Houston-based Carrizo Oil & Gas will acquire more than 13,000 acres of Eagle Ford shale mineral interests, increasing its total net position in the South Texas play to about 33,000 acres.
The acreage is located in the condensate trend in La Salle County. The up-front cash cost is about $1,650 per acre, with an undisclosed amount also going toward covering other development costs for a partner in the project.
In a research note this morning, analysts with Jefferies said the total cost per acre comes closer to about $5,500.”A reasonable price versus recent [joint ventures] north of $15k/acre,” Jefferies says. “However, those transactions largely included more production, more delineation, greater infrastructure as well as higher EUR targets.”
In other words, the lower price here likely reflects less pipeline and processing capacity directly connecting to the acreage. So Carrizo and its partners will have more spending to do.
As part of a plan to step up the pace of Eagle Ford development, Carrizo said it is moving its remaining drilling rig from the Barnett Shale (H&P 332) to South Texas, and is now on location drilling the Ivey Ranch 10H well in Dimmit County. The rig will remain in the Eagle Ford until replaced by a new purpose-built rig currently scheduled for arrival in December 2011, at which time the H&P 332 rig will return to the Barnett.
Two other rigs, including a new purpose-built H&P Flex 3S, are also at work in the Eagle Ford for Carrizo.
Despite the quicker pace of Eagle Ford drilling, the company said it isn’t increasing its previous guidance for 2011 oil production “due to the timing of well completions and initiation of oil sales.”
Carrizo also provided updates on other operations.
