April 5, 2018 – 24/7 Wall Street
Activist Investor Targets Carrizo, Wants Permian Focus
By Paul Ausick
Over the past three years or so, the oil and gas exploration and production (E&P) segment has lost about 11% of its market value. Since reaching a high over $69 in June of 2014, shares of Carrizo Oil & Gas Inc. (NASDAQ: CRZO) were down about 78%, closing Wednesday night below $15 a share.
Shares have bounced about 10% higher Thursday morning following news that affiliates of activist energy investment firm Kimmeridge Energy Management have built a stake of 8.1% in Carrizo and are pushing the independent E&P firm to sharpen its focus on the company’s holdings in the Permian Basin.…
Read the full article here: https://247wallst.com/investing/2018/04/05/activist-investor-targets-carrizo-wants-permian-focus/
…There’s a catch to everyone piling into the Permian Basin, however. John Zanner at RBN Energy puts it succinctly:
“Permian production is increasing at a breakneck pace as new players are entering the scene. Private equity-backed exploration and production companies (E&Ps) are no longer just acquiring and flipping acreage, as they are being forced to prove their assets are profitable and can generate a return on investment. The combination of large drilling plans from the majors and new production from these smaller operators — with no new pipeline takeaway capacity in sight — has sent Permian crude pricing into a tailspin.”
Zanner noted that Permian crude is priced at a $4 a barrel discount to West Texas Intermediate (WTI) and that’s entirely due to the lack of pipeline capacity. Producers have been forced to transport crude by truck to the nearest pipeline injection point that will accept it…
