The Eagle Ford Shale continued to drive results for Houston-based Rosetta Resources Inc. last year, leading the company to record production, reserves and cash flow. The South Texas play also lifted Carrizo Oil & Gas Inc.

The company ended the year with a fully self-funding Eagle Ford program, said outgoing Rosetta CEO Randy Limbacher. “Rosetta is on track to deliver another year of double-digit production growth. In addition, we continue to advance our efforts to capture new opportunities and further expand our substantial inventory of projects.”

Production during the fourth the quarter averaged a record 44,300 boe/d, an increase of 38% from the same period in 2011 and 20% from the prior quarter. Production for the year averaged an all-time annual record of 37,200 boe/d, up 35% from 2011. The increase for all periods was a result of strong production growth from the Eagle Ford. The company’s 2012 exit rate averaged 47,300 boe/d. Oil and natural gas liquids (NGL) production both reached all-time high levels for the year, increasing 87% and 69% year over year, respectively.

For 2012, revenues were $613.5 million compared to $446.2 million for the same period in 2011. Full-year 2012 revenues including realized derivative activities were $593.8 million in 2012 and $445.0 million in 2011. For the year, 81% of revenue was generated from oil, condensate and NGL sales including the effects of realized derivative instruments, as compared to 63% a year ago.

Since beginning operations in the Eagle Ford area, Rosetta has completed 126 horizontal Eagle Ford wells as of Dec. 31. About 13% of the company’s identified Eagle Ford inventory is drilled and on production. At the end of the year, 32 drilled wells were awaiting completion, 20 of which were drilled during the fourth quarter. During the fourth quarter, Rosetta successfully drilled its first Pearsall Shale exploratory well on the Tom Hanks lease in LaSalle County. The well is completed and awaiting pipeline connection. In addition, 1,711 gross acres were acquired in Atascosa County.

Limbacher is resigning as its chairman, CEO and president to be succeeded by James Craddock, who has served as Rosetta’s senior vice president of drilling and production operations. Limbacher will stay on with the company until April.

The fourth quarter was Eagle Ford-focused Carrizo Oil & Gas Inc.’s ninth consecutive quarter of revenue growth and one during which it charted record oil production and oil revenue, affirming the wisdom of management’s decision to transform Carrizo into an oil company, CEO Chip Johnson said.

“Thanks to our record oil production, we reported the highest quarterly revenue and EBITDA [earnings before interest, taxes, depreciation and amortization] in the history of the company,” Johnson said. “We have now reported sequential revenue growth for the last nine quarters and remain confident that this growth trend will continue.

“…[W]e are seeing dramatic benefits from our transformation to a more oily company. Our EBITDA margin per boe expanded once again to $39.08 from $36.73 last quarter and from $24.55 for the fourth quarter of 2011. Our EBITDA margin came in at 80% this quarter, even higher than the 74% reported for the fourth quarter of 2011.”

Ryder Scott recently completed an evaluation of Carrizo’s reserves. With that in hand, Johnson said, in response to an analyst’s question during a conference call, that the company would begin to evaluate what it might be able to get in the marketplace for its Barnett Shale assets and what effect a sale might have on cash flow. Johnson was asked what he would sell in order to buy more acreage in the emerging Utica Shale.

“Probably the most obvious thing would be the Barnett, just because we don’t have much near-term upside there,” he said. “We need gas prices to go up before the rate of return on that drilling can compete with the oily plays or even the Marcellus, so that would probably be the most obvious [to sell]. I think [of] our other shale plays, none of them have gotten to the point where we have really flat production rates because we’re still drilling and adding production, which makes them less attractive to MLPs [master limited partnerships], which seems to be where most of the capital is coming from right now.”

Carrizo is active in the Marcellus, Utica, Barnett, Eagle Ford and Niobrara shales, and recently said the majority of this year’s capital spending of about $500 million would be dedicated to the Eagle Ford.

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