Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced the Company’s financial results for the first quarter of
2019 and provided an operational update. Highlights include:
First Quarter 2019 Highlights
- Total production of 61,960 Boe/d, 21%
above the first quarter of 2018
- Crude oil production of 40,727 Bbls/d,
19% above the first quarter of 2018
- Net income attributable to common
shareholders of $146.2 million, or $1.58 per diluted share, and Net
cash provided by operating activities of $125.1 million
- Adjusted net income attributable to
common shareholders of $43.6 million, or $0.47 per diluted share,
and Adjusted EBITDA of $152.9 million
Guidance and Operational Highlights
- Production from multipads in the Eagle
Ford Shale and Delaware Basin expected to drive a 7%-9% increase in
volumes during the second quarter
- Early results from initial multi-layer,
co-development test in the Delaware Basin have been
encouraging
- Greater-than-expected efficiency gains
have yielded further well cost reductions across the asset
portfolio
- 2019 DC&I capital expenditure
guidance maintained at $525-$575 million
- 2019 production guidance reiterated at
66,800-67,800 Boe/d
Carrizo reported first quarter of 2019 net income attributable
to common shareholders of $146.2 million, or $1.59 and $1.58 per
basic and diluted share, respectively, compared to net income
attributable to common shareholders of $14.7 million, or $0.18 per
basic and diluted share, in the first quarter of 2018. The net
income attributable to common shareholders for the first quarter of
2019 and the first quarter of 2018 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 below, for the first quarter of 2019 was
$43.6 million, or $0.47 per diluted share, compared to $39.5
million, or $0.48 per diluted share, in the first quarter of
2018.
For the first quarter of 2019, Adjusted EBITDA was $152.9
million. Adjusted EBITDA and the reconciliation to net income
attributable to common shareholders and net cash provided by
operating activities are presented in the non-GAAP reconciliation
tables below.
Production volumes during the first quarter of 2019 were 5,576
MBoe, or 61,960 Boe/d, an increase of 21% versus the first quarter
of 2018, and near the high end of the Company’s guidance range of
61,100-62,100 Boe/d. The year-over-year growth was driven by strong
production from both of the Company’s core plays. Crude oil
production during the first quarter of 2019 averaged 40,727 Bbls/d,
an increase of 19% versus the first quarter of 2018 and above the
high end of the Company’s guidance range; natural gas and NGL
production were 67,977 Mcf/d and 9,903 Bbls/d, respectively, during
the first quarter of 2019.
Drilling, completion, and infrastructure (DC&I) capital
expenditures for the first quarter of 2019 were $214.7 million.
Approximately 63% of the first quarter DC&I spending was in the
Eagle Ford Shale, with the balance in the Delaware Basin. Land and
seismic capital expenditures during the quarter were $9.1 million,
and were primarily focused in the Delaware Basin.
For 2019, Carrizo is maintaining its DC&I capital
expenditure guidance of $525.0-$575.0 million. The Company’s 2019
development plan continues to call for it to run an average of 3-4
rigs during the year between its assets in the Eagle Ford Shale and
Delaware Basin. Based on this level of activity, Carrizo 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 is reiterating its 2019 production guidance of
66,800-67,800 Boe/d. Crude oil production is expected to account
for 63% of the Company's production for the year, while total
liquids are expected to account for 80%. The 2019 guidance range
equates to annual growth of approximately 11% at the midpoint. For
the second quarter of the year, Carrizo expects production to be
66,500-67,500 Boe/d. This implies an increase of 7%-9% versus the
first quarter of the year as the Company’s production benefits from
its multipad projects in the Eagle Ford Shale and Delaware Basin.
For the quarter, crude oil is expected to account for 64% of
production, while total liquids are expected to account for 81%. 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, “During the first quarter, we executed on our plan
in all areas of our business. Our recent operational focus has been
on the development of several highly-efficient multipad projects,
which we completed on time and within budget. While these
larger-scale projects are expected to result in greater
efficiencies, and thus, improved project-level economics, they also
result in a more uneven production profile. We saw this impact in
the first quarter, as the limited number of wells that we turned to
sales late in the fourth quarter and early in the first quarter,
combined with a higher level of planned downtime for offsetting
completion activity, led to a sequential decline in our production.
However, we are now reaping the rewards of this activity as we
began bringing on wells from our two large-scale multipad projects
in the Eagle Ford Shale during the first quarter and our initial
multipad project in the Delaware Basin during the second quarter.
As a result, we expect to see a significant increase in our
production during the current quarter.
“In the Delaware Basin, we are very pleased with the early
results from The Six, our initial four-layer, co-development test
of the Wolfcamp A, B, and C, as the project has already reached a
rate of approximately 10,600 Boe/d with crude oil production of
approximately 6,400 Bbls/d. Included in The Six is an additional
Wolfcamp C test, which has recently been averaging more than 1,450
Boe/d. This provides us with another encouraging data point from
this upside target on our acreage position.
“One of our primary corporate initiatives in 2019 has been
increasing our capital efficiency through the optimization of all
phases of our drilling and completion programs. We set aggressive
targets for cost reductions and efficiency gains, and we are
currently exceeding these targets in both of our plays. As a
result, we have been able to reduce our well costs in the Eagle
Ford Shale and Delaware Basin by an additional 5%-10%. A key driver
of these additional efficiency gains has been reduced cycle times
in our operations, especially in the Delaware Basin, where we have
been drilling wells faster than planned. Given this, we may not
need to add a third rig in the Delaware Basin as early as
previously forecast in order to execute on our planned drilling
activity for 2019.
“We remain committed to capital discipline and achieving our
goals of generating free cash flow and reducing debt. As a result,
we have no plans to adjust our planned 2019 budget in response to
the recent increase in crude oil prices. We remain on track to
reach a free-cash-flow-positive inflection point by the third
quarter of this year and currently plan to use incremental cash
flow from higher-than-budgeted commodity prices to accelerate debt
reduction.”
Operational Update
In the Eagle Ford Shale, where the Company holds approximately
76,500 net acres, Carrizo drilled 27 gross (24 net) operated wells
during the first quarter and completed 32 gross (32 net) operated
wells. Production from the play was more than 39,500 Boe/d for the
quarter, up 2% versus the prior quarter as production from the
multipads began coming online; crude oil accounted for 79% of the
Company’s production from the play. At the end of the quarter,
Carrizo had 41 gross (38 net) operated Eagle Ford Shale wells in
progress or waiting on completion. Carrizo currently expects to
drill 55-60 gross (45-50 net) operated wells and complete 75-80
gross (70-75 net) operated wells in the play during 2019.
Production from Carrizo’s two recent large-scale multipad
projects in the Eagle Ford Shale, located in its Pena and RPG
project areas, began during the first quarter of the year. Total
production from the projects has increased materially over the last
several months as additional wells have been turned to sales. The
projects consist of a total of 33 wells on eight pads, with 12
wells located in the Pena project area and 21 wells located in the
RPG project area. Production from the projects has been consistent
with the Company’s expectations, and has recently been averaging
more than 13,700 Boe/d net (90% oil) from restricted chokes.
Carrizo continues to reduce cycle times and capture efficiency
gains in its Eagle Ford Shale program. Year-to-date, Carrizo has
averaged approximately 8 drilling days per well, down from 9-10 in
2018. The Company has also been able to increase its completion
cadence to approximately 9 stages per day, versus 6-7 on average in
2018. The improved cycle times, plus the other process improvements
and service cost reductions that the Company has previously
discussed, resulted in a 10%-15% reduction in average drilling cost
and completion cost per effective lateral foot in the first quarter
relative to the fourth quarter of 2018. The efficiency gains
achieved to date have exceeded the Company’s prior expectations,
and Carrizo now expects average well costs in the Eagle Ford Shale
to be $3.9-$4.1 million for a 6,600-ft. lateral well, down from
$4.3 million previously.
In the Delaware Basin, where it holds more than 46,000 net
acres, Carrizo drilled 8 gross (8 net) operated wells during the
first quarter and completed 11 gross (9 net) wells. Production from
the play was more than 22,400 Boe/d for the quarter, down versus
the prior quarter due to a limited number of wells coming online in
late 2018 and early 2019 as well as a higher level of downtime
associated with offsetting completion activity. Crude oil
production during the first quarter was approximately 9,400 Bbls/d,
accounting for 42% of the Company’s production from the play. At
the end of the quarter, Carrizo had 9 gross (8 net) operated
Delaware Basin wells in progress or waiting on completion. Carrizo
currently expects to drill 20-25 gross (20-25 net) operated wells
and complete 20-25 gross (15-20 net) operated wells in the play
during 2019.
Carrizo’s primary operational focus in the Delaware Basin thus
far in 2019 has been testing multi-layer, co-development concepts
on its acreage. The Company recently completed The Six, its first
large-scale, co-development test of the Wolfcamp A, B, and C,
consisting of six wells across four landing zones. The test spans
more than 550 feet of vertical reservoir thickness with the six
wells spaced in a 330-ft. wine-rack configuration. The wells began
production in mid-April, and are continuing to clean up. While
early, Carrizo is pleased with the initial performance from the
project as it has already achieved a rate of approximately 10,600
Boe/d (60% oil, 78% liquids).
Included in this co-development, or cube, test was an additional
Wolfcamp C well in the Phantom project area. The St. Clair 2827
Allocation A 12H, which was drilled approximately 250 feet below
the two Wolfcamp B Lower wells, recently recorded a 7-day rate of
more than 1,450 Boe/d (51% oil, 73% liquids) from an approximate
10,000-ft. lateral. The early results from this well continue to
support the Wolfcamp C as an additional potential target on the
Company’s Phantom-area acreage. Currently, Carrizo’s estimate of
net de-risked drilling locations in the Delaware Basin includes
only those in the Wolfcamp A and B.
Early processing results from the microseismic data collected
during the completion of The Six have yielded some notable
insights. In particular, the spatial distribution of the
microseismic events showed the potential for increased hydraulic
fracture complexity and increased stimulated rock in the Wolfcamp
layers. This implies that multi-layer co-development could
result in improved frac geometries and positive communication, a
dynamic the Company previously saw when developing the Barnett
Shale. In addition to these preliminary conclusions, the
microseismic data indicates that carbonates of a certain thickness
may act as a barrier to control frac-height growth. Carrizo is
planning additional co-development tests in both the Ford West and
Phantom areas, and expects to provide updates on them once it has
sufficient production history.
Carrizo also remains focused on improving efficiencies and
driving down costs in its Delaware Basin operations. In 2019, the
Company has transitioned to a full-scale, multi-well pad
development program in the basin. During the first quarter of the
year, Carrizo’s drilling activity was primarily on its Ford West
acreage, as it was completing The Six in the Phantom area. The
Company was able to materially reduce its drilling cycle times in
the play during the quarter, with wells on multi-well pads being
drilled 19% faster than their single-well counterparts during 2018.
One recent three-well pad of 10,000-ft. lateral wells in the Ford
West area was drilled in approximately 20 days on average, a
Company record; this was more than 30% faster than the Company’s
budgeted drilling curve for the area. The reduced cycle times
coupled with other process improvements resulted in more than a 35%
reduction in drilling cost per effective lateral foot in the Ford
West area during the first quarter relative to the fourth quarter
of 2018. Efficiency gains and cost reductions have also helped
Carrizo materially reduce its completion costs in the Delaware
Basin, with average completion cost per effective lateral foot
declining by approximately 25% in the first quarter relative to the
third quarter of 2018. As with the Eagle Ford Shale, these
efficiency gains have exceeded the Company’s prior expectations,
and Carrizo now expects average well costs in the Delaware Basin to
be $7.8-$8.2 million for a 7,000-ft. lateral well, down from $8.5
million previously.
Hedging Activity
Hedging continues to be an important element of Carrizo’s
strategy to protect its balance sheet and provide predictable cash
flows. As part of this strategy, the Company maintains an active
hedging program while retaining the flexibility to benefit from
commodity price increases. Carrizo currently has hedges in place
for more than 70% of estimated crude oil production for the
remainder of 2019 (based on the midpoint of guidance), consisting
of swaps covering 4,455 Bbls/d of crude oil at an average fixed
price of $64.80 and three-way collars covering 27,000 Bbls/d of
crude oil with an average floor price of $50.96/Bbl, ceiling price
of $74.23/Bbl, and sub-floor price of $41.67/Bbl.
For 2020, the Company currently has swaps covering 3,000 Bbls/d
of crude oil at an average fixed price of $55.06/Bbl and three-way
collars covering 12,000 Bbls/d with an average floor price of
$55.63/Bbl, ceiling price of $66.04/Bbl, and sub-floor price of
$45.63/Bbl.
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 first quarter
2019 financial results on Wednesday, May 8, 2019 at 10:00 AM
Central Daylight Time. To participate in the call, please dial
(800) 768-9481 (U.S. & Canada) or +1 (303) 223-0120
(Intl.) ten minutes before the call is scheduled to begin. A replay
of the call will be available through Wednesday, May 15, 2019 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 21922809 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 “First Quarter 2019 Earnings Call”.
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,
expectations or projections, cost reductions, drilling, fracking
and capital efficiencies, cycle times, growth within cash flow and
goal of free cash flow generation, activity among basins, goals,
leverage metrics, capital expenditure, infrastructure program,
resource potential, guidance, results of tests, rig program,
production, average well returns, 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 and optimization, benefits of certain well
completion designs, well spacing, landing zone optimization,
drilling techniques, including multi-pad and multi-zone drilling,
completion and development techniques, 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, 2018 and its other filings
with the U.S. Securities and Exchange Commission.
(Financial Highlights to Follow)
CARRIZO OIL & GAS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per
share amounts)
(Unaudited)
March 31,2019
December 31,2018
Assets Current assets Cash and cash equivalents $2,173
$2,282 Accounts receivable, net 94,944 99,723 Derivative assets
10,858 39,904 Other current assets 9,669 8,460 Total
current assets 117,644 150,369 Property and equipment
Oil and gas properties, full cost method Proved properties, net
2,514,178 2,333,470 Unproved properties, not being amortized
665,957 673,833 Other property and equipment, net 11,880
11,221 Total property and equipment, net 3,192,015 3,018,524
Deferred income taxes 179,146 — Operating lease right-of-use assets
71,965 — Other long-term assets 13,222 16,207
Total Assets $3,573,992 $3,185,100
Liabilities and Shareholders’ Equity Current liabilities
Accounts payable $122,941 $98,811 Revenues and royalties payable
46,027 49,003 Accrued capital expenditures 99,597 60,004 Accrued
interest 23,314 18,377 Derivative liabilities 75,994 55,205
Operating lease liabilities 35,543 — Other current liabilities
46,508 40,609 Total current liabilities 449,924
322,009 Long-term debt 1,714,764 1,633,591 Asset
retirement obligations 21,521 18,360 Long-term operating lease
liabilities 42,468 — Deferred income taxes 7,945 8,017 Other
long-term liabilities 30,417 47,797 Total liabilities
2,267,039 2,029,774
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, 2019 and December 31, 2018 175,223 174,422
Shareholders’ equity Common stock, $0.01 par value,
180,000,000 shares authorized; 92,503,562 issued and outstanding as
of March 31, 2019 and 91,627,738 issued and outstanding as of
December 31, 2018 925 916 Additional paid-in capital 2,130,989
2,131,535 Accumulated deficit (1,000,184 ) (1,151,547 ) Total
shareholders’ equity 1,131,730 980,904
Total
Liabilities and Shareholders’ Equity $3,573,992
$3,185,100
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per share
amounts)
(Unaudited)
Three Months EndedMarch
31,
2019 2018 Revenues Crude oil
$202,744 $194,919 Natural gas liquids 16,837 16,902 Natural gas
13,459 13,459 Total revenues 233,040 225,280
Costs and Expenses Lease operating 42,031 39,273 Production
and ad valorem taxes 14,894 12,548 Depreciation, depletion and
amortization 75,322 64,467 General and administrative, net 24,732
27,292 Loss on derivatives, net 83,284 29,596 Interest expense, net
16,451 15,517 Loss on extinguishment of debt — 8,676 Other expense,
net 4,358 100 Total costs and expenses 261,072
197,469
Income (Loss) Before Income Taxes (28,032 )
27,811 Income tax (expense) benefit 179,395 (319 )
Net
Income $151,363 $27,492 Dividends on preferred
stock (4,360 ) (4,863 ) Accretion on preferred stock (801 ) (753 )
Loss on redemption of preferred stock — (7,133 )
Net
Income Attributable to Common Shareholders $146,202
$14,743
Net Income Attributable to Common
Shareholders Per Common Share Basic $1.59 $0.18 Diluted $1.58
$0.18
Weighted Average Common Shares Outstanding
Basic 91,740 81,542 Diluted 92,292 82,578
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, 2018 91,627,738 $916 $2,131,535 ($1,151,547 ) $980,904
Stock-based compensation expense — — 4,624 — 4,624 Issuance of
common stock upon grants of restricted stock awards and vestings of
restricted stock units and performance shares 875,824 9 (9 ) — —
Dividends on preferred stock — — (4,360 ) — (4,360 ) Accretion on
preferred stock — — (801 ) — (801 ) Net income — — —
151,363 151,363
Balance as of March 31,
2019 92,503,562 $925 $2,130,989
($1,000,184 ) $1,131,730
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, 2019
2018 Cash Flows From Operating Activities Net
income $151,363 $27,492 Adjustments to reconcile net income to net
cash provided by operating activities Depreciation, depletion and
amortization 75,322 64,467 Loss on derivatives, net 83,284 29,596
Cash paid for commodity derivative settlements, net (2,638 )
(14,365 ) Loss on extinguishment of debt — 8,676 Stock-based
compensation expense, net 4,115 3,518 Deferred income tax (benefit)
expense (179,218 ) 193 Non-cash interest expense, net 603 662
Other, net 1,364 (2,689 ) Changes in components of working capital
and other assets and liabilities- Accounts receivable (4,309 )
10,738 Accounts payable (14,385 ) 15,526 Accrued liabilities 10,568
(4,317 ) Other assets and liabilities, net (966 ) (773 ) Net cash
provided by operating activities 125,103 138,724
Cash Flows From Investing Activities Capital expenditures
(171,042 ) (234,685 ) Acquisitions of oil and gas properties 8,222
— Proceeds from divestitures of oil and gas properties 3,107
342,359 Other, net (880 ) (87 ) Net cash provided by (used in)
investing activities (160,593 ) 107,587
Cash Flows From
Financing Activities Redemptions of senior notes — (326,010 )
Redemption of preferred stock — (50,030 ) Borrowings under credit
agreement 470,632 694,260 Repayments of borrowings under credit
agreement (389,920 ) (563,860 ) Payments of credit facility
amendment fees (613 ) (150 ) Payments of dividends on preferred
stock (4,360 ) (4,863 ) Cash paid for settlements of contingent
consideration arrangements, net (40,000 ) — Other, net (358 ) (313
) Net cash provided by (used in) financing activities 35,381
(250,966 )
Net Decrease in Cash and Cash Equivalents (109 )
(4,655 )
Cash and Cash Equivalents, Beginning of Period
2,282 9,540
Cash and Cash Equivalents, End of
Period $2,173 $4,885
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, 2019
2018
(In thousands, except pershare
amounts)
Net Income Attributable to Common Shareholders (GAAP)
$146,202 $14,743 Loss on redemption of preferred stock — 7,133
Income tax expense (benefit) (179,395 ) 319 Loss on derivatives,
net 83,284 29,596 Cash paid for commodity derivative settlements,
net (2,638 ) (14,365 ) Non-cash general and administrative, net
4,115 3,518 Loss on extinguishment of debt — 8,676 Non-recurring
and other expense, net 4,358 1,193 Adjusted income
before income taxes 55,926 50,813 Adjusted income tax expense (1)
(12,303 ) (11,265 )
Adjusted Net Income Attributable to Common
Shareholders (Non-GAAP) $43,623 $39,548
Net Income Attributable to Common Shareholders Per Diluted
Common Share (GAAP) $1.58 $0.18 Loss on redemption of preferred
stock — 0.09 Income tax expense (benefit) (1.94 ) — Loss on
derivatives, net 0.90 0.36 Cash paid for commodity derivative
settlements, net (0.03 ) (0.17 ) Non-cash general and
administrative, net 0.05 0.04 Loss on extinguishment of debt — 0.11
Non-recurring and other expense, net 0.05 0.01
Adjusted income before income taxes 0.61 0.62 Adjusted income tax
expense (0.14 ) (0.14 )
Adjusted Net Income Attributable to
Common Shareholders Per Diluted Common Share (Non-GAAP) $0.47
$0.48
Diluted Weighted Average Shares
Outstanding 92,292 82,578
__________
(1) For the three months ended March 31, 2019 and 2018,
adjusted income tax expense was calculated using a rate of 22.0%
and 22.2%, respectively, which approximates the Company’s statutory
tax rate adjusted for ordinary permanent differences.
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,
2019 2018
(In thousands, except per Boe
amounts)
Net Income Attributable to Common Shareholders (GAAP)
$146,202 $14,743 Dividends on preferred stock 4,360 4,863 Accretion
on preferred stock 801 753 Loss on redemption of preferred stock —
7,133 Income tax expense (benefit) (179,395 ) 319 Depreciation,
depletion and amortization 75,322 64,467 Interest expense, net
16,451 15,517 Loss on derivatives, net 83,284 29,596 Cash paid for
commodity derivative settlements, net (2,638 ) (14,365 ) Non-cash
general and administrative, net 4,115 3,518 Loss on extinguishment
of debt — 8,676 Non-recurring and other expense, net 4,358
1,193
Adjusted EBITDA (Non-GAAP) $152,860 $136,413
Cash interest expense, net (15,848 ) (14,855 ) Dividends on
preferred stock (4,360 ) (4,863 ) Other cash and non-cash
adjustments, net 1,238 738
Discretionary Cash
Flows (Non-GAAP) $133,890 $117,433 Changes in components of
working capital and other (8,787 ) 21,291
Net Cash
Provided By Operating Activities (GAAP) $125,103
$138,724
Adjusted EBITDA (Non-GAAP) $152,860
$136,413 Total barrels of oil equivalent 5,576 4,613
Adjusted EBITDA Margin ($ per Boe) (Non-GAAP) $27.41
$29.57
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND REALIZED
PRICES
(Unaudited)
Three Months EndedMarch 31, 2019
2018 Total production volumes - Crude
oil (MBbls) 3,665 3,072 NGLs (MBbls) 891 739 Natural gas (MMcf)
6,118 4,810
Total barrels of oil equivalent
(MBoe) 5,576 4,613
Daily
production volumes by product - Crude oil (Bbls/d) 40,727
34,136 NGLs (Bbls/d) 9,903 8,213 Natural gas (Mcf/d) 67,977
53,446
Total barrels of oil equivalent (Boe/d)
61,960 51,257
Daily production
volumes by region (Boe/d) - Eagle Ford 39,533 35,623 Delaware
Basin 22,427 15,235 Other — 399
Total
barrels of oil equivalent (Boe/d) 61,960
51,257
Realized prices - Crude oil ($ per Bbl) $
55.32 $ 63.45 NGLs ($ per Bbl) $ 18.90 $ 22.87 Natural gas ($ per
Mcf) $ 2.20 $ 2.80
CARRIZO OIL & GAS,
INC. COMMODITY DERIVATIVE CONTRACTS - AS OF MAY 3, 2019
(Unaudited)
Fixed Fixed Sub-Floor
Floor Ceiling Price Volumes
Price Price Price Price
Differential (Bbls ($ per ($ per ($
per ($ per ($ per Commodity Period
Type of Contract Index per day) Bbl)
Bbl) Bbl) Bbl) Bbl) Crude oil 2Q19
Price Swaps NYMEX WTI 3,352 $64.80 — — — — Crude oil 2Q19 Three-Way
Collars NYMEX WTI 27,000 — $41.67 $50.96 $74.23 — Crude oil 2Q19
Basis Swaps LLS-WTI Cushing 6,000 — — — — $5.16 Crude oil 2Q19
Basis Swaps WTI Midland-WTI Cushing 7,609 — — — — ($4.38 ) Crude
oil 2Q19 Sold Call Options NYMEX WTI 3,875 — — — $81.07 —
Crude oil 3Q19 Price Swaps NYMEX WTI 5,000 $64.80 — — — — Crude oil
3Q19 Three-Way Collars NYMEX WTI 27,000 — $41.67 $50.96 $74.23 —
Crude oil 3Q19 Basis Swaps LLS-WTI Cushing 6,000 — — — — $5.16
Crude oil 3Q19 Basis Swaps WTI Midland-WTI Cushing 9,100 — — — —
($4.44 ) Crude oil 3Q19 Sold Call Options NYMEX WTI 3,875 — — —
$81.07 — Crude oil 4Q19 Price Swaps NYMEX WTI 5,000 $64.80 —
— — — Crude oil 4Q19 Three-Way Collars NYMEX WTI 27,000 — $41.67
$50.96 $74.23 — Crude oil 4Q19 Basis Swaps WTI Midland-WTI Cushing
9,200 — — — — ($4.64 ) Crude oil 4Q19 Sold Call Options NYMEX WTI
3,875 — — — $81.07 — Crude oil 2020 Price Swaps NYMEX WTI
3,000 $55.06 — — — — Crude oil 2020 Three-Way Collars NYMEX WTI
12,000 — $45.63 $55.63 $66.04 — Crude oil 2020 Basis Swaps WTI
Midland-WTI Cushing 10,658 — — — — ($1.68 ) Crude oil 2020 Sold
Call Options NYMEX WTI 4,575 — — — $75.98 — Crude oil 2021
Basis Swaps WTI Midland-WTI Cushing 8,000 — — — — $0.18
Fixed Fixed Sub-Floor Floor
Ceiling Price Volumes Price
Price Price Price Differential
(MMBtu ($ per ($ per ($ per ($
per ($ per Commodity Period Type of
Contract Index per day) MMBtu)
MMBtu) MMBtu) MMBtu) MMBtu) Natural gas
2Q19 Basis Swaps Waha-NYMEX Henry Hub 14,000 — — — — ($2.12 )
Natural gas 2Q19 Sold Call Options NYMEX Henry Hub 33,000 — — —
$3.25 — Natural gas 3Q19 Basis Swaps Waha-NYMEX Henry Hub
15,000 — — — — ($1.60 ) Natural gas 3Q19 Sold Call Options NYMEX
Henry Hub 33,000 — — — $3.25 — Natural gas 4Q19 Basis Swaps
Waha-NYMEX Henry Hub 15,000 — — — — ($1.05 ) Natural gas 4Q19 Sold
Call Options NYMEX Henry Hub 33,000 — — — $3.25 — Natural
gas 2020 Basis Swaps Waha-NYMEX Henry Hub 29,541 — — — — ($0.77 )
Natural gas 2020 Sold Call Options NYMEX Henry Hub 33,000 — — —
$3.50 —
CARRIZO OIL & GAS, INC. SECOND QUARTER
AND FULL YEAR 2019 GUIDANCE SUMMARY
Second Quarter 2019 Full Year 2019 Daily
Production Volumes (Boe/d) 66,500 - 67,500 66,800 - 67,800
Crude oil 64% 63% NGLs 17% 17% Natural gas 19% 20%
Unhedged Commodity Price Realizations Crude oil (% of NYMEX
oil) 99% - 101% N/A NGLs (% of NYMEX oil) 27% - 29% N/A Natural gas
(% of NYMEX gas) 33% - 35% N/A Cash paid for commodity
derivative settlements, net ($MM) $6.0 - $10.0 N/A
Costs
and Expenses - Lease operating ($/Boe) $7.00 - $7.50 $6.75 -
$7.50 Production and ad valorem taxes (% of total revenues) 6.25% -
6.75% 6.00% - 6.75% Cash general and administrative, net ($MM)
$10.0 - $10.5 $50.5 - $52.0 Depreciation, depletion and
amortization ($/Boe) $13.00 - $14.00 $13.00 - $14.00 Interest
expense, net ($MM) $17.5 - $18.5 N/A
Capital Expenditures
- Drilling, completion, and infrastructure ($MM) N/A $525.0 -
$575.0 Interest ($MM) $8.3 - $8.8 N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507006005/en/
Carrizo Oil & Gas, Inc.Jeffrey P. Hayden,
CFAVP - Financial Planning and Analysis(713)
328-1044orKim PinyopusarerkManager - Investor
Relations(713) 358-6430
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