Carrizo Oil & Gas announced year-end results along with updates from the company's development in oil plays. Eagle Ford Shale reserves increased 90% year over year from 15 mmboe to 28.5 mmboe.
Carrizo's 41,000 acres is primarily located in the gas condensate window, of La Salle and McMullen counties, where expectations are for a production stream of 75% liquids and 25% rich gas. Oil in the area is selling at an average of $4 better than NYMEX prices, so even with infrastructure constraints we're seeing the benefits of proximity to the Gulf Coast refining complex.
The company's first 26 wells have come online with initial production rates ranging from 600 to 1,000 bopd. 20 gross (15.5 net) wells were brought to production in 2011. The company still has a backlog of almost 10 wells waiting to be brought to production. While a very positive operations update, there were delays with coiled tubing services and mechanical problems requiring attention before wells were completed.
Production from the fourth quarter of 2011 was negatively impacted by delays in bringing multi-well drilling pads on production in the Eagle Ford. These delays were associated with availability of coiled-tubing drilling services and mechanical issues affecting ancillary well site equipment. The conditions causing these delays have been resolved and performance of our new wells in both the Eagle Ford and Niobrara continue to meet or exceed our expectations.
Carrizo has 4 rigs active now and will operate 3 net rigs throughout 2012 spending approximately $320 million of the company's $440 million capital budget in the Eagle Ford Shale. That's a quick shift for the historically gas focused company.
Capital budget allocations for 2012
- $320 million - Eagle Ford Shale
- $62 million - Marcellus Shale
- $43 million - Niobrara Formation
- $15 million - Barnett Shale
The company's liquids/oil operations are focused in the Eagle Ford and Niobrara Shale of Colorado. The company will spend approximately 10% of its capital budget in the Niobrara this year, while $77 million will be spent in natural gas plays.
Read the entire press release at crzo.net