On the heels of selling off much of its Barnett Shale assets to focus on the liquids-rich Eagle Ford Shale and Niobrara Formation, Carrizo Oil & Gas Inc. is reporting record production rates from the second quarter of the year.
The Houston-based company produced 11.2 Bcfe, or 122,788 Mcfe/d, the result of increased drilling in the Barnett, Eagle Ford and Niobrara, the company said during a quarterly earnings call on Tuesday. Those production levels are up 20% year over year and 5% quarter over quarter, but they could have been higher if not for normal production declines and the sale of most of Carrizo's noncore Barnett assets in May (see Shale Daily, June 8; April 29).
"Except for the dour economy, we had a great quarter," CEO Chip Johnson said.
Carrizo earned $7.7 million (25 cents/share) in net income on $54.1 million in revenues during the quarter. The company realized natural gas prices of $3.83/Mcfe in the second quarter, compared to $4.40/Mcfe in the second quarter of 2010, but saw oil prices stay mostly level to $93.90/bbl this year from $93.30/bbl last year.
Carrizo began sales from a three-well pad in the Eagle Ford of South Texas and from a Niobrara well in Colorado in late July, making "an inflection point in our liquids production growth ramp," according to Johnson.
The Eagle Ford wells reached rates between 920 boe/d and 1,184 boe/d: 720 to 984 b/d of oil and 1,200 Mcf/d of high-BTU natural gas. Carrizo is currently producing 3,260 net boe/d -- including 2,677 b/d of liquids -- from the Eagle Ford from eight wells, with a backlog of seven wells. The company is running three rigs in the Eagle Ford.
Carrizo is currently producing 475 net boe/d from four wells in the Niobrara. The company is currently drilling its seventh well in the region. One Niobrara well averaged 580 b/d over its first week. Carrizo is currently completing two subsequent Niobrara wells and plans to add another Niobrara well each month through the end of the year.
"We anticipate the oil production from these new wells to be followed by a fairly steady increase for the remainder of the year, with each month's oil production sequentially higher than the last, as a sufficient inventory of drilled wells has been built in the Eagle Ford and Niobrara to allow the execution of a continuous completion program," he said.
Johnson estimated that Carrizo would end the year at or above 5,000 net b/d of oil.
Carrizo is still running two rigs in the Marcellus Shale of northeastern Pennsylvania -- one in Susquehanna County and one in Wyoming County -- through a joint venture with Reliance Industries Ltd. (see Daily GPI, Aug. 6).
Carrizo is working through a backlog of 13 wells in the Marcellus. The company plans to hydraulically fracture some of those wells soon in preparation for the Laser Marcellus pipeline, currently under construction and expected to come online later this summer but said other wells have been delayed by water supply problems (see Shale Daily, Feb. 3).
In the Barnett, Carrizo is currently producing 105 MMcf/d. The company is operating one full-time completion crew working on a backlog of 19 net wells, but moved its sole drilling rig in the play to the Eagle Ford earlier this year.