Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced the Company’s financial results for the second quarter of
2018 and provided an operational update, which includes the
following highlights:
- Total production of 57,077 Boe/d,
12% above the second quarter of 2017 and above the high-end of the
Company’s guidance range
- Crude oil production of 37,860
Bbls/d, 13% above the second quarter of 2017 and 11% above the
first quarter of 2018
- Net income attributable to common
shareholders of $30.1 million, or $0.36 per diluted share, and Net
cash provided by operating activities of $137.1 million
- Adjusted net income attributable to
common shareholders of $66.6 million, or $0.79 per diluted share,
and Adjusted EBITDA of $178.9 million
- Multiple Delaware Basin Wolfcamp A
wells that achieved crude oil production rates of more than 1,000
Bbls/d on restricted chokes
- Signed a deal with a major crude
purchaser that provides 100% flow assurance for Delaware Basin
crude oil production through mid-2020 with no minimum volume
commitments
- Shifting capital to the Eagle Ford
Shale from the Delaware Basin in order to capitalize on the
superior margins and rates of return being generated
Carrizo reported second quarter of 2018 net income attributable
to common shareholders of $30.1 million, or $0.37 and $0.36 per
basic and diluted share, respectively, compared to net income
attributable to common shareholders of $56.3 million, or $0.86 and
$0.85 per basic and diluted share, respectively in the second
quarter of 2017. The net income attributable to common shareholders
for the second quarter of 2018 and the second 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 second quarter of 2018 was $66.6 million, or $0.79 per diluted
share, compared to $20.0 million, or $0.30 per diluted share, in
the second quarter of 2017.
For the second quarter of 2018, Adjusted EBITDA was $178.9
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 second quarter of 2018 were 5,193
MBoe, or 57,077 Boe/d, an increase of 12% versus the second 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 30% versus the second
quarter of 2017, driven by development in the Eagle Ford Shale and
Delaware Basin. Crude oil production during the second quarter of
2018 averaged 37,860 Bbls/d, an increase of 13% versus the second
quarter of 2017; natural gas and NGL production were 59,029 Mcf/d
and 9,379 Bbls/d, respectively, during the second quarter of 2018.
Second quarter of 2018 production exceeded the high end of the
Company’s guidance range of 53,800-54,800 Boe/d.
Drilling, completion, and infrastructure capital expenditures
for the second quarter of 2018 were $218.0 million. Nearly 55% of
the second quarter drilling, completion, and infrastructure
spending was in the Delaware Basin, with the balance in the Eagle
Ford Shale. Land and seismic expenditures during the quarter were
$6.1 million, and were primarily focused in the Delaware Basin.
In early July, Carrizo closed on the divestiture of non-operated
assets in its Ford West area of the Delaware Basin. The divested
assets included approximately 1,700 net acres and had associated
net production during the second quarter of 2018 of approximately
820 Boe/d (34% oil, 62% liquids).
Given the relative outlook for crude oil prices in the Eagle
Ford Shale and Delaware Basin over the next 18 months, Carrizo has
elected to shift capital to the Eagle Ford Shale in order to take
advantage of the superior returns offered from the play in the
current environment. At the end of the first quarter, Carrizo was
running four rigs in the Delaware Basin and two rigs in the Eagle
Ford Shale. The Company moved one of its rigs to the Eagle Ford
Shale during the second quarter and recently added a fourth rig to
the play. For the balance of the year, Carrizo currently plans to
run an average of six rigs, with four located in the Eagle Ford
Shale and two located in the Delaware Basin, and two to three
completion crews. Given the faster cycle times in the Eagle Ford
Shale, as well as the Company’s decision to maintain a six-rig
program for the remainder of the year, Carrizo now expects to drill
123-132 gross (112-121 net) operated wells and complete 108-117
gross (93-102 net) operated wells during the year. This compares to
the Company’s estimate of 93-103 gross (82-91 net) operated wells
drilled and 113-123 gross (96-105 net) operated wells completed
under the prior plan. As a result of the increased drilling
activity, Carrizo is increasing its 2018 drilling, completion, and
infrastructure capital expenditure guidance to $800-$825 million
from $750-$800 million.
Despite the impact of the Company’s non-operated divestiture as
well as its expectation of an accelerated payout at the Brown Trust
multipad as described below, Carrizo is maintaining the upper end
of its 2018 production guidance range and tightening it to
58,700-60,100 Boe/d from 58,500-60,100 Boe/d. Crude oil is still
expected to account for 65%-67% of the Company’s production for the
year, while total liquids are expected to account for 81%-84%. This
equates to annual production growth of more than 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 third quarter of the year, Carrizo expects production
to be 62,000-63,000 Boe/d; crude oil is expected to account for 65%
of production, while total liquids are expected to account for 82%.
A full summary of Carrizo’s guidance is provided in the attached
tables.
Based on the Company’s expectation that additional pipeline
capacity out of the Permian Basin will be operational in late 2019,
resulting in a more normalized spread between local oil prices in
the Eagle Ford Shale and Permian Basin, Carrizo currently expects
to begin shifting activity back to the Delaware Basin in the second
half of 2019. Carrizo maintains a significant amount of flexibility
to shift capital between its plays in 2019; thus, should the
announced pipelines be delayed causing local Permian Basin oil
prices to remain weak, the Company has the flexibility and
inventory depth to keep its activity weighted to the Eagle Ford
Shale.
S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented
on the results, “The second quarter was another outstanding
operational and financial quarter for the Company as we delivered
production 4% above the high end of our guidance range, operating
expenses 3% below the low end of our guidance range, and expanded
our EBITDA margin by 17% from the first quarter to $34/Boe. During
the quarter, we also successfully executed our initial capital
shift from the Delaware Basin to the Eagle Ford Shale, where our
margins benefit from premium Gulf Coast pricing.
“The current environment highlights the advantages of having
complementary acreage positions in the Eagle Ford Shale and
Delaware Basin. While we had previously taken steps to protect our
Delaware Basin margins, such as placing basis hedges on a large
percentage of our expected 2018 oil production at a $0.10
differential to NYMEX, we were able to quickly shift capital to the
Eagle Ford Shale once it appeared that Permian Basin differentials
were deteriorating sooner and to a greater degree than we had
previously expected. This pivot allows us to avoid aggressively
developing our valuable Delaware Basin inventory during a period of
weak local market prices while at the same time enhancing our
overall financial metrics as returns in the Eagle Ford Shale are
significantly higher than returns in the Delaware Basin based on
current strip prices.
“While our new plan should result in higher EBITDA during 2018,
the bigger benefit should be realized in 2019. Our new plan allows
us to build our inventory of drilled, uncompleted wells in the
Eagle Ford Shale up to more than 40 by year-end, setting us up for
strong growth from the play in 2019. We currently expect the Eagle
Ford Shale to be the primary driver of our production growth next
year. And with the higher margins that are expected to be generated
by Eagle Ford Shale production based on current strip prices, we
believe our new plan should result in more than $100 million of
incremental EBITDA through the end of 2019. This should accelerate
our leverage reduction as well as enhance our ROCE.
“Our decision to shift capital out of the Delaware Basin is
entirely a returns-focused, economical decision given weak regional
pricing. We continue to be very pleased with the results from our
Delaware Basin position and are in an excellent position from a
midstream standpoint. We recently executed a deal with a major
crude purchaser that provides us with flow assurance for 100% of
our oil production through mid-2020 while not subjecting us to any
minimum volume commitments. Our wells continue to deliver strong
results, as we brought online multiple Wolfcamp A wells during the
quarter that achieved crude oil production rates of more than 1,000
Bbls/d on restricted chokes.”
Operational Update
In the Eagle Ford Shale, where the Company holds approximately
77,300 net acres, Carrizo drilled 19 gross (18 net) operated wells
during the second quarter and completed 18 gross (16 net) operated
wells. Production from the play was more than 37,000 Boe/d, up 4%
versus the prior quarter as production from new wells, including
the Brown Trust multipad, more than offset the impact of the
downdip asset sale during the prior quarter. Crude oil production
during the second quarter was nearly 29,200 Bbls/d, accounting for
79% of the Company’s production from the play. At the end of the
quarter, Carrizo had 15 gross (14 net) operated Eagle Ford Shale
wells waiting on completion. Carrizo currently expects to drill
95-100 gross (90-95 net) operated wells and complete 85-90 gross
(75-80 net) operated wells in the play during 2018.
Production from the Company’s first large-scale multipad project
in the Eagle Ford Shale, located in its Brown Trust project area,
continues to be strong. Production from the multipad has now been
online for more than 120 days, and continues to produce more than
14,000 Boe/d (88% oil) on restricted chokes. 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. Given
the strong performance from this project, as well as
higher-than-expected commodity prices, the multipad is now expected
to pay out during the second half of 2018 versus the Company’s
prior expectation of early 2019. Upon payout, Carrizo’s average
working interest in the wells will decline to 54% from 79%. The
expected impact of this is a reduction to the Company’s full-year
2018 production of more than 200 Boe/d.
In the Delaware Basin, where it holds approximately 36,300 net
acres, Carrizo drilled 9 gross (8 net) operated wells during the
second quarter and completed 12 gross (9 net) operated wells.
Production from the play was approximately 19,800 Boe/d for the
quarter, up 30% versus the prior quarter. Crude oil production
during the second quarter was approximately 8,500 Bbls/d,
accounting for 43% of the Company’s production from the play. At
the end of the quarter, Carrizo had 10 gross (9 net) operated
Delaware Basin wells waiting on completion. Carrizo currently
expects to drill 28-32 gross (22-26 net) operated wells and
complete 23-27 gross (18-22 net) operated wells in the play during
2018.
During the second quarter, Carrizo’s completion activity was
weighted towards wells drilled in the Wolfcamp A, with multiple
wells achieving crude oil production rates of more than 1,000
Bbls/d on restricted chokes. Wolfcamp A highlights from the
Company’s primary Phantom area block include the following:
- the Dorothy Unit 38 11H achieved a peak
30-day rate of more than 2,200 Boe/d (50% oil, 76% liquids) from an
approximate 11,000-ft. lateral
- the Woodson 36 Allocation A 11H
achieved a peak 30-day rate of more than 2,400 Boe/d (49% oil, 75%
liquids) from an approximate 9,800-ft. lateral
- three Zeman wells which have thus far
achieved an average peak 30-day rate of more than 2,050 Boe/d (45%
oil, 73% liquids) from an average lateral of approximately 7,600
ft.
Two of the wells the Company drilled this quarter, the Zeman 40
Allocation C 11H and Dorothy 11H, were vertical stack tests of
Wolfcamp A over existing Lower Wolfcamp B. The Zeman 11H was
drilled over an existing Lower Wolfcamp B well that had been online
for approximately 13 months. The vertical separation between the
wells was approximately 460 ft. The Dorothy 11H was drilled over an
existing Lower Wolfcamp B well that had been online for
approximately eight months. The vertical separation between the
wells was approximately 445 ft. Carrizo is very encouraged by the
early results of these tests.
Carrizo also recently brought a very encouraging Wolfcamp A well
online in its northeastern Phantom area acreage in Ward County. The
SRO 551 Allocation A 100H began production in July, and while it
has yet to achieve a peak 30-day rate, production has recently been
more than 2,400 Boe/d (41% oil, 71% liquids) on a restricted choke
from an approximate 7,400-ft. lateral. Carrizo’s estimate of net
de-risked drilling locations does not currently include many
locations on this acreage position.
The Company has continued to enhance its portfolio of midstream
contracts. Carrizo recently executed a deal with a major crude
purchaser that provides it with flow assurance on 100% of its
Delaware Basin crude oil production at a Midland-based price. The
term of the contract is from September 2018 through July 2020,
providing the Company with additional flow protection until new
pipelines come online. Importantly, the agreement does not contain
any minimum volume commitments, allowing Carrizo to maintain the
flexibility to allocate capital between its plays in order to
maximize its returns. For its natural gas production, Carrizo has
continued to work with its third-party gas purchaser to increase
firm capacity to WAHA and other points out of the basin. Carrizo
and its third-party purchaser have currently executed contracts
that have expanded firm takeaway to 60-65 MMcf/d from November 2018
through October 2019 and to 40-45 MMcf/d from November 2019 through
March 2020. As the Company’s third-party gathering solution
connects to multiple outlets that provide access to Mexico, the
West Coast, or the Gulf Coast, Carrizo remains confident that it
will be able to market its gas production.
Hedging Activity
Carrizo currently has hedges in place for approximately 70% 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 has three-way collars covering 15,000 Bbls/d. Additionally,
Carrizo has swap contracts in place for more than 45% 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 $5.11/Bbl LLS-Cushing premium on 18,000
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 second
quarter financial results on Tuesday, August 7, 2018 at 10:00 AM
Central Daylight Time. To participate in the call, please dial
(800) 732-5617 (U.S. & Canada) or +1 (212) 231-2905
(Intl.) ten minutes before the call is scheduled to begin. A replay
of the call will be available through Tuesday, August 14, 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 21892918 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 “Second 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,
effect of pivot to Eagle Ford, expectations or projections for the
remainder of 2018 and 2019, 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, Delaware Basin constraints,
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, pipeline
and other transportation issues, 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)
June 30,
2018
December 31,
2017
Assets Current assets Cash and cash equivalents $2,099
$9,540 Accounts receivable, net 111,100 107,441 Derivative assets
10,928 — Other current assets 8,378 5,897 Total
current assets 132,505 122,878 Property and equipment
Oil and gas properties, full cost method Proved properties, net
1,959,951 1,965,347 Unproved properties, not being amortized
597,892 660,287 Other property and equipment, net 10,582
10,176 Total property and equipment, net 2,568,425 2,635,810
Other assets 20,909 19,616
Total Assets
$2,721,839 $2,778,304
Liabilities and
Shareholders’ Equity Current liabilities Accounts payable
$113,651 $74,558 Revenues and royalties payable 53,280 52,154
Accrued capital expenditures 117,934 119,452 Accrued interest
21,126 28,362 Derivative liabilities 145,520 57,121 Other current
liabilities 52,020 41,175 Total current liabilities
503,531 372,822 Long-term debt 1,502,307 1,629,209
Asset retirement obligations 16,305 23,497 Derivative liabilities
87,933 112,332 Deferred income taxes 4,164 3,635 Other liabilities
8,273 51,650 Total liabilities 2,122,513
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
June
30, 2018 and 250,000 issued and
outstanding as of December 31, 2017
172,858 214,262
Shareholders’ equity
Common stock, $0.01 par value, 180,000,000
shares authorized; 82,107,544 issued and outstanding as of
June 30, 2018 and 81,454,621 issued and
outstanding as of December 31, 2017
821 815 Additional paid-in capital 1,918,820 1,926,056 Accumulated
deficit (1,493,173 ) (1,555,974 ) Total shareholders’ equity
426,468 370,897
Total Liabilities and
Shareholders’ Equity $2,721,839 $2,778,304
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedJune
30, Six Months EndedJune 30,
2018 2017 2018
2017 Revenues Crude oil $229,798 $142,806 $424,717
$270,898 Natural gas liquids 21,269 7,786 38,171 15,211 Natural gas
12,906 15,891 26,365 31,729 Total
revenues 263,973 166,483 489,253 317,838
Costs and
Expenses Lease operating 35,151 36,048 74,424 65,893 Production
taxes 12,487 7,143 23,062 13,351 Ad valorem taxes 3,640 1,073 5,613
4,040 Depreciation, depletion and amortization 72,430 59,072
136,897 113,454 General and administrative, net 18,265 11,596
45,557 33,299 (Gain) loss on derivatives, net 67,714 (26,065 )
97,310 (51,381 ) Interest expense, net 15,599 21,106 31,116 41,677
Loss on extinguishment of debt — — 8,676 — Other expense, net 2,895
204 2,995 1,178 Total costs and
expenses 228,181 110,177 425,650 221,511
Income Before
Income Taxes 35,792 56,306 63,603 96,327 Income tax expense
(483 ) — (802 ) —
Net Income $35,309
$56,306 $62,801 $96,327 Dividends on preferred
stock (4,474 ) — (9,337 ) — Accretion on preferred stock (740 ) —
(1,493 ) — Loss on redemption of preferred stock — —
(7,133 ) —
Net Income Attributable to Common
Shareholders $30,095 $56,306 $44,838
$96,327
Net Income Attributable to Common
Shareholders Per Common Share Basic $0.37 $0.86 $0.55 $1.47
Diluted $0.36 $0.85 $0.54 $1.46
Weighted Average Common
Shares Outstanding Basic 82,058 65,767 81,802 65,479 Diluted
83,853 65,908 83,240 65,866
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’
EQUITY
(In thousands, except share
amounts)
(Unaudited)
Common Stock
AdditionalPaid-in Capital
Accumulated
Deficit
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 — — 10,757 — 10,757
Issuance of common stock upon grants of
restricted
stock awards and vestings of restricted
stock units and
performance shares
652,923 6 (30 ) — (24 ) Dividends on preferred stock — — (9,337 ) —
(9,337 ) Accretion on preferred stock — — (1,493 ) — (1,493 ) Loss
on redemption of preferred stock — — (7,133 ) — (7,133 ) Net income
— — — 62,801 62,801
Balance
as of June 30, 2018 82,107,544 $821 $1,918,820
($1,493,173 ) $426,468
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Three Months EndedJune
30, Six Months EndedJune 30,
2018 2017 2018
2017 Cash Flows From Operating Activities Net income
$35,309 $56,306 $62,801 $96,327 Adjustments to reconcile net income
to net cash provided by operating activities Depreciation,
depletion and amortization 72,430 59,072 136,897 113,454 (Gain)
loss on derivatives, net 67,714 (26,065 ) 97,310 (51,381 ) Cash
(paid) received for derivative settlements, net (24,083 ) (261 )
(38,448 ) 1,258 Loss on extinguishment of debt — — 8,676 —
Stock-based compensation expense, net 7,206 1,582 10,724 3,596
Deferred income taxes 336 — 529 — Non-cash interest expense, net
600 983 1,262 2,074 Other, net 6,664 1,147 3,975 2,767 Changes in
components of working capital and other assets and liabilities-
Accounts receivable (8,301 ) (5,345 ) 2,437 (8,094 ) Accounts
payable (11,648 ) 7,825 3,878 14,486 Accrued liabilities (8,566 )
7,804 (12,883 ) 5,650 Other assets and liabilities, net (513 ) (301
) (1,286 ) (982 ) Net cash provided by operating activities 137,148
102,747 275,872 179,155
Cash Flows
From Investing Activities Capital expenditures (195,954 )
(166,876 ) (430,639 ) (290,625 ) Acquisitions of oil and gas
properties — (9,501 ) — (16,533 ) Deposit for acquisition of oil
and gas properties — (75,000 ) — (75,000 ) Proceeds from
divestitures of oil and gas properties, net 3,430 829 345,789
18,201 Other, net (1,009 ) (2,062 ) (1,096 ) (2,479 ) Net cash used
in investing activities (193,533 ) (252,610 ) (85,946 ) (366,436 )
Cash Flows From Financing Activities Redemptions of senior
notes (4,425 ) — (330,435 ) — Redemption of preferred stock — —
(50,030 ) — Borrowings under credit agreement 432,596 638,593
1,126,856 919,097 Repayments of borrowings under credit agreement
(369,296 ) (479,293 ) (933,156 ) (723,797 ) Payments of debt
issuance costs (477 ) (4,318 ) (627 ) (4,368 ) Payment of
commitment fee for issuance of preferred stock — (5,000 ) — (5,000
) Payments of dividends on preferred stock (4,474 ) — (9,337 ) —
Other, net (325 ) (282 ) (638 ) (617 ) Net cash provided by (used
in) financing activities 53,599 149,700 (197,367 )
185,315
Net Decrease in Cash and Cash Equivalents
(2,786 ) (163 ) (7,441 ) (1,966 )
Cash and Cash Equivalents,
Beginning of Period 4,885 2,391 9,540
4,194
Cash and Cash Equivalents, End of Period $2,099
$2,228 $2,099 $2,228
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 EndedJune
30, Six Months EndedJune 30,
2018 2017 2018
2017 (In thousands, except per share amounts) Net
Income Attributable to Common Shareholders (GAAP) $30,095
$56,306 $44,838 $96,327 Loss on redemption of preferred stock — —
7,133 — Income tax expense 483 — 802 — (Gain) loss on derivatives,
net 67,714 (26,065 ) 97,310 (51,381 ) Cash (paid) received for
derivative settlements, net (24,083 ) (261 ) (38,448 ) 1,258
Non-cash general and administrative, net 7,206 1,582 10,724 3,596
Loss on extinguishment of debt — — 8,676 — Non-recurring and other
expense, net 4,264 204 5,457 1,178
Adjusted income before income taxes 85,679 31,766 136,492 50,978
Adjusted income tax expense (1) (19,106 ) (11,722 ) (30,438 )
(18,811 )
Adjusted Net Income Attributable to Common
Shareholders (Non-GAAP) $66,573 $20,044 $106,054
$32,167
Net Income Attributable to Common
Shareholders Per Diluted Common Share (GAAP) $0.36 $0.85 $0.54
$1.46 Loss on redemption of preferred stock — — 0.09 — Income tax
expense 0.01 — 0.01 — (Gain) loss on derivatives, net 0.81 (0.40 )
1.17 (0.78 ) Cash (paid) received for derivative settlements, net
(0.29 ) — (0.46 ) 0.02 Non-cash general and administrative, net
0.08 0.03 0.13 0.05 Loss on extinguishment of debt — — 0.10 —
Non-recurring and other expense, net 0.05 — 0.06
0.02 Adjusted income before income taxes 1.02 0.48
1.64 0.77 Adjusted income tax expense (0.23 ) (0.18 ) (0.37 ) (0.28
)
Adjusted Net Income Attributable to Common Shareholders Per
Diluted Common Share (Non-GAAP) $0.79 $0.30 $1.27
$0.49
Diluted Weighted Average Shares
Outstanding 83,853 65,908 83,240 65,866
_____________
(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
22.3% and 36.9% for the three months ended June 30, 2018 and 2017,
respectively, as well as for the six months ended June 30, 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 EndedJune
30, Six Months EndedJune 30,
2018 2017 2018
2017 (In thousands, except per Boe amounts) Net
Income Attributable to Common Shareholders (GAAP) $30,095
$56,306 $44,838 $96,327 Dividends on preferred stock 4,474 — 9,337
— Accretion on preferred stock 740 — 1,493 — Loss on redemption of
preferred stock — — 7,133 — Income tax expense 483 — 802 —
Depreciation, depletion and amortization 72,430 59,072 136,897
113,454 Interest expense, net 15,599 21,106 31,116 41,677 (Gain)
loss on derivatives, net 67,714 (26,065 ) 97,310 (51,381 ) Cash
(paid) received for derivative settlements, net (24,083 ) (261 )
(38,448 ) 1,258 Non-cash general and administrative, net 7,206
1,582 10,724 3,596 Loss on extinguishment of debt — — 8,676 —
Non-recurring and other expense, net 4,264 204 5,457
1,178
Adjusted EBITDA (Non-GAAP) $178,922
$111,944 $315,335 $206,109 Cash interest expense, net (14,998 )
(20,123 ) (29,853 ) (39,603 ) Dividends on preferred stock (4,474 )
— (9,337 ) — Other cash and non-cash adjustments, net 218
943 956 1,589
Discretionary Cash Flows
(Non-GAAP) $159,668 $92,764 $277,101 $168,095 Changes in
components of working capital and other (22,520 ) 9,983
(1,229 ) 11,060
Net Cash Provided By Operating Activities
(GAAP) $137,148 $102,747 $275,872 $179,155
Adjusted EBITDA (Non-GAAP) $178,922 $111,944
$315,335 $206,109 Total barrels of oil equivalent (MBoe) 5,193
4,643 9,807 8,816
Adjusted EBITDA
Margin ($ per Boe) (Non-GAAP) $34.45 $24.11
$32.15 $23.38
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND REALIZED
PRICES
(Unaudited)
Three Months
EndedJune 30, Six Months
EndedJune 30, 2018 2017
2018 2017 Total production volumes
- Crude oil (MBbls) 3,445 3,060 6,517 5,656 NGLs (MBbls) 853
453 1,593 859 Natural gas (MMcf) 5,372 6,775 10,182
13,803
Total barrels of oil equivalent (MBoe) 5,193
4,643 9,807 8,816
Daily production
volumes by product - Crude oil (Bbls/d) 37,860 33,629 36,008
31,250 NGLs (Bbls/d) 9,379 4,982 8,800 4,746 Natural gas (Mcf/d)
59,029 74,451 56,252 76,260
Total barrels
of oil equivalent (Boe/d) 57,077 51,019 54,183
48,706
Daily production volumes by region (Boe/d)
- Eagle Ford 37,039 38,055 36,335 35,332 Delaware Basin 19,783
2,151 17,522 2,284 Other 255 10,813 326 11,090
Total barrels of oil equivalent (Boe/d) 57,077 51,019
54,183 48,706
Realized prices - Crude
oil ($ per Bbl) $66.70 $46.67 $65.17 $47.90 NGLs ($ per Bbl) $24.93
$17.19 $23.96 $17.71 Natural gas ($ per Mcf) $2.40 $2.35 $2.59
$2.30
CARRIZO OIL & GAS, INC. COMMODITY
DERIVATIVE CONTRACTS - AS OF AUGUST 1, 2018 (Unaudited)
CRUDE OIL Volume Sub-Floor Price
Floor Price Ceiling Price Period Type of
Contract (Bbls/d) ($/Bbl) ($/Bbl)
($/Bbl) Q3 2018 Fixed Price Swaps 6,000 $49.55 Three-Way
Collars 24,000 $39.38 $49.06 $60.14 Basis Swaps 18,000 $5.11 (1)
Basis Swaps 6,000 ($0.10 ) (2) Net Sold Call Options 3,388 $71.33
Q4 2018 Fixed Price Swaps 6,000 $49.55 Three-Way Collars
24,000 $39.38 $49.06 $60.14 Basis Swaps 18,000 $5.11 (1) Basis
Swaps 6,000 ($0.10 ) (2) Net Sold Call Options 3,388 $71.33
Q1 2019 Three-Way Collars 15,000 $41.00 $49.72 $62.48 Basis Swaps
3,000 ($3.83 ) (2) Net Sold Call Options 3,875 $73.66 Q2
2019 Three-Way Collars 15,000 $41.00 $49.72 $62.48 Basis Swaps
3,000 ($3.83 ) (2) Net Sold Call Options 3,875 $73.66 Q3
2019 Three-Way Collars 15,000 $41.00 $49.72 $62.48 Basis Swaps
3,500 ($4.18 ) (2) Net Sold Call Options 3,875 $73.66 Q4
2019 Three-Way Collars 15,000 $41.00 $49.72 $62.48 Basis Swaps
11,000 ($3.84 ) (2) Net Sold Call Options 3,875 $73.66 FY
2020 Net Sold Call Options 4,575 $75.98
____________
(1) Represents the fixed premium between LLS prices and WTI
prices at Cushing, Oklahoma. (2) Represents the fixed discount
between WTI prices at Midland, Texas and WTI prices at Cushing,
Oklahoma.
CARRIZO OIL & GAS, INC. COMMODITY
DERIVATIVE CONTRACTS - AS OF AUGUST 1, 2018 (Unaudited)
(Continued) NATURAL GAS
LIQUIDS Volume Fixed Price (1)
Period Product Stream Type of Contract
(Bbls/d) ($/Bbl) 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) 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 $3.50
CARRIZO OIL & GAS, INC.
THIRD QUARTER AND FULL YEAR 2018 GUIDANCE SUMMARY
Third Quarter 2018
Full Year 2018 Daily Production Volumes (Boe/d)
62,000 - 63,000 58,700 - 60,100 Crude oil 65% 65% - 67% NGLs 17%
16% - 17% Natural gas 18% 17% - 18%
Unhedged Commodity
Price Realizations Crude oil (% of NYMEX oil) 95.0% - 97.0% N/A
NGLs (% of NYMEX oil) 38.0% - 40.0% N/A Natural gas (% of NYMEX
gas) 80.0% - 82.0% N/A Cash paid for derivative settlements,
net ($MM) ($28.5) - ($24.5) N/A
Costs and Expenses -
Lease operating ($/Boe) $6.75 - $7.25 $7.15 - $7.50 Production
taxes (% of total revenues) 4.75% - 5.00% 4.70% - 4.90% Ad valorem
taxes (% of total revenues) 1.25% - 1.75% 1.10% - 1.50% Cash
general and administrative, net ($MM) $10.0 - $10.5 $52.5 - $53.5
Depreciation, depletion and amortization ($/Boe) $13.75 - $14.75
$13.75 - $14.50 Interest expense, net ($MM) $15.8 - $16.8 N/A
Capital Expenditures - Drilling, completion, and
infrastructure ($MM) N/A $800.0 - $825.0 Interest ($MM) $8.0 - $8.5
N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180806005580/en/
Carrizo Oil & Gas, Inc.Jeffrey P. Hayden,
CFAVP - Investor Relations(713)
328-1044orKim PinyopusarerkManager - Investor
Relations(713) 358-6430
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