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Carrizo Has Record-Setting Quarter

Houston-based Carrizo Oil & Gas Inc. posted records during the first quarter for natural gas, natural gas liquids (NGL) and oil production as well as chart-topping revenue, largely thanks to the Eagle Ford Shale of South Texas and the Barnett Shale in North Texas. Meanwhile, Marcellus Shale activities are ramping up.

"Our oil production rate of 5,945 b/d for the quarter came in slightly above the high end of our range of guidance due to quicker-than-anticipated initiation of production from new wells in the Eagle Ford," said CEO Chip Johnson. "Our gas and NGL production of 116,687 Mcf/d came in above our forecast primarily due to lower-than-expected declines in Barnett production.

"We were pleased to see the first material contribution to gas production from our Marcellus development in Susquehanna County, PA, come online during the quarter when the three-pad, 14-well, Baker area initiated full production. We exited the quarter with those wells flowing at approximately 17.7 MMcf/d net to Carrizo."

Carrizo oil production increased 91% from the fourth quarter of 2011. Total production came to 13.9 Bcfe, or 152.4 MMcfe/d, an increase of 16% from the fourth quarter of 2011. The year-over-year increase was primarily due to increased production from new wells, partially offset by normal production decline and the sale of substantially all of the company's noncore area Barnett Shale properties to KKR Natural Resources in May 2011.

Revenue of $80.7 million was a record and came to $91.7 million when adjusted for realized hedges. Oil revenue alone also was a record at $59.4 million, or 74% of total revenue, the company said.

Including the impact of realized hedges, the company's average realized oil price increased 23% to $109.65/bbl compared to $88.84/bbl for the first quarter of 2011 and the gas price decreased 27% to $3.05/Mcfe compared to $4.14/Mcfe for the first quarter of 2011.

"Higher realized oil prices during the quarter caused our 91% sequential quarterly growth in oil production to result in a 110% sequential increase in revenues from oil sales," Johnson said. "Before the effects of hedging, 74% of our total sales revenues during the quarter came from oil. After considering the impact of the current oil and gas futures pricing strip on our annual production guidance, we have decided to report our combined production in terms of barrels of equivalent oil from this point forward as Carrizo has become predominantly dependent on oil production."

Adjusted 2012 domestic production guidance now stands at 2.75-3.05 million bbl of oil and 35.2-36.4 Bcf of gas and NGLs.

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