Callon Petroleum will acquire Carrizo Oil & Gas at a price tag of more than $1.2 billion in a combination of two Houston oil producers.
The deal is a merger of near-equals focused exclusively on Texas shale oil and gas in the booming Permian Basin and the Eagle Ford shale. The all-stock deal will leave Callon stockholders with a 54 percent stake and Carrizo investors with 46 percent.
The deal offers a 25 percent premium on Carrizo’s stock price from Friday.
Their goal is to focus largely on the rapidly growing Delaware Basin of the Permian as it shifts to more of a manufacturing mode with more repeatable drilling efforts, said Callon Chief Executive Joe Gatto. The more mature Eagle Ford and Permian assets will help provide cash flow and production at lower capital costs, he said.
“We are excited about this transformational transaction, creating a differentiated oil and gas company by integrating core asset bases in premier basins,” Gatto said.
Callon just moved its headquarters from Mississippi to Houston at the beginning of this year, and the combined company will remain in Houston.
In the last couple of years, Carrizo has focused on growing in the Permian while selling its other assets in Colorado and the gassy Appalachian Basin nearer to the East Coast.
The combined Callon will hold about 200,000 net acres in the Eagle Ford and Permian, including more than 90,000 net acres in the Delaware Basin.
The company will have 11 board members, including Callon’s eight existing board members and three appointed from Carrizo.
Callon and Carrizo each employ more than 200 people, so some layoffs will be expected where there is duplication.
The deal is expected to close in the fourth quarter of this year.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.