Carrizo and Avista Capital Partners have entered into a joint venture to acquire and develop acreage in the liquids rich region of the Utica Shale. The JV has closed on its first acquisition of 15,000 net acres in eastern Ohio and northwestern Pennsylvania at an average cost of less than $1,500 per acre. Under the terms of the agreement, Carrizo will own an initial 10% interest in the joint venture properties with Avista owning the remaining 90%. Avista has the right to contribute aggregate funds of up to $130 million to the joint venture, with the ability to raise this amount by an incremental $70 million.
Carrizo holds two purchase options to increase its participating interest to 50% in the properties acquired by the joint venture over the next 18 months. Carrizo's purchase options may be exercised at specified increments above acreage cost and associated improvements at any time during the option period. In the event these purchase options are not exercised, Carrizo will be entitled to share in any cash distributions by Avista to its partners, provided specified return on investment thresholds on Avista's investment are achieved.
Carrizo will initially serve as operator of the joint venture properties and will provide certain management services to Avista related to the joint venture.
Carrizo's President and CEO, S. P. "Chip" Johnson, IV, commented, "We are excited about this joint venture with Avista which should allow both companies to quickly grow a meaningful position in one of the highest potential liquids-rich shale plays in the U.S."
"Avista is pleased to continue its partnership with the Carrizo team and build upon the great success we have achieved together in the Marcellus Shale," said Avista Partner Robert L. Cabes, Jr. "We are excited about our prospects in the Utica Shale and look forward to the successful growth of this venture."
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