Carrizo Oil & Gas

Carrizo Oil & GasCarrizo Oil & Gas, Inc. is a Houston-based energy company actively engaged in the exploration, development, and production of oil and gas from resource plays located in the United States.

The company has accumulated significant expertise in the drilling and completion of complex extended reach horizontal wells in shale plays, from densely populated urban areas to difficult terrains. This strategy has led to significant success in the Eagle Ford Shale of South Texas.

The company’s operations in the Eagle Ford are focused on the central portion of the trend, which has the optimal combination of light oil and reservoir energy. Carrizo’s mineral leases and leasing activities are located primarily in La Salle County with smaller positions in Atascosa, Frio, and McMullen Counties.

In April of 2010 the company announced the initiation of oil focused horizontal development programs in the Eagle Ford Shale in South Texas where they have accumulated ~82,500 net acres.

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Carrizo Eagle Ford Shale Quarterly Commentary

November 2016

Carrizo’s third quarter included spending a hefty chunk of their drilling budget on the Eagle Ford. Approximately 80% of the Carizzo’s third quarter drilling and completion spending was in the Eagle Ford Shale. Other highlights include:

  • Drilled 17 gross (14.9 net) operated wells
  • Completed 24 gross (23.2 net) wells
  • Crude oil production was more than 21,600 Bbls/d, up 2% versus the prior quarter
  • Company expects fourth quarter volumes to show a material increase
  • At the end of the quarter, company has 26 gross (23.8 net) operated  wells waiting on completion
  • Currently operating two rigs in the Eagle Ford
  • Company expects to drill approximately 71 gross (67 net) operated wells and complete 73 gross (69 net) operated wells in the play during 2016

October 2016

Carrizo agreed to acquire approximately 15,000 net acres located primarily in the the Eagle Ford Shale for $181 million with an estimated net production during of approximately 3,100 Boe/d (61% oil). Following the closing of the transaction, Carrizo will hold approximately 101,000 net acres in the Eagle Ford Shale, concentrated in LaSalle, McMullen, and Atascosa counties.

August 2016

In the Eagle Ford Shale, Carrizo drilled 19 gross (18.3 net) operated wells during the second quarter and completed 19 gross (18.0 net) wells. Crude oil production from the play was approximately 21,200 Bbls/d for the quarter, down from the prior quarter as production was impacted by significant downtime associated with planned shut-ins for offsetting completion activity. The majority of the planned downtime occurred atBrown Trust and RPG, two of the Company’s oilier areas within its Eagle Ford Shale position. At the end of the quarter, Carrizo had 33 gross (32.1 net) operated Eagle Ford wells waiting on completion, equating to net crude oil production potential of more than 12,000 Bbls/d. The Company is operating two rigs in the Eagle Ford and currently expects to drill approximately 67 gross (63 net) operated wells and complete 73 gross (68 net) operated wells in the play during 2016.

In the Lower Eagle Ford, Carrizo has been developing its acreage on 330 ft. spacing for more than two years, and has now tested a significant portion of its position. Based on the results to date, the Company believes that the majority of the acreage tested warrants development at this spacing.

May 2016

Carrizo Oil & Gas executives reported 2016 first quarter results that included an adjusted net income of $9.2 million. The company also reported record production of 42,025 Boe/d, 21% above the first quarter of 2015. The company spent approximately 85% of its budget in the Eagle Ford and acquired 4,000 net acres in the region. For the remainder of 2016, the company plans to increase crude oil production growth target to 9%.

Other first quarter Eagle Ford highlights:

  • Expects to drill approximately 57 gross (53 net) operated wells and complete 55 gross (52 net) operated wells in the play during 2016
  • Drilled 18 gross (17.0 net) operated wells
  • Completed 14 gross (12.5 net) wells
  • Crude oil production from the play rose to approximately 22,800 Bbls/d for the quarter, up 2% versus the prior quarter
  • 33 gross (31.8 net) operated Eagle Ford wells waiting on completion
  • Operating two rigs
  • Reduction of well costs for a 6,100 ft. lateral well are currently expected to average approximately $4.1 million, down from $4.6 million previously.

March 2016

At the end of the fourth quarter of 2015, Carrizo had 29 gross (27.3 net) operated Eagle Ford wells waiting on completion, equating to net crude oil production potential of approximately 10,200 Bbls/d. Other highlights include :

  • Drilled 17 gross (16.8 net) operated wells
  • Completed 13 gross (12.8 net) well
  • Crude oil production from the play rose to more than 22,300 Bbls/d up from about 20,700 Bbls/d in the prior quarter.

The Company is operating two rigs in the Eagle Ford and currently expects to drill approximately 49 gross (46 net) operated wells and complete 56 gross (53 net) operated wells in the play during 2016. Carrizo is testing multiple initiatives aimed at significantly increasing its Lower Eagle Ford drilling inventory on its existing acreage position.

The Company continues to see encouraging results from its remaining 330 ft. downspacing tests, and currently has production online from three pads testing even tighter spacing through various stagger-stack configurations within the Lower Eagle Ford. The stagger-stack pads are currently testing effective lateral spacing ranging from 165 ft. to 280 ft. which, if successful, could increase Carrizo’s drilling inventory by 200 to more than 800 net locations relative to a single layer development plan at 330 ft. spacing. The pads have been online for periods ranging from three to four months, and to date, the Company has not seen any data that would indicate a stagger-stack development is not feasible. However, more production history is needed to determine optimal spacing.

During 2015, Carrizo also began production from its initial Upper Eagle Ford test. The well has been on production for 115 days, and had a 30-day peak rate of 395 Boe/d (93% oil). While the well experienced a lower initial production rate relative to the Company’s Lower Eagle Ford wells, it has also exhibited a shallower decline. Importantly, the Upper Eagle Ford formation does appear to be acting independently of the Lower Eagle Ford, adding another layer of potential to the Company’s development options in the region. Carrizo currently estimates that the Upper Eagle Ford could add approximately 50 net locations to its inventory count. While the Company does not currently expect to allocate much nearterm capital to the Upper Eagle Ford, Carrizo currently believes it is able to hold all of its Upper Eagle Ford rights with wells drilled in the Lower Eagle Ford.

The Company continues to improve its drilling efficiency in the Eagle Ford, with recent leading edge spud-to-total-depth drilling times now becoming more the norm as it has further optimized its drilling program using the two newbuild rigs it received in 2015. As a result, the Company drilled approximately 2.8 long-lateral wells per rig per month in the fourth Total ($MM) Property acquisition costs Proved property acquisition costs $ — Unproved property acquisition costs 63.5 Total property acquisition costs 63.5 Exploration costs 117.2 Development costs 389.4 Total costs incurred (1) $570.1 quarter, up from approximately 2.4 in the prior quarter.

Source: Carrizo Oil & Gas

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