Carrizo Oil & Gas Inc. raised its oil production guidance for the rest of the year as 1Q2014 oil and natural gas production beat guidance and acreage was bolted on in the Eagle Ford and Utica shales. The company said it may have the best condensate-producing well in the entire Utica.

Houston-based Carrizo said Tuesday that it hit a record for oil production at 15,022 b/d during the quarter, a 61.3% increase over the 9,311 b/d produced during 1Q2013. The company also made an oil revenue record, $130.4 million, which accounted for 82.9% of total revenue — $157.2 million, another record — and was 49% above the $87.5 million for oil fetched in the preceding first quarter.

Total production during 1Q2014 was 1.35 million bbl of oil, 5.22 Bcf of gas and 166,000 bbl of natural gas liquids (NGL). Compared to 1Q2013, total oil production was up 61.3% (from 838,000 bbl) and NGLs were up 64.4% (101,000 bbl), but gas was down 40.2% (8.73 Bcf).

Carrizo said capital expenditures (capex) for drilling and completion costs were $170.7 million during the quarter, about 75% of which was spent in the Eagle Ford. The company said it was increasing capex by $15 million for the full-year 2014 to $665-685 million, primarily to fund additional drilling and completions in the Eagle Ford. It also raised production guidance for the full-year 2014 — from 17,000-17,800 b/d to 17,500-18,200 b/d — again, based on the “continued strong performance” from the Eagle Ford.

During the quarter, Carrizo drilled 15 gross (12.3 net) operated wells and completed 15 gross (12.2 net) wells in the Eagle Ford. The company said crude oil production in the play exceeded 12,700 b/d, a 14% increase over 4Q2013. At the end of 1Q2014, Carrizo had 29 gross (23.5 net) operated wells in the Eagle Ford waiting on completion, and it had three operated rigs deployed in the play. It expects to drill 64 gross (51 net) wells in the play by the end of the year.

In the Utica, Carrizo’s condensate production averaged more than 380 b/d. The company said it had recently shut in its first well in the play — Rector 1H, located in Guernsey County, OH — to await midstream infrastructure, but reported that it had produced more than 57,000 bbl of condensate on a gross basis during a long-term stabilized test, or an average of more than 500 b/d.

Before the Rector 1H well was shut in, Carrizo said it was flowing at a stabilized rate of about 420 b/d of condensate and 1.8 MMcf/d of rich natural gas on a 16/64-inch choke.

Carrizo said it plans to spud its next well in the Utica — Brown 1H, in northern Guernsey County — during the second quarter.

“We’re not planning to produce any more [from Rector 1H] until we have a gas pipeline. We just don’t want to flare any more gas, and we think we have a decent handle on the condensate production,” CEO Chip Johnson said during an earnings conference call Tuesday to discuss 1Q2014.

Johnson added that Carrizo would test the Brown 1H well “as soon as we can, even if we have to flare gas, because we need the information on the quality of that acreage and what kind of midstream we’re going to need in that area.

“We’re assuming that we’ll [hydraulically fracture] that well probably in July [and] rest it 60 days, unless there’s some evidence to the contrary, and then start producing. You’re probably talking about September [production]. My guess is it would be an extended test.”

Johnson added that Carrizo needed more data from the Rector 1H well to complete its type curve for the Utica, essential before moving forward in the play. In the meantime, he said Carrizo would try to average data from three rivals in the Utica: Gulfport Energy Corp., PDC Energy Inc. and Antero Resources Corp. (see Shale Daily, April 24; April 22; April 21).

“The Rector well exceeded the condensate curve for both rate and cumulative production after 117 days, and it underperformed on gas,” Johnson said. “We’re pretty comfortable on the condensate, but we really don’t know how gassy the well is going to get. I think it will just take a couple more tests…it might be year-end before we come out with [a type curve]…

“It looks to be maybe the best condensate well in the entire Utica.”

Johnson added that “if you move far enough to the west in Guernsey County, the wells don’t look economic because they make too much condensate and not enough gas. Based on what we know and how close we are to the other wells that have performed, we’re pretty confident it’s going to work. But in the Utica, you never know really know until you produce the wells. It might just be a matter of economics to be sure everything’s going to be profitable. But we need some way to rank the opportunities going forward based on the condensate-gas ratio.”

Johnson said Carrizo has added approximately 5,500 net acres in the Eagle Ford and 4,200 net acres in the Utica since the end of 2013. Elsewhere, the company has been testing 60-acre spacing in the Niobrara formation and drilled three gross (1.2 net) operated wells targeting the Marcellus Shale during the first quarter.

Analysts reacted favorably to the news for the quarter. Tudor, Pickering, Holt & Co. gave Carrizo a “strong” rating, citing the company beating quarterly production targets and the results from the Rector 1H well. Meanwhile, David Tameron, senior analyst for Wells Fargo Securities LLC, said Carrizo’s news was “positive,” based on production.

“Even though expectations were high for the quarter, we think today’s release was enough to hold recent outperformance,” Tameron said.

Carrizo reported adjusted net income of $23.4 million (51 cents/share) for 1Q2014, a 13.5% increase over the $20.6 million in adjusted net income (51 cents/share) reported during the preceding first quarter.