Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced the Company’s financial results for the third quarter of
2017 and provided an operational update, which includes the
following highlights:
- Crude oil production of 34,903
Bbls/d, 43% above the third quarter of 2016
- Total production of 55,224 Boe/d,
35% above the third quarter of 2016
- Net income attributable to common
shareholders of $5.6 million, or $0.07 per diluted share, and Net
cash provided by operating activities of $101.4 million
- Adjusted net income attributable to
common shareholders of $26.7 million, or $0.33 per diluted share,
and Adjusted EBITDA of $132.8 million
- Two recent Delaware Basin wells
recorded an average peak 30-day rate of 1,644 Boe/d (50% oil, 68%
liquids)
Carrizo reported third quarter of 2017 net income attributable
to common shareholders of $5.6 million, or $0.07 per basic and
diluted share, compared to a net loss attributable to common
shareholders of $101.2 million, or $1.72 per basic and diluted
share in the third quarter of 2016. The net income attributable to
common shareholders for the third quarter of 2017 and net loss
attributable to common shareholders for the third quarter of 2016
include certain items typically excluded from published estimates
by the investment community. Adjusted net income attributable to
common shareholders, which excludes the impact of these items as
described in the non-GAAP reconciliation tables included below, for
the third quarter of 2017 was $26.7 million, or $0.33 per diluted
share, compared to $13.6 million, or $0.23 per diluted share, in
the third quarter of 2016.
For the third quarter of 2017, Adjusted EBITDA was $132.8
million, an increase of 46% from the prior-year quarter due to
higher production volumes and commodity prices. Adjusted EBITDA and
the reconciliation to net income (loss) attributable to common
shareholders are presented in the non-GAAP reconciliation tables
included below.
Production volumes during the third quarter of 2017 were 5,080
MBoe, or 55,224 Boe/d, an increase of 35% versus the third quarter
of 2016. The year-over-year production growth was driven by
drilling activity in the Eagle Ford Shale and Delaware Basin plus
the addition of production from the Sanchez property acquisition in
late 2016 and the ExL property acquisition during the quarter.
Crude oil production during the third quarter of 2017 averaged
34,903 Bbls/d, an increase of 43% versus the third quarter of 2016;
natural gas and NGL production were 81,265 Mcf/d and 6,777 Bbls/d,
respectively, during the third quarter of 2017. Third quarter of
2017 production exceeded the high end of the Company's guidance
despite the impact of Hurricane Harvey during the quarter.
Drilling and completion capital expenditures for the third
quarter of 2017 were $165.0 million. Approximately 75% of the third
quarter drilling and completion spending was in the Eagle Ford
Shale, while more than 20% was in the Delaware Basin. Land and
seismic expenditures (excluding the ExL acquisition) during the
quarter were $11.8 million, and were primarily focused in the
Permian Basin and Eagle Ford Shale.
Since taking over operations on the Delaware Basin properties
acquired from ExL during August, Carrizo has successfully upgraded
the drilling rigs on the acreage with more modern equipment.
Carrizo is currently operating four horizontal rigs on the acreage,
and expects to temporarily add a fifth rig later this quarter in
order to build an inventory of locations. This should help the
Company drive drilling and completion efficiencies in the play by
shifting more of its upcoming activity to pad development. To
further ensure a smooth development on the properties, Carrizo has
also elected to accelerate the build-out of its water handling
system in the area, shifting activity originally planned for 2018
into 2017. As a result of these schedule changes, as well as an
increase in non-operated activity on its acreage in the Delaware
Basin and DJ Basin, Carrizo is increasing its 2017 drilling and
completion capital expenditure guidance to $600-$620 million from
$590-$610 million.
Over the past several months, Carrizo entered into agreements to
sell its assets in the Utica Shale and Marcellus Shale. Both
divestitures are currently expected to close during November; the
impact of these divestitures on the Company's fourth quarter of
2017 production is estimated to be a reduction of approximately
3,050 Boe/d (2% oil) relative to the Company's previously-issued
guidance. Additionally, the Company previously announced that
Hurricane Harvey temporarily impacted its production in the third
quarter of 2017 by approximately 2,500 Boe/d (approximately 55%
oil). After accounting for these items, Carrizo is adjusting its
2017 oil production guidance to 34,400-34,600 Bbls/d from
34,600-34,800 Bbls/d previously. Using the midpoint of this range,
the Company’s 2017 oil production growth guidance equates to 34%.
For natural gas and NGLs, Carrizo is adjusting its 2017 guidance to
77-78 MMcf/d and 6,100-6,200 Bbls/d, respectively, from 81-83
MMcf/d and 5,900-6,000 Bbls/d, respectively. For the fourth quarter
of 2017, Carrizo expects oil production to be 40,400-40,800 Bbls/d,
and natural gas and NGL production to be 74-78 MMcf/d and
8,200-8,400 Bbls/d, respectively. A full summary of Carrizo’s
guidance is provided in the attached tables.
S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented
on the results, “The third quarter was an eventful and challenging
one for Carrizo as we closed the largest acquisition in our
history, approximately 16,500 net acres in the core of the Delaware
Basin, worked towards simplifying our portfolio by divesting
non-core assets, and dealt with the aftermath of Hurricane Harvey.
I'm extremely proud of our team, as their focus and dedication
allowed us to hit the ground running on our Delaware Basin
acquisition and once again deliver an excellent quarter. Third
quarter production of 55,224 Boe/d exceeded the high end of the
guidance we provided back in August despite the impact of Hurricane
Harvey. This speaks to the strong underlying performance we're
seeing across our assets.
“Our operations in the Delaware Basin have been on schedule
since we closed the ExL acquisition in August. We have rapidly
reduced drilling days, and have seen lower operating costs than we
modeled in our acquisition economics. We continue to be pleased
with the well results we have seen on the acquired acreage. Two
recent wells located on the northwestern portion of it delivered an
average peak 30-day rate of 1,644 Boe/d, with 50% of the product
mix being oil. The wells not only delivered strong production
rates, but also helped confirm our geologic model, which indicated
that only a small portion of the acreage would have a high GOR
profile.
“We remain committed to reducing our leverage and moving towards
a free cash flow positive development program by year-end 2018. We
expect to close on our Appalachia divestitures this month and
expect to be able to announce a sale of our DJ Basin assets this
quarter. We are also evaluating expanding our planned asset
divestiture program to include other assets where we do not expect
to allocate material capital over the next several years. This
would allow us to increase the debt reduction targets we previously
announced.”
Operational Update
In the Eagle Ford Shale, Carrizo drilled 24 gross (19.8 net)
operated wells during the third quarter and completed 19 gross
(17.7 net) operated wells. Crude oil production from the play was
more than 30,000 Bbls/d for the quarter, nearly flat with the prior
quarter despite the impact of Hurricane Harvey. At the end of the
quarter, Carrizo had 32 gross (27.2 net) operated Eagle Ford Shale
wells in progress or waiting on completion, equating to net crude
oil production potential of more than 10,000 Bbls/d. The Company is
currently operating two rigs in the Eagle Ford Shale, and expects
to drill approximately 90 gross (77 net) operated wells and
complete 88 gross (82 net) operated wells in the play during
2017.
Carrizo continues to be pleased with the results it is seeing
across its Eagle Ford Shale position. During the third quarter,
Carrizo turned 18 net wells to sales in the Eagle Ford Shale, which
had an average lateral length of approximately 7,050 ft. The
average peak 30-day rate from the wells was 724 Boe/d (86% oil, 93%
liquids) on restricted chokes.
The Company continues to test a number of concepts aimed at
maximizing the value of its Eagle Ford Shale position. Some of the
concepts being tested are well spacing, stage spacing, and proppant
loading. Carrizo recently conducted a test at a five-well pad in
its Jasik area in LaSalle County where the wells were drilled with
effective lateral spacing of 230-300 ft., and completed with 180
ft. stage spacing and 2,000 lbs/ft. of proppant. The wells recorded
an average peak 30-day rate of 928 Boe/d (84% oil, 92% liquids) on
restricted chokes.
In the Delaware Basin, Carrizo drilled 5 gross (3.8 net)
operated wells during the third quarter and completed 3 gross (2.4
net) operated wells. Crude oil production from the play was
approximately 3,000 Bbls/d for the quarter, up from approximately
900 Bbls/d in the prior quarter due primarily to the addition of
the ExL properties during the quarter.
Since taking over operations on the ExL properties, which it is
referring to as the Phantom area, in August, Carrizo has begun to
implement its Eagle Ford operational philosophy. To date, the
Company has replaced the rig fleet with Generation 4 and 5 rigs,
upgraded the downhole motors to match the rig capabilities, and
brought its own people and procedures to the project. This,
combined with the Company's previous operating experience in the
Delaware Basin, has allowed Carrizo to realize early efficiencies
that have resulted in time and cost savings. The Company sees the
potential for additional material efficiency gains over time.
Carrizo is currently running four horizontal rigs in the basin,
and recently secured another Generation 5 rig, which should arrive
later this week. This will temporarily give the Company five rigs
in the basin, which will allow it to build an inventory of drilling
locations to help facilitate pad development. Carrizo currently
expects to release one of the rigs by year-end and another in
February, leaving it with three rigs running in the basin, all of
which are Generation 5 spec. Carrizo currently expects to drill
approximately 13 gross (10.4 net) operated wells and complete 17
gross (13.4 net) operated wells in the play during 2017.
Carrizo continues to be pleased with the well performance from
the Phantom area. The Company recently brought two wells located on
the northwestern part of this acreage online. The Christian 2#1T
was brought online in September, and achieved a peak 30-day rate of
1,728 Boe/d (48% oil, 66% liquids) on a restricted choke from an
approximate 7,300 ft. lateral; the well was completed in the Lower
Wolfcamp A. The State CVX Unit A1314 #1H was also brought online in
September and achieved a peak 30-day rate of 1,559 Boe/d (52% oil,
69% liquids) on a restricted choke from an approximate 6,400 ft.
lateral; the well was completed in the Upper Wolfcamp B. These
results support the Company's evaluation of the acreage, which
indicated that only a small portion would have a high GOR
(gas-oil-ratio) profile.
In the Niobrara Formation, Carrizo did not drill or complete any
operated wells during the third quarter. Crude oil production from
the play was approximately 1,700 Bbls/d for the quarter, down from
approximately 1,900 Bbls/d in the prior quarter due to the lack of
new operated wells coming online.
Divestiture Program Update
Carrizo previously announced that it had entered into agreements
to sell its assets in the Utica Shale and Marcellus Shale for cash
proceeds of $62 million and $84 million, subject to customary
closing terms and conditions, respectively, plus contingent
payments based on the level of commodity prices over the next three
years. Both divestitures are currently expected to close later this
month.
Borrowing Base Update
During November, Carrizo’s banking syndicate, led by Wells Fargo
as administrative agent, completed its semi-annual borrowing base
redetermination. In conjunction with this, the borrowing base under
the Company’s senior credit facility was redetermined at $900
million, and Carrizo has elected to maintain the commitment amount
at $800 million. The borrowing base excludes the Company's assets
in Appalachia and the DJ Basin, which have been included in its
divestiture program. The next scheduled redetermination of the
borrowing base is expected in the spring of 2018.
Hedging Activity
Carrizo currently has hedges in place for more than 35% of
estimated crude oil production for the fourth quarter of 2017
(based on the midpoint of guidance). For the fourth quarter, the
Company has swaps covering 15,000 Bbls/d of crude oil at an average
fixed price of $53.44/Bbl. For 2018, Carrizo currently has hedges
covering 30,000 Bbls/d of crude oil production, consisting of
three-way collars covering 24,000 Bbls/d of crude oil with an
average floor price of $49.06/Bbl, ceiling price of $60.14/Bbl, and
sub-floor price of $39.38/Bbl, and swaps covering 6,000 Bbls/d at
an average fixed price of $49.55/Bbl. For 2019, Carrizo currently
has three-way collars covering 12,000 Bbls/d of crude oil with an
average floor price of $48.40/Bbl, ceiling price of $60.29/Bbl, and
sub-floor price of $40.00/Bbl.
Carrizo also has hedges in place for more than 25% of estimated
natural gas production for the fourth quarter of 2017. For the
quarter, the Company has swaps covering 20,000 MMBtu/d of natural
gas at an average fixed price of $3.30/MMBtu. (Please refer to the
attached tables for details of the Company’s derivative
contracts.)
Conference Call Details
The Company will hold a conference call to discuss 2017 third
quarter financial results on Wednesday, November 8, 2017 at 9:00 AM
Central Standard Time. To participate in the call, please dial
(800) 410-4983 (U.S. & Canada) or +1 (303) 223-2693
(Intl.) ten minutes before the call is scheduled to begin. A replay
of the call will be available through Wednesday, November 15, 2017
at 11:00 AM Central Standard Time at (800) 633-8284 (U.S.
& Canada) or +1 (402) 977-9140 (Intl.). The reservation
number for the replay is 21860148 for U.S., Canadian, and
International callers.
A simultaneous webcast of the call may be accessed over the
internet by visiting our website at http://www.carrizo.com, clicking on “Upcoming
Events”, and then clicking on the “2017 Third Quarter Earnings
Call” link. To listen, please go to the website in time to register
and install any necessary software. The webcast will be archived
for replay on the Carrizo website for 7 days.
Carrizo 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. Our
current operations are principally focused in proven, producing oil
and gas plays primarily in the Eagle Ford Shale in South Texas and
the Permian Basin in West Texas.
Statements in this release that are not historical facts,
including but not limited to those related to capital requirements,
free cash flow positive program, the ExL acquisition (including
effects thereof), dispositions, contingent payment amounts,
monetization process matters and results, capital expenditure,
guidance, rig program, production, average well returns, the
estimated production results and financial performance, effects of
transactions, targeted ratios and other metrics, timing, levels of
and potential production, downspacing, crude oil production
potential and growth, oil and gas prices, drilling and completion
activities, drilling inventory, including timing thereof, well
costs, break-even prices, production mix, development plans,
growth, hedging activity, the Company’s or management’s intentions,
beliefs, expectations, hopes, projections, assessment of risks,
estimations, plans or predictions for the future, results of the
Company’s strategies and other statements that are not historical
facts are forward-looking statements that are based on current
expectations. Although the Company believes that its expectations
are based on reasonable assumptions, it can give no assurance that
these expectations will prove correct. Important factors that could
cause actual results to differ materially from those in the
forward-looking statements include assumptions regarding well
costs, estimated recoveries, pricing and other factors affecting
average well returns, results of wells and testing, failure of
actual production to meet expectations, performance of rig
operators, spacing test results, availability of gathering systems,
costs of oilfield services, actions by governmental authorities,
joint venture partners, industry partners, lenders and other third
parties, actions by purchasers or sellers of properties,
satisfaction of closing conditions and failure of transactions to
close, purchase price adjustment, integration and other risks and
effects of acquisitions and dispositions, market and other
conditions, risks regarding financing, capital needs, availability
of well connects, capital needs and uses, commodity price changes,
effects of the global economy on exploration activity, results of
and dependence on exploratory drilling activities, operating risks,
right-of-way and other land issues, availability of capital and
equipment, weather, and other risks described in the Company’s Form
10-K for the year ended December 31, 2016 and its other filings
with the U.S. Securities and Exchange Commission. There can be no
assurance any transaction described in this press release will
occur on the terms or timing described, or at all.
(Financial Highlights to Follow)
CARRIZO OIL & GAS, INC. CONSOLIDATED BALANCE
SHEETS (In thousands, except share and per share
amounts) (Unaudited)
September 30,
2017
December 31,
2016
Assets Current assets Cash and cash equivalents $5,092
$4,194 Accounts receivable, net 89,809 64,208 Other current assets
7,826 4,586 Total current assets 102,727
72,988 Property and equipment Oil and gas properties, full
cost method Proved properties, net 1,882,575 1,294,667 Unproved
properties, not being amortized 740,205 240,961 Other property and
equipment, net 10,538 10,132 Total property and
equipment, net 2,633,318 1,545,760 Other assets 9,681 7,579
Total Assets $2,745,726 $1,626,327
Liabilities and Shareholders’ Equity Current
liabilities Accounts payable $87,077 $55,631 Revenues and royalties
payable 46,821 38,107 Accrued capital expenditures 111,485 36,594
Accrued interest 25,305 22,016 Accrued lease operating expense
16,394 12,377 Derivative liabilities 6,778 22,601 Other current
liabilities 24,579 24,633 Total current liabilities
318,439 211,959 Long-term debt 1,701,439 1,325,418
Asset retirement obligations 24,671 20,848 Derivative liabilities
77,184 27,528 Other liabilities 21,914 17,116 Total
liabilities 2,143,647 1,602,869
Commitments and
contingencies Preferred stock
Preferred stock, $0.01 par value,
10,000,000 shares authorized; 250,000 issued and outstanding as
of
September 30, 2017 and none issued and
outstanding as of December 31, 2016
213,400 —
Shareholders’ equity
Common stock, $0.01 par value, 180,000,000
shares authorized; 81,454,621 issued and outstanding as
of September 30, 2017 and 90,000,000
shares authorized; 65,132,499 issued and outstanding as of
December 31, 2016
815 651 Additional paid-in capital 1,926,798 1,665,891 Accumulated
deficit (1,538,934 ) (1,643,084 ) Total shareholders’ equity
388,679 23,458
Total Liabilities and Shareholders’
Equity $2,745,726 $1,626,327
CARRIZO OIL & GAS, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share amounts)
(Unaudited) Three
Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2017 2016
2017 2016 Revenues Crude oil
$152,101 $95,154 $422,999 $254,758 Natural gas liquids 12,467 5,616
27,678 15,119 Natural gas 16,711 10,407 48,440
29,886 Total revenues 181,279 111,177 499,117 299,763
Costs and Expenses Lease operating 34,874 24,282 100,767
71,071 Production taxes 7,741 4,886 21,092 12,940 Ad valorem taxes
1,736 1,426 5,776 3,950 Depreciation, depletion and amortization
67,564 48,949 181,018 160,492 General and administrative, net
16,029 18,119 49,328 59,046 (Gain) loss on derivatives, net 24,377
(11,744 ) (27,004 ) 29,938 Interest expense, net 20,673 21,190
62,350 58,913 Impairment of proved oil and gas properties — 105,057
— 576,540 Other expense, net 462 499 1,640
1,568 Total costs and expenses 173,456 212,664 394,967
974,458
Income (Loss) Before Income Taxes 7,823
(101,487 ) 104,150 (674,695 ) Income tax benefit — 313
— —
Net Income (Loss) $7,823
($101,174 ) $104,150 ($674,695 ) Dividends on preferred
stock (2,249 ) — (2,249 ) —
Net Income (Loss)
Attributable to Common Shareholders $5,574 ($101,174 )
$101,901 ($674,695 )
Net Income (Loss) Attributable to
Common Shareholders Per
Common Share
Basic $0.07 ($1.72 ) $1.44 ($11.49 ) Diluted $0.07 ($1.72 ) $1.43
($11.49 )
Weighted Average Common Shares Outstanding
Basic 81,053 58,945 70,728 58,705 Diluted 81,138 58,945 71,147
58,705
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (In
thousands, except share amounts) (Unaudited)
Common Stock
AdditionalPaid-in Capital
AccumulatedDeficit
TotalShareholders’ Equity
Shares Amount Balance as of December
31, 2016 65,132,499 $651 $1,665,891 ($1,643,084 ) $23,458
Stock-based compensation expense — — 17,967 — 17,967
Issuance of common stock upon grants of
restricted
stock awards and vestings of restricted
stock units
and performance shares
722,122 8 (36 ) — (28 ) Sale of common stock, net of offering costs
15,600,000 156 222,222 — 222,378 Issuance of warrants — — 23,003 —
23,003 Dividends on preferred stock — — (2,249 ) — (2,249 ) Net
income — — — 104,150 104,150
Balance as of September 30, 2017 81,454,621 $815
$1,926,798 ($1,538,934 ) $388,679
CARRIZO OIL & GAS, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three
Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2017 2016
2017 2016 Cash Flows From Operating
Activities Net income (loss) $7,823 ($101,174 ) $104,150
($674,695 )
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities
Depreciation, depletion and amortization 67,564 48,949 181,018
160,492 Impairment of proved oil and gas properties — 105,057 —
576,540 (Gain) loss on derivatives, net 24,377 (11,744 ) (27,004 )
29,938 Cash received for derivative settlements, net 6,456 20,357
7,714 98,820 Stock-based compensation expense, net 4,866 8,420
8,462 30,834 Non-cash interest expense, net 887 1,041 2,961 3,105
Other, net 1,482 85 4,249 2,427 Changes in components of working
capital and other assets and liabilities- Accounts receivable
(17,791 ) 3,160 (25,885 ) 1,768 Accounts payable 262 (1,094 )
14,748 (20,294 ) Accrued liabilities 6,320 822 11,970 (7,954 )
Other assets and liabilities, net (804 ) (2,071 ) (1,786 ) (3,134 )
Net cash provided by operating activities 101,442 71,808
280,597 197,847
Cash Flows From Investing
Activities Capital expenditures (142,936 ) (106,384 ) (433,561
) (346,245 ) Acquisitions of oil and gas properties (600,473 ) —
(692,006 ) — Proceeds from divestitures of oil and gas properties,
net 11 694 18,212 15,331 Deposit for pending divestiture of oil and
gas properties 6,200 — 6,200 — Other, net (1,325 ) 212
(3,804 ) (661 ) Net cash used in investing activities (738,523 )
(105,478 ) (1,104,959 ) (331,575 )
Cash Flows From Financing
Activities Issuance of senior notes 250,000 — 250,000 —
Borrowings under credit agreement 392,778 219,464 1,311,875 510,116
Repayments of borrowings under credit agreement (459,478 ) (184,464
) (1,183,275 ) (414,116 ) Payments of debt issuance costs and
credit facility amendment fees (4,596 ) — (8,964 ) (1,150 ) Sale of
common stock, net of offering costs 222,378 — 222,378 — Sale of
preferred stock, net of issuance costs 241,404 — 236,404 — Payment
of dividends on preferred stock (2,249 ) — (2,249 ) — Other, net
(292 ) (253 ) (909 ) (805 ) Net cash provided by financing
activities 639,945 34,747 825,260 94,045
Net Increase (Decrease) in Cash and Cash Equivalents
2,864 1,077 898 (39,683 )
Cash and Cash Equivalents, Beginning
of Period 2,228 2,158 4,194 42,918
Cash and Cash Equivalents, End of Period $5,092
$3,235 $5,092 $3,235
CARRIZO OIL & GAS, INC.
NON-GAAP FINANCIAL MEASURES
(Unaudited)
Reconciliation of Net Income (Loss) Attributable to Common
Shareholders (GAAP) to Adjusted Net Income Attributable to Common
Shareholders (Non-GAAP)
Adjusted net income attributable to common shareholders is a
non-GAAP financial measure which excludes certain items that are
included in net income (loss) attributable to common shareholders,
the most directly comparable GAAP financial measure. Items excluded
are those which the Company believes affect the comparability of
operating results and are typically excluded from published
estimates by the investment community, including items whose timing
and/or amount cannot be reasonably estimated or are
non-recurring.
Adjusted net income attributable to common shareholders is
presented because management believes it provides useful additional
information to investors for analysis of the Company’s fundamental
business on a recurring basis. In addition, management believes
that adjusted net income attributable to common shareholders is
widely used by professional research analysts and others in the
valuation, comparison, and investment recommendations of companies
in the oil and gas exploration and production industry.
Adjusted net income attributable to common shareholders should
not be considered in isolation or as a substitute for net income
(loss) attributable to common shareholders or any other measure of
a company’s financial performance or profitability presented in
accordance with GAAP. A reconciliation of the differences between
net income (loss) attributable to common shareholders and adjusted
net income attributable to common shareholders is presented below.
Because adjusted net income attributable to common shareholders
excludes some, but not all, items that affect net income (loss)
attributable to common shareholders and may vary among companies,
our calculation of adjusted net income attributable to common
shareholders may not be comparable to similarly titled measures of
other companies.
Three Months
EndedSeptember 30, Nine Months
EndedSeptember 30, 2017 2016
2017 2016 (In thousands, except per share
amounts) Net Income (Loss) Attributable to Common
Shareholders (GAAP) $5,574 ($101,174 ) $101,901 ($674,695 )
Income tax benefit — (313 ) — — (Gain) loss on derivatives, net
24,377 (11,744 ) (27,004 ) 29,938 Cash received for derivative
settlements, net 6,456 20,357 7,714 98,820 Non-cash general and
administrative, net 5,494 8,402 9,090 30,985 Impairment of proved
oil and gas properties — 105,057 — 576,540 Other expense, net 462
499 1,640 390 Adjusted income before
income taxes 42,363 21,084 93,341 61,978 Adjusted income tax
expense (1) (15,632 ) (7,527 ) (34,443 ) (22,126 )
Adjusted Net Income Attributable to
Common Shareholders (Non-GAAP)
$26,731 $13,557 $58,898 $39,852
Net Income (Loss) Attributable to Common Shareholders Per
Diluted Common Share (GAAP) $0.07 ($1.72 ) $1.43 ($11.49 )
Income tax benefit — (0.01 ) — — (Gain) loss on derivatives, net
0.30 (0.20 ) (0.38 ) 0.50 Cash received for derivative settlements,
net 0.08 0.34 0.11 1.66 Non-cash general and administrative, net
0.06 0.14 0.13 0.52 Impairment of proved oil and gas properties —
1.76 — 9.71 Other expense, net 0.01 0.01 0.02 0.01 Effect of
dilutive securities due to adjusted net income attributable to
common shareholders — 0.03 (2) — 0.13
(2) Adjusted income before income taxes 0.52 0.35 1.31 1.04
Adjusted income tax expense (0.19 ) (0.12 ) (0.48 ) (0.37 )
Adjusted Net Income Attributable to Common Shareholders Per
Diluted Common Share (Non-GAAP) $0.33 $0.23 $0.83
$0.67
Diluted WASO (GAAP) 81,138 58,945
71,147 58,705 Dilutive shares adjustment — 698 —
664
Adjusted Diluted WASO (Non-GAAP) 81,138
59,643 (2) 71,147 59,369 (2)
__________
(1) Adjusted income tax expense is calculated by
applying the Company’s estimated annual effective income tax rates
applicable to the adjusted income before income taxes, which were
36.9% for the three months and nine months ended September 30, 2017
and 35.7% for the three months and nine months ended September 30,
2016. (2) Adjusted diluted weighted average common shares
outstanding (“Adjusted Diluted WASO”) is a non-GAAP financial
measure which includes the effect of potentially dilutive
instruments that, under certain circumstances described below, are
excluded from diluted weighted average common shares outstanding
(“Diluted WASO”), the most directly comparable GAAP financial
measure. When a net loss attributable to common shareholders
exists, all potentially dilutive instruments are anti-dilutive to
the net loss attributable to common shareholders per common share
and therefore excluded from the computation of Diluted WASO. The
effect of potentially dilutive instruments is included in the
computation of Adjusted Diluted WASO for purposes of computing the
per diluted common share impacts of the reconciling items as well
as adjusted net income attributable to common shareholders per
diluted common share.
CARRIZO OIL & GAS, INC.
NON-GAAP FINANCIAL MEASURES
(Unaudited)
Reconciliation of Net Income (Loss) Attributable to Common
Shareholders (GAAP) to Adjusted EBITDA (Non-GAAP) to Net Cash
Provided by Operating Activities (GAAP)
Adjusted EBITDA is a non-GAAP financial measure which excludes
certain items that are included in net income (loss) attributable
to common shareholders, the most directly comparable GAAP financial
measure. Items excluded are interest, income taxes, depreciation,
depletion and amortization, impairments, dividends on preferred
stock and items that the Company believes affect the comparability
of operating results such as items whose timing and/or amount
cannot be reasonably estimated or are non-recurring.
Adjusted EBITDA is presented because management believes it
provides useful additional information to investors and analysts,
for analysis of the Company’s financial and operating performance
on a recurring basis and the Company’s ability to internally
generate funds for exploration and development, and to service
debt. In addition, management believes that adjusted EBITDA is
widely used by professional research analysts and others in the
valuation, comparison, and investment recommendations of companies
in the oil and gas exploration and production industry.
Adjusted EBITDA should not be considered in isolation or as a
substitute for net income (loss) attributable to common
shareholders, net cash provided by operating activities, or any
other measure of a company’s profitability or liquidity presented
in accordance with GAAP. A reconciliation of net income (loss)
attributable to common shareholders to adjusted EBITDA to net cash
provided by operating activities is presented below. Because
adjusted EBITDA excludes some, but not all, items that affect net
income (loss) attributable to common shareholders, our calculations
of adjusted EBITDA may not be comparable to similarly titled
measures of other companies.
Reconciliation of Net Cash Provided by Operating Activities
(GAAP) to Discretionary Cash Flows (Non-GAAP)
Discretionary cash flows are a non-GAAP financial measure which
excludes certain items that are included in net cash provided by
operating activities, the most directly comparable GAAP financial
measure. Items excluded are changes in the components of working
capital and other items that the Company believes affect the
comparability of operating cash flows such as items that are
non-recurring.
Discretionary cash flows are presented because management
believes it provides useful additional information to investors for
analysis of the Company’s ability to generate cash to fund
exploration and development, and to service debt. In addition,
management believes that discretionary cash flows is widely used by
professional research analysts and others in the valuation,
comparison, and investment recommendations of companies in the oil
and gas exploration and production industry.
Discretionary cash flows should not be considered in isolation
or as a substitute for net cash provided by operating activities or
any other measure of a company’s cash flows or liquidity presented
in accordance with GAAP. A reconciliation of net cash provided by
operating activities to discretionary cash flows is presented
below. Because discretionary cash flows excludes some, but not all,
items that affect net cash provided by operating activities and may
vary among companies, our calculation of discretionary cash flows
may not be comparable to similarly titled measures of other
companies.
Three Months
EndedSeptember 30, Nine Months
EndedSeptember 30, 2017 2016
2017 2016 (In thousands) Net
Income (Loss) Attributable to Common Shareholders (GAAP) $5,574
($101,174 ) $101,901 ($674,695 ) Dividends on preferred stock 2,249
— 2,249 — Income tax benefit — (313 ) — — Depreciation, depletion
and amortization 67,564 48,949 181,018 160,492 Interest expense,
net 20,673 21,190 62,350 58,913 (Gain) loss on derivatives, net
24,377 (11,744 ) (27,004 ) 29,938 Cash received for derivative
settlements, net 6,456 20,357 7,714 98,820 Non-cash general and
administrative, net 5,494 8,402 9,090 30,985 Impairment of proved
oil and gas properties — 105,057 — 576,540 Other expense, net 462
499 1,640 390
Adjusted EBITDA
(Non-GAAP) $132,849 $91,223 $338,958 $281,383 Cash interest
expense, net (19,786 ) (20,149 ) (59,389 ) (55,808 ) Cash dividends
on preferred stock (2,249 ) — (2,249 ) — Other cash and non-cash
adjustments, net 392 469 1,981 1,986
Discretionary Cash Flows (Non-GAAP) $111,206 $71,543
$279,301 $227,561 Changes in components of working capital and
other (9,764 ) 265 1,296 (29,714 )
Net Cash
Provided By Operating Activities (GAAP) $101,442 $71,808
$280,597 $197,847
CARRIZO OIL
& GAS, INC. PRODUCTION VOLUMES AND REALIZED PRICES
(Unaudited)
Three Months EndedSeptember 30, Nine
Months EndedSeptember 30, 2017
2016 2017 2016 Total
production volumes - Crude oil (MBbls) 3,211 2,253 8,867 6,780
NGLs (MBbls) 623 435 1,482 1,324 Natural gas (MMcf) 7,476
6,372 21,279 19,502
Total barrels of oil
equivalent (MBoe) 5,080 3,750 13,896
11,354
Daily production volumes by product - Crude
oil (Bbls/d) 34,903 24,488 32,481 24,744 NGLs (Bbls/d) 6,777 4,730
5,430 4,831 Natural gas (Mcf/d) 81,265 69,262 77,946
71,174
Total barrels of oil equivalent (Boe/d) 55,224
40,762 50,902 41,438
Daily
production volumes by region (Boe/d) - Eagle Ford 39,002 29,110
36,569 30,101 Delaware Basin 6,994 1,344 3,871 660 Niobrara 2,427
2,576 2,627 2,845 Marcellus 6,120 6,811 7,136 6,451 Utica and other
681 921 699 1,381
Total barrels of oil
equivalent (Boe/d) 55,224 40,762 50,902
41,438
Realized prices - Crude oil ($ per Bbl) $47.37
$42.23 $47.70 $37.57 NGLs ($ per Bbl) $20.01 $12.91 $18.68 $11.42
Natural gas ($ per Mcf) $2.24 $1.63 $2.28 $1.53
CARRIZO OIL & GAS, INC. COMMODITY DERIVATIVE
CONTRACTS - AS OF NOVEMBER 6, 2017 (Unaudited)
Crude Oil (1)
Volume Sub-Floor Price
Floor Price Ceiling Price Period
Type of Contract (in Bbls/d) ($/Bbl)
($/Bbl) ($/Bbl) Q4 2017 Fixed Price Swaps 15,000
$53.44 FY 2018 Fixed Price Swaps 6,000 $49.55 Three-Way
Collars 24,000 $39.38 $49.06 $60.14 Net Sold Call Options 3,388
$71.33 FY 2019 Three-Way Collars 12,000 $40.00 $48.40 $60.29
Net Sold Call Options 3,875 $73.66 FY 2020 Net Sold Call
Options 4,575 $75.98
__________
(1) In addition to the volumes above, the Company has
Midland-Cushing and LLS-Cushing crude oil basis swaps.
Natural Gas
Volume Floor Price
Ceiling Price Period Type of Contract (in
MMBtu/d) ($/MMBtu) ($/MMBtu) Q4 2017 Fixed Price
Swaps 20,000 $3.30 Sold Call Options 33,000 $3.00 FY 2018
Sold Call Options 33,000 $3.25 FY 2019 Sold Call Options
33,000 $3.25 FY 2020 Sold Call Options 33,000 $3.50
CARRIZO OIL & GAS, INC. FOURTH QUARTER AND
FULL YEAR 2017 GUIDANCE SUMMARY
Fourth Quarter 2017
Full Year 2017 Daily Production Volumes - Crude oil
(Bbls/d) 40,400 - 40,800 34,400 - 34,600 NGLs (Bbls/d) 8,200 -
8,400 6,100 - 6,200 Natural gas (Mcf/d) 74,000 - 78,000 77,000 -
78,000 Total (Boe/d) 60,933 - 62,200 53,333 - 53,800
Unhedged Commodity Price Realizations - Crude oil (% of
NYMEX oil) 99.0% - 101.0% N/A NGLs (% of NYMEX oil) 43.0% - 45.0%
N/A Natural gas (% of NYMEX gas) 70.0% - 75.0% N/A Cash
(paid) received for derivative settlements, net ($MM) ($1.5) - $2.0
N/A
Costs and Expenses - Lease operating ($/Boe)
$6.75 - $7.25 $7.10 - $7.25 Production taxes (% of total revenues)
4.50% - 4.75% 4.30% - 4.40% Ad valorem taxes ($MM) $1.3 - $1.8 $7.1
- $7.6 Cash general and administrative, net ($MM) $10.5 - $11.0
$50.7 - $51.2 Depreciation, depletion and amortization ($/Boe)
$13.00 - $14.00 $13.00 - $13.30 Interest expense, net ($MM) $18.5 -
$19.5 N/A
Capital Expenditures - Drilling and
completion ($MM) N/A $600.0 - $620.0 Interest ($MM) $11.5 - $12.0
N/A
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171107006592/en/
Carrizo Oil & Gas, Inc.Jeffrey P. Hayden, CFAVP -
Investor Relations713-328-1044orKim PinyopusarerkManager - Investor
Relations713-358-6430
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