Carrizo Oil & Gas has signed an agreement to acquire Delaware Basin assets from Quantum Energy Partners portfolio firm ExL Petroleum Management for around $648m.

Under the deal, Carrizo will purchase 23,656 gross acres situated in the core of the Delaware Basin in Reeves and Ward counties, Texas. Anadarko, Centennial, Devon, Noble, and PDC are some of the offset operators in the basin.

The deal will also include an additional $50m contingent payment to ExL per year, if WTI averages more than $50/Bbl in any calendar year during 2018-2021.

The deal will allow Carrizo to increase its acreage in the Delaware Basin to around 42,500 net acres on a pro forma basis.

Current net production from the acquired properties is around 8,000 Boe/d from 11 gross producing horizontal wells.

Additionally, seven wells are currently under process of drilling, completion and flowback.

At present, ExL is operating four rigs on the properties to manage near-term leasehold obligations. Carrizo intends that two rigs can manage the leasehold obligations on the acreage beyond this year.

According to Carrizo, recent successful horizontal wells on the target properties have significantly de-risked three target zones, including Wolfcamp A, Upper Wolfcamp B and Lower Wolfcamp B.

Subject to customary closing adjustments, the deal is expected to complete in mid-August 2017

Carrizo president and CEO S.P. "Chip" Johnson, IV said: "Over the past couple of years, we have evaluated numerous deals in the Delaware Basin, and these properties rank amongst the best we have evaluated, meeting all of our acquisition criteria.

“The assets are located in the core of the Delaware Basin, offering the potential for decades of high-return drilling locations across multiple horizontal zones.”