Marcellus Shale

Carrizo Oil and Gas Updates Activity In Marcellus Shale

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.

Carrizo Oil and Gas Forms Marcellus Shale Joint Venture

Carrizo Oil and Gas (CRZO) reported that the company has entered into an agreement with Reliance Industries Limited to jointly develop acreage in the Marcellus Shale.

Reliance Industries Limited will acquire a 20% interest in 52,200 net acres in Pennsylvania from Carrizo Oil and Gas in exchange for $65 million. Carrizo Oil and Gas said that Reliance Industries Limited would pay $13 million up front, and then carry $52 million of the future costs of developing the acreage. The deal will close in September 2010.

Reliance Industries Limited also acquired 52,200 net acres in the Marcellus Shale from Avista Capital Partners for $326.6 million.

Carrizo Oil and Gas said that the new joint venture would total 104,400 gross acres in the Marcellus Shale, with the company owning a 40% interest, and Reliance Industries Limited owning 60%.

Carrizo Oil and Gas - Marcellus Shale Update - First Quarter 2010

Carrizo Oil and Gas (CRZO) released an operational update on its exploration and development activities, and updated its progress in various unconventional resource basins, including the Marcellus Shale.

Carrizo Oil and Gas has 108,000 net acres under lease in the Marcellus Shale. In West Virginia, the company has drilled several vertical test wells and is starting to fracture the wells.

The company has acreage in Susquehanna County, Pennsylvania, and is conducting seismic operations on the acreage and plans to initiate a horizontal development program starting in the Fall 2010. Carrizo Oil and Gas plans 5 vertical, and 6 horizontal wells by the end of 2010.

Carrizo Oil and Gas also has acreage in New York, but any development there is on hold until regulations on drilling are finalized.