Carrizo Oil and Gas (CRZO:NASDAQ) and Avista Capital Partners have announced a joint venture to go after liquid rich natural gas in the Utica shale.

The partnership has acquired 15,000 acres in formation, at a cost below $1,500 per acre. Avista will retain a 90 percent interest in the joint venture properties, and Carrizo will retain the remaining 10 percent stake. Carrizzo will serve as the operator of the properties owned by the venture and will provide some venture-related management services to Avista. Carrizo currently owns two purchase options that it can use to increase its stake in the properties purchased over the next 18 months to 50 percent.

If Carrizo declines to exercise these options over the next year-and-a-half the will be allowed to share any cash distribution Avista makes to its partners, as long as return on investment levels on Avista's portion of the investment and reached.

The Utica shale, which spans from New York to Tennessee and lies underneath Marcellus shale, contains an estimated 5.5 billion barrels of crude.