Letter from President Spaniolo
December 17, 2008
To the University Community:
I am pleased to provide you with an update on our recent progress and future activity at the natural gas site at UT Arlington.
In late September, Carrizo Oil & Gas, Inc., concluded the well completion phase at the site located at the southeast corner of our campus. The flowback and flaring process was concluded well ahead of schedule, and Carrizo recently moved into the production and transportation phase for the six wells at that site.
In other words, the four phases of exploration and production for the first six wells are complete, and natural gas is now flowing to market. Our success is largely attributable to the fact that Carrizo was able to place the pipeline mostly within existing utility easements, which significantly reduces the inconvenience to neighbors.
This is truly exciting news for our University community. UT Arlington, as well as some of our neighbors in the College Hills neighborhood and other areas, will soon begin receiving monthly royalty checks from Carrizo for production from these six wells. This is a significant achievement, and all of us here at UT Arlington are looking forward to using our royalties to support undergraduate scholarships and graduate fellowships, faculty recruitment and retention, and the campus master plan. These funds will be invested and leveraged with private gifts to achieve their maximum potential.
From the very beginning of this process in 2007, it has been the University’s position that we would not make any decisions on additional natural gas activity on campus until certain milestones were reached at the first site and until the entire process had been thoroughly reviewed and assessed. With that assessment now complete, and with the benefit of an encouraging first year of exploration and development now behind us, we have decided to further develop the current site in 2009.
During the first week of January, Carrizo will begin the process of drilling several additional wells at the current site. These wells will be drilled from the same site located at the southeast corner of our campus, eliminating the need to prepare an entirely new pad location elsewhere on campus. These additional wells are expected to benefit UT Arlington, but the primary benefit will be to the property owners to the south and east of campus who have signed leases with Carrizo — including the Arlington Independent School District, the City of Arlington, and numerous individual property owners.
As this next drilling phase begins, Carrizo will erect the necessary sound barriers around the drill site and will utilize the same type of state-of-the-art drilling equipment that was used last year. During this time, there will be a temporary increase in traffic around the site, primarily along the previously approved routes of South Cooper, Mitchell, and Pecan Streets. Each of the horizontal wells will take approximately 25 days to drill, with the initial drilling phase at the site expected to continue for approximately six months. If everything goes according to schedule, Carrizo estimates that these new wells will be completed and in production before the end of 2009, providing additional future royalty revenues for the surrounding community, as well as for the campus.
Additionally, construction of the compressor station adjacent to the site is underway and should be completed by late January. UT Arlington is requiring that sound from the compressor station not exceed existing levels of ambient sound levels in the area (typical sound levels calculated before this facility was installed). This requirement is more restrictive than the noise standards established by City of Arlington ordinances. To help control levels of sound at the source, the compressor station will be powered by an electric motor. Use of an electric motor also ensures that there will be no airborne or surface discharges of any kind. The compressor station is a compact facility that will be enclosed by a brick wall.
As our natural gas program progresses, we will continue to communicate with you on a regular basis. In the meantime, our web site will always include the latest news and updated information: http://www.uta.edu/naturalgas. And of course, you’re welcome to contact me directly anytime at jds@uta.edu.
If you have any questions regarding leases or royalties, please contact Carrizo Oil & Gas, Inc., at 817-419-7352.
Thank you for your ongoing support for this important project. I wish each of you a very happy holiday season.
Sincerely,
James D. Spaniolo
President
The University of Texas at Arlington