Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced the Company’s financial results for the first quarter of
2018 and provided an operational update, which includes the
following highlights:
- Total production of 51,257 Boe/d,
11% above the first quarter of 2017 and above the high-end of the
Company’s guidance range
- Crude oil production of 34,136
Bbls/d, 18% above the first quarter of 2017
- Net income attributable to common
shareholders of $14.7 million, or $0.18 per diluted share, and Net
cash provided by operating activities of $138.7 million
- Adjusted net income attributable to
common shareholders of $39.5 million, or $0.48 per diluted share,
and Adjusted EBITDA of $136.4 million
- Initial Eagle Ford Shale multipad
came online on schedule and has recently been producing at gross
rates of more than 12,000 Bbls/d
- Another strong Delaware Basin
Wolfcamp B well that achieved oil production rates of more than
1,000 Bbls/d
Carrizo reported first quarter of 2018 net income attributable
to common shareholders of $14.7 million, or $0.18 per basic and
diluted share compared to net income attributable to common
shareholders of $40.0 million, or $0.61 per basic and diluted share
in the first quarter of 2017. The net income attributable to common
shareholders for the first quarter of 2018 and the first quarter of
2017 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 first quarter of 2018 was $39.5 million, or
$0.48 per diluted share, compared to $12.1 million, or $0.18 per
diluted share, in the first quarter of 2017.
For the first quarter of 2018, Adjusted EBITDA was $136.4
million. Adjusted EBITDA and the reconciliation to net income
attributable to common shareholders are presented in the non-GAAP
reconciliation tables included below.
Production volumes during the first quarter of 2018 were 4,613
MBoe, or 51,257 Boe/d, an increase of 11% versus the first quarter
of 2017. The year-over-year comparison is impacted by a significant
amount of acquisition and divestiture (A&D) activity, including
the acquisition of properties in the Delaware Basin, and the
divestiture of the Company’s Appalachia, DJ Basin, and downdip
Eagle Ford Shale assets. Pro forma for this A&D activity, the
Company’s production increased by more than 40% versus the first
quarter of 2017, driven by development in the Eagle Ford Shale and
Delaware Basin. Crude oil production during the first quarter of
2018 averaged 34,136 Bbls/d, an increase of 18% versus the first
quarter of 2017; natural gas and NGL production were 53,446 Mcf/d
and 8,213 Bbls/d, respectively, during the first quarter of 2018.
First quarter of 2018 production exceeded the high end of the
Company’s guidance range of 48,600-49,800 Boe/d; this was partially
due to an earlier-than-anticipated expansion of the Company’s
water-handling capacity in the Delaware Basin.
Drilling, completion, and infrastructure capital expenditures
for the first quarter of 2018 were $209.9 million. Approximately
65% of the first quarter drilling, completion, and infrastructure
spending was in the Eagle Ford Shale, while approximately 35% was
in the Delaware Basin. Land and seismic expenditures during the
quarter were $5.5 million, and were primarily focused in the
Delaware Basin.
For 2018, Carrizo is maintaining its drilling, completion, and
infrastructure capital expenditure guidance of $750-$800 million.
The Company’s 2018 development plan continues to call for it to run
an average of 5-6 rigs and 2-3 completion crews during the year
between its assets in the Eagle Ford Shale and Delaware Basin.
Based on this level of activity, Carrizo expects to drill 93-103
gross (82-91 net) operated wells and complete 113-123 gross (96-105
net) operated wells during the year.
Carrizo is reiterating its 2018 production guidance of
58,500-60,100 Boe/d. Crude oil is expected to account for 65%-67%
of the Company’s production for the year, while total liquids are
expected to account for 80%-84%. This equates to annual production
growth of approximately 10% using the midpoint of the range. Pro
forma for the Company’s A&D activity, 2018 guidance equates to
year-over-year production growth of more than 30%, with crude oil
production growth of more than 20%. For the second quarter of the
year, Carrizo expects production to be 53,800-54,800 Boe/d; crude
oil is expected to account for 67% of production, while total
liquids are expected to account for 82%. 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 first quarter was an excellent start to the
year for the Company as we accomplished every milestone we had
identified for the period. We wrapped up our previously-announced
divestiture program with both the DJ Basin and downdip Eagle Ford
divestitures closing on schedule, and we used the proceeds to help
retire $370 million of debt and preferred stock. We also delivered
operating results that exceeded expectations while executing on our
larger operational initiatives in both of our core plays. This
included the expansion of our water-handling and disposal
infrastructure in the Delaware Basin and the completion of our
initial large-scale multipad development in the Eagle Ford Shale,
which came online on schedule and has exhibited strong
performance.
“We remain focused on the synergistic development of our two
core assets, on which we currently have more than a decade’s worth
of highly-profitable drilling locations. The positions are
complementary, as the Eagle Ford provides us with a high-return,
quick-payback, free-cash-flow-generating asset while the Delaware
Basin provides us with a high-potential growth engine.
Additionally, their geographical proximity and operational
similarities allow us to maximize our returns while minimizing risk
as we can shift both drilling rigs and completion crews between the
plays in order to avoid potential bottlenecks, take advantage of
market opportunities, or optimize development activity. By
implementing a steady development program across both assets,
including a measured increase in activity over time, we believe we
can generate double-digit production growth while improving our
ROCE and moving toward a free-cash-flow-positive development
program.
“We continue to be very pleased with the results we have seen
from our Delaware Basin position. During the first quarter, we
delivered one of our best Wolfcamp B results to date from the
Phantom area. The Griffin State 10H has recorded a peak 30-day rate
of approximately 2,150 Boe/d on a restricted choke, with crude oil
production of more than 1,150 Bbls/d. Production from the well has
remained strong at approximately 2,000 Boe/d. With two of our three
dedicated completion crews moving back to the Delaware Basin during
the second quarter combined with the recent expansion of our
water-handling capacity, we expect to deliver significant growth
from our Delaware Basin asset during the remainder of the
year.”
Operational Update
In the Eagle Ford Shale, where the Company holds approximately
79,100 net acres, Carrizo drilled 11 gross (9 net) operated wells
during the first quarter and completed 31 gross (26 net) operated
wells. Production from the play was more than 35,600 Boe/d, down
versus the prior quarter as expected due to the divestiture of more
than 6,200 Boe/d of production associated with the Company’s
downdip Eagle Ford Shale assets at the end of January as well as
limited new wells being turned to sales during the quarter. Crude
oil production during the first quarter was nearly 27,000 Bbls/d,
accounting for more than 75% of the Company’s production from the
play. At the end of the quarter, Carrizo had 20 gross (17 net)
operated Eagle Ford Shale wells in progress or waiting on
completion. Carrizo continues to expect to drill 60-65 gross (56-61
net) operated wells and complete 80-85 gross (71-76 net) operated
wells in the play during 2018.
Initial production from the Company’s first large-scale multipad
project in the Eagle Ford Shale, located in its Brown Trust project
area, began as scheduled at the end of March, and achieved the
targeted plateau production rate in early April. Production from
the multipad has recently averaged approximately 13,700 Boe/d (91%
oil) on restricted chokes, with several wells achieving crude oil
production rates of more than 1,000 Bbls/d each. The multipad
consists of 16 wells on three pads, with an average lateral length
of approximately 9,100 ft. and frac stage spacing of 150-180 ft.
Carrizo holds an average working interest of 79% in the wells.
In the Delaware Basin, where the Company holds approximately
38,600 net acres, Carrizo drilled 10 gross (7 net) operated wells
during the first quarter and completed 3 gross (2 net) operated
wells. Production from the play was more than 15,200 Boe/d for the
quarter, holding roughly flat with the prior quarter as forecasted
while water-handling infrastructure initiatives were completed and
brought online. Crude oil production was more than 6,900 Bbls/d,
accounting for more than 45% of the Company’s production from the
play. At the end of the quarter, Carrizo had 12 gross (10 net)
operated Delaware Basin wells in progress or waiting on completion.
Carrizo continues to expect to drill 33-38 gross (26-30 net)
operated wells and complete 33-38 gross (25-29 net) operated wells
in the play during 2018.
Carrizo recently brought another strong Lower Wolfcamp B well
online in its Phantom area. The Griffin State Unit 1922 10H began
production in March, and has thus far achieved a peak 30-day rate
of approximately 2,150 Boe/d (54% oil, 75% liquids) on a restricted
choke from an approximate 9,750 ft. lateral. Carrizo holds an 80%
working interest in the Griffin State well, which is the 12th
Wolfcamp B well completed in the Company’s main Phantom area
block.
Carrizo has made significant progress on its water-handling
initiatives in the Delaware Basin since the beginning of the year.
During the first quarter, the Company’s 250,000 Bbl/d in-field
water-handling system was brought online in the main part of the
Phantom area. Complementary third-party disposal capacity upgrades
were completed on schedule, increasing overall disposal capacity to
approximately 125,000 Bbls/d currently; this should provide Carrizo
with ample capacity to achieve its forecasted production ramp from
the area. Additionally, Carrizo has currently received permits for
operated water-disposal wells totaling 65,000 Bbls/d; these wells
can be operational by early 2019 if needed. Using a combination of
existing capacity, permitted Company-operated disposal wells,
additional committed third-party capacity, and water recycling,
Carrizo expects its total water-takeaway capacity to increase to
more than 250,000 Bbls/d by mid-2019. This capacity is expected to
satisfy Carrizo’s needs for the foreseeable future.
Carrizo recently executed a firm transportation agreement on
ONEOK’s Roadrunner pipeline, providing the Company with 40 MMcf/d
of guaranteed takeaway capacity through November. This agreement
provides certainty of flow on more than 90% of the Company’s
current net natural gas production from the Phantom area.
Additionally, Carrizo currently has 13,500 Bbls/d of guaranteed
capacity on Oryx’s system, which increases to 25,000 Bbls/d later
this year. These agreements, combined with the Company’s
Midland-Cushing basis hedges, provide Carrizo with a significant
amount of insulation from potential bottlenecks or basis blowouts
during the year. Carrizo continues to evaluate additional firm
transportation agreements for its natural gas as well as crude oil
production from the Delaware Basin.
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 $1.0 billion,
and Carrizo has elected to increase the commitment amount to $900
million. Additionally, the interest rate on the Company’s
outstanding borrowings has been reduced by 50 bps, to LIBOR plus
150-250 bps. The next scheduled redetermination of the borrowing
base is expected in the fall of 2018.
Hedging Activity
Carrizo currently has hedges in place for approximately 75% of
estimated crude oil production for the remainder of 2018 (based on
the midpoint of guidance); the Company’s 2018 crude oil hedge
portfolio includes both swaps and three-way collars. For 2019, the
Company recently added 3,000 Bbls/d of three-way collars, bringing
its total crude oil hedge position to 15,000 Bbls/d. Additionally,
Carrizo has swap contracts in place for more than 50% and 35% of
its estimated NGL and natural gas production, respectively, for the
remainder of 2018.
In order to further manage its commodity price exposure, Carrizo
has also put various basis hedges in place. For the balance of the
year, Carrizo has basis swaps locking in a $0.10/Bbl
Midland-Cushing differential on 6,000 Bbls/d. The Company also has
basis swaps locking in a $2.91/Bbl LLS-Cushing premium on 6,000
Bbls/d over the same period.
Please refer to the attached tables for full details of the
Company’s commodity derivative contracts.
Conference Call Details
The Company will hold a conference call to discuss 2018 first
quarter financial results on Tuesday, May 8, 2018 at 10:00 AM
Central Daylight Time. To participate in the call, please dial
(800) 931-1309 (U.S. & Canada) or +1 (212) 231-2913
(Intl.) ten minutes before the call is scheduled to begin. A replay
of the call will be available through Tuesday, May 15, 2018 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 21887873 for U.S., Canadian, and International
callers.
A simultaneous webcast of the call may be accessed over the
internet by visiting the Carrizo website at http://www.carrizo.com, clicking on “Upcoming
Events”, and then clicking on the “First Quarter 2018 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, improving ROCE, capital
expenditure, infrastructure program, 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,
expectations regarding growth, oil and gas prices, drilling and
completion activities, drilling inventory, including timing
thereof, well costs, break-even prices, production mix, development
plans, 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, results of infrastructure
program, failure to reach significant growth, performance of rig
operators, spacing test results, availability of gathering systems,
costs and availability of oilfield services, actions by
governmental authorities, joint venture partners, industry
partners, lenders and other third parties, actions by purchasers or
sellers of properties, 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, 2017 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 31,2018
December 31,2017
Assets Current assets Cash and cash equivalents $ 4,885 $
9,540 Accounts receivable, net 98,788 107,441 Other current assets
15,528 5,897 Total current assets
119,201 122,878 Property and equipment
Oil and gas properties, full cost method Proved properties, net
1,772,927 1,965,347 Unproved properties, not being amortized
617,754 660,287 Other property and equipment, net 10,304
10,176 Total property and equipment, net
2,400,985 2,635,810 Other assets 18,271 19,616
Total Assets $ 2,538,457 $ 2,778,304
Liabilities and Shareholders’ Equity Current
liabilities Accounts payable $ 106,328 $ 74,558 Revenues and
royalties payable 47,231 52,154 Accrued capital expenditures 93,531
119,452 Accrued interest 23,737 28,362 Derivative liabilities
115,259 57,121 Other current liabilities 45,495
41,175 Total current liabilities 431,581
372,822 Long-term debt 1,442,898 1,629,209
Asset retirement obligations 15,518 23,497 Derivative liabilities
70,852 112,332 Deferred income taxes 3,828 3,635 Other liabilities
10,381 51,650 Total liabilities
1,975,058 2,193,145
Commitments and
contingencies Preferred stock Preferred stock, $0.01 par
value, 10,000,000 shares authorized; 200,000 issued and outstanding
as of March 31, 2018 and 250,000 issued and outstanding as of
December 31, 2017 172,118 214,262
Shareholders’ equity
Common stock, $0.01 par value, 180,000,000 shares authorized;
82,065,561 issued and outstanding as of March 31, 2018 and
81,454,621 issued and outstanding as of December 31, 2017 821 815
Additional paid-in capital 1,918,942 1,926,056 Accumulated deficit
(1,528,482 ) (1,555,974 ) Total shareholders’ equity
391,281 370,897
Total Liabilities
and Shareholders’ Equity $ 2,538,457 $ 2,778,304
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedMarch
31,
2018 2017 Revenues Crude oil $ 194,919
$ 128,092 Natural gas liquids 16,902 7,425 Natural gas
13,459 15,838 Total revenues 225,280 151,355
Costs and Expenses Lease operating 39,273 29,845
Production taxes 10,575 6,208 Ad valorem taxes 1,973 2,967
Depreciation, depletion and amortization 64,467 54,382 General and
administrative, net 27,292 21,703 (Gain) loss on derivatives, net
29,596 (25,316 ) Interest expense, net 15,517 20,571 Loss on
extinguishment of debt 8,676 — Other expense, net 100
974 Total costs and expenses 197,469 111,334
Income Before Income Taxes 27,811 40,021 Income tax expense
(319 ) —
Net Income $ 27,492 $
40,021 Dividends on preferred stock (4,863 ) — Accretion on
preferred stock (753 ) — Loss on redemption of preferred stock
(7,133 ) —
Net Income Attributable to
Common Shareholders $ 14,743 $ 40,021
Net Income Attributable to Common Shareholders Per Common
Share Basic $ 0.18 $ 0.61 Diluted $ 0.18 $ 0.61
Weighted Average Common Shares Outstanding Basic 81,542
65,188 Diluted 82,578 65,778
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’
EQUITY
(In thousands, except share
amounts)
(Unaudited)
Common Stock
AdditionalPaid-inCapital
AccumulatedDeficit
TotalShareholders’Equity
Shares Amount Balance as of December
31, 2017 81,454,621 $ 815 $ 1,926,056 ($1,555,974 ) $ 370,897
Stock-based compensation expense — — 5,647 — 5,647 Issuance of
common stock upon grants of restricted stock awards and vestings of
restricted stock units and performance shares 610,940 6 (12 ) — (6
) Dividends on preferred stock — — (4,863 ) — (4,863 ) Accretion on
preferred stock — — (753 ) — (753 ) Loss on redemption of preferred
stock — — (7,133 ) — (7,133 ) Net income — —
— 27,492 27,492
Balance as of
March 31, 2018 82,065,561 $ 821 $ 1,918,942
($1,528,482 ) $ 391,281
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Three Months EndedMarch 31, 2018
2017 Cash Flows From Operating Activities Net income
$ 27,492 $ 40,021 Adjustments to reconcile net income to net cash
provided by operating activities Depreciation, depletion and
amortization 64,467 54,382 (Gain) loss on derivatives, net 29,596
(25,316 ) Cash (paid) received for derivative settlements, net
(14,365 ) 1,519 Loss on extinguishment of debt 8,676 — Stock-based
compensation expense, net 3,518 2,014 Deferred income taxes 193 —
Non-cash interest expense, net 662 1,091 Other, net (2,689 ) 1,620
Changes in components of working capital and other assets and
liabilities- Accounts receivable 10,738 (2,749 ) Accounts payable
15,526 6,661 Accrued liabilities (4,317 ) (2,154 ) Other assets and
liabilities, net (773 ) (681 ) Net cash provided by
operating activities 138,724 76,408
Cash Flows From Investing Activities Capital expenditures
(234,685 ) (123,749 ) Acquisitions of oil and gas properties —
(7,032 ) Proceeds from divestitures of oil and gas properties, net
342,359 17,372 Other, net (87 ) (417 ) Net cash
provided by (used in) investing activities 107,587
(113,826 )
Cash Flows From Financing Activities
Redemption of senior notes (326,010 ) — Redemption of preferred
stock (50,030 ) — Borrowings under credit agreement 694,260 280,504
Repayments of borrowings under credit agreement (563,860 ) (244,504
) Payments of debt issuance costs (150 ) (50 ) Payment of dividends
on preferred stock (4,863 ) — Other, net (313 ) (335
) Net cash provided by (used in) financing activities
(250,966 ) 35,615
Net Decrease in Cash and Cash
Equivalents (4,655 ) (1,803 )
Cash and Cash Equivalents,
Beginning of Period 9,540 4,194
Cash and Cash Equivalents, End of Period $ 4,885 $
2,391
CARRIZO OIL & GAS, INC.NON-GAAP
FINANCIAL MEASURES(Unaudited)
Reconciliation of Net Income 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 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
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 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
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 EndedMarch 31, 2018
2017 (In thousands, except per share
amounts) Net Income Attributable to Common Shareholders
(GAAP) $ 14,743 $ 40,021 Income tax expense 319 — (Gain) loss
on derivatives, net 29,596 (25,316 ) Cash (paid) received for
derivative settlements, net (14,365 ) 1,519 Non-cash general and
administrative, net 3,518 2,014 Loss on extinguishment of debt
8,676 — Loss on redemption of preferred stock 7,133 — Non-recurring
and other expense, net 1,193 974
Adjusted income before income taxes 50,813 19,212 Adjusted income
tax expense (1) (11,265 ) (7,089 )
Adjusted Net
Income Attributable to Common Shareholders (Non-GAAP) $ 39,548
$ 12,123
Net Income Attributable to Common
Shareholders Per Diluted Common Share (GAAP) $ 0.18 $ 0.61
Income tax expense — — (Gain) loss on derivatives, net 0.36 (0.38 )
Cash (paid) received for derivative settlements, net (0.17 ) 0.02
Non-cash general and administrative, net 0.04 0.03 Loss on
extinguishment of debt 0.11 — Loss on redemption of preferred stock
0.09 — Non-recurring and other expense, net 0.01
0.01 Adjusted income before income taxes 0.62 0.29
Adjusted income tax expense (0.14 ) (0.11 )
Adjusted Net Income Attributable to Common Shareholders Per
Diluted Common Share (Non-GAAP) $ 0.48 $ 0.18
Diluted Weighted Average Shares Outstanding 82,578
65,778
____________
(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
22.2% and 36.9% for the three months ended March 31, 2018 and 2017,
respectively.
CARRIZO OIL & GAS, INC.NON-GAAP
FINANCIAL MEASURES(Unaudited)
Reconciliation of Net Income 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 attributable to
common shareholders, the most directly comparable GAAP financial
measure. Items excluded are interest, income taxes, depreciation,
depletion and amortization, impairments, dividends and accretion 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 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 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 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 EndedMarch 31, 2018
2017 (In thousands) Net Income
Attributable to Common Shareholders (GAAP) $ 14,743 $ 40,021
Dividends on preferred stock 4,863 — Accretion on preferred stock
753 — Loss on redemption of preferred stock 7,133 — Income tax
expense 319 — Depreciation, depletion and amortization 64,467
54,382 Interest expense, net 15,517 20,571 (Gain) loss on
derivatives, net 29,596 (25,316 ) Cash (paid) received for
derivative settlements, net (14,365 ) 1,519 Non-cash general and
administrative, net 3,518 2,014 Loss on extinguishment of debt
8,676 — Non-recurring and other expense, net 1,193
974
Adjusted EBITDA (Non-GAAP) $ 136,413 $
94,165 Cash interest expense, net (14,855 ) (19,480 ) Dividends on
preferred stock (4,863 ) — Other cash and non-cash adjustments, net
738 646
Discretionary Cash Flows
(Non-GAAP) $ 117,433 $ 75,331 Changes in components of working
capital and other 21,291 1,077
Net
Cash Provided By Operating Activities (GAAP) $ 138,724 $
76,408
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND REALIZED
PRICES
(Unaudited)
Three Months EndedMarch 31, 2018
2017 Total production volumes - Crude
oil (MBbls) 3,072 2,596 NGLs (MBbls) 739 406 Natural gas (MMcf)
4,810 7,028
Total barrels of oil equivalent
(MBoe) 4,613 4,173
Daily
production volumes by product - Crude oil (Bbls/d) 34,136
28,844 NGLs (Bbls/d) 8,213 4,508 Natural gas (Mcf/d) 53,446
78,088
Total barrels of oil equivalent (Boe/d)
51,257 46,367
Daily production
volumes by region (Boe/d) - Eagle Ford 35,623 32,578 Delaware
Basin 15,235 2,418 Niobrara and other 399
11,371
Total barrels of oil equivalent (Boe/d) 51,257
46,367
Realized prices - Crude oil ($
per Bbl) $ 63.45 $ 49.34 NGLs ($ per Bbl) $ 22.87 $ 18.29 Natural
gas ($ per Mcf) $ 2.80 $ 2.25
CARRIZO OIL & GAS,
INC. COMMODITY DERIVATIVE CONTRACTS - AS OF APRIL 30,
2018 (Unaudited)
CRUDE OIL
Volume Sub-Floor Price Floor Price Ceiling
Price Period Type of Contract (Bbls/d)
($/Bbl) ($/Bbl) ($/Bbl) Q2 2018 Fixed Price
Swaps 6,000 $49.55 Basis Swaps 6,000 $2.91 (1) Basis Swaps 6,000
($0.10 ) (2) Three-Way Collars 24,000 $39.38 $49.06 $60.14 Net Sold
Call Options 3,388 $71.33 Q3 2018 Fixed Price Swaps 6,000
$49.55 Basis Swaps 6,000 $2.91 (1) Basis Swaps 6,000 ($0.10 ) (2)
Three-Way Collars 24,000 $39.38 $49.06 $60.14 Net Sold Call Options
3,388 $71.33 Q4 2018 Fixed Price Swaps 6,000 $49.55 Basis
Swaps 6,000 $2.91 (1) Basis Swaps 6,000 ($0.10 ) (2) Three-Way
Collars 24,000 $39.38 $49.06 $60.14 Net Sold Call Options 3,388
$71.33 FY 2019 Basis Swaps 3,000 ($3.92 ) (2) Three-Way
Collars 15,000 $41.00 $49.72 $62.48 Net Sold Call Options 3,875
$73.66 FY 2020 Net Sold Call Options 4,575 $75.98
____________
(1) The Company has entered into crude oil basis swaps in
order to fix the differential between LLS-Cushing. The weighted
average price differential represents the amount of premium to
Cushing for the volumes presented in the table above. (2) The
Company has entered into crude oil basis swaps in order to fix the
differential between Midland-Cushing. The weighted average price
differential represents the amount of reduction to Cushing for the
volumes presented in the table above.
CARRIZO OIL &
GAS, INC. COMMODITY DERIVATIVE CONTRACTS - AS OF APRIL 30,
2018 (Unaudited) (Continued)
NATURAL GAS LIQUIDS Volume Fixed
Price (1) Period Product Stream Type of
Contract (Bbls/d) ($/Bbl) Q2 2018
Ethane Fixed Price Swaps 2,200 $12.01 Propane Fixed Price Swaps
1,500 $34.23 Butane Fixed Price Swaps 200 $38.85 Isobutane Fixed
Price Swaps 600 $38.98 Natural Gasoline Fixed Price Swaps 600
$55.23 Q3 2018 Ethane Fixed Price Swaps 2,200 $12.01 Propane
Fixed Price Swaps 1,500 $34.23 Butane Fixed Price Swaps 200 $38.85
Isobutane Fixed Price Swaps 600 $38.98 Natural Gasoline Fixed Price
Swaps 600 $55.23 Q4 2018 Ethane Fixed Price Swaps 2,200
$12.01 Propane Fixed Price Swaps 1,500 $34.23 Butane Fixed Price
Swaps 200 $38.85 Isobutane Fixed Price Swaps 600 $38.98 Natural
Gasoline Fixed Price Swaps 600 $55.23
_____________
(1) The fixed prices of the Company’s
natural gas liquids derivative contracts are based on the OPIS Mont
Belvieu Non-TET reference prices for the applicable product
stream.
NATURAL GAS Volume Floor Price
Ceiling Price Period Type of Contract
(MMBtu/d) ($/MMBtu) ($/MMBtu) Q2 2018 Fixed
Price Swaps 25,000 $3.01 Sold Call Options 33,000 $3.25 Q3
2018 Fixed Price Swaps 25,000 $3.01 Sold Call Options 33,000 $3.25
Q4 2018 Fixed Price Swaps 25,000 $3.01 Sold Call Options
33,000 $3.25 FY 2019 Sold Call Options 33,000 $3.25
FY 2020 Sold Call Options 33,000 $3.50
CARRIZO OIL &
GAS, INC. SECOND QUARTER AND FULL YEAR 2018 GUIDANCE
SUMMARY Second
Quarter 2018 Full Year 2018 Daily Production Volumes
(Boe/d) 53,800 - 54,800 58,500 - 60,100 Crude oil 67% 65% - 67%
NGLs 15% 15% - 17% Natural gas 18% 17% - 19%
Unhedged
Commodity Price Realizations Crude oil (% of NYMEX oil) 97.0% -
99.0% N/A NGLs (% of NYMEX oil) 32.0% - 34.0% N/A Natural gas (% of
NYMEX gas) 75.0% - 77.0% N/A Cash paid for derivative
settlements, net ($MM) ($25.5) - ($21.5) N/A
Costs and
Expenses - Lease operating ($/Boe) $7.50 - $8.00 $7.50 - $8.25
Production taxes (% of total revenues) 4.75% - 5.00% 4.75% - 5.00%
Ad valorem taxes ($MM) $2.0 - $2.5 $7.5 - $9.0 Cash general and
administrative, net ($MM) $9.5 - $10.0 $52.5 - $54.5 Depreciation,
depletion and amortization ($/Boe) $13.75 - $14.75 $13.50 - $14.50
Interest expense, net ($MM) $14.8 - $15.8 N/A
Capital
Expenditures - Drilling, completion, and infrastructure ($MM)
N/A $750.0 - $800.0 Interest ($MM) $8.5 - $9.0 N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180507006022/en/
Carrizo Oil & Gas, Inc.Jeffrey P. Hayden,
CFAVP - Investor Relations(713)
328-1044orKim PinyopusarerkManager - Investor
Relations(713) 358-6430
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