SOURCE: Carrizo Oil & Gas, Inc.

Carrizo Oil & Gas, Inc.

October 25, 2010 06:13 ET

Carrizo Oil & Gas Provides Operational Update and Announces Earnings Release Date

HOUSTON, TX--(Marketwire - October 25, 2010) -  Carrizo Oil & Gas, Inc. (NASDAQ: CRZO) today released an update to its production results. The Company's production for the third quarter of 2010 was 8.6 Bcfe or an average of 93.4 Mmcfe per day. A delay in the completion of natural gas transport pipeline capacity expansion (serving our core Barnett Shale properties in S.E.Tarrant County, Texas) by our midstream partner extended the period that our production was partially constrained, resulting in the average production rate for the quarter to be below expectations. The pipeline expansion was completed in late September and the Company's production in the first half of October has averaged approximately 120 Mmcfe/d.

Carrizo's EBITDA for the third quarter will reflect the benefit of a $20.8 million cash dividend payment from its Marcellus Shale joint venture partner, Avista Capital Partners in connection with the sale of their interest to Reliance Industries. EBITDA for the fourth quarter of 2010 is expected to include the benefit of additional cash dividend payments from Avista totaling approximately $23 million. In order to allow for the investment of this cash dividend and the additional cash proceeds from Carrizo's transaction with Reliance, the Carrizo Board of Directors raised the 2010 capital expenditures budget by $55 million from $225 million to $280 million. Net capital expenditures in 2010, after offsetting for the estimated total proceeds expected from the Reliance transaction and the equity offering proceeds in April 2010 of $74 million, is an estimated $149 million.

The company's fifth Eagle Ford well in central La Salle County, Texas is nearing total depth in the drilling of the horizontal leg and a frac crew is on location pumping the initial stages of the completion of Carrizo's first Eagle Ford well. The vertical portion of the company's first Niobrara well has been drilled and logged in Township 9 North, Range 60 West of Weld County, Colorado. The drilling of the horizontal portion of this well has just commenced.

Carrizo President and CEO S. P. "Chip" Johnson, IV commented, "The compression installation and completion of transport interconnects necessary to accommodate the ramp-up in production volumes from the Arlington area was completed nearly two weeks later than the date given us by our midstream partner. This delay in timing had a material effect on our third quarter average production. The new Barnett wells recently added to production have been performing at or above our expectations and our current production volumes are in-line with our internal projections. We have a number of wells that have been drilled, frac'ed, and are waiting on the addition of compression and/or connection to gas gathering systems. Our midstream partner has notified us of scheduling delays for connecting up three new well pads which will delay first production from two of these new pads until late November or early December. First production from the third new well pad is not expected until early to mid January. Accordingly, we currently estimate our fourth quarter production will average around 120 Mmcfe per day and our 2010 exit rate will be approximately 127 Mmcfe per day. We used the cash generated by our Marcellus related transactions to accelerate the pace of our move into the Eagle Ford and Niobrara liquids rich plays, including our decision to add a fifth horizontal Eagle Ford well to our 2010 program. This investment should contribute to a significant increase in our oil to gas production mix going forward. In addition, the cash dividends from Avista improve our overall liquidity and financial flexibility under our borrowing base".

Carrizo will hold a conference call to discuss 2010 third quarter financial results on Tuesday, November 9 at 10:00 AM Central Time. Carrizo plans to issue an earnings press release prior to the market opening on Tuesday, November 9th.

Date & Time:     Tuesday, November 9 at 10:00 AM Central Time
Dial-In Number:     (800) 909-4145 (U.S. & Canada)
      (212) 231-2900 (Intl./Local)
Telephone Replay Number:     (800) 633-8284 (U.S. & Canada)
      (402) 977-9140 (Intl./Local)
Enter Replay Reservation #:     21485945 for U.S., Canadian and International callers.

Replay available through Wednesday, November 17, 2010 at 11:59 AM Central Time.

A simultaneous webcast of the call may be accessed over the internet at or by visiting our website at, clicking on "Investor Relations" and then clicking on "2010 Third Quarter Earnings Conference Call Webcast." To listen, please go to either website in time to register and install any necessary software. The webcast will be archived for replay on the Carrizo website for 15 days.

Carrizo Oil & Gas, Inc. is a Houston-based energy company actively engaged in the exploration, development, exploitation and production of oil and natural gas primarily in the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, the Eagle Ford Shale in South Texas, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions. Carrizo controls significant prospective acreage blocks and utilizes advanced 3-D seismic techniques to identify potential oil and gas reserves and drilling opportunities. Carrizo also controls large acreage positions in other productive shale resource plays.

EBITDA is a non-GAAP Financial Measure

We define EBITDA as net income (loss) before income tax expense, interest expense, depreciation and amortization expense and certain other items management believes affect the comparability of operating results. The GAAP measure most directly comparable to EBITDA is net income (loss) available to common shareholders. We believe that EBITDA may provide additional information about our ability to meet our future requirements for debt service, capital expenditures and working capital. EBITDA is a financial measure commonly used in the oil and gas industry and should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. Because EBITDA excludes some, but not all, items that affect net income, the EBITDA presented by us may not be comparable to similarly titled measures of other companies.

Statements in this news release that are not historical facts, including but not limited to those related to production, new production, production mix, drilling, fracturing, stimulation, completion, seismic activities, future locations, performance of drilling rigs, future development plans, distribution payments and future announcements and timing, are forward-looking statements that are based on current expectations. Although Carrizo believes that its expectations are based on reasonable assumptions, it can give no assurance that these expectations will prove correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements include results of wells and production testing, performance of rig operators, actions by joint venture partners, industry partners and lenders, market and other conditions, availability of well connects, capital needs and uses, commodity price changes, effects of the global financial crisis on exploration activity, results of and dependence on exploratory drilling activities, operating risks, land issues, weather, and other risks described in Carrizo's Form 10-K for the year ended December 31, 2009 and its other filings with the Securities and Exchange Commission.

Contact Information

  • Contact:
    Carrizo Oil & Gas, Inc.
    Richard Hunter
    Vice President of Investor Relations
    Paul F. Boling
    Chief Financial Officer
    (713) 328-1000