Here’s an open secret: Carrizo Oil & Gas’s acquisition efforts are stridently stingy and soaked in skepticism. They’re easy to root for on that account, alone.

The saving grace in that approach is Carrizo’s president and CEO, S.P. “Chip” Johnson IV, is remarkably patient—enough to withstand the occasional bizarre twist (Russia) and turn (oil prices) to make a deal.

In late June, Carrizo said it would purchase 16,488 net Delaware Basin acres in Reeves and Ward counties, Texas, from Quantum Energy Partners-based ExL Petroleum Management LLC. The price tag: $648 million, or $22,000 per acre.

After a steady ascent in 2016, Permian acreage prices have been erratic this year. Recent deals include spendthrift QEP’s $51,000 per acre and Oxy’s $31,700. From February to July, the mean acreage price was $21,400, according to Raymond James.

Unsurprisingly, Carrizo’s 2016 bid for ExL came in too low. In fact, Carrizo’s various bids on Permian packages all came up short.

“We used the same exact criteria we’ve used before and failed every time to be the top bidder,” Johnson said.

Last fall, Carrizo viewed ExL’s acreage as suspect —a gassy well on the acreage’s northern flank was troublesome, Johnson said during a July conference call.

“We felt like this was an area in the Delaware where there were some risks from faulting,” he said.

ExL’s top bid came from Russian billionaire Mikhail Fridman’s company, Letter One, at $700 million. But, Letter One never made it to the finish line. “That deal was nixed by the U.S. government and so the property was remarketed this spring,” Johnson said.The deal was reviewed by the U.S. Treasury Department’s Committee on Foreign Investment in the United States (CFIUS), which evaluates the national security implications of foreign transactions.

Fridman previously has said that CFIUS’s review—and alleged ties to President Donald Trump—were not factors in his decision to walk away.

Meanwhile, Carrizo had continued to scour the Delaware Basin for a prime asset, seeking to become a dual Permian-Eagle Ford producer. In April, the company actively placed bids on three marketed Delaware packages and made two unsolicited offers.

By then, ExL, now showcasing 8,000 barrels of oil equivalent per day (boe/d) production, came back into the picture.

“When we looked … in April and May at the wells that they were bringing online that defined the middle part of this acreage, we were very impressed,” Johnson said. “These wells were over 1,000 boe per day [and] some were 65% oil.”

Ever-cautious Carrizo bought the company’s 3-D seismic data and pored over it.

Add flexibility to Johnson’s acumen. After a review, “we were very confident at that point, as their wells came on that they drilled early this year, that we understood the rock,” he said.

In particular, ExL’s Wolfcamp A and upper and lower Wolfcamp B appeared to be de-risked.

“We felt like this was really core acreage. It’s also blocked up,” he said.

(Johnson’s confidence wasn’t misplaced. On Aug. 8, the company reported three new ExL wells had peak IP rates ranging from 1,217 boe/d to 1,766 boe/d, with 50% to 61% oil, using average lateral lengths of about 6,700 feet.)

However, in the midst of working out the deal, oil prices continued to founder. Carrizo and ExL worked out their differences with kicker payments of up to $125 million. The contingency is based on oil average $50 or more over the next four calendar years.

“We felt like that was a great trade for the short term cost of the deal,” Johnson said.

The ExL deal was set for a mid-August close.

And that, for now, appears to close the book on big acquisitions for Carrizo.

“Deals of this size are off the table for a long time for us,” Johnson said.

Carrizo’s now turns its attention to divesting assets to reduce leverage. Up for sale are its Marcellus and Utica assets; a teaser for its Niobrara package is soon to be released to buyers, said Brad Heffern, an analyst at RBC Capital Markets.

The company can “nearly hit” the $300 million in proceeds it wants on PDP value alone, Heffern said. “We also think that buyers may ascribe some upside in both the Niobrara and Marcellus, so the final figure could be above $350 million,” he said.

Carrizo just needs to avoid picky, unflappable buyers—call them Carrizo-esque—as it switches to sales mode.

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