After adding to its Eagle Ford Shale assets last year and growing company-wide production by 10% during the first quarter, Houston-based Carrizo Oil & Gas Inc. is pondering the sale of its Appalachian assets, CEO Chip Johnson said Tuesday.

“We have elected to test the market for our Appalachian assets as they do not currently compete for capital with our three core oily plays,” Johnson said during an earnings conference call. “Monetization of these assets would leave Carrizo with a core position in three high-return, oil-weighted plays and should enhance our long-term production growth profile.”

According to its website, Carrizo has 16,000 net acres in the Marcellus and 25,900 net acres in the Utica. Remaining plays after a sale of the Appalachia holdings would be the Eagle Ford, the Permian’s Delaware sub-basin, and the Niobrara formation.

A recent “run-up” in natural gas prices in the Marcellus Shale gave management the idea that it might be time for an opportunistic sale of Carrizo’s assets there, Johnson said. “…[W]e felt like now’s the time to test the market,” he said. “We know there are some other people who are aggressive in that market and thought we should test it.”

In Appalachia, which encompasses the company’s Utica and Marcellus shale positions, Carrizo did not drill or complete any operated wells during the first quarter. Oil and condensate production from the Utica was 180 b/d during the quarter, down from 200 b/d in the prior quarter due to the lack of activity.

In the Marcellus production was 47.6 MMcf/d, up from 35.8 MMcf/d in the prior quarter as Carrizo increased production in response to an improved local market price environment. Carrizo expects to continue to vary its Marcellus production during 2017 based on local market pricing, management said. It has currently allocated only a minimal amount of maintenance capital to Appalachia during 2017.

Overall production during the first quarter was 4.17 million boe, or 46,367 boe/d, an increase of 10% versus the first quarter of 2016. The growth was driven by continued performance from Eagle Ford and Delaware drilling, the addition of production from an Eagle Ford property acquired from Sanchez Energy Corp. in late 2016, and an increase in Marcellus Shale production given improved netbacks.

Oil production during the first quarter averaged 28,844 b/d, an increase of 12% versus the first quarter of 2016. Natural gas and natural gas liquids (NGL) production averaged 78,088 Mcf/d and 4,508 b/d, respectively, during the first quarter.

First quarter production exceeded the high end of company guidance due primarily to stronger-than-expected production from the Niobrara formation and Delaware sub-basin assets.

More than 85% of first quarter drilling and completion spending was in the Eagle Ford, with the balance weighted toward the Delaware and Niobrara.

As a result of the improvement in commodity prices earlier this year, Carrizo has seen a material increase in planned nonoperated activity on its acreage in the Niobrara and Delaware. The company has increased its planned nonoperated budget by $30 million. Carrizo expects to offset this through efficiency gains realized since the beginning of the year as well as a slight reduction in planned completion activity in the Eagle Ford.

As a result, the company is maintaining its 2017 drilling and completion capital expenditure guidance of $530-550 million. It is increasing its land and seismic capital expenditure guidance to $45 million for the year from $20 million previously.

Carrizo is increasing its 2017 oil production guidance to 32,400-32,700 b/d from 31,400-31,900 b/d. Using the midpoint of this range, 2017 oil production growth guidance increases to 26% from 23% previously. For natural gas and NGLs, Carrizo is adjusting its guidance to 71-75 MMcf/d and 5,300-5,500 b/d, respectively, from 69-73 MMcf/d and 5,600-5,900 b/d, respectively.

The company said it continues to expect to deliver a three-year compound annual growth rate of more than 20% for its crude oil production. For the second quarter, Carrizo expects oil production to be 31,800-32,200 b/d, and natural gas and NGL production to be 67-71 MMcf/d and 4,800-5,000 b/d, respectively.

In the Eagle Ford, Carrizo drilled 24 gross (20.1 net) operated wells during the first quarter and completed 29 gross (28.7 net) wells. Crude oil production from the play was more than 25,500 b/d, up 2% versus the prior quarter. At the end of the quarter, Carrizo had 29 gross (23.9 net) operated Eagle Ford wells in progress or waiting on completion, equating to net crude oil production potential of 9,000 b/d. The company is operating three rigs in the Eagle Ford and expects to drill 106 gross (91 net) operated wells and complete 94 gross (85 net) operated wells in the play during 2017.

The company continues to test stagger stack pilots on its acreage, with five pilots currently on production across its core acreage position in the Eagle Ford testing effective lateral spacing between 220 and 250 feet.The company is also planning to drill its initial infill test on the acreage it recently acquired from Sanchez. This would be its first test of an infill well between two understimulated parent wells.

In the Delaware Carrizo had no operated drilling or completion activity during the first quarter. Crude oil production from the play was more than 1,100 b/d, down from 1,200 b/d in the prior quarter due to the lack of new wells coming online. Carrizo currently plans to drill six gross (six net) operated wells and complete five gross (five net) operated wells in the Delaware during 2017.

Carrizo did not drill or complete any operated Niobrara wells during the first quarter. Crude oil production from the play was more than 2,000 b/d, down from 2,200 b/d in the prior quarter due to the lack of new wells coming online. While Carrizo is not currently budgeting any operated activity in the Niobrara during 2017, it continues to evaluate resuming operated development activity later this year or next year, management said. Industry activity has increased around the company’s acreage, and as a result, Carrizo now expects to participate in 32 gross (5.1 net) nonoperated wells in the play during 2017, up from an expectation of 21 gross (1.8 net) previously.

Carrizo reported first quarter net income of $40 million (61 cents/share) compared with a net loss of $311.4 million (minus $5.34) in the first quarter of 2016.