8/7/2019 080710 Carrizo Partnership

1/1

WB_VOICE - CVDAILY - 5 - 08/07/10 WB_VOICE/PAGES [T05] 08/06/10 22:24 SUPERIMPWB

Marcellus Shale Northeastern Pennsylvanias New FrontierNew indictmentexpected againstCordaro, Munchak

Carrizo Oil partnership to boost operations in Pa.

By Patrick Sweet

Staff Writer

Carrizo Oil & Gas Inc.hasitsfoot onthe gaspedal.

The Houston-based natu-ral gas companyentered intoa joint venture with India-based Reliance IndustriesLimited on Thursday thatwillprovide theboostin capi-tal Carrizo needs to acceler-ate its drilling operations inPennsylvania.

We had a very large lease-hold in the Marcellus thatwould have taken us manyyears to develop, RichardHunter, Carrizo vice-presi-dent of investor relations,said. So wesold a portionof themand will use thecashto turn around and invest indevelopment.

The deal, worth $392 mil-lion, includes$340 million ofcash and$52 million of devel-

opment obligations to cover75 percent of Carrizos coststhrough an anticipated two-year program, according to aReliance news release.

Reliance is excited aboutthe opportunity to furtherexpand presence in the Mar-cellus Shale in the UnitedStates, Reliance PresidentWalter Van de Vijver said inthe release.

Carrizo will hold 40 per-cent interest in roughly

104,400 acres in central andNortheastern Pennsylvania;R e li a n ce w i l l h o l d t h eremainder. Carrizooriginallysplit the interest in the min-eral rights 50-50 with AvistaCapital Partners. Avistasoldall of its interest and Carrizosold20 percent.

Despiteholding the minor-ity interest, Carrizo will stillmaintain control of develop-ment operations unless Reli-

ance feels development isntmovingquick enough.If thatis the case, the Indian com-pany willhelp drillingopera-tions in the central part ofthe state.

We could be drillingwellsshoulder to shoulder or with-in the same county or town-ship, Hunter said.Moreorlessin the centralregion.

The additional capitalmayallow the company to add asecond drilling rig in Penn-sylvania, Huntersaid. Effectsof the deal wont be felt untilnext year, though.

This relationship willhaveno effect on 2010,Hunt-er said.It will havean effecton 2011. Thats when theacceleration in our drillingwillreallytake effect.

Carrizo plans on rampingup drilling operations inWyoming County during thesecond half of 2011, Huntersaid.

Wyoming (County) devel-opment willbe initiated afterour Susquehanna Countydrilling is initiated, Hunter

said. We probably would nothave started drilling in theWyoming area with develop-ment wells until the thirdquarter (without thedeal).

Gas extracted from theshale willnot be sentoverseas,Hunter said. The process ofliquefying natural gas andshipping it acrossthe globe istoo expensive to justify.

In late April, Relianceentered into a similar agree-ment with Pittsburgh-basedAtlas Energy Inc. that includ-ed the transfer of 40 percentof the domestic companysshale interest.

We are pleased to estab-lish a long-term partnershipwithCarrizo,whichhas dem-onstrated operating expertisein the shale plays, Van deVijver said. The proposed

jointventure willsupplementstrengths achieved throughour recent joint ventures andfurtherexpands ourfootprintin North American shale gasoperations.

psweet@citizensvoice.com, 570-821-2117

By Joe McDonaldStaff Writer

Federal prosecutors areexpected to tweak a federali n di ctme n t n e x t mo n thagainst Lackawanna CountyCommissionerA.J. Munchakand former CommissionerRobert C. Cordaro in light ofa recent U.S. Supreme Courtopinion that redefined the

useof a favoritetool prosecu-tors havewidely used in pub-lic corruption cases.

Munchakand Cordarohavebeen notified through theirlawyers that prosecutors willask a grand jury to return asuperseding indictmentagainst themin September.

In courtpapers filedFriday,Cordaros lawyer, William C.Costopoulos, said he hadrecently been told by Assis-tant U.S.AttorneyLorna Gra-ham that prosecutors willseek a newindictmentin Sep-tember. Costopoulos courtfiling asked for more time toprepare pretrial motions.

Heidi Havens, a spokes-woman for the U.S. Attor-neys office, would not con-firm if a newindictmentwillbe soughtin September.

We would have no com-ment, Havens said. Costo-poulos was not available forcomment.

A grand jury indictedMunchak and Cordaro inMarch on racketeering,incometax evasion andhon-est services fraud charges,among others. Cordaro andMunchak are accused ofpocketing kickbacks fromcontractors while they werethe majoritycommissioners.

If convicted, Cordaro, 48,faces up to 364 years in pris-

on and a $7.7 million fine;Munchak, 64,up to 193yearsand $3.2 million in fines.Munchak and Cordaro havepleaded not guilty and areawaiting trial,probablynextyear.

Before theSupreme Courtdecision in June, honest ser-vices fraud was broadlydefined as someones puttinghisor herself-interest abovethe publicinterest, especially

if they arean elected official.Defense lawyers have longcomplained the law was too

vague when it came to deter-mining exactly what trig-gered an honest servicesfraud prosecution.

The court in essence saidhonest services fraud onlyapplies if a public official ora corporate executive enrich-es himself or herself by tak-ing a bribeor a kickback.

The honest services fraudcharge is woven throughoutth e i n di ctme n t a ga i n st

Munchak and Cordaro, start-ing with the first eightcounts, which allege honestservicesmail fraud andmailfraud. Counts nine through12 contain the same chargesagainst only Cordaro. In all,honest services fraudis listed14 times in the indictmentagainst Cordaro and ninetimes againstMunchak.

The Supreme Court rulinghas already hadan impactin

one local public corruptioncase. Last week, prosecutorsconceded their honest ser-vices fraud case against for-mer Luzerne County JudgeMichael T. Toole had crum-bled. Toole had pleadedguilty to accepting free useof a beach house on severaloccasions from 2005 to 2008,and failed to report the gifton state-mandated financialdisclosure forms. Toole, who

had faced up to 20 years inprison, is now awaiting sen-tencing only on a tax countthat could send himto prisonfor months.

Unlike Toole, Cordaro andMunchak are alleged to havetaken large amountsof cash.

P r o se c u t or s c l a i mMunchak took about $30,000in cash on twooccasions, andCordarotook about$30,000.

jmcdonald@timesshamrock.com

DENNIS BRIGGS / THE CITIZENS VOICE

Progress continued Wednesday at the EncanaOil & Gas USA Inc. natural gas drilling site onZosh Road in Lake Township. The ground hasbeen cleared and the well pad is taking shape.Trees were removed and the access road is be-ing built. Gravel will be used to make the pad,

which will be removed when it is reclaimedafter the well is complete. On Tuesday the Lu-zerne County Zoning Hearing Board granted

Encana conditional use to drill five more wellsin Lake Township on a property owned by 4-PRealty, which is located near this site. Drilling isunder way at Encanas first well on Route 118behind the Ricketts Glen Hotel in FairmountTownship. The company plans to have the Lake

Township well pad ready in time to bring the rigover as soon as drilling is complete at the Fair-mount Township site.

ENCANA DRILL SITE IN LAKE TWP. PROGRESSING

Gas extracted from Marcellus wont be

shipped overseas, company official says

Cordaro Munchak

THE

CITIZENSVOICE

SATURDAY,AUGUST7,2010

5