Callon Petroleum to acquire Carrizo for $3.2bn

Independent energy company Callon Petroleum has signed a definitive agreement to acquire US-based oil and gas production firm Carrizo in a deal valued at $3.2bn.

The acquisition is set to create a new combined oil and gas company with scaled development operations across its assets in the Permian Basin and Eagle Ford Shale production areas.

Under the terms of the transaction, Callon will pay 2.05 of its shares for each Carrizo share, representing $13.12 per Carrizo share as of 12 July.

Callon Petroleum president and CEO Joe Gatto said: “With a deep inventory of high rate-of-return well locations in well-established areas and substantial upside opportunities for organic inventory delineation, we will be able drive differentiated growth deploying our life-of-field development model for many years to come.”

The combined company will control 200,000 net acres in the Permian Basin and Eagle Ford Shale, including more than 90,000 net acres in the Delaware Basin and approximately 2,500 total gross horizontal drilling locations.

According to Callon, the combination is expected to be immediately accretive to free cash flow per share.

Carrizo president and CEO Chip Johnson IV said: “Through our combination, we bring together a strong foundation of Midland Basin and Eagle Ford Shale assets and overlay a substantial Delaware acreage position and value proposition that will be unlocked through an integrated plan of large-scale programme development.”

This acquisition is expected to generate total revenue of $850m in net present value.

The transaction is subject to customary closing conditions and regulatory approvals, which are expected to close in the last quarter of this year.