SM Energy Company & Carrizo Oil & Gas merger in the works?

SM Energy Company “SM” recently had a discussion with Carrizo Oil & Gas, Inc. CRZO about a merger reported Bloomberg.

The source didn’t provide any additional information on the potential merger deal. Moreover, there are possibilities that this early stage of discussion will not convert into an accord, the source added.

Carrizo – In the Delaware Basin – a portion of the broader Permian basin – Carrizo has a footprint of over 46,000 net acreages, covering net undrilled locations of more than 1,400. Notably, in the Delaware Basin, SM Energy has estimated its proved reserves at 180 million barrels of oil equivalent (MMBoE) as of 2018-end.

SM Energy – also has a strong foothold in the Permian, where it reported roughly 97% production growth in 2018. The company is also planning to realize production growth of 20% through 2019. Importantly, SM Energy has decided to allocate 80% of its 2019 drilling and completion budget for the broader Permian.

Mergers and acquisitions have been expected in order to gain synergies at a time when the Majors are planning major expansions in the Permian Basin. although some Mergers have also been called off, Denbury Resources for example Abandoned Its Controversial Merger. Investors didn’t like the Denbury combination because of a suspect strategic fit as well as the fact that volatility has returned to the oil market over the past few months.

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