In connection with the joint venture, Reliance acquired a 20% interest in approximately 52,200 net Carrizo acres in Pennsylvania at a purchase price of $65m.
Reliance paid $11.4m in cash to Carrizo at closing with $1.7m more expected later this year.
In addition, Reliance will pay an expected $52m of Carrizo’s share of future drilling, completion, and seismic costs (development carry).
Simultaneous with the closing of this transaction, an affiliate of Carrizo’s already existing joint venture partner, Avista Capital Partners (Avista), closed on the sale its entire interest in the same properties to Reliance for approximately $327m.
As per the terms of Carrizo’s current joint venture agreement with Avista, Carrizo expects to receive approximately $44m in cash from Avista based on the sale of Avista’s approximately 52,200 net acres.
The new Carrizo/Reliance joint venture agreement covers approximately 104,400 gross acres in northern and central Pennsylvania.
As per the terms of the agreement, Carrizo retains a 40% working interest in the acreage and Reliance owns 60%.
Carrizo will continue as operator with Reliance having the right to assume operations in certain parts of Central Pennsylvania after one year.
