Carrizo selling rest of Barnett Shale holdings

Posted Thursday, Sep. 05, 2013  comments  Print Reprints

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Carrizo Oil & Gas, the seventh-largest producer in the Barnett Shale last year, has agreed to sell its remaining holdings in the field, including 22 wells at the University of Texas at Arlington.

The sale, announced Wednesday, is part of the Houston-based company’s move to dispose of “noncore” assets, which include production in East Texas and undeveloped acreage in the Marcellus Shale. The transaction, with an unnamed buyer, is valued at $268 million.

It marks Carrizo’s third big sale of Barnett assets. In March 2012, it sold 12,000 acres and 110 producing wells in the Barnett for $190 million to Atlas Resource Partners. In April 2011, it sold properties valued at $104 million to KKR Natural Resources.

The latest deal includes about 9,000 net acres in the Barnett, mostly in southeast Tarrant County, where Carrizo leased actively in 2007 and 2008. The properties being sold had 303.5 billion cubic feet of reserves at the end of 2012 and have current production of about 44 million cubic feet a day.

Carrizo said it will use the proceeds to repay debt and fund part of its 2013 operations, primarily in the Eagle Ford Shale in South Texas. The deal is expected to close by late October and will have an effective date of July 1.

Other properties included in the sale are acreage and production in the Camp Hill field, near Palestine in Anderson County, and 2,850 acres in the Marcellus in Pennsylvania.

The sale continues a trend of early drillers exiting the Barnett Shale. Like Carrizo, those producers are generally looking to pay down debt used to buy lease positions at high prices or pursue plays that generally promise more crude oil and natural gas liquids, which now draw far better prices in the market.

In March, Fort Worth-based Quicksilver Resources announced a deal to sell 25 percent of its Barnett Shale assets to Tokyo Gas for $485 million.

Other large deals have included EnerVest Ltd.’s purchase of more than $2 billion worth of properties from Encana Oil & Gas and Talon Oil & Gas in late 2011, and Legend Production Holdings’ acquisition of $900 million in properties from Fort Worth-based Range Resources in March 2011.

Carrizo CEO Chip Johnson called it “a bittersweet day for Carrizo, as the Barnett Shale started the company’s transformation into an unconventional resource player back in 2003. While we’ve had a great run in the play, and worked with some great partners, we believe the sale of these assets is a natural step in our continued shift towards premier oil and liquids-rich plays.”

He said the sale will help underwrite the company’s Eagle Ford spending as well as drilling next year in Ohio’s Utica Shale.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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