Each one in plain English, with the numbers worked through for a shareholder.
30 Oct 2014debt financing● NeutralMajor
Carrizo sold $300M of additional 7.50% Senior Notes due 2020 in a private placement that closed Oct 30, 2014, guaranteed by its subsidiaries. Proceeds are to fund the Eagle Ford Minerals acquisition ($243.0M, of which $93.0M was already paid via the revolver) and repay revolver debt. Under a registration rights agreement, Carrizo must try to register an exchange of these for registered notes. This follows the notes offering announced in the Oct 27 acquisition filing.
27 Oct 2014asset acquisition disposition▲ GoodMajor
On Oct 24, 2014 Carrizo closed the purchase from Eagle Ford Minerals of extra Eagle Ford interests (about 6,820 net acres, 20.1 net producing wells), taking it from a 75% to 100% working interest in properties it already operated. Price is $243.0M cash net of adjustments: about $93.0M paid at closing and $150.0M due by Feb 16, 2015, funded by revolver borrowings and a proposed notes offering. The company estimates 16.7 MMBoe of proved reserves on these properties (internal estimate). The banks also lifted the borrowing base to $800M from $675M, with commitments limited to $685M. The filing also announces a proposed senior notes offering.
On Oct 7, 2014 Carrizo signed the Fifth Amendment to its revolving credit facility. The borrowing base rose from $570M to $675M, though Carrizo limited lender commitments to $585M. The letter of credit sublimit doubled from $15M to $30M, and the earlier $350M cap on additional senior notes was replaced by unlimited issuance provided financial covenants are met. Next redetermination is expected in spring 2015.
On Nov 6, 2013 Carrizo agreed to sell 4,500,000 new common shares to underwriters (RBC, Wells Fargo Securities, Global Hunter) at $44.00, or $42.24 net per share, with an option for 675,000 more. Proceeds are to fund its increased capital plan, including the recently completed Utica Shale acreage acquisition and accelerated Eagle Ford fracking, plus general purposes. Existing shareholders are diluted by the new shares; closing expected Nov 13, 2013.
On Oct 9, 2013 Carrizo signed the Fourth Amendment to its revolving credit facility (Wells Fargo agent): maturity extended from Jan 27, 2016 to July 2, 2018, maximum commitments raised from $750M to $1.0B, and interest margins lowered. The senior debt/EBITDA and EBITDA/interest covenants were removed, while total debt/EBITDA and current ratio covenants remain. Borrowing base stays at $530M until the Barnett sale closes, then drops automatically to $470M; banks supported $535M but Carrizo chose to request $470M, saying that is enough liquidity and controls unused-commitment fees.
Carrizo agreed on Sept 3, 2013 to sell substantially all of its remaining Barnett Shale assets to affiliates of EnerVest for about $218.0 million in cash plus assumed liabilities, expected to close in late October. The press release adds sales of its Camp Hill Field (East Texas) interest and some undeveloped Marcellus acreage, for about $268.0 million total including roughly $250.4 million cash. Proceeds are meant to repay revolver borrowings and fund part of 2013 spending, largely in the Eagle Ford. This continues the Barnett exit begun with the 2012 sale to Atlas Resource Partners.
Carrizo closed the $300 million 7.50% Senior Notes due 2020 offering on September 10, 2012. The notes are unsecured and guaranteed by its subsidiaries, with interest paid every March 15 and September 15 starting March 15, 2013. They mature September 15, 2020 and can be redeemed early under set terms. This completes the deal announced September 5.
On September 5, 2012 Carrizo agreed to sell $300 million of 7.50% Senior Notes due 2020 to underwriters, with closing expected September 10. It expects net proceeds of about $294.2 million to repay revolver borrowings and for general corporate purposes. This uses the extra note capacity created by the credit facility amendement days earlier.
Carrizo amended its revolving credit facility on September 4, 2012 to raise the room for additional senior notes from $200 million to $350 million. It also gave a 2012 plan of $600 million gross U.S. capital spending ($350 million net of asset-sale proceeds), most of it for Eagle Ford drilling ($378 million), plus production of 24.2 MBoe/d as of August 27 and June 30 proved reserves of 103.5 MMBoe. The amendment names Wells Fargo as administrative agent, whereas the 2011 agreement named BNP Paribas.
2 May 2012asset acquisition disposition● NeutralMajor
On April 30, 2012 Carrizo closed the sale of part of its Barnett Shale properties to a subsidiary of Atlas Resource Partners for about $187 million in cash (subject to adjustments). The properties held about 312 Bcfe of proved reserves at year-end 2011. Substantially all proceeds went to pay down the revolver, no gain or loss was booked, and the spring borrowing base was set at $325 million, down from $340 million in fall 2011.
Carrizo filed a registration statement offering to swap the $200 million of 8.625% Senior Notes due 2018 sold privately in November 2011 for identical notes registered with the SEC. This is the exchange offer the November 2011 registration rights agreement required; Carrizo receives no proceeds and the debt amount does not change.
On November 14, 2011 Carrizo agreed to sell an additional $200 million of 8.625% Senior Notes due 2018, closing November 17, with expected net proceeds of about $192.8 million. It plans to use the money to repay a substantial portion of its US bank credit facility. The notes are added to the existing 2018 series, so total notes of this type rise to $600 million (inference from adding $200 million to the earlier $400 million), and a registration rights agreement requires a later exchange offer.
Carrizo filed a registration statement on April 29, 2011 for an offer to swap its $400 million of privately placed 8.625% Senior Notes due 2018 (issued November 2, 2010) for identical registered notes. It receives no proceeds and the debt terms stay the same. This fulfils the registration rights obligation tied to the November 2010 notes and changes nothing about the company's debt load.
On March 30, 2011 Carrizo said its third-quarter 2010 results should no longer be relied on. The $20.8 million it received from the Avista-affiliated ACP II Marcellus investment should reduce the cost of its oil and gas properties rather than count as income. The restatement cuts previously reported net income and shareholders' equity by $11.5 million for the three and nine months to September 30, 2010 (a $0.32 and $0.34 per share reduction). The company says it does not affect cash, liquidity or its credit-facility covenant compliance or borrowing capacity. This is a further accounting correction following the 2009 restatement.
2 Feb 2011material agreement termination▲ GoodMajor
On January 27, 2011 Carrizo signed a new bank credit facility with BNP Paribas as agent: up to $750 million (initial borrowing base $350 million), maturing January 27, 2016, and it borrowed $112 million to repay the old 2006 credit agreement in full. This delivers the amend-and-restate flagged earlier, with maturity extended to 2016 rather than 2015. On January 28 it also signed a separate limited-recourse facility for its UK Huntington Field share: a $55 million term loan, $6.5 million cost-overrun loan and $22.5 million post-completion facility, after a roughly $19 million equity contribution; the company must fund any cost overruns beyond those sources. This resolves the open Huntington financing thread.
Carrizo agreed on December 9, 2010 to sell 3,500,000 new common shares to Credit Suisse at $28.90 per share to the company, and the underwriter's option for 475,000 more shares was exercised in full. It plans to repay revolving credit facility borrowings with the proceeds and then use the freed capacity for its 2011 Eagle Ford and Niobrara spending. This issuance adds to the share count, and closing was expected December 15, 2010.
Carrizo reported early Eagle Ford results: its first two wells produce about 1,260 barrels of oil a day combined, and a third well flowed 1,035 barrels of oil a day in a 24-hour test. Its Niobrara drilling is proceeding, with first results expected before year-end. Fourth-quarter production is now estimated at 114 Mmcfe/d, about 5% below prior guidance, due to continued Barnett connection delays, though the roughly 127 Mmcfe/d year-end exit rate is still expected if hookups are on schedule. The company also expects the lenders to be advised to cut the $350 million borrowing base, and says the UK government approved the Huntington Field development, with first production expected in Q1 2012 and about $50 million of 2011 spending.
On November 16, 2010 Carrizo moved its Avista joint venture interests (about 147,000 net acres, mainly in West Virginia and New York) into a separate subsidiary, Carrizo (Marcellus) WV LLC, and restated the joint venture agreement with fixed percentages and thresholds for sharing cash flow and sale proceeds. The filing notes that Carrizo chairman Steven Webster is a senior executive of an Avista affiliate. This follows the September separation of the Reliance properties from the Avista venture.
Carrizo closed a $400 million sale of 8.625% Senior Notes due 2018 on November 2, 2010, with expected net proceeds of about $387.7 million. It plans to repay the bank credit facility in full, then use the rest, plus bank borrowings, to fund the tender offer for up to $300 million of its 4.375% convertible notes, or otherwise to fund its expanded capital programme (including Eagle Ford and Niobrara) and general purposes. This carries out the financing flagged in the October 25 filing, replacing bank debt and convertible debt with fixed-rate notes that pay interest twice yearly from April 15, 2011.
Carrizo amended its credit agreement a fourteenth time to allow up to $425 million of new senior notes and a tender offer for its 4.375% convertible notes due 2028 (the tender offer is allowed only if at least $200 million is raised from the notes). Once notes are issued, the bank debt must be repaid in full, and the borrowing base is reduced when convertible notes are bought. The filing also raises the 2010 capital plan to $280 million (from $225 million), estimates 2010 production at about 38 Bcfe, and says fourth-quarter production should average about 120 Mmcfe/d, with Barnett pipeline connection delays holding back new output. Carrizo also says it intends to amend and restate the credit facility to extend maturity to 2015 by the end of April 2011.
On September 10, 2010 Carrizo sold 20% of its interests in some Pennsylvania Marcellus Shale properties to Reliance for $11.4 million in cash (up to $1.7 million more expected in 2010), and formed a new joint venture with Reliance over about 104,400 gross acres. Carrizo keeps a 40% working interest and stays operator; Reliance takes 60% and will pay 75% of Carrizo's share of certain development costs, up to about $52 million, until September 2012. Avista (the existing Marcellus partner) sold its entire interest in the same properties to Reliance for about $327 million, and Carrizo expects up to about $44 million in distributions from that. The Avista joint venture continues on about 140,000 gross acres, mainly in West Virginia and New York. The credit agreement was amended a thirteenth time to allow this.
Carrizo sold 2,800,000 new shares at $23.50 each ($23.00 net of underwriting discount) through Wells Fargo Securities, plus 420,000 more shares from the underwriter's fully exercised option. This was upsized from an original 2.5 million shares. Proceeds will repay revolving credit facility borrowings, freeing capacity for a 2010 capital budget raised from $170 million to $225 million. The company also announced a new growth strategy in oil and liquids-rich plays in the Eagle Ford (LaSalle County, Texas) and Niobrara (Weld County, Colorado). Issuing shares dilutes existing holders.
On December 16, 2009 an Eleventh Amendment raised Carrizo's borrowing base from $290 million to $350 million and lender commitments from $284 million to $350 million, under the Wells Fargo-led facility. The filing also furnishes press releases, including one on a strategic joint venture with Sumitomo Corporation in the Barnett Shale; terms of that venture are not in the filing text.
Carrizo said investors should not rely on its 2008 annual and first-quarter 2009 financial statements, and will restate them after finding non-cash errors in how it calculated its oil and gas property write-downs (ceiling test) and deferred taxes. The 2008 net loss rises from $17.9 million to $45.0 million (impairment $178.5 million versus $138.6 million), while the Q1 2009 net loss falls from $148.3 million to $124.2 million. The filing says the figures are preliminary. It also furnishes second-quarter 2009 results. Possibly connected to the auditor change a couple of months earlier, but the filing does not say so (inference only).
On June 3, 2009 Carrizo dismissed its auditor Pannell Kerr Forster and hired KPMG for the 2009 audit, with Audit Committee approval. The filing says PKF's 2007 and 2008 reports were clean and there were no disagreements or reportable events.
On May 20, 2009 a Tenth Amendment to the credit agreement made Wells Fargo the new administrative agent and issuing bank in place of Guaranty Bank, which assigned $50 million of its commitment to Wells Fargo. The amendment also caps hedging (swaps) at 80% of forecasted production from proved producing reserves, removes the five-year limit on swap length, and limits interest rate swaps to the amount of borrowings outstanding.
On April 22, 2009 Carrizo signed an Eighth Amendment to its credit agreement. It temporarily loosens the maximum debt-to-earnings ratio (for example 4.25 to 1.00 for June 2009 and 4.75 to 1.00 for quarters from December 2009 to September 2010, returning to 4.00 by March 2011), excludes part of the 4.375% convertible notes due 2028 from the debt calculation, and adds a new senior leverage limit of 2.25 to 1.00. It also narrows the interest margins on loans and sets new rules for changing swap (hedging) agreements. Continues the bank facility thread.
Union Bank of California joined Carrizo's bank credit facility as a new lender, committing $27.5 million. This raised the total commitment under the facility to $250 million, equal to the borrowing base (the cap on how much Carrizo can borrow).
