The financial consideration comprises of $63.65m in cash and assumption of $31.35m for Carrizo’s future drilling and development costs.
The asset sale, completes the joint venture agreement between the two companies, and is subject to customary post-closing adjustments and indemnities.
Post sale, the integrated gas company GAIL will acquire 4,040 net acres located primarily in La Salle County, Texas and a 20% interest in eight horizontal wells.
Currently, the wells produce approximately 1,700 net barrels of oil per day (340 barrels per day net to GAIL) and 3,800 net Mcf per day of rich gas (760 Mcfpd net to GAIL).
Proved reserves allocated to these acres amount to 13.8 million boe (2.76 million boe net to GAIL), of which 2.5 million boe are classified as proved developed (0.5 million boe net to GAIL), according to Carrizo’s internally estimated mid-year 2011.
Carrizo will continue as operator of these properties, where a drilling rig is currently in the process of drilling a four well pad.
The wells are expected to begin production by the end of this year.
In addition, Carrizo has executed purchase agreements for additional Eagle Ford acreage which will not be included in the joint venture with GAIL.
Carrizo will now own approximately 41,000 net acres in the Eagle Ford Shale play.
