Carrizo Oil & Gas, Inc. provided an update on its operations following Hurricane Harvey as well as announced an agreement to sell its assets in the Utica Shale.
Operational Update Following Hurricane Harvey
Carrizo's producing assets and facilities in the Eagle Ford Shale sustained no damage as a result of Hurricane Harvey. In preparation for the storm, the Company suspended its drilling and completions operations in the play, but crews were able to return to the field last week, and all of the Company's operated Eagle Ford rigs and frac crews have resumed operations.
As a result of downtime at third party midstream facilities and Gulf Coast refineries, sales volumes were temporarily reduced. The Company was able to secure some storage capacity, which has partially mitigated the impact on its production. Many of the third party facilities have restarted and resumed taking crude oil and natural gas, and Carrizo expects to be able to ramp back to nearly full sales capacity in the play this week. The Company plans to update its production guidance once more detailed information is available.
Utica Shale Divestiture
On August 31, 2017, Carrizo entered into an agreement to sell substantially all of its assets in the Utica Shale, located primarily in Guernsey County, OH, for $62 million in cash, subject to customary closing conditions. Additionally, Carrizo could receive contingent payments of up to $15 million in aggregate based on average annual WTI prices exceeding certain thresholds over the next three years. The effective date of the transaction is April 1, 2017, and the transaction is currently expected to close by October 31, 2017.
S.P. "Chip" Johnson, IV, Carrizo's President and CEO, commented, "While we cannot yet fully quantify the impact of Hurricane Harvey given potential damage to third party midstream and refining assets along the Gulf Coast, we are pleased to report that our employees are safe and our assets were not damaged. I'd like to commend our staff for their effort and dedication leading up to the storm as well as in the days following it. As a result, our team was able to return to drilling and completion operations with limited downtime as well as finalize the sale of our Utica Shale package while also dealing with the personal aftermath of this historic storm. As a Houston-based company, our thoughts continue to be with our employees as well as our neighbors and the many other Texans who were impacted by Hurricane Harvey and are dealing with very difficult conditions."