Carrizo Oil & Gas Inc. plans to develop more large-scale multi-pad projects in the Eagle Ford Shale and perform additional multi-layer testing in the Permian Basin's Delaware sub-basin in 2019 in expectations of delivering double-digit production growth.

The Houston-based producer reiterated plans to spend $525-575 million on drilling and completions in 2019, a 35% reduction from 2018. Carrizo is running a five-rig drilling program, but it plans to reduce its rig count in the Eagle Ford from four to one by the end of March. Plans are to run two rigs in the Delaware during the first half of the year; a third Delaware rig may be added during the second half.

"This plan should allow us to generate more than 10% production growth during the year while achieving a free cash flow positive inflection point during the third quarter and entering 2020 with positive operational momentum," CEO Chip Johnson said during a quarterly earnings call Tuesday. "At this level of activity, we'd expect to generate continued production growth with a similar level of capital expenditures this year and generate positive free cash flow for the year."

Although Johnson said it was too early to speculate on guidance for 2020, "in the current price environment, our expectations would be to add a second rig back to the Eagle Ford Shale next year as...well economics are quite attractive at current commodity price levels, and they're also competitive with our Permian Basin economics."

However, CFO David Pitts added that the producer has no plans for now to increase activity only on improvements in commodity prices. "We believe reducing our outstanding debt and leverage improves our long term competitive position in the market and will allow us to capitalize on value added opportunities regardless of where we are in commodity price cycle," he said.

In the Eagle Ford, flowback has begun at the operator’s 15-well Pena project, and the 21-well RPG project is being completed, with flowback scheduled to begin in 2Q2019.

In the Delaware, the first four-layer co-development project is underway to test multiple development concepts targeting the Wolfcamp’s A, B and C intervals. It highlighted five wells in the Ford West and Phantom operating areas that had recent, 24-hour 30-day production rates of 1,185-1,737 boe/d (40-66% oil) with laterals from 4,372-11,850 feet.

Carrizo reported total production of 68,328 boe/d in 4Q2018, up 9.5% from the year-ago quarter. Oil production was 43,040 b/d in 4Q2018, 7% higher year/year, while natural gas production climbed 6.2% to 83,067 Mcf/d. Natural gas liquids (NGL) production increased 24.6% to 11,443 b/d.

Full-year production averaged 60,382 boe/d in 2018, up 12.2% from 2017. Oil production increased 13.3% to 38,992 b/d in 2018, helping to offset a 13.5% decline in natural gas production, which totaled 67,503 Mcf/d. Full-year NGL production increased 59% to 10,139 b/d.

Broken down by play, Delaware sub-basin production was 29,655 boe/d in 4Q2018, nearly double from the year-ago quarter. Full-year Delaware production surged to 22,609 boe/d in 2018, equating to a 237% increase from 2017. Production in the Eagle Ford was 38,628 boe/d in 4Q2018, down 7% from 4Q2017, and it was essentially flat in 2018, when production was 37,591 boe/d.

Carrizo drilled 37 net operated wells and completed 16 in the Eagle Ford during 4Q2018, and it drilled four net operated wells in the Delaware. At the end of the quarter, 39 net operated wells in the Eagle Ford and nine in the Delaware were waiting on completion.

The company expects to drill 45-50 net operated wells and complete 70-75 in the Eagle Ford in 2019. It also expects to drill 20-25 and complete 15-20 in the Delaware. Carrizo currently holds about 76,500 net acres in the Eagle Ford and more than 46,000 net acres in the Delaware.

Carrizo reported net income of $255.1 million ($2.75/share) in 4Q2018, compared with a net loss of $23.4 million (minus 29 cents) in the year-ago quarter. For the full year, net income totaled $376.1 million versus $78.5 million in 2017.

Revenues totaled $273.3 million in 4Q2018, compared with $246.8 million a year earlier. Full-year revenues totaled $1.07 billion, up from $745.9 million in 2017.