Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced its initial 2019 capital program and production guidance.
The 2019 plan is designed to facilitate long-term, disciplined
growth within cash flow in a mid-$50s NYMEX oil price environment.
Highlights of the 2019 plan include:
- Targeting 2019 DC&I capital
spending of $525-$575 million, a reduction of approximately 35% vs.
2018
- Reducing operated activity to one rig
in the Eagle Ford Shale and two to three rigs in the Delaware
Basin
- Continuing to test additional zones and
multi-layer, cube development in the Delaware Basin
- Forecasting 2019 production of
66,800-67,800 Boe/d, equivalent to annual growth of approximately
11%
- Achieving positive free cash flow in
the third quarter of the year
- Providing longer-term momentum by
delivering production growth from the fourth quarter of 2018 to the
fourth quarter of 2019
S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented,
“Our 2019 capital plan provides us with a prudent path forward in a
$50 to $60 per barrel world. It allows us to continue delivering
profitable, double-digit production growth while also achieving a
free-cash-flow-positive inflection point in the third quarter of
the year and maintaining momentum into 2020. Additionally, our 2019
plan allows us to balance these objectives with the continued
testing of additional layers and development concepts in the
Delaware Basin, where we have only scratched the surface of our
resource potential.
“Our dual-basin portfolio continues to provide us with
significant flexibility. Our pivot to the Eagle Ford Shale during
2018 paid off as its exposure to premium, seaborne crude oil
markets insulated us from the regional price differential blowouts
seen in the Permian Basin. This allowed us to maintain some of the
strongest margins in the industry. With price differentials
currently improving in the Permian Basin due to the imminent
addition of pipeline capacity out of the region, we are planning to
begin shifting capital back to the Delaware Basin this year.”
2019 Capital Program and Guidance
For 2019, Carrizo is providing initial drilling, completion, and
infrastructure (DC&I) capital expenditure guidance of $525-$575
million. Carrizo currently plans to reduce its rig count in the
Eagle Ford Shale from four to one by the end of the first quarter.
The Company currently expects to maintain two rigs in the Delaware
Basin during the first half of the year, and add a third rig to the
play in the second half of the year. Based on this level of
activity, the Company expects to drill 75-85 gross (65-75 net)
operated wells and complete 95-105 gross (85-95 net) operated wells
during the year. Carrizo also expects to participate in several net
non-operated wells during the year.
Based on this program, Carrizo is providing initial 2019
production guidance of 66,800-67,800 Boe/d. Crude oil production is
expected to account for approximately 63% of the Company's
production for the year, while total liquids are expected to
account for approximately 80%. This 2019 production guidance range
equates to annual growth of approximately 11% at the midpoint.
During the fourth quarter of 2018, the Company took an extended
frac holiday while it drilled large multipad projects in both the
Eagle Ford Shale (36 total wells) and Permian Basin (6 total
wells). While this is expected to result in a sequential decline in
the Company’s production during the first quarter of 2019, Carrizo
expects to see a material increase in its production as these wells
are completed and turned to sales over the first and second
quarters of the year. The Company currently expects its 2019
activity plan to maintain this momentum in the second half of the
year, resulting in production in the fourth quarter of 2019
exceeding production in the fourth quarter of 2018.
Fourth Quarter 2018 Update
Preliminary production volumes during the fourth quarter of 2018
were 68,328 Boe/d, an increase of 6% versus the prior quarter.
Crude oil production during the fourth quarter of 2018 averaged
43,040 Bbls/d, while natural gas and NGL production were 83,067
Mcf/d and 11,443 Bbls/d, respectively.
Preliminary drilling, completion, and infrastructure capital
expenditures for the fourth quarter of 2018 were $175.4 million,
above the Company’s initial expectations as it elected to complete
an additional pad in the Eagle Ford Shale late in the quarter. This
allowed Carrizo to take advantage of the attractive discounts
offered by service providers resulting from the industry-wide
slowdown in activity. Due to timing, the additional pad did not add
any material production to the fourth quarter.
Fourth Quarter Conference Call and Upcoming
Presentation
The Company will hold a conference call to discuss 2018 fourth
quarter and full year financial results on Tuesday, February 26,
2019 at 10:00 AM Central Standard Time. Carrizo plans to issue a
press release containing its financial and operating results after
the market closes on Monday, February 25, 2019.
Date & Time: Tuesday, February 26 at 10:00
AM CST Dial-In Number: (800) 698-0460 (U.S. & Canada)
+1 (303) 223-4374 (Intl./Local) Telephone Replay
Number: (800) 633-8284 (U.S. & Canada)
+1 (402) 977-9140 (Intl./Local) Enter Replay Reservation #:
21915115 The replay will be available through Tuesday, March
5, 2019 at 12:00 PM CST.
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 “2018 Fourth
Quarter and Year-end Conference Call Webcast.” 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.
Additionally, Carrizo management is scheduled to present at the
following upcoming conference. A webcast of the presentation, if
available, as well as the slide book used can be accessed on the
Carrizo website at http://www.carrizo.com under the “Investor
Relations” section.
Credit Suisse 24th Annual Energy SummitMonday, February 11, 2019
at 8:15am CSTVail, CO
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 the pivot to the Eagle Ford, and redeployment back to the
Permian, expectations or projections for the 2019 capital plan and
development plan, including its design, results and effects, free
cash flow, momentum, changes in rig count, including timing
thereof, expected drilling and completion activity, benefits of
multi-pad drilling, expected portion of activity in the respective
basin, capital expenditure, infrastructure program, resource
potential, guidance, rig program, production, average well returns,
comparative margins, 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. In addition, the results for the fourth quarter of
2018 are preliminary and are subject to change, including changes
resulting from the Company’s obtaining additional information and
completing its accounting closing procedures for the fourth quarter
and year-end of 2018. 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, benefits of multi-pad drilling, results of the 2019
capital and development plan estimated recoveries, pricing,
margins, and other factors affecting average well returns, timing
of well completions and the results of production from such 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190206005741/en/
Jeffrey P. Hayden, CFA, VP - Investor Relations(713)
328-1044
Kim Pinyopusarerk, Manager - Investor Relations(713)
358-6430
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