Exploration & Production | Drilling / Well Results | Quarterly / Earnings Reports | Production | Third Quarter (3Q) Update | Key Wells

Carrizo Plans Robust 2015; No Budget Adjustments

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   |    Friday,November 07,2014

Carrizo Oil & Gas Inc. has reported its third quarter 2014 results as well as outlined its preliminary 2015 capital budget.

Operational Update

Carrizo's operational updates for the third quarter can be accessed below.

Carrizo Testing 330 to 500-ft. Spacing in the Eagle Ford; Talks Strategy

Carrizo Sees Production Stall in the Marcellus, Utica Shales

Carrizo Looking for Niobrara Sweet Spot; Tests Multiple Benches

Production

Production volumes during the third quarter of 2014 were 3,090 MBoe, or 33,587 Boe/d, an increase of 12% versus the third quarter of 2013 and 1% versus the prior quarter. The year-over-year production growth was driven by strong results in each of the Company's operating regions, which more than offset the sale of the Company's remaining natural-gas-weighted Barnett Shale properties during the fourth quarter of 2013. Oil production during the third quarter of 2014 averaged 20,000 Bbls/d, an increase of 64% versus the third quarter of 2013 and 8% versus the prior quarter; natural gas and NGL production averaged 81,500 Mcfe/d during the third quarter of 2014. Third quarter of 2014 production exceeded the high end of Company guidance due primarily to strong performance from the Company's Eagle Ford Shale assets and a lower-than-expected amount of voluntary production curtailments in its Marcellus Shale assets.

Drilling & Completions

Drilling and completion capital expenditures for the third quarter of 2014 were $159.7 million. Approximately 74% of the third quarter drilling and completion spending was in the Eagle Ford Shale. Land and seismic expenditures during the quarter were $23.0 million. Carrizo is maintaining its full-year 2014 drilling and completion capital expenditure guidance range at $690.0-710.0 million despite adding capital to cover the additional Eagle Ford Shale working interest obtained through the recent Eagle Ford Minerals ("EFM") acquisition. Carrizo is revising its 2014 land and seismic capital expenditure guidance to $150.0 million from $130.0 million as it has continued to be successful bolting on acreage to its core positions. These numbers exclude the $243.0 million net acquisition price for the EFM transaction.

Due to the continued strong performance from the Company's Eagle Ford Shale assets combined with the impact of the EFM acquisition, Carrizo is increasing its 2014 oil production guidance to 18,800-18,900 Bbls/d from 18,100-18,300 Bbls/d. Using the midpoints of these ranges, the Company's 2014 oil production growth guidance increases to 63% from 57%. Excluding the impact of the recent EFM acquisition, the Company's 2014 oil production growth guidance would have increased to 59% from 57%. For natural gas and NGLs, Carrizo is increasing its 2014 guidance to 80-83 MMcfe/d from 67-75 MMcfe/d due primarily to a lower-than-expected amount of voluntary production curtailments in the Marcellus Shale. For the fourth quarter of 2014, Carrizo expects oil production to be 21,800-22,100 Bbls/d and natural gas and NGL production to be 80-90 MMcfe/d. The new guidance ranges include the impact of the EFM acquisition as of the closing date of October 24.

S.P. "Chip" Johnson, IV, Carrizo's President and CEO, commented on the results, "This was another record quarter for Carrizo as we once again delivered crude oil production growth that exceeded our forecast. The continued outperformance versus our forecast not only is the result of strong performance from our wells, but also reflects our operating personnel's ability to drive efficiencies throughout the entire development process."

2015 Plans

Johnson said: "We're currently evaluating a number of different commodity price environments as we put together a budget for next year. While we expect 2015 to be another year of excellent production growth for Carrizo, we do not plan to lose focus on our balance sheet, and are still targeting a net-debt-to-EBITDA ratio around 2.0x. We have a significant amount of operational flexibility within our portfolio, allowing us to be nimble with respect to drilling and completion activity. And our recent notes offering and borrowing base increase, coupled with the cash flow support provided by our strong crude oil hedge position in 2015, gives us ample liquidity to fund an increase in our activity level even at lower prices. As a result, we believe the Company is well positioned for either a high or low commodity price environment."