- Explorer working with Royal Bank of Canada on potential sale
- Niobrara formation assets could fetch up to $200 million
Carrizo Oil & Gas Inc. is seeking buyers for its land in Colorado’s Niobrara shale formation, which could fetch as much as $200 million, according to people familiar with the situation.
The Houston-based company is working with Royal Bank of Canada to seek buyers for the assets, said the people, who asked not to be identified because the matter isn’t public.
U.S. explorers are selling off land to preserve cash and raise money for drilling in their best areas as they deal with a prolonged slump in commodity prices. Carrizo’s shares rose 1.5 percent to $33.27 at 1:38 p.m. in New York on Tuesday, giving the company a market value of about $1.94 billion.
Representatives for Carrizo and Royal Bank of Canada didn’t respond to requests for comment.
Analysts and investors consider Carrizo to be among the healthier U.S. shale explorers because it has a fairly liquid balance sheet and controls lots of valuable land in Texas, Colorado, Pennsylvania and elsewhere.
The company has significant hedges to sell much of its oil at above-market prices through 2016, and was among more than a dozen U.S. explorers that made it through a recent evaluation of its bank loans with its credit line intact, according to company filings and data compiled by Bloomberg.
Carrizo has 35,100 net acres in the Niobrara with proved reserves equivalent to 5.9 million barrels of oil, according to a December investor presentation. Its top competitors in the Niobrara include Whiting Petroleum Corp. and Noble Energy Inc., the presentation shows.
Its Niobrara position is its second largest, based on net acres, behind its 84,000 net acres in the Eagle Ford Shale basin of Texas, where it is primarily focused. It has reduced spending in the Niobrara this year while allocating about 70 percent of its estimated $540 million 2015 capital budget to the Eagle Ford, according to the presentation.
Carrizo also drills in the Permian basin of west Texas and New Mexico, and in the Utica and Marcellus Shale basins in the eastern U.S. The company reported a net loss of about $775 million during the first nine months of 2015, after earning about $93 million in the same period a year earlier, according to its third-quarter report.