Carrizo Oil & Gas Inc. announced Monday that it had closed on the sale of a majority of its leasehold in the northern Utica Shale to an undisclosed buyer for $43 million in cash.
Before the sale was finalized, the Houston-based company used a purchase option with its joint venture (JV) partner, Avista Capital Partners, to increase its interest in the properties from 10% to 50%.
Richard Hunter, vice president of investor relations for Carrizo, told NGI’s Shale Daily on Monday that 19,000 acres were sold, but he did not identify the buyer. In a statement, the Houston-based company said the acreage is in Crawford and Mercer counties, PA, and Trumbull County, OH.
Hunter said the revenue from the sale “will be going to funding our spending in the Eagle Ford Shale and the Niobrara [Formation].” He added that Avista had also sold its 50% interest in the acreage.
In August, Hunter said the northern Utica acreage was not on very contiguous blocks, which made it difficult for Carrizo to ever be the operator (see Shale Daily, Aug. 10). He also echoed CEO Chip Johnson’s concern that there is little data on what resources the acreage holds.
As Carrizo divests from the northern Utica, it is simultaneously looking to purchase acreage in the southern Utica, although the moves are not related or dependent on each other. Johnson said Carrizo was looking to the south during a 2Q2012 earnings call in August.
“We are still buying acres down in the southern portion of the play, in Guernsey, Belmont and Harrison counties,” Hunter said. “We’re just steadily increasing our ownership down there.”
Carrizo owns a 10% undivided interest on nearly 26,000 gross acres in the southern Utica, mostly in Guernsey County, with an option to increase its ownership to 50%. The company said the acreage is “in proximity to recent encouraging industry drilling results.”
Carrizo formed the JV with Avista, a private equity company, last year (see Shale Daily, Oct. 3, 2011). Its first acquisition was 15,000 net acres in the Utica Shale in eastern Ohio and northwestern Pennsylvania.
Earlier this month Carrizo announced that it had formed a JV partnership valued at $82.5 million with OIL India Ltd. and Indian Oil Corp Ltd. in the Niobrara (see Shale Daily, Oct. 5). Carrizo has an estimated 61,500 net acres in the Niobrara, most of it in Adams and Weld counties, CO.
Meanwhile the company also owns a 50% interest in 16,000 net acres in New York State in three counties — Broome, Chemung and Tioga — all of which have been mentioned as potential development counties by Gov. Andrew Cuomo (see Shale Daily, Oct. 12; June 14).
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