Carrizo Oil & Gas unveiled a new position in the Permian basin, where the US independent hopes to tap the emerging stacked Wolfcamp liquids play.
Houston-based Carrizo has snapped up 17,000 acres in Culberson and Reeves counties in the Delaware sub-basin of the Permian in West Texas and hopes to drill its first well within the next six months, chief executive Chip Johnson told investors on Tuesday.
The acreage was bought in a series of transactions that averaged about $1000 per acre.
The company is targeting the liquids-rich portion of the Wolfcamp being tapped by offset operators like Cimarex Energy, EOG Resources, Concho Resources, ConocoPhillips and BHP Billiton.
Carrizo began looking at the area about two years ago but initially it was not impressed with the results, Johnson said.
"We were disappointed with most of the well results we saw," he said. "But late last year, it seemed like the industry cracked the code and started making some big Wolfcamp, A and B wells particularly."
Carrizo hopes to add acreage to its position in the future.
"There's so much acreage in that basin, and it's held by smaller companies that haven't drilled a lot of horizontal wells and probably need a drilling partner going forward," Johnson said. "So we look at it as an area that we could expand into, if we like our early results."
However, the company plans to go slow on its initial development of the property.
"I think we have a lot to learn before we ramp anything up out there," Johson said when asked about adding a full-time rig for the acreage. "And there are infrastructure issues out there and water issues out there - so that's going to be a little farther out."
For the three months that ended in June, Carrizo reported adjusted net income of $32.4 million (72 cents per share) compared to $24 million (60 cents per share) for the same period a year ago.
Overall, revenue hit a record of $193.5 million, 44% higher than last year.