Carrizo Oil and Gas (CRZO) updated its drilling operations on its properties in Pennsylvania that are prospective for the Marcellus Shale. The company has leased a drilling rig and will start drilling from a multi well pad in Susquehanna County, Pennsylvania in October 2010.
Carrizo Oil and Gas has 111,290 net acres that are prospective for the Marcellus Shale. The acreage is concentrated mostly in northeastern Pennsylvania, and Carrizo Oil and Gas estimates that the average well here will cost $3.6 million and have net reserves of 5.5 billion cubic feet equivalent.
Carrizo Oil and Gas estimates that the internal rate of return on wells here will be 30% assuming a NYMEX natural gas price of $4.00. The internal rate of return for Marcellus Shale wells increases to 110% at a NYMEX natural gas price of $6.00.