Carrizo Focuses on Eagle Ford

Carrizo Oil & Gas Earnings Report
Carrizo Oil & Gas Earnings Report

Carrizo Oil and Gas, Inc. announced that their Eagle Ford assets maintained strong production through the Q4 and hinted they still look to the region for future development opportunities.

Related: EOG Highlights Eagle Ford Well Performance

During a recent earnings call, Carrizo executives announced a fourth quarter loss of $380.7 million, while also experiencing record oil production of 24,942 Bbls/d, 13% above the fourth quarter of 2014 .

Looking to 2016, Carrizo has a growth target of 8%production growth, which is driven by strong results from their Eagle Ford assets. They plan to spend $270-$290 million for drilling and completion projects, a decrease of nearly 45% over 2015.

Despite the substantial reduction in commodity prices from 2014 to 2015, the Company was still able to grow its proved reserves by 13% during the year. This speaks to the highly economical nature of our reserves in the Eagle Ford, where we currently believe that more than 80% of our drilling inventory is economical below $40/Bbl WTI.S.P.
— "Chip" Johnson, IV, Carrizo's President and CEO

Eagle Ford Operations

During the fourth quarter, Carrizo drilled 17 gross (16.8 net) operated wells  and completed 13 gross (12.8 net) wells in the Eagle Ford. Other highlights include:

  • Crude oil production from the play rose to more than 22,300 Bbls/d for the quarter, up from about 20,700 Bbls/d in the prior quarter.
  • At the end of the quarter, 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.
  • 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. Carrizo plans to provide an update on the results of these initiatives later this year. 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.
  •  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.

Read more about Carrizo in the Eagle Ford

Carrizo's position in the Eagle Ford remains in excess of 84,000 net acres. As the Company believes that the Eagle Ford is one of the lowest break-even cost plays in the U.S., Carrizo continues to look for opportunities to add to its acreage position in the current environment.