Carrizo Forms Strategic JV with Sumitomo in Barnett Shale
Carrizo Oil & Gas announced the sale of an interest in a portion of its core Barnett Shale acreage to a subsidiary of Sumitomo Corporation for $15.7 million. Sumitomo has purchased on a promoted basis, a one-eighth (12.5%) interest in 16 Carrizo Barnett drilling units, including six recently completed wells with a current production rate net to Sumitomo of 1.25 million cubic feet per day. As part of this agreement, Sumitomo will participate on a promoted basis in the completion of 18 drilled wells and the drilling and completion of 12 more wells under similar terms. In addition, Sumitomo has the right to participate, on a promoted basis and at the same working interest, in up to 56 future wells within these units.
S.P. "Chip" Johnson IV, Carrizo's President and Chief Executive Officer, commented, "We are excited to enter into this strategic joint venture with Sumitomo Corporation. We view Sumitomo as a strong partner that will permit us to opportunistically accelerate drilling in our core Barnett Shale development area. We believe that this joint venture relationship with Sumitomo also has the potential to expand into other exciting resource plays as well."
After application of the net proceeds from the transaction to repay borrowings outstanding under our credit facility, the current outstanding balance under the credit facility has been reduced to $187 million. This transaction has no effect on Carrizo's redetermined borrowing base of $350 million announced on Monday, December 14, 2009.