Carrizo Oil & Gas Inc., Houston, has agreed to acquire certain Delaware basin properties from Devon Energy Corp. for $215 million in cash.
Thedeal includes 10,600 gross acres—9,600 net with 90% operated—in Reeves and Ward counties, 94% of which is held by production. Net production is 2,500 boe/d, 60% of which is oil, with more than 100 net potential derisked drilling locations identified across the Wolfcamp A and B based on 7,000-ft laterals. The company said there is upside potential from additional zones, further delineation, and future downspacing.
The deal also includes saltwater disposal wells that can be integrated into Carrizo’s system.
The acquisition fits with the company’s existing Phantom-area acreage, said Carrizo Pres. and Chief Executive Officer S.P. Johnson IV. “Upon completion of the transaction, we will hold approximately 26,300 net acres in our Phantom area and 46,000 net acres in the Delaware basin,” he said.
The company expects to integrate the assets into its existing development plan for the area, “which currently assumes a ramp-up in activity in the second half of 2019 as Permian pipeline takeaway is forecast to increase,” Johnson said.
An equity offering of 9.5 million shares of common stock expected to generate total gross proceeds of $218.5 million will be used to fund the acquisition, which is expected to close in this year’s fourth quarter.