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Carrizo Production Up Despite Curtailments

Production was up but profits were down during the third quarter at Houston-based Carrizo Oil & Gas Inc., the company said last week. The production increase was charted over the year-ago quarter even though the company voluntarily constrained some output due to low commodity prices.

Earnings before interest, income tax, depreciation and amortization expenses and certain other items during the third quarter were $33.1 million ($1.07/share), compared to $42.2 million ($1.38/share) during the third quarter of 2008.

Production volumes during the third quarter were 8.21 Bcfe, 37% higher compared to 5.98 Bcfe during the third quarter of 2008. The increase was largely due to new production contributions from Barnett Shale development.

"During the course of the quarter, we periodically constrained some of our production due to low prices, so our announced production results somewhat understate our actual deliverability during the quarter," said CEO S.P. "Chip" Johnson IV. "We feel that natural gas futures prices in 2010 have risen to the level where we will begin completing our backlog of 32 net Barnett Shale wells, mostly in southeast Tarrant County and Denton County, TX."

Adjusted revenues from the sale of oil and gas production, which includes oil and gas revenues of $27.3 million and realized hedge settlements of $18.7 million, for the third quarter of 2009 were $46 million, as compared to $56.9 million during the third quarter of 2008. The decrease in adjusted revenues was primarily driven by significantly lower realized oil and natural gas prices, partially offset by increased production.

Carrizo's average oil sales price decreased 42% to $66.25/bbl compared to $114.16/bbl for the third quarter of 2008 and the average natural gas sales price decreased 40% to $5.43/Mcf compared to $9.05/Mcf for the third quarter of 2008. Prices include the impact of cash-settled hedges.

Carrizo is active in the Barnett Shale in North Texas, the Marcellus Shale in Appalachia and in proven onshore trends along the Texas and Louisiana Gulf Coast regions.

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