Eagle Ford Shale Drives Carrizo's Q1

Carrizo Oil 2015 Q1
Carrizo Oil 2015 Q1

Carrizo Oil announced its first quarter earnings and reveal a production growth driven by activity in the Eagle Ford

Related: Carrizo Acquires Eagle Ford Working Interest

Eagle Ford Highlights

Carrizo’s first quarter activity in the Eagle Ford includes 23 gross operated wells waiting on completion. These wells equate to potential crude oil production of more than 7,500 barrels per day. For the same period, the company drilled 14 gross (12.2 net) operated wells during the first quarter, and completed 16 gross (14.5 net) wells. Crude oil production from the play was approximately 18,700 Bbls/d for the quarter.

We remain focused on cost savings in the current environment, and continue to make good progress on this front. Currently, we have achieved drilling cost reductions of more than 10% and completion cost reductions of nearly 25% from late 2014 levels, putting us ahead of the forecast we provided in January.
— S.P. "Chip" Johnson, IV, Carrizo's President and CEO

Q1 Highlights:

  • Oil Production of 21,373 Bbls/d, 42% above the first quarter of 2014
  • Total Production of 34,595 Boe/d, 30% above the first quarter of 2014
  • Loss From Continuing Operations of $21.5 million, or ($0.46) per diluted share, and Adjusted Net Income of $6.4 million, or $0.14 per diluted share
  • Adjusted EBITDA of $101.8 million
  • Raising 2015 crude oil production growth target to 18%

Carrizo currently has 81,000 net acres with mineral leases and leasing activities located primarily in La Salle County with smaller positions in Atascosa, Frio, and McMullen Counties.

Read more at carrizo.com

Carrizo Acquires Eagle Ford Working Interest - $250-Million

Carrizo Eagle Ford Acreage Map
Carrizo Eagle Ford Acreage Map

Houston-based Carrizo Oil & Gas, Inc., has closed its $250-million Eagle Ford acquisition of 6,820 net Eagle Ford acres from Eagle Ford Minerals, LLC, for $250-million. The deal represents a ~25% working interest* in the acquired properties, where Carrizo was already the operator. At closing, Carrizo assumed 100% of the working interest in the assets.

The acreage includes leaseholds and producing interests, and is located primarily in the oil window of the play, in LaSalle, Atascosa, and McMullen Counties. Net production from the acquired assets in the third-quarter was approximately 2,670 boe/d, with an 85% oil cut.

While Carrizo has not historically been active in the acquisition of producing properties, we felt this was a perfect deal for the company. The acquisition adds an incremental 25% working interest in three of our four highest-return areas within the Eagle Ford Shale, and adds a significant amount of undrilled potential in addition to the existing production.
— S.P. "Chip" Johnson, IV, Carrizo's President and CEO

The acquisition increases Carrizo's Eagle Ford position to more than 81,000 net acres, and its drilling inventory in the play by 93 net wells to more than 915 net locations. At the end of September, Carrizo estimated net proved reserves associated with the acquisition to be 16.7 MMBoe (82% oil).

The transaction was completed on October 24, 2014, with an effective date of October 1, 2014. At closing, Carrizo paid approximately $93 million, with the remaining $150 million to be paid by February 2015.

Working Interest* - whosoever owns the working interest is liable for a portion of the ongoing costs associated with exploration, drilling and production. Working interest owner(s) also fully participate in the profits of any successful wells.

Read more at carrizo.com

Carrizo Expects The Eagle Ford To Drive Oil Production Growth Higher

Carrizo Oil &Gas Eagle Ford Well Pad Map
Carrizo Oil &Gas Eagle Ford Well Pad Map

Carrizo Oil & Gas raised oil production growth guidance from 28% to 40% earlier in the summer due to improving well results in the Eagle Ford.

The company also raised second quarter oil production guidance from ~9.800 boe/d to ~11,000 boe/d. That represents and increase of more than 12%. There were a few factors that led to the increase:

Key drivers of the outperformance have been flatter-than-expected decline rates from new wells in a number of areas, successful results from artificial lift installations and less well downtime than expected.

Oil production is outperforming expectations, while gas and NGL production is coming in at the high end of guidance. Carrizo increased its company-wide growth target from 6% to 10% for the year.

Carrizo is running three rigs in the Eagle Ford, one in the Niobrara Shale, and one in the Marcellus Shale. Along with production guidance, Carrizo increased its capital spending plans by ~$35 million to $530-540 million in 2013.

In the Eagle Ford Shale, Carrizo is increasing planned 2013 drilling activity by three wells as a result of increases in drilling efficiencies, and increasing planned completion activity by 35 net frac stages primarily for lease management purposes.

Read the full press release at crzo.net

Carrizo Oil & Gas Plans Big Spending in the Eagle Ford

Carrizo Eagle Ford and Pearsall Map
Carrizo Eagle Ford and Pearsall Map

Carrizo Oil & Gas has allocated $385 million of its $500 million development budget to drilling & completing wells in the South Texas Eagle Ford. The company plans to keep three rigs running in the play throughout 2013.

The company will spend a total of $624 million in 2013. Spending will be allocated as follows:

  • $385 million - Eagle Ford
  • $124 million - Land, seismic, and related activities
  • $70 million - Marcellus Shale
  • $35 million - Niobrara Shale
  • $10 million - Other drilling activities

As of December 2012, Carrizo had drilled 91 horizontal wells and had brought 68 to production. To date, wells have produced a little over 500 bbls/d of oil in the first 30 days and  360 bbls/d of oil over the first 180 days. The company's oil production is also fetching a premium of almost $10 to WTI.

Also, the company has updated its latest figures related to well costs and completions referenced in the map above. Development well costs are now estimated at $6.5-7.5 million and will be completed with 20 frac stages.

Carrizo President and CEO, S. P. "Chip" Johnson, IV stated, "This 2013 plan allows us to maintain our current level of drilling activity plus the addition of a new rig working in the Niobrara Formation for the entirety of 2013. Our rig count will remain at three rigs running in the Eagle Ford Shale, one rig drilling in the Marcellus Shale and now two rigs running in the Niobrara Formation. This drilling activity supports our previously announced 2013 production forecast for approximately 28% annual growth in oil production and a natural gas production decline of approximately 3%.

Read the full press release from the company at crzo.net

Carrizo Plans Pearsall Shale Test - Added 2,000 Acres in Q3

Carrizo Eagle Ford and Pearsall Shale Map
Carrizo Eagle Ford and Pearsall Shale Map

Carrizo Oil & Gas will test a Pearsall Shale well in late 2012. The Eagle Ford Shale is the company's primary focus in Frio, La Salle, McMullen, and Atascosa counties, but the Pearsall could add additional resource to the company's portfolio. The first test will spud in late November 2012 in Frio County. Just a couple of weeks ago, Cabot Reported Pearsall Shale Well Results that looked promising. Carrizo is following suit.

Carizzo also added 2,000 acres in La Salle County during the third quarter of 2012. The company now has more than 48,000 net acres prospective for the Eagle Ford. That acreage is predominately located in La Salle County, but stretches across three neighboring counties as well. The Pearsall is prospective on 30,000+ acres of the company's position, but it will take several exploration wells before the company knows where the play has liquids potential. Dry gas wells aren't going to be the target if natural gas prices stay low. [ic-c]

Carrizo's Eagle Ford Assets Continue Growth Trajectory

Carrizo's Eagle Ford Production Mid-2012
Carrizo's Eagle Ford Production Mid-2012

At the end of the third quarter, Carrizo was producing 7,200 b/d and 14 mmcfd net. The company is producing from 61 gross wells and has three rigs running continuously. 24 gross (19 net) wells are waiting to be brought to production. Four 80-acre spacing wells have been tested, but more production history is needed before the company can deem the down spacing test successful.

The company's first 45 wells averaged 530 b/d of production through the first 30 days. IP rates are coming in consistently in the 600-1,000 barrel range and EURs are estimated at approximately 400,000 boe per well.  Oil production is also enjoying premiums of as much as $8 to NYMEX quoted prices. Watch for conclusive results on down spacing and production from the first Pearsall Test.