1ST ANNUAL ANALYST CONFERENCE Carrizo Oil & Gas, Inc. January 28, 2014
Agenda January 28, 2014 Company Overview Chip Johnson 8:00am-8:20am President and CEO Operations Brad Fisher 8:20am-8:40am COO Eagle Ford Shale Brad Fisher Andy Agosto 8:40am-10:10am VP Business Development Break…
Overview Chip Johnson
Carrizo Today Positioned to Deliver Sustainable Growth High-quality acreage position focused on oil and condensate resource plays Eagle Ford Shale, Utica Shale, and Niobrara Formation Significant resource potential 380 MMBoe of…
Success in Executing Oil Strategy 2010 2011 2012 2013 Q2: Announced new oil growth Q1: Announced plan to Q1: Divested portion of non-core Q1: Exercised option with Avista strategy reallocate drilling capital from Barnett assets to…
Portfolio of Assets Niobrara 47,500 net acres Utica 5.2 MMBOE Proved 22,000 net acres Marcellus 37,300 net acres 22.6 MMBOE Proved YE13 SEC Proved NPV10 (MM) Eagle Ford Eagle Ford 1,341 62,200 net acres Niobrara 119…
Portfolio of Assets CBM Northern Utica Niobrara 47,500 net acres Utica 5.2 MMBOE Proved 22,000 net acres Marcellus 37,300 net acres 22.6 MMBOE Proved Fayetteville Barnett Shale Ft. Worth Basin East Texas Eagle Ford…
Review of 2013 Goals / Accomplishments Continue to rebalance portfolio toward oil Crude oil now accounts for 55% of reserves and production Increase low-risk drilling inventory Added 13,000 net acres in the Eagle Ford, 11,000…
Highlights of 2014 Plan 3 rig program in Eagle Ford Grow oil production by Test 330 ft. lateral spacing in 50% Eagle Ford D&C capital of 650-670 1 rig program in Niobrara MM Begin 1 rig program in Utica Maintain Net Debt-to-…
2014 Capital Program (All figures in MM) 2013 Est. 2014 Est. Continued focus on oily plays Eagle Ford 407 440 Generates strong production growth Funds additional acreage acquisitions Utica 16 110 in Eagle Ford and Utica Niobrara…
Carrizo is an Oil Growth Story 35.0 Net Daily Prod, (MBoepd) Oil plays 30.0 expected to 25.0 20.0 drive future 15.0 production 10.0 growth 5.0 0.0 Oil production expected to grow 50% in Eagle Ford Niobrara Utica…
Oil Strategy Revenue and EBITDA Our increased focus on oil has resulted in significant revenue and EBITDA growth, despite multiple asset divestitures Quarterly Revenue by Commodity (MM) (1) Quarterly EBITDA (MM) 160 120 114.8…
Financial Leverage is Below Peer-average Adjusted Net Debt / LTM EBITDA 10.0x 8.0x 6.0x Leverage Ratio 4.0x 2.0x 0.0x -2.0x Notes: Net debt is Q313 adjusted for Q413 capital market transactions and M&A.…
Valuation Remains at a Discount 12.0x 10.0x 8.0x 2014E EV/EBITDA 6.0x 4.0x 2.0x 0.0x Source: Bloomberg, Company reports 16 CRZO
Sustainable Growth Project Development Summary (1) Undrilled Well Details (PUD & Probable) Net Net Additional Effective Well Drillable Proved Proved Net Total Lateral Spacing Spacing Net Net Developed Undeveloped Probable Undrilled…
Sustainable Growth Undrilled Potential Undrilled Well Locations 900 800 700 211 600 Net Wells 500 400 106 461 300 200 304 100 115 123 2 - 51 10 Eagle Ford Niobrara Utica NE PA Marcellus PUD Probable Downspacing…
Analyst Valuations by Region Wall Street Valuations vs. Carrizo Estimates Eagle Ford 1,677 2,474 2,857 4,155 Marcellus 98 160 251 173 Niobrara 277 361 700 863 Utica 125 356 651 1,256 0 500 1,000 1,500 2,000…
Production Maintenance Minimal capital commitment of less than 200 MM / year 13,000 BOPD Maintenance 20,000 15,000 Net BOPD 10,000 EF Rig 1 5,000 CRZO PDP & Well Inventory 0 Jul-14 Jul-15 Jul-16…
Eagle Ford Potential 3 Rig Program 50,000 40,000 30,000 Net BOPD 20,000 Rig 3 Rig 2 10,000 Rig 1 CRZO PDP & Well Inventory 0 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 21 CRZO
Eagle Ford Potential 6 Rig Program 50,000 Rig 6 40,000 Rig 5 30,000 Net BOPD Rig 4 20,000 Rig 3 Rig 2 10,000 Rig 1 CRZO PDP & Well Inventory 0 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18…
2014 Analyst Day Highlights Increasing 2014 oil production guidance to 50% from 40%+ Higher Eagle Ford type curve More Eagle Ford completions Maintain low Net Debt-to-EBITDA Eagle Ford cost savings driving higher capital…
Operations Brad Fisher 24
Operational Strategy Operate and utilize our experience Understand the operating environment Apply a consistent development methodology to evaluate our position Utilize manufacturing processes to reduce costs and increase…
Operational Strategy Operate and utilize our experience Effective Lateral Area Average Longest Count Barnett 5,212 8,112 262 Enter new plays high on the learning Marcellus 4,982 7,941 93 curve Eagleford 5,825 10,246 147 Niobrara…
Operational Strategy Fracking horizontal wells Pumped almost 7,000 stages Frac stages Area Average Most Count across 5 different plays Barnett Shale 1,775 Marcellus 18 27 1,161 Strong track record of cost Eagleford 23 42 2,815…
Operational Strategy Understand the operating environment Identify and plan around operational, infrastructure and regulatory hurdles Hire local knowledge and build local relationships Operational steps for a successful all shale…
Operational Strategy Apply a consistent development methodology to evaluate our position Well placement in the target interval Between well spacing Completion techniques Choke management Consistent appraisal approach allows for…
Operational Strategy Utilize manufacturing processes to increase efficiency and reduce costs Optimize the equipment Optimize the process Optimize the application Properly evaluate performance using manufacturing benchmarks. Time…
Manufacturing Process Upgrading the Equipment New build rigs have been tailored to meet the demands of developing shale plays More horse power Gen 2 Compact Automation Gen 3 Self skidding Bigger pumps Properly applied the…
Manufacturing Process Optimizing the Application Spudder vs. horizontal rig Best practices drilling process in Pa. calls for air over mud Foreign to Gulf Coast rigs brought into the area hugely inefficient Local supply of air…
Manufacturing Process Optimizing the Process Eagle Ford fracking Mature service area Water readily available Experienced crews Supply chain in place Opportunity to improve the process Strategic partnership Optimize Halliburton…
Manufacturing Process Continuous Improvement Applications of learnings and technology allow us to enter new plays higher on the learning curve Major Rig and build from there Improvements Operatorship allows us to take advantage of…
Eagle Ford Drilling Improvements Efficiency Drivers 2nd and 3rd generation rigs with biggest driver being pump improvements Drill bit technology Process improvements Capital Impact Daily rate costs applied to fewer days = lower…
Niobrara Drilling Improvements Efficiency Drivers Fit for purpose rig Fast moving yet big enough to handle well design demands Rig moves in 38 hrs. vs 114 hrs. for larger rigs 3 xs faster. From 2012 to 2013 we have increased…
Eagle Ford Shale Brad Fisher Andy Agosto 37
Eagle Ford Shale Driving Growth Carrizo has built a position of over 62,000 net acres almost entirely in the volatile oil window of the Eagle Ford in the west-central area of play Represents a significant resource potential 2P…
Eagle Ford Shale Driving Growth Well established production across entire acreage position De-risking of each project area is almost complete Transitioning from acreage holding to full development mode during 2014 Companys…
Eagle Ford Shale Driving Growth San Antonio Black Oil Volatile Oil Gas CRZO Eagle Ford Trend Boundary 40 CRZO
Eagle Ford Shale At a Glance Acreage 62,200 net acres Added 13,000 net acres in 2013 Operated Activity Through YE 2013 152 gross / 118 net wells drilled 123 gross / 95 net wells fracked Remaining Wells Current: 58,300 net…
Eagle Ford Shale Logistical Advantages Abundant midstream options All gas production is currently gathered and processed by major industry companies: DCP Midstream, Enterprise, Kinder Morgan Oil pipeline infrastructure is now…
Eagle Ford Shale Capex Progression Analysis Drilling Cost / Well Completion Cost / Well Well Cost Stages Well Cost Lateral Length Total Well Cost Well Cost Well Count 43 CRZO
Eagle Ford Shale Geologic Overview Structure on Base of Eagle Ford Measured Depth 45 CRZO
Eagle Ford Shale Geologic Overview Lower Eagle Ford ShcPhih & Structure on Base of Eagle Ford * Note: Shc-phi-h is hydrocarbon saturation multiplied by porosity and thickness and is proportional to the volume of oil in…
Eagle Ford Shale Geologic Overview EAGLEFORD Structural Irvin Ranch 10H Carrizo Oil and Gas Monoclinal dip toward Gulf Coast GR_EDTC [GAPI] AT90 [OHMM] DPHZ [CFCF] Structural elements include Pleasanton-Atascosa Subsea…
Eagle Ford Shale Geologic Overview EAGLEFORD Irvin Ranch 10H Lower Eagle Ford is target zone on Carrizo Carrizo Oil and Gas GR_EDTC [GAPI] AT90 [OHMM] DPHZ [CFCF] acreage Subsea Subsea Depth(ft) 0 150 0.2 2000 0.3 0…
Eagle Ford Shale Geologic Overview 49 CRZO
Eagle Ford Shale Geologic Overview Porosity present in Upper Eagle Ford section, but not as high as lower Eagle Ford; has hydrocarbon storage capacity 50 CRZO
Eagle Ford Shale Lease Acquisitions Company strategy was to acquire acreage with Eagle Ford at depths shallower than 10,000 feet Avoided the need for more expensive completions (medium/high strength proppant) More profitable…
Eagle Ford Shale Acreage Acquisitions 2010 Displays CRZO leases acquired in 2010 and industry completions through 2010 Black Oil Volatile Oil Gas 52 CRZO
Eagle Ford Shale Acreage Acquisitions 2011 Adds CRZO leases acquired in 2011 Black Oil Volatile Oil Gas 53 CRZO
Eagle Ford Shale Acreage Acquisitions 2012 Adds CRZO leases acquired in 2012 Black Oil Volatile Oil Gas 54 CRZO
Eagle Ford Shale Acreage Acquisitions 2013 Adds CRZO leases acquired in 2013 Black Oil Volatile Oil Gas 55 CRZO
Eagle Ford Shale Acreage Acquisitions Through 2013 Displays CRZO leases acquired through 2013 and industry completions through 2013 Clearly shows CRZO acreage centered in the area of majority of activity Black Oil…
Eagle Ford Shale Lease Inventory 70,000 Undeveloped Developed 60,000 52,353 13,868 3,966 50,000 13,314 4,040 Net Acres 40,000 1,564 21,913 30,000 20,000 277 13,105 10,000 9,847 - Notes: Developed…
Eagle Ford Shale Competitive Landscape Displays offset operator completions by company in close proximity to CRZO leases Largest competitors are EOG, CHK, and EPE Black Oil Volatile Oil Gas 58 CRZO
Eagle Ford Shale Project Areas NE RPG North LaSalle LaSalle Arnold Pena Winfield Irvin Brown Trust Mumme Gardendale East Mumme SE Cotulla Pierce 59 CRZO
Eagle Ford Shale Benchmarking Study Objective Benchmark Carrizo development strategy, processes and performance relative to offset operators Scope Data gathering was targeted around operating areas to ensure that data comparisons…
Eagle Ford Shale Benchmarking Study Stage Completion Design Fluid EAGLE FORD WELLBORE DIAGRAM 7,800 bbls hybrid slick water and 80' Conductor 16 Conductor cross linked gel Proppant 380,000 lbs of 3,000' - 5,000' Surface Casing…
Eagle Ford Shale Benchmarking Study Completion Design Carrizo 62 CRZO
Eagle Ford Shale Benchmarking Study Completion Design Carrizo 63 CRZO
Eagle Ford Shale Benchmarking Study Gardendale Gardendale Area Historical and Forecast Oil Production Gardendale Area Historical and Forecast Oil Production 300,000 300,000 Cumulative Oil Production - Normalized to 5000'…
Eagle Ford Shale Benchmarking Study Mumme Sum of NormCumOil Mumme Area Historical and Forecast Oil Production Mumme Area Historical and Forecast Oil Production 200,000 200,000 Cumulative Oil Production - Normalized to 5000'…
Eagle Ford Shale Benchmarking Study Pena Winfield Pena Winfield Area Historical and Forecast Oil Production Pena Winfield Area Historical and Forecast Oil Production 250,000 250,000 Cumulative Oil Production - Normalized to 5000'…
Eagle Ford Shale Benchmarking Study RPG RPG Area Historical and Forecast Oil Production RPG Area Historical and Forecast Oil Production 300,000 300,000 Cumulative Oil Production - Normalized to 5000' Lateral Cumulative Oil…
Eagle Ford Shale Benchmarking Study LaSalle vs Karnes/Gonzales Also evaluated Carrizo Eagle Ford well performance against several areas in the eastern Eagle Ford Focused on the areas shown which were randomly selected and are…
Eagle Ford Shale Benchmarking Study LaSalle vs Karnes/Gonzales Avg. Depth: Avg. Depth: Avg. Depth: 11,000 Ft. 10,500 Ft. 11,000 Ft. 69 CRZO
Eagle Ford Shale Benchmarking Study Takeaways We believe this study Validates the Companys completion strategy Demonstrates that Carrizo consistently ranks as best in area or in top quartile in terms of normalized production…
Eagle Ford Shale Valuation Analysis Summary Valuation model is a type curve driven approach to forecasting total reserves and NPV10 for Carrizos entire Eagle Ford project Relies upon actual production data from all wells across the…
Eagle Ford Shale Project Areas NE RPG North LaSalle LaSalle Arnold Pena Winfield Irvin Brown Trust Mumme Gardendale East Mumme SE Cotulla Pierce 72 CRZO
Eagle Ford Shale RPG Type Curve Example Displays development plan for RPG area down to 500 ft. well spacing Blue lines are existing wells drilled at wider spacing; green lines are future wells Gap on west side indicates…
Eagle Ford Shale RPG Type Curve Example Plot daily cumulative Time zero 1 production data for all wells 2 wells Calculate average prod Normalize to 5,000 ft. 4 curve (green) 3 lateral length Average production 74 CRZO
Eagle Ford Shale RPG RPG Average Normalized 21 Stage Well Daily Oil Rate Oil vs. Time 1000 100 This displays the same average production curve as on prior slide presented on a log scale in daily rate format Well Count 100…
Eagle Ford Shale RPG RPG Average Normalized 21 Stage Well Daily Oil Rate Oil vs. Time 1000 100 Hyperbolic IP Rate 690 BOPD b-Factor 1.35 Well Count Di 76% BOPD 100 10 GOR 600 cf/BO 35 Yr. EUR 467 MBO 280 MMCF…
Eagle Ford Shale Irvin Ranch Total net acres: 8,300 Drillable net acres: 8,300 Producing 13 gross / 9.8 net wells Drilled Not Completed 3 gross / 2.3 net wells Future Wells 118 gross / 88.5 net wells Avg. lateral…
Eagle Ford Shale Irvin Ranch Irvin Ranch Average Normalized 21 Stage Well Daily Oil Rate Oil vs. Time 1000 100 Initial Exponential IP Rate 535 BOPD Cum. Prod. 65 MBO Hyperbolic IP Rate 340 BOPD b-Factor 1.35 Well Count 100…
Eagle Ford Shale Family of Type Curves All Project Areas Normalized 21 Stage Type Well Daily Oil Rate Oil vs. Time 650 Displays 21 stage 600 normalized type curves by area 550 500 Several areas exhibit 450 early exponential…
Eagle Ford Shale Family of Type Curves All Project Areas Normalized 21 Stage Type Well Daily Oil Rate Oil vs. Time 650 Displays 21 stage 600 normalized type curves by area 550 Several areas exhibit 500 early exponential 450…
Eagle Ford Shale Family of Type Curves All Project Areas Normalized 21 Stage Type Well Daily Oil Rate Oil vs. Time 200000 Displays 21 stage normalized type curves 175000 IRR = 187% by area Several areas exhibit 150000 early…
Eagle Ford Shale Summary of Wells by Area Remaining 500 Ft. Per Well Gross Per Well Net Oil Gross Non Producing or Oil Reserve Reserve Producing Net Producing Undrilled Net Avg. Eff. Avg. Frac Potential Potential Project Area Wells…
Eagle Ford Shale Summary of Wells by Area Total Total Net Remaining PDP Undrilled Well Net Producing Undrilled Net Reserves Reserves Total PDP Undrilled Well Total NPV10 Project Area Wells Wells (MBOE) (MBOE) NPV10 (MM) NPV10 (MM)…
Eagle Ford Shale Valuation Analysis Summary 3 rig program 10+ year drilling inventory Average Drill & Case capital: 2.5 MM Average Completion & Facility capital: 200,000 per frack stage 12/31/2013 SEC oil & gas pricing: 96.78/Bbl…
Eagle Ford Shale Type Curve Economics Weighted Average Future Well Future Well Type Curve 700 170 650 160 Total Well Cost 7.5 MM 150 600 Frac Stages 25.0 140 550 130 Lateral Length 6,005 ft. 500 120 Gross 523 Mboe 450…
Eagle Ford Shale Benefits of Longer Laterals Mumme 70 Pad Mumme 70 Pad Performance - Cum Prod vs. Flowing Pressure (208 Producing Days) We attempt to drill longer 3,000 laterals whenever lease geometry allows 2,500 Longer…
Eagle Ford Shale Benefits of Longer Laterals Mumme 70 Pad Additional lateral length Mumme 70 Mumme 71 results in small increase in drilling cost Lateral Length (Ft) 10,000 5,300 Based upon results to date, there is a direct…
Eagle Ford Shale Downspacing 750 Spacing 500 Spacing 330 Spacing Wells Per Section 7 10 15 Spacing (Acres / Well) 103 70 42 EUR Reduction / Well (Based on 750 Spacing) 0% 0% Est. Gross Reserves / Well (MBoe) 523 523 Est. Gross…
Niobrara Formation Brad Fisher Andy Agosto 89
Niobrara Shale Driving Growth Acreage position of over Whiting 47,000 net acres Weld County Redtail Overlap Testing 60 acre spacing Noble Participating in Super East Pony Noble Overlap Pads with Noble and West Pony Whiting to…
Niobrara Shale At a Glance Acreage 47,500 net acres Operated Activity Through YE 2013 87 gross / 33 net wells drilled 74 gross / 30 net wells fracd Inventory 355 net wells 80 acre spacing 106 additional net wells 60 acre…
Niobrara Shale Capex Progression Analysis Drilling Cost / Well Completion Cost / Well 3.0 4,100 4.0 18.0 3.2 2.5 2.4 4,000 Completion Cost / Well ( MM) Effective Lateral Length (ft) Drilling Cost / Well ( MM) 2.1 3.0…
Niobrara Shale Geologic Overview Structural DJ is an asymmetric basin trending N/S Deep seated NE trending faults extend into basin These faults are thought to control thermal maturation of the Niobrara Depositional environment…
Niobrara Shale Geologic Overview B bench depth ranges from 5,000 feet to 7,000 feet on our acreage B bench thickness ranges from 85-115 feet Median porosity ranges from 7% to 11% in the B bench A and C benches are more…
Niobrara Shale Geologic Overview 96 CRZO
Niobrara Shale Valuation Methodology Niobrara is our most complex play from a geologic and production performance standpoint Despite complexity, we believe there is sufficient production data across our acreage position to more…
Niobrara Shale Acreage Ranking Identified several discreet areas within Niobrara project and evaluated development potential and economics separately Ranking criteria: Geologic / petrophysical quality Activity level…
Niobrara Shale Type Curves Area 1 1000 100 Hyperbolic IP Rate 640 BOPD b-Factor 1.7 Well Count BOPD 100 10 Di 89% GOR 1,500 cf/BO 30 Yr. EUR 265 MBO 400 MMCF 10 1 0 60 120 180 240 300 360 420 480 540 600 660…
Niobrara Shale Type Curves Area 2 1000 100 Hyperbolic IP Rate 485 BOPD b-Factor 1.7 Well Count BOPD 100 10 Di 90% GOR 1,500 cf/BO 30 Yr. EUR 175 MBO 265 MMCF 10 1 0 120 240 360 480 600 720 840 960 1080 Days…
Niobrara Shale Type Curves Area 3 1000 1000 100 100 Hyperbolic IP Rate 395 BOPD b-Factor 1.6 Well Count Count BOPD 100 100 10 10 Di 90% BOPD Well GOR 1,500 cf/BO 30 Yr. EUR 125 MBO 188 MMCF 10 10…
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