Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) today
announced the Company’s financial results for the first quarter of
2017 and provided an operational update, which includes the
following highlights:
- Crude oil production of 28,844 Bbls/d, 12% above the
first quarter of 2016
- Total production of 46,367 Boe/d, 10% above the first
quarter of 2016
- Net income of $40.0 million, or $0.61 per diluted
share, and Net Cash Provided by Operating Activities of $76.4
million
- Adjusted Net Income of $12.1 million, or $0.18 per
diluted share, and Adjusted EBITDA of $94.2 million
- Increasing 2017 crude oil production growth target to
26%Borrowing base recently increased to $900
million, with an elected commitment of $800 million
Carrizo reported first quarter of 2017 net
income of $40.0 million, or $0.61 per basic and diluted share
compared to a net loss of $311.4 million, or $5.34 per basic and
diluted share in the first quarter of 2016. The net income for the
first quarter of 2017 and net loss for the first quarter of 2016
include certain items typically excluded from published estimates
by the investment community. Adjusted net income, which excludes
the impact of these items as described in the non-GAAP
reconciliation tables included below, for the first quarter of 2017
was $12.1 million, or $0.18 per diluted share compared to $9.2
million, or $0.16 per diluted share in the first quarter of
2016.
For the first quarter of 2017, Adjusted EBITDA
was $94.2 million, an increase of 2% from the prior year quarter
due to higher production volumes and commodity prices, partially
offset by lower cash receipts for derivative settlements. Adjusted
EBITDA and the reconciliation to net income (loss) are presented in
the non-GAAP reconciliation tables included below.
Production volumes during the first quarter of
2017 were 4,173 MBoe, or 46,367 Boe/d, an increase of 10% versus
the first quarter of 2016. The year-over-year production growth was
driven by continued performance from the Company’s Eagle Ford Shale
and Delaware Basin drilling activity, the addition of production
from the Sanchez property acquisition in late 2016, and an increase
in Marcellus Shale production given improved netbacks. Oil
production during the first quarter of 2017 averaged 28,844 Bbls/d,
an increase of 12% versus the first quarter of 2016; natural gas
and NGL production averaged 78,088 Mcf/d and 4,508 Bbls/d,
respectively, during the first quarter of 2017. First quarter of
2017 production exceeded the high end of Company guidance due
primarily to stronger-than-expected production from the Company’s
Niobrara Formation and Delaware Basin assets.
Drilling and completion capital expenditures for
the first quarter of 2017 were $128.2 million. More than 85% of the
first quarter drilling and completion spending was in the Eagle
Ford Shale, with the balance weighted towards the Delaware Basin
and Niobrara Formation. Land and seismic expenditures during the
quarter were $14.5 million. As a result of the improvement in
commodity prices earlier this year, Carrizo has seen a material
increase in planned non-operated activity on its acreage in the
Niobrara Formation and Delaware Basin. Given this, the Company has
increased its planned non-operated budget by approximately $30
million. Carrizo expects to offset this incremental capital through
efficiency gains realized since the beginning of the year as well
as a slight reduction in planned completion activity in the Eagle
Ford Shale during the year. As a result, the Company is maintaining
its 2017 drilling and completion capital expenditure guidance of
$530-$550 million. The Company is increasing its land and seismic
capital expenditure guidance to $45 million for the year from $20
million previously.
Based on the continued strong performance from
the Company’s operated activity, Carrizo is increasing its 2017 oil
production guidance to 32,400-32,700 Bbls/d from 31,400-31,900
Bbls/d previously. Using the midpoint of this range, the Company’s
2017 oil production growth guidance increases to 26% from 23%
previously. For natural gas and NGLs, Carrizo is adjusting its 2017
guidance to 71-75 MMcf/d and 5,300-5,500 Bbls/d, respectively, from
69-73 MMcf/d and 5,600-5,900 Bbls/d, respectively. Carrizo
continues to expect to deliver a three-year compound annual growth
rate of more than 20% for its crude oil production. For the second
quarter of 2017, Carrizo expects oil production to be 31,800-32,200
Bbls/d, and natural gas and NGL production to be 67-71 MMcf/d and
4,800-5,000 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, “We are off to a good start in 2017
with production exceeding our expectations. While sequential crude
oil production growth in the first quarter was impacted by a large
number of planned shut-ins, the underlying production from each of
our key regions continues to perform well. As a result, we expect
to see a double-digit sequential increase in our crude oil
production in the current quarter and now expect to grow our crude
oil production by approximately 26% in 2017. This is up from 23%
previously without any increase to our planned drilling and
completion capital expenditures for the year.
“Given the increase in drilling and completion
activity in our industry since late 2016, we have begun to see an
increase in service costs. While this was inevitable in a cyclical
industry such as ours, our team strives to offset as much of the
cost pressure as possible with continued efficiency gains. Thus
far, our operational team has done an outstanding job as additional
efficiency gains for both drilling and completion have more than
offset the increase in service costs we have seen to date. As a
result, we have actually been able to decrease our estimate for a
type-curve well in the Eagle Ford Shale to $4.0 million from $4.1
million previously.
“We recently completed our semi-annual borrowing
base redetermination, which resulted in a $300 million increase to
our borrowing base and a $200 million increase to our elected
commitment amount. This further strengthens our liquidity position,
which currently provides us with ample financial flexibility to
navigate potential near-term volatility in commodity prices while
executing our 2017 plan.”
Operational Update
In the Eagle Ford Shale, Carrizo drilled 24
gross (20.1 net) operated wells during the first quarter and
completed 29 gross (28.7 net) wells. Crude oil production from the
play was more than 25,500 Bbls/d for the quarter, up 2% versus the
prior quarter. At the end of the quarter, Carrizo had 29 gross
(23.9 net) operated Eagle Ford wells in progress or waiting on
completion, equating to net crude oil production potential of
approximately 9,000 Bbls/d. The Company is currently operating
three rigs in the Eagle Ford and expects to drill approximately 106
gross (91 net) operated wells and complete 94 gross (85 net)
operated wells in the play during 2017.
Carrizo is testing multiple initiatives aimed at
determining the optimal development spacing on its acreage
position. The Company continues to test stagger stack pilots on its
acreage, with five pilots currently on production across its Core
acreage position in the Eagle Ford testing effective lateral
spacing between 220 ft. and 250 ft. The Company is also planning to
drill its initial infill test on the acreage it recently acquired
from Sanchez. This will be the Company’s first test of an infill
well between two understimulated parent wells. Carrizo does not
currently include any infill locations from the recently-acquired
acreage in its inventory count.
In addition to conducting spacing optimization
tests on its acreage, the Company also continues to test various
completion optimization techniques. The Company continues to be
pleased by the performance of its wells with 200 ft. frac stage
spacing, and currently has 13 wells online that were completed with
180 ft. frac stage spacing. Carrizo plans to provide an update on
these pilots once it has more production history.
Carrizo continues to reduce its well costs in
the Eagle Ford through efficiency gains on both the drilling and
completion side. The Company currently estimates that a typical
6,300 ft. lateral well will cost $4.0 million, down from $4.1
million previously. The updated well cost estimate includes a
forecast double-digit increase in frac prices relative to actual
costs in the first quarter.
The Company continues to add bolt-on acreage to
its Eagle Ford position, which now stands at approximately 103,300
net acres. This is up from approximately 101,600 net acres
previously and includes the recent closing of the remaining
approximately 900 net acres from the Sanchez acquisition announced
during the fourth quarter of 2016.
In the Delaware Basin, Carrizo had no operated
drilling or completion activity during the first quarter. Crude oil
production from the play was more than 1,100 Bbls/d for the
quarter, down from approximately 1,200 Bbls/d in the prior quarter
due to the lack of new wells coming online. Carrizo currently plans
to drill approximately 6 gross (6 net) operated wells and complete
5 gross (5 net) operated wells in the Delaware Basin during
2017.
The Company recently completed its Thunderbolt
State 1H well, which is currently in early-stage flowback. The well
is located to the south of Carrizo’s initial operated well in the
play, the Mustang State 1H. The Thunderbolt State well was drilled
with an approximate 4,100 ft. lateral and completed with 20 frac
stages. Carrizo tested a new completion design on the Thunderbolt
State well, completing it with 100% slickwater and all 100-mesh
sand. Carrizo operates the Thunderbolt State 1H with an 80% working
interest.
In the Niobrara Formation, Carrizo did not drill
or complete any operated wells during the first quarter. Crude oil
production from the play was more than 2,000 Bbls/d for the
quarter, down from approximately 2,200 Bbls/d in the prior quarter
due to the lack of new wells coming online. While Carrizo is not
currently budgeting any operated activity in the Niobrara during
2017, the Company continues to evaluate resuming operated
development activity later this year or next year. Industry
activity has increased around the Company’s acreage, and as a
result, Carrizo now expects to participate in 32 gross (5.1 net)
non-operated wells in the play during 2017, up from an expectation
of 21 gross (1.8 net) previously.
In Appalachia, which encompasses the Company’s
Utica Shale and Marcellus Shale positions, Carrizo did not drill or
complete any operated wells during the first quarter. Oil and
condensate production from the Utica was approximately 180 Bbls/d
during the quarter, down from approximately 200 Bbls/d in the prior
quarter due to the lack of activity. In the Marcellus, the
Company’s production was 47.6 MMcf/d, up from 35.8 MMcf/d in the
prior quarter as the Company elected to increase its production in
response to an improved local market price environment. Carrizo
expects to continue to vary its Marcellus production during 2017
based on local market pricing. Carrizo has currently allocated only
a minimal amount of maintenance capital to Appalachia during
2017.
Borrowing Base Update
During May, 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
increased to $900 million from $600.0 million and the maturity
date was generally extended to May 2022. However, Carrizo has
elected to take a lower commitment amount of $800 million.
Additionally, the following changes were made to the covenants
governing the facility:
- Removed Maximum Secured Leverage Ratio of 2.0x
- Removed Minimum Interest Coverage Ratio of 2.5x
- Added Maximum Leverage Ratio (Total Net Debt to EBITDA) of
4.0x
The next scheduled redetermination of the
borrowing base is expected in the fall of 2017. As of April 28,
2017, Carrizo had $171.0 million drawn on the facility.
Hedging Activity
Carrizo used the recent improvement in commodity
prices to add to its hedge position in 2017 and 2018. Carrizo
currently has hedges in place for more than 30% of estimated crude
oil production for the remainder of 2017 (based on the midpoint of
guidance). For the balance of the year, the Company has swaps
covering approximately 11,000 Bbls/d of crude oil at an average
fixed price of approximately $52.46/Bbl. For 2018, Carrizo
currently has three-way collars covering 6,000 Bbls/d of crude oil
with an average floor price of $50.00/Bbl, ceiling price of
$65.00/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 remainder of 2017.
For the balance of the year, 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 first quarter financial results on Tuesday, May 9,
2017 at 10:00 AM Central Daylight Time. To participate in the call,
please dial (888) 223-5152 (U.S. & Canada) or +1 (303)
223-4366 (Intl.) ten minutes before the call is scheduled to begin.
A replay of the call will be available through Tuesday, May 16,
2017 at 12:00 PM Central Daylight Time at (800) 633-8284 (U.S.
& Canada) or +1 (402) 977-9140 (Intl.). The reservation
number for the replay is 21850731 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 First 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, the Delaware Basin in West Texas, the
Niobrara Formation in Colorado, the Utica Shale in Ohio, and the
Marcellus Shale in Pennsylvania.
Statements in this release that are not
historical facts, including but not limited to those related to
capital requirements, capital expenditure and other spending plans,
the three-year growth rate, economical basis of wells or inventory,
rig program, effect of transactions offsetting hedge positions,
production, average well returns, the estimated production results
and financial performance of such properties, effects of
transactions, targeted ratios and other metrics, the ability to
acquire additional acreage, midstream infrastructure availability
and capacity, 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, resource potential, well costs, breakeven
prices, production mix, development plans, growth, midstream
matters, use of proceeds, hedging activity, the ability to maintain
a sound financial position, 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, expected income tax rates 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, the need
to obtain board approval of expenditures in the three-year plan,
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 the acquisition to close, purchase price
adjustment, integration and effects of acquisitions, 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) |
|
|
|
|
|
|
|
March 31,2017 |
|
December 31,2016 |
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
2,391 |
|
|
$ |
4,194 |
|
Accounts
receivable, net |
|
|
67,257 |
|
|
|
64,208 |
|
Derivative assets |
|
|
1,036 |
|
|
|
1,237 |
|
Other
current assets |
|
|
2,542 |
|
|
|
3,349 |
|
Total
current assets |
|
|
73,226 |
|
|
|
72,988 |
|
Property and
equipment |
|
|
|
|
Oil and
gas properties, full cost method |
|
|
|
|
Proved
properties, net |
|
|
1,371,335 |
|
|
|
1,294,667 |
|
Unproved
properties, not being amortized |
|
|
253,270 |
|
|
|
240,961 |
|
Other
property and equipment, net |
|
|
9,599 |
|
|
|
10,132 |
|
Total
property and equipment, net |
|
|
1,634,204 |
|
|
|
1,545,760 |
|
Other assets |
|
|
7,010 |
|
|
|
7,579 |
|
Total
Assets |
|
$ |
1,714,440 |
|
|
$ |
1,626,327 |
|
|
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts
payable |
|
$ |
51,968 |
|
|
$ |
55,631 |
|
Revenues
and royalties payable |
|
|
44,038 |
|
|
|
38,107 |
|
Accrued
capital expenditures |
|
|
69,040 |
|
|
|
36,594 |
|
Accrued
interest |
|
|
20,957 |
|
|
|
22,016 |
|
Accrued
lease operating expense |
|
|
11,919 |
|
|
|
12,377 |
|
Derivative liabilities |
|
|
7,456 |
|
|
|
22,601 |
|
Other
current liabilities |
|
|
22,650 |
|
|
|
24,633 |
|
Total
current liabilities |
|
|
228,028 |
|
|
|
211,959 |
|
Long-term debt |
|
|
1,362,046 |
|
|
|
1,325,418 |
|
Asset retirement
obligations |
|
|
21,737 |
|
|
|
20,848 |
|
Derivative
liabilities |
|
|
18,675 |
|
|
|
27,528 |
|
Other liabilities |
|
|
14,027 |
|
|
|
17,116 |
|
Total
liabilities |
|
|
1,644,513 |
|
|
|
1,602,869 |
|
Commitments and
contingencies |
|
|
|
|
Shareholders’
equity |
|
|
|
|
Common
stock, $0.01 par value, 90,000,000 shares authorized; 65,796,342
issued and outstanding as of March 31, 2017 and 65,132,499 issued
and outstanding as of December 31, 2016 |
|
|
658 |
|
|
|
651 |
|
Additional paid-in capital |
|
|
1,672,332 |
|
|
|
1,665,891 |
|
Accumulated deficit |
|
|
(1,603,063 |
) |
|
|
(1,643,084 |
) |
Total
shareholders’ equity |
|
|
69,927 |
|
|
|
23,458 |
|
Total
Liabilities and Shareholders’ Equity |
|
$ |
1,714,440 |
|
|
$ |
1,626,327 |
|
CARRIZO OIL & GAS, INC. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
2017 |
|
|
2016 |
Revenues |
|
|
|
Crude
oil |
$ |
128,092 |
|
|
$ |
67,996 |
|
Natural
gas liquids |
|
7,425 |
|
|
|
3,440 |
|
Natural
gas |
|
15,838 |
|
|
|
9,826 |
|
Total
revenues |
|
151,355 |
|
|
|
81,262 |
|
|
|
|
|
Costs and
Expenses |
|
|
|
Lease
operating |
|
29,845 |
|
|
|
23,675 |
|
Production taxes |
|
6,208 |
|
|
|
3,431 |
|
Ad
valorem taxes |
|
2,967 |
|
|
|
2,070 |
|
Depreciation, depletion and amortization |
|
54,382 |
|
|
|
59,577 |
|
General
and administrative, net |
|
21,703 |
|
|
|
21,303 |
|
(Gain)
loss on derivatives, net |
|
(25,316 |
) |
|
|
(10,553 |
) |
Interest
expense, net |
|
20,571 |
|
|
|
18,713 |
|
Impairment of proved oil and gas properties |
|
— |
|
|
|
274,413 |
|
Other
(income) expense, net |
|
974 |
|
|
|
(93 |
) |
Total
costs and expenses |
|
111,334 |
|
|
|
392,536 |
|
|
|
|
|
Income (Loss)
Before Income Taxes |
|
40,021 |
|
|
|
(311,274 |
) |
Income tax expense |
|
— |
|
|
|
(121 |
) |
Net Income
(Loss) |
$ |
40,021 |
|
|
$ |
(311,395 |
) |
|
|
|
|
Net Income
(Loss) Per Common Share |
|
|
|
Basic |
$ |
0.61 |
|
|
$ |
(5.34 |
) |
Diluted |
$ |
0.61 |
|
|
$ |
(5.34 |
) |
|
|
|
|
Weighted
Average Common Shares Outstanding |
|
|
|
Basic |
|
65,188 |
|
|
|
58,360 |
|
Diluted |
|
65,778 |
|
|
|
58,360 |
|
CARRIZO OIL & GAS, INC. |
CONSOLIDATED STATEMENT OF SHAREHOLDERS’
EQUITY |
(In thousands, except share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional Paid-in
Capital |
|
Accumulated Deficit |
|
Total Shareholders’
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 |
|
— |
|
|
|
— |
|
|
|
6,448 |
|
|
|
— |
|
|
|
6,448 |
|
Issuance of common
stock upon grants of restricted stock awards, net of forfeitures,
and vestings of restricted stock units and performance shares |
|
663,843 |
|
|
|
7 |
|
|
|
(7 |
) |
|
|
— |
|
|
|
— |
|
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40,021 |
|
|
|
40,021 |
|
Balance as of
March 31, 2017 |
|
65,796,342 |
|
|
$ |
658 |
|
|
$ |
1,672,332 |
|
|
$ |
(1,603,063 |
) |
|
$ |
69,927 |
|
CARRIZO OIL & GAS, INC. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
Three Months EndedMarch 31, |
|
|
2017 |
|
|
2016 |
Cash Flows From
Operating Activities |
|
|
|
Net income (loss) |
$ |
40,021 |
|
|
$ |
(311,395 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities |
|
|
|
Depreciation, depletion and amortization |
|
54,382 |
|
|
|
59,577 |
|
Impairment of proved oil and gas properties |
|
— |
|
|
|
274,413 |
|
(Gain)
loss on derivatives, net |
|
(25,316 |
) |
|
|
(10,553 |
) |
Cash
received for derivative settlements, net |
|
1,519 |
|
|
|
51,163 |
|
Stock-based compensation expense, net |
|
2,014 |
|
|
|
11,522 |
|
Non-cash
interest expense, net |
|
1,091 |
|
|
|
1,160 |
|
Other,
net |
|
1,620 |
|
|
|
1,116 |
|
Changes in components
of working capital and other assets and liabilities- |
|
|
|
Accounts
receivable |
|
(2,749 |
) |
|
|
(2,065 |
) |
Accounts
payable |
|
6,661 |
|
|
|
(18,711 |
) |
Accrued
liabilities |
|
(2,154 |
) |
|
|
(1,667 |
) |
Other
assets and liabilities, net |
|
(681 |
) |
|
|
(692 |
) |
Net cash
provided by operating activities |
|
76,408 |
|
|
|
53,868 |
|
Cash Flows From
Investing Activities |
|
|
|
Capital expenditures -
oil and gas properties |
|
(123,749 |
) |
|
|
(125,989 |
) |
Acquisitions of oil and
gas properties |
|
(7,032 |
) |
|
|
— |
|
Proceeds from sales of
oil and gas properties, net |
|
17,372 |
|
|
|
1,785 |
|
Other, net |
|
(417 |
) |
|
|
(617 |
) |
Net cash
used in investing activities |
|
(113,826 |
) |
|
|
(124,821 |
) |
Cash Flows From
Financing Activities |
|
|
|
Borrowings under credit
agreement |
|
280,504 |
|
|
|
73,647 |
|
Repayments of
borrowings under credit agreement |
|
(244,504 |
) |
|
|
(43,097 |
) |
Payments of debt
issuance costs |
|
(50 |
) |
|
|
(50 |
) |
Other, net |
|
(335 |
) |
|
|
(307 |
) |
Net cash
provided by financing activities |
|
35,615 |
|
|
|
30,193 |
|
Net Decrease in
Cash and Cash Equivalents |
|
(1,803 |
) |
|
|
(40,760 |
) |
Cash and Cash
Equivalents, Beginning of Period |
|
4,194 |
|
|
|
42,918 |
|
Cash and Cash
Equivalents, End of Period |
$ |
2,391 |
|
|
$ |
2,158 |
|
CARRIZO OIL & GAS,
INC.NON-GAAP FINANCIAL
MEASURES(Unaudited)
Reconciliation of Net Income (Loss) (GAAP) to Adjusted
Net Income (Non-GAAP)
Adjusted net income is a non-GAAP financial
measure which excludes certain items that are included in net
income (loss), 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 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 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 should not be considered in
isolation or as a substitute for net income (loss) 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) and adjusted net income is
presented below. Because adjusted net income excludes some, but not
all, items that affect net income (loss) and may vary among
companies, our calculation of adjusted net income may not be
comparable to similarly titled measures of other companies.
Reconciliation of Diluted Weighted Average Common Shares
Outstanding (GAAP) to Adjusted Diluted Weighted Average Common
Shares Outstanding (Non-GAAP)
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 exists, all potentially dilutive
instruments are anti-dilutive to the net loss per common share and
therefore excluded from the computation of Diluted WASO. The effect
of potentially dilutive instruments are included in the computation
of Adjusted Diluted WASO for purposes of computing diluted adjusted
net income per common share.
|
Three Months EndedMarch
31, |
|
|
2017 |
|
|
2016 |
|
(In thousands, except per share
amounts) |
Net Income
(Loss) (GAAP) |
$ |
40,021 |
|
|
$ |
(311,395 |
) |
Income tax expense |
|
— |
|
|
|
(121 |
) |
Income (Loss) Before
Income Taxes |
|
40,021 |
|
|
|
(311,274 |
) |
(Gain)
loss on derivatives, net |
|
(25,316 |
) |
|
|
(10,553 |
) |
Cash
received for derivative settlements, net |
|
1,519 |
|
|
|
51,163 |
|
Non-cash
general and administrative expense, net |
|
2,014 |
|
|
|
11,758 |
|
Impairment of proved oil and gas properties |
|
— |
|
|
|
274,413 |
|
Other
(income) expense, net |
|
974 |
|
|
|
(1,271 |
) |
Adjusted income before
income taxes |
|
19,212 |
|
|
|
14,236 |
|
Adjusted income tax
expense (1) |
|
(7,089 |
) |
|
|
(5,082 |
) |
Adjusted Net
Income (Non-GAAP) |
$ |
12,123 |
|
|
$ |
9,154 |
|
|
|
|
|
Net Income
(Loss) Per Common Share - Diluted (GAAP) |
$ |
0.61 |
|
|
$ |
(5.34 |
) |
Effect of change from
diluted WASO to adjusted diluted WASO |
|
— |
|
|
|
(0.06 |
) |
Income tax expense |
|
— |
|
|
|
— |
|
Income (Loss) Before
Income Taxes |
|
0.61 |
|
|
|
(5.28 |
) |
(Gain)
loss on derivatives, net |
|
(0.38 |
) |
|
|
(0.18 |
) |
Cash
received for derivative settlements, net |
|
0.02 |
|
|
|
0.87 |
|
Non-cash
general and administrative expense, net |
|
0.03 |
|
|
|
0.20 |
|
Impairment of proved oil and gas properties |
|
— |
|
|
|
4.65 |
|
Other
(income) expense, net |
|
0.01 |
|
|
|
(0.02 |
) |
Adjusted income before
income taxes |
|
0.29 |
|
|
|
0.24 |
|
Adjusted income tax
expense (1) |
|
(0.11 |
) |
|
|
(0.08 |
) |
Adjusted Net
Income Per Common Share - Diluted (Non-GAAP) |
$ |
0.18 |
|
|
$ |
0.16 |
|
|
|
|
|
Diluted WASO
(GAAP) |
|
65,778 |
|
|
|
58,360 |
|
Effect of potentially
dilutive instruments |
|
— |
|
|
|
625 |
|
Adjusted
Diluted WASO (Non-GAAP) |
|
65,778 |
|
|
|
58,985 |
|
(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% and 35.7% for the three months ended March 31, 2017 and 2016,
respectively.
CARRIZO OIL & GAS,
INC.NON-GAAP FINANCIAL
MEASURES(Unaudited)
Reconciliation of Net Income (Loss) (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), the most directly comparable GAAP financial measure. Items
excluded are interest expense, depreciation, depletion and
amortization 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), 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) 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), 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 is 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 is presented because
management believes it provides useful additional information to
investors for analysis of the Company’s ability to generate cash to
internally 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 Ended March
31, |
|
|
2017 |
|
|
2016 |
|
(In thousands) |
Net Income
(Loss) (GAAP) |
$ |
40,021 |
|
|
$ |
(311,395 |
) |
Income tax expense |
|
— |
|
|
|
(121 |
) |
Income (Loss) Before
Income Taxes |
|
40,021 |
|
|
|
(311,274 |
) |
Depreciation, depletion and amortization |
|
54,382 |
|
|
|
59,577 |
|
Interest
expense, net |
|
20,571 |
|
|
|
18,713 |
|
(Gain)
loss on derivatives, net |
|
(25,316 |
) |
|
|
(10,553 |
) |
Cash
received for derivative settlements, net |
|
1,519 |
|
|
|
51,163 |
|
Non-cash
general and administrative expense, net |
|
2,014 |
|
|
|
11,758 |
|
Impairment of proved oil and gas properties |
|
— |
|
|
|
274,413 |
|
Other
(income) expense, net |
|
974 |
|
|
|
(1,271 |
) |
Adjusted EBITDA
(Non-GAAP) |
$ |
94,165 |
|
|
$ |
92,526 |
|
Interest
expense, net |
|
(20,571 |
) |
|
|
(18,713 |
) |
Non-cash
interest expense, net |
|
1,091 |
|
|
|
1,160 |
|
Other
cash and non-cash adjustments, net |
|
646 |
|
|
|
852 |
|
Discretionary
Cash Flows (Non-GAAP) |
$ |
75,331 |
|
|
$ |
75,825 |
|
Changes
in components of working capital and other |
|
1,077 |
|
|
|
(21,957 |
) |
Net Cash
Provided By Operating Activities (GAAP) |
$ |
76,408 |
|
|
$ |
53,868 |
|
CARRIZO OIL & GAS, INC. |
PRODUCTION VOLUMES AND REALIZED
PRICES |
(Unaudited) |
|
|
|
Three Months Ended March
31, |
|
|
|
2017 |
|
|
2016 |
Total
production volumes - |
|
|
|
|
Crude oil
(MBbls) |
|
|
2,596 |
|
|
|
2,348 |
|
NGLs
(MBbls) |
|
|
406 |
|
|
|
414 |
|
Natural
gas (MMcf) |
|
|
7,028 |
|
|
|
6,373 |
|
Total barrels of oil equivalent (MBoe) |
|
|
4,173 |
|
|
|
3,824 |
|
|
|
|
|
|
Daily
production volumes by product - |
|
|
|
|
Crude oil
(Bbls/d) |
|
|
28,844 |
|
|
|
25,806 |
|
NGLs
(Bbls/d) |
|
|
4,508 |
|
|
|
4,547 |
|
Natural
gas (Mcf/d) |
|
|
78,088 |
|
|
|
70,033 |
|
Total barrels of oil equivalent (Boe/d) |
|
|
46,367 |
|
|
|
42,025 |
|
|
|
|
|
|
Daily
production volumes by region (Boe/d) - |
|
|
|
|
Eagle
Ford |
|
|
32,578 |
|
|
|
30,971 |
|
Delaware
Basin |
|
|
2,418 |
|
|
|
140 |
|
Niobrara |
|
|
2,765 |
|
|
|
3,186 |
|
Marcellus |
|
|
7,928 |
|
|
|
6,026 |
|
Utica and
other |
|
|
678 |
|
|
|
1,702 |
|
Total barrels of oil equivalent (Boe/d) |
|
|
46,367 |
|
|
|
42,025 |
|
|
|
|
|
|
Realized prices
- |
|
|
|
|
Crude oil
($ per Bbl) |
|
$ |
49.34 |
|
|
$ |
28.96 |
|
Crude oil ($ per Bbl) - including cash received/paid for
derivative settlements, net |
|
$ |
50.37 |
|
|
$ |
50.75 |
|
NGLs ($
per Bbl) |
|
$ |
18.29 |
|
|
$ |
8.31 |
|
Natural
gas ($ per Mcf) |
|
$ |
2.25 |
|
|
$ |
1.54 |
|
Natural gas ($ per Mcf) - including cash received/paid for
derivative settlements, net |
|
$ |
2.09 |
|
|
$ |
1.54 |
|
CARRIZO OIL & GAS, INC. |
COMMODITY DERIVATIVE CONTRACTS - AS OF APRIL
28, 2017 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Crude Oil Derivative Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average |
|
Weighted Average |
|
Weighted Average |
|
|
|
|
Volume |
|
Sub-Floor Price |
|
Floor Price |
|
Ceiling Price |
Period |
|
Type of Contract |
|
(in Bbls/d) |
|
($/Bbl) |
|
($/Bbl) |
|
($/Bbl) |
Q2 2017 |
|
Fixed Price Swaps |
|
12,000 |
|
|
|
$ |
50.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2017 |
|
Fixed Price Swaps |
|
12,000 |
|
|
|
$ |
53.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2017 |
|
Fixed Price Swaps |
|
9,000 |
|
|
|
$ |
53.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2018 |
|
Three-Way Collars |
|
6,000 |
|
$ |
40.00 |
|
$ |
50.00 |
|
$ |
65.00 |
|
|
Net Sold Call
Options |
|
3,388 |
|
|
|
|
|
$ |
63.98 |
|
|
|
|
|
|
|
|
|
|
|
FY 2019 |
|
Net Sold Call
Options |
|
3,875 |
|
|
|
|
|
$ |
65.98 |
|
|
|
|
|
|
|
|
|
|
|
FY 2020 |
|
Net Sold Call
Options |
|
4,575 |
|
|
|
|
|
$ |
67.95 |
Natural Gas Derivative Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average |
|
Weighted Average |
|
|
|
|
Volume |
|
Floor Price |
|
Ceiling Price |
Period |
|
Type of Contract |
|
(in MMBtu/d) |
|
($/MMBtu) |
|
($/MMBtu) |
Q2 - 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. |
SECOND QUARTER AND FULL YEAR 2017 GUIDANCE
SUMMARY |
|
|
|
|
|
|
|
Second Quarter 2017 |
|
Full Year 2017 |
Daily
Production Volumes - |
|
|
|
|
Crude oil
(Bbls/d) |
|
31,800
- 32,200 |
|
32,400
- 32,700 |
NGLs
(Bbls/d) |
|
4,800
- 5,000 |
|
5,300
- 5,500 |
Natural
gas (Mcf/d) |
|
67,000
- 71,000 |
|
71,000
- 75,000 |
Total
(Boe/d) |
|
47,767
- 49,033 |
|
49,533
- 50,700 |
|
|
|
|
|
Unhedged
Commodity Price Realizations - |
|
|
|
|
Crude
oil (% of NYMEX oil) |
|
94.0%
- 96.0% |
|
N/A |
NGLs
(% of NYMEX oil) |
|
28.0%
- 30.0% |
|
N/A |
Natural gas (% of NYMEX gas) |
|
67.0%
- 72.0% |
|
N/A |
|
|
|
|
|
Cash (paid) received
for derivative settlements, net (in millions) |
|
($1.5)
- $1.5 |
|
N/A |
|
|
|
|
|
Costs and
Expenses - |
|
|
|
|
Lease
operating ($/Boe) |
|
$7.25
- $7.75 |
|
$6.75
- $7.50 |
Production taxes (% of total revenues) |
|
4.50%
- 4.75% |
|
4.25%
- 4.75% |
Ad
valorem taxes (in millions) |
|
$2.8 -
$3.3 |
|
$11.0
- $13.0 |
Cash
general and administrative, net (in millions) |
|
$10.0
- $10.5 |
|
$50.0
- $52.0 |
DD&A
($/Boe) |
|
$13.25
- $14.25 |
|
$13.25
- $14.25 |
Interest
expense, net (in millions) |
|
$21.0
- $22.0 |
|
N/A |
|
|
|
|
|
Capitalized
Items - |
|
|
|
|
Drilling
and completion capital expenditures (in millions) |
|
N/A |
|
$530.0
- $550.0 |
Capitalized interest (in millions) |
|
$3.5 -
$4.0 |
|
N/A |
Source: Carrizo Oil & Gas, Inc
Contact:
Jeffrey P. Hayden, CFA, VP - Investor Relations
(713) 328-1044
Kim Pinyopusarerk, Manager - Investor Relations
(713) 358-6430
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