They are getting strong well results and D&C costs are coming down as they move to pad development drilling.
Strong Operating Cash Flows are locked in (even if we assume $3.50 natural gas and $80/bbl WTI forever)
CFPS
2012A = $6.15
2013A = $8.43
2014E = $11.43 < My forecast
2015E = $13.04 < My forecast
2016E = $19.43 < This is First Call's CFPS estimate
2014E = $19.10 < This is First Call's CFPS estimate

Note: First Call's estimates for revenues, EPS and CFPS do not include the acquisition announced today, which is accretive.