Carrizo Oil & Gas, Inc. announced that it has entered into a joint venture agreement with subsidiaries of OIL India Ltd. and Indian Oil Corporation Ltd., both international energy companies based in Delhi, India. Pursuant to the agreement, OIL and Indian Oil Corp. have together acquired an undivided 30% non-operated interest in substantially all of Carrizo's assets and operations prospective for Niobrara Formation oil development located primarily in Weld and Adams Counties, Colorado for approximately $82.5 million. Included in the transaction is the sale of approximately 18,100 net mineral acres and approximately 555 Boe/day (75% oil) of production from 24 gross currently producing Carrizo operated wells.
Under the terms of the joint venture, Carrizo is receiving $41.25 million in cash and an additional $41.25 million in the form of a drilling carry that will be applied to fund a portion of Carrizo's share of future Niobrara development costs. The carry is anticipated to be fully utilized by early 2014. The transaction has an effective date of October 1, 2012 and is subject to customary post-closing adjustments, consents and indemnities.
Carrizo's President and CEO, S.P. "Chip" Johnson, IV, commented, "We are pleased to announce this joint venture and relationship with Oil India Ltd. and Indian Oil Corporation. We plan to apply the cash portion of the transaction to help fund our remaining 2012 capital expenditures and the drilling carry will allow the addition of a second drilling rig in the Niobrara in early 2013. We estimate that the acceleration in development activity net to Carrizo from the additional rig will offset our future lower working interest and will result in an increase in Niobrara oil production net to our shareholder's interests over the course of 2013 compared to our pre-JV internal estimates."
Gulf Coast Sale
Carrizo announced that it has completed the divestiture of substantially all of its legacy producing properties along the onshore Gulf of Mexico located primarily in Texas and Louisiana for approximately $19.5 million cash consideration, subject to customary post-closing adjustments, consents and indemnities. Effective date for the transaction was July 1, 2012. Net production from the sold properties is approximately 120 bbls/day of oil/condensate and 5,000 mcf/day of high BTU gas.