Carrizo to Ramp Up Oil & Liquids Production by 2011
Carrizo O&G announced an additional growth strategy in crude oil and liquids-rich plays. The Company is attempting to increase significantly the level of its crude oil and liquids production and reserves by as early as the first quarter of 2011. As part of this effort, the Company has completed the acquisition of acreage and is pursuing additional land acquisitions in an unconventional play that is rich in condensate and natural gas liquids located in the Eagle Ford shale formation, principally in LaSalle County, Texas. The Company is also pursuing land acquisitions in an unconventional oil play located in the Niobrara formation in the Denver-Julesberg basin in Weld County, Colorado.
The Company's Board of Directors has approved an increase in the Company's 2010 capital expenditure plan from $170 million to $225 million if the Company successfully completes the offering of common stock described below. The increase in the capital expenditure plan is expected to be allocated as follows:
- $30 million for acreage acquisitions, which includes 6,800 acres already acquired in the first quarter of 2010 that are located near recently announced discoveries by El Paso Corporation and EOG Resources Inc., and drilling two horizontal wells in the Eagle Ford Shale; and
- $25 million for acreage acquisitions and, if successful, drilling of two to three horizontal wells in the Niobrara, including the targeted acquisition of at least 50,000 net acres, including approximately 47,000 acres located near recently announced discoveries by EOG that are subject to a letter of intent and expected to be acquired on or before May 15, 2010.
Carrizo has commenced an underwritten public offering of 2,500,000 shares of its common stock under an effective shelf registration statement. The underwriters will have an option to purchase up to an additional 250,000 shares from Carrizo to cover any over-allotments. The Company intends to use the net proceeds from the offering to repay borrowings under its revolving credit facility. The Company expects to use the resulting additional capacity under its revolving credit facility to fund, in part, its recently expanded capital expenditure plan for 2010 and for general corporate purposes.
Wells Fargo Securities is serving as sole underwriter in the offering.
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