Carrizo Oil & Gas Inc. (NASDAQ: CRZO) said Nov. 8 that the company is close to announcing the sale of its 30,600 net acres in the Denver-Julesburg (D-J) Basin—but may downsize its footprint even more.

The company is evaluating the sale of Delaware Basin and Eagle Ford Shale assets that have a longer than desired shelf life.

S.P. “Chip” Johnson IV, president and CEO, said assets that don’t fit with the company’s funding priorities in the next few years could be candidates for sale.

“This would allow us to bring forward the value of these assets, many of which we don’t believe we receive any credit for from Wall Street as well as expand our debt reduction targets,” Johnson said in a Nov. 8 earnings call.

Johnson said the company has already fielded offers.

“We’ve been approached by several companies about buying pieces of our assets. We just look at each one of them as are we going to get to these in the next two or three years or not,” he said. “Some of that’s logistics and some of its price. Then we run that to the ground and see what they’re willing to offer and we’ll keep doing that.”

Kashy Harrison, an analyst with Piper Jaffray & Co., said the prospect of selling in the Permian Basin was intriguing.

“We interpret this as the first step towards possibly selling the Western Delaware position, which we believe would be a significant catalyst for the stock,” Harrison said in a Nov. 7 report.

Still left in Carrizo’s original divestiture program is the D-J Basin position, which could command about $200 million in proceeds, said Gabriele Sorbara, an analyst at Williams Capital Group.

Carrizo’s D-J Basin assets include 640 net undrilled locations. In the third-quarter, Carrizo reported production of 2,427 barrels of oil equivalent per day (boe/d), including crude oil volumes of 1,700 barrels per day. Carrizo did not drill or complete any operated wells in the quarter.

In September and October deals, Carrizo announced the divestiture of Marcellus and Utica assets in deals totaling $146 million. Johnson said the deals, which eliminate about 3,050 boe/d of production, are expected to close in November.

Carrizo began divesting following the purchase of ExL Petroleum Management LLC in August for $648 million. The acquisition included 16,488-net Delaware acre position in Reeves and Ward counties, Texas. Contingency payments could increase the price by another $125 million.

The third quarter was an eventful and challenging one for Carrizo as we closed the largest acquisition in our history … worked towards simplifying our portfolio by divesting non-core assets and dealt with the aftermath of Hurricane Harvey,” Johnson said.

Since taking over operations in its “Phantom” area from ExL, Carrizo said it has upgraded the drilling rigs on the acreage with more modern equipment. Carrizo is operating four horizontal rigs on the acreage and expects to temporarily add a fifth rig in the fourth quarter to build an inventory of locations.

Operationally, Carrizo’s Delaware results tracked about 20% higher than estimates by Tudor, Pickering, Holt & Co.

Carrizo said it has also elected to accelerate the build-out of its water handling system in the area, shifting activity originally planned for 2018 into 2017. Along with an increase in non-operated activity on its acreage in the Delaware and D-J basins, Carrizo increased its 2017 drilling and completion capex forecast by $20 million to $610 million at the midpoint of guidance.

Darren Barbee can be reached at dbarbee@hartenergy.com.