Exploration and production company Carrizo Oil & Gas has signed a $648m agreement for the acquisition of Delaware Basin properties from ExL Petroleum Management, which cover a total area of 23,656 gross acres.
Carrizo will increase its acreage position in the basin to more than 42,500 net acres via the new acquisiton.
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The company is set to make a contingent payment to ExL of $50m per year during 2018-2021 under the terms of the purchase and sale agreement, up to a maximum of $125m.
Carrizo Oil & Gas president and CEO SP 'Chip' Johnson IV said: "The assets are located in the core of the Delaware Basin, offering the potential for decades of high-return drilling locations across multiple horizontal zones.
“Additionally, the properties have a significant amount of well control, not just across the acreage, but also within the various target zones, dramatically reducing the future operational risk.”
"With this acquisition, we believe we have assembled core positions with a deep inventory of future drilling locations in two of the highest-return plays in North America, the Eagle Ford Shale and Delaware Basin.”
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By GlobalDataThe company is also planning to raise at least $300m by selling its non-core assets and focussing on these two regions.
The proposed assets comprise four operated rigs and are located in the Reeves and Ward counties of Texas. They have total net production of around 8,000 Boe/d.
Carrizo noted that the acreage consists of multiple stacked pay zones across the Bone Spring and Wolfcamp formations. More than 350 net potential locations have been identified across the Wolfcamp A and B formations.
Completion of the transaction is currently scheduled for mid-August.
