Carrizo Oil & Gas Inc. agreed to sell substantially all of its Barnett Shale Tier 1 properties to KKR Natural Resources (KNR), a partnership of an affiliate of Kohlberg Kravis Roberts & Co. LP (KKR) and Premier Natural Resources, for $104 million, the companies said Wednesday.
The approximately 13,000 acres being sold include 75 gross (58.5 net) wells currently producing at an approximate gross rate of 15.7 MMcfe/d (8.3 MMcfe/d net). Estimated proved reserves amount to 122.4 Bcfe, 55% of which are proved undeveloped, as determined by Carrizo's third-party engineers at year-end 2010.
"With their significant proved developed producing reserve component in a reservoir we know well through our current operations in the region, the assets are a great fit for our KKR Natural Resources platform," said Jonathan Smidt, a senior member of KKR's energy and infrastructure business. "We are pleased to add these assets to our oil and gas portfolio and remain excited about the opportunity to grow the KNR platform through the acquisition of additional oil and gas properties in North America."
Carrizo said it intends to use the net proceeds from the sale to repay borrowings under its revolving credit facility and expects to use the resulting additional credit capacity to fund, in part, its 2011 capital expenditure plan, and for general corporate purposes.
"Our plan to focus our Barnett Shale development drilling on our core properties in Tarrant County and our success in the initial development of our liquids-rich Eagle Ford Shale and Niobrara resource plays made our Tier 1 Barnett property a candidate for divestiture," said Carrizo CEO Chip Johnson.
"We had a number of strong indications of interest in this quality gas asset and are pleased to be able to announce this sale to KKR. The resulting increase in liquidity generated by the sale of these properties will give us the flexibility to increase our investment in liquids-rich resource plays should the opportunity appear."
The transaction is the third investment made by KNR and, following the acquisition of certain properties from ConocoPhillips in January (see Shale Daily, Jan. 26) the second investment made by KNR in the Barnett Shale.
The sale is expected to close in mid-May subject to conditions and price adjustments.