HOUSTON, June 28, 2017 (GLOBE NEWSWIRE) -- Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) today announced that it has agreed to acquire Delaware Basin properties from ExL Petroleum Management, LLC (ExL), a portfolio company of Quantum Energy Partners, for $648 million in cash, subject to customary closing adjustments. Additionally, Carrizo is providing an update to its second quarter and full-year 2017 production guidance.
Acquisition Highlights
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
Highly contiguous acreage position that is conducive for long-lateral development
High degree of operational control with 95% of net acreage operated
70% average working interest across the acreage
Rapidly growing production base with four operated rigs currently running and current net production of approximately 8,000 Boe/d (48% oil, 67% liquids)
Acreage contains multiple stacked pay zones across the Bone Spring and Wolfcamp formations, with four of six target Wolfcamp formations having been successfully tested with horizontal wells
More than 350 net potential locations identified across the Wolfcamp A and B formations, with significant upside potential from additional zones and future downspacing
Projected average per-well EURs of 1,300-1,500 MBoe and IRRs that stack up well with Carrizo's existing inventory
Acquisition is expected to be accretive on earnings, cash flow, and net asset value metrics
Effective date of May 1 with an anticipated closing in mid-August
Details here: https://finance.yahoo.com/quote/CRZO/?p=CRZO
CRZO announces BIG ACQUISITION
CRZO announces BIG ACQUISITION
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO announces BIG ACQUISITION
Transaction Financing
Carrizo plans to finance the acquisition through potential capital markets transactions, which may include equity or debt offerings, and the Preferred Stock offering described below. The Company anticipates that the combination of the acquisition and financing sources, as well as the proceeds from non-core asset sales, will have a positive impact on its forward-looking leverage profile.
Redeemable Preferred Stock. Carrizo has agreed to issue $250 million of newly-created Redeemable Preferred Stock to funds managed by GSO Capital Partners LP (GSO). The Preferred Stock will pay quarterly dividends at a rate of 8.875% per annum. Carrizo has the option, beginning in September, to pay in shares of its common stock up to 100% of the dividends in the first year, 75% of the dividends in the second year, and 50% of the dividends in the third year. After the third anniversary of closing, the Company may redeem the Preferred Stock for cash at 104.4375% of liquidation value, declining ratably to liquidation value over the subsequent two anniversaries. Additionally, the Company has granted GSO warrants to purchase 2,750,000 shares of common stock at an exercise price of $16.08 per share; the warrants are exercisable only on a cashless "net exercise" basis and have a term of 10 years.
Asset Sale Program. The Company currently plans to expand its announced asset monetization program of its Appalachia assets to include other non-core assets in its portfolio. Carrizo is currently targeting proceeds from the planned non-core divestitures of at least $300 million.
Carrizo plans to finance the acquisition through potential capital markets transactions, which may include equity or debt offerings, and the Preferred Stock offering described below. The Company anticipates that the combination of the acquisition and financing sources, as well as the proceeds from non-core asset sales, will have a positive impact on its forward-looking leverage profile.
Redeemable Preferred Stock. Carrizo has agreed to issue $250 million of newly-created Redeemable Preferred Stock to funds managed by GSO Capital Partners LP (GSO). The Preferred Stock will pay quarterly dividends at a rate of 8.875% per annum. Carrizo has the option, beginning in September, to pay in shares of its common stock up to 100% of the dividends in the first year, 75% of the dividends in the second year, and 50% of the dividends in the third year. After the third anniversary of closing, the Company may redeem the Preferred Stock for cash at 104.4375% of liquidation value, declining ratably to liquidation value over the subsequent two anniversaries. Additionally, the Company has granted GSO warrants to purchase 2,750,000 shares of common stock at an exercise price of $16.08 per share; the warrants are exercisable only on a cashless "net exercise" basis and have a term of 10 years.
Asset Sale Program. The Company currently plans to expand its announced asset monetization program of its Appalachia assets to include other non-core assets in its portfolio. Carrizo is currently targeting proceeds from the planned non-core divestitures of at least $300 million.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO announces BIG ACQUISITION
Updated Guidance
Based primarily on continued strong performance from its Eagle Ford Shale assets, Carrizo expects second quarter production to exceed the high-end of its previously-provided guidance range. As a result, the Company is increasing its crude oil production guidance for the second quarter of 2017 to 33,600-33,700 Bbls/d from 31,800-32,200 Bbls/d previously. For natural gas and NGLs, Carrizo is adjusting its second quarter guidance range to 71-73 MMcf/d and 4,700-4,800 Bbls/d.
The Company currently expects the ExL acquisition to close in mid-August 2017. Based on the level of activity required to manage the near-term leasehold obligations on the ExL properties, Carrizo currently plans to move one of its Eagle Ford Shale rigs to the Delaware Basin following the closing of the acquisition. Based on this timing and development plan, Carrizo is increasing its 2017 crude oil production guidance to 35,700-36,000 Bbls/d from 32,400-32,700 Bbls/d. Using the midpoint of the range, the Company's new crude oil production growth guidance increases to 39%. Carrizo is also increasing its 2017 total production guidance to 54,933-56,100 Boe/d from 49,533-50,700 Boe/d previously.
Based primarily on continued strong performance from its Eagle Ford Shale assets, Carrizo expects second quarter production to exceed the high-end of its previously-provided guidance range. As a result, the Company is increasing its crude oil production guidance for the second quarter of 2017 to 33,600-33,700 Bbls/d from 31,800-32,200 Bbls/d previously. For natural gas and NGLs, Carrizo is adjusting its second quarter guidance range to 71-73 MMcf/d and 4,700-4,800 Bbls/d.
The Company currently expects the ExL acquisition to close in mid-August 2017. Based on the level of activity required to manage the near-term leasehold obligations on the ExL properties, Carrizo currently plans to move one of its Eagle Ford Shale rigs to the Delaware Basin following the closing of the acquisition. Based on this timing and development plan, Carrizo is increasing its 2017 crude oil production guidance to 35,700-36,000 Bbls/d from 32,400-32,700 Bbls/d. Using the midpoint of the range, the Company's new crude oil production growth guidance increases to 39%. Carrizo is also increasing its 2017 total production guidance to 54,933-56,100 Boe/d from 49,533-50,700 Boe/d previously.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO announces BIG ACQUISITION
Based on the new production guidance, Carrizo will beat the current First Call Q2 estimates for EPS and CFPS by a wide margin.
I am updating by forecast model to include the new full-year guidance and impact of the common stock and debt offerings, assuming they sell it all.
To get their full-year guidance, production should be ~70,000 BOE per day by year-end.
I am updating by forecast model to include the new full-year guidance and impact of the common stock and debt offerings, assuming they sell it all.
To get their full-year guidance, production should be ~70,000 BOE per day by year-end.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group