Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced the Company’s financial results for the third quarter of
2018 and provided an operational update, which includes the
following highlights:
- Total production of 64,627 Boe/d,
17% above the third quarter of 2017 and above the high-end of the
Company’s guidance range
- Crude oil production of 40,813
Bbls/d, 17% above the third quarter of 2017 and 8% above the second
quarter of 2018
- Net income attributable to common
shareholders of $76.1 million, or $0.85 per diluted share, and Net
cash provided by operating activities of $189.4 million
- Adjusted net income attributable to
common shareholders of $84.1 million, or $0.94 per diluted share,
and Adjusted EBITDA of $209.0 million
- Additional strong Delaware Basin
results from the Company’s Phantom and Ford West areas
- Increasing 2018 production guidance
to 60,200-60,500 Boe/d from 58,700-60,100 Boe/d
Carrizo reported third quarter of 2018 net income attributable
to common shareholders of $76.1 million, or $0.88 and $0.85 per
basic and diluted share, respectively, compared to net income
attributable to common shareholders of $5.6 million, or $0.07 per
basic and diluted share, in the third quarter of 2017. The net
income attributable to common shareholders for the third quarter of
2018 and the third 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 third quarter of 2018
was $84.1 million, or $0.94 per diluted share, compared to $26.7
million, or $0.33 per diluted share, in the third quarter of
2017.
For the third quarter of 2018, Adjusted EBITDA was $209.0
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 included below.
Production volumes during the third quarter of 2018 were 5,946
MBoe, or 64,627 Boe/d, an increase of 17% versus the third quarter
of 2017. The year-over-year growth was driven by the Permian Basin,
where the Company’s production increased by approximately 265%,
more than offsetting the impact of non-core divestitures over the
period. Crude oil production during the third quarter of 2018
averaged 40,813 Bbls/d, an increase of 17% versus the third quarter
of 2017; natural gas and NGL production were 74,072 Mcf/d and
11,469 Bbls/d, respectively, during the third quarter of 2018.
Third quarter of 2018 production exceeded the high end of the
Company’s guidance range of 62,000-63,000 Boe/d.
Drilling, completion, and infrastructure capital expenditures
for the third quarter of 2018 were $241.1 million. Approximately
62% of the third quarter drilling, completion, and infrastructure
spending was in the Eagle Ford Shale, with the balance in the
Delaware Basin. Land and seismic capital expenditures during the
quarter were $6.7 million, and were primarily focused in the
Delaware Basin.
For 2018, Carrizo is maintaining its drilling, completion, and
infrastructure capital expenditure guidance of $800-$825 million.
The Company’s 2018 development plan continues to call for it to run
an average of 6 rigs for the balance of the year between its assets
in the Eagle Ford Shale and Delaware Basin. Completion activity is
expected to decline in the fourth quarter as the Company’s 2018
development plan has included a frac holiday during the quarter.
Based on this level of activity, Carrizo expects to drill 123-132
gross (112-121 net) operated wells and complete 110-115 gross
(95-100 net) operated wells during the year.
Carrizo is increasing its 2018 production guidance range to
60,200-60,500 Boe/d from 58,700-60,100 Boe/d. Crude oil is expected
to account for 64%-65% of the Company’s production for the year,
while total liquids are expected to account for 81%-82%. This
equates to annual production growth of approximately 12% using the
midpoint of the range. For the fourth quarter of the year, Carrizo
expects production to be 67,700-68,700 Boe/d; crude oil is expected
to account for 63% of production, while total liquids are expected
to account for 80%. During the fourth quarter, Carrizo’s production
has been negatively impacted by delays resulting from the heavy
rains in Texas as well as maintenance on the DCP natural gas
gathering system; DCP is the Company’s largest third-party gas
gatherer in the Eagle Ford Shale. Additionally, fourth quarter
Eagle Ford Shale production has been negatively impacted by
elevated downtime in parent wells that offset slickwater
completions. Combined, these items are expected to impact the
Company’s production by more than 1,000 Bbls/d during the quarter,
with the impact weighted to the Eagle Ford Shale. 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 third quarter was another strong operational
and financial quarter for the Company as we delivered production 3%
above the high end of our guidance range with operating expenses
below the midpoint of our guidance ranges. We continued to see the
benefit of our dual-basin strategy during the quarter, as our Eagle
Ford Shale production received 104% of NYMEX pricing. This shielded
us from the significant widening of Permian Basin differentials and
allowed us to expand our EBITDA margin to $35/Boe.
“During the third quarter, we completed our activity pivot to
the Eagle Ford Shale. We currently have four of our six rigs
operating in the play, where our production continues to benefit
from advantaged pricing. We expect our activity to remain weighted
to the Eagle Ford Shale until the second half of 2019, when we plan
to begin moving rigs back to the Delaware Basin. We are using the
increased activity in the Eagle Ford Shale to drill two additional
large-scale multipad projects, which should help drive significant
production growth when they come online in 2019.
“While the Eagle Ford Shale should be the primary driver of our
production growth next year, we remain active in the Delaware
Basin. During the quarter, we delivered strong well results from
both our Phantom and Ford West areas and announced an attractive
bolt-on acquisition in the Phantom area. Though the acquisition
closed just last month, we have already begun to execute on some of
the identified synergies. Over the next several quarters, we plan
to focus our program in the basin on testing multi-layer
development concepts throughout the Wolfcamp formation, which
should help us maximize the long-term value of our asset.
“Our near- and long-term corporate goals include continuing to
reduce our leverage and generating double-digit production growth
within cash flow, and we continue to make progress toward achieving
these targets. At the end of the third quarter, our leverage metric
in accordance with our bank covenants fell below 2x, and we
currently expect it to move even lower by year-end 2019. We also
remain on track to achieving a free cash flow positive inflection
point during 2019.”
Operational Update
In the Eagle Ford Shale, where the Company holds approximately
76,600 net acres, Carrizo drilled 32 gross (31 net) operated wells
during the third quarter and completed 25 gross (24 net) operated
wells. Production from the play was more than 39,000 Boe/d, up 5%
versus the prior quarter. Crude oil production during the third
quarter was nearly 30,000 Bbls/d, accounting for 77% of the
Company’s production from the play. At the end of the quarter,
Carrizo had 20 gross (19 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.
Performance from Carrizo’s initial multipad project, located in
its Brown Trust area, continues to meet expectations. The Company
now believes that multipad development combined with a lower-fluid,
hybrid frac design, is the optimal development strategy where
applicable. Advantages of multipad development include elimination
of multiple parent-well frac hits, reduction in the total number of
parent/child relationships created over time, and improvement in
stimulation efficiency in the reservoir through the creation of
enhanced multi-directional stress profiles during completion
operations. At Brown Trust, the multipad project has resulted in
very strong well results coupled with a material reduction in
expected long-term, parent-well downtime in the area relative to a
traditional 4-6 well pad approach. Carrizo has begun operations on
two additional multipad projects, a 15-well project in its Pena
Winfield area and a 23-well project in its RPG area. Production
from both of these large-scale projects is expected in the first
half of 2019.
In the Delaware Basin, where it holds more than 46,000 net
acres, Carrizo drilled 7 gross (5 net) operated wells during the
third quarter and completed 10 gross (9 net) operated wells.
Production from the play was approximately 25,600 Boe/d for the
quarter, up 29% versus the prior quarter. Crude oil production
during the third quarter was approximately 10,900 Bbls/d,
accounting for 42% of the Company’s production from the play. At
the end of the quarter, Carrizo had 7 gross (6 net) operated
Delaware Basin wells waiting on completion. Carrizo currently
expects to drill 28-32 gross (22-26 net) operated wells and
complete approximately 25 gross (20 net) operated wells in the play
during 2018.
During the third quarter, Carrizo’s completion activity was
spread across its Phantom and Ford West acreage, with strong
results from both areas. Highlights from the Company’s third
quarter activity include the following:
- the Davis 2728 Unit 10H achieved a peak
30-day rate of approximately 2,350 Boe/d (46% oil, 71% liquids)
from an approximate 10,000-ft. lateral in the Wolfcamp A
- the Lovelace State Unit B912 11H has
yet to achieve a peak 30-day rate, but recently averaged nearly
2,100 Boe/d (40% oil, 68% liquids) over seven days from an
approximate 6,950-ft. lateral in the Wolfcamp B
- the Sandhu State 14 12H achieved a peak
30-day rate of more than 1,950 Boe/d (34% oil, 64% liquids) from an
approximate 10,000-ft. lateral in the Wolfcamp A
- the Mustang State Unit 20H achieved a
peak 30-day rate of more than 1,600 Boe/d (48% oil, 72% liquids)
from an approximate 6,150-ft. lateral in the Wolfcamp A
While the Davis 10H and the Lovelace State 11H build upon the
Company’s track record of strong well results from the Wolfcamp A
and B in its primary Phantom block, the Sandhu State 12H was a
delineation well located on the Company’s most westerly acreage in
the Phantom area. Carrizo is very encouraged by the performance of
this well as production has remained relatively flat, achieving a
peak 60-day rate of more than 1,800 Boe/d (35% oil, 65%
liquids).
The Mustang State 20H is a Wolfcamp A test located in the
Company’s Ford West area. The well is located approximately 3,000
ft. from its previously-drilled Mustang State 1H well and
incorporated technical and operational learnings from Carrizo’s
early activity in the area. The Mustang State 20H continues to
perform very well, having recently recorded a peak 60-day rate of
more than 1,500 Boe/d (47% oil, 71% liquids).
During October, Carrizo closed the previously-announced bolt-on
acquisition of Delaware Basin properties from Devon Energy
Corporation. The acquisition added approximately 10,000 net acres
adjacent to the Company’s Phantom position and approximately 1,700
Boe/d of net production. Since acquiring the asset, Carrizo has
identified more than 1,000 additional net acres on the position
through the evaluation of reprocessed 3D seismic that it believes
can be developed. The Company is also actively working to realize
the identified operational efficiencies. Carrizo expects to fully
integrate the newly-acquired water disposal system into its
existing system by year-end, which should allow it to shift the
disposal of produced water from some of its wells from a
third-party disposal site to Company-owned disposal wells acquired
in the transaction. The Company has also identified a number of
existing wells where it believes production can be increased by
optimizing artificial lift, and expects to begin this activity
shortly. Additionally, as a result of the acquisition, Carrizo will
be able to drill an upcoming well in the southeast portion of its
Phantom acreage in an optimized location, as it can now drill it as
an allocation well using a reduced lease-line setback. This should
lead to a more efficient development of its acreage in this
area.
With the Eagle Ford set to be the primary driver of the
Company’s production growth over the next year, Carrizo plans to
focus much of its near-term Delaware Basin activity on testing
additional layers as well as multi-layer cube concepts. This should
allow the Company to formulate a development plan that maximizes
the value of its vast resource potential in the basin. Some of the
near-term multi-layer tests the Company has planned include a
6-well cube in the Phantom area testing co-development of the
Wolfcamp A, B, and C and a 3-well cube in the Ford West area
testing co-development of the Wolfcamp A and B. Carrizo’s current
estimate of net de-risked drilling locations in the Delaware Basin
includes only Wolfcamp A locations in the Ford West area and
Wolfcamp A and B locations in the Phantom area. Carrizo currently
plans to provide updates on these projects, as well as additional
development tests, once it has sufficient production history.
Borrowing Base Update
During October, 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 $1.3 billion
from $1.0 billion, and Carrizo elected a commitment amount of $1.1
billion. Additionally, the interest rate on the Company’s facility
has been reduced by 25 basis points to LIBOR plus 125-225 basis
points. The next scheduled redetermination of the borrowing base is
expected in the spring of 2019.
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). For 2019, the Company has three-way
collars covering 27,000 Bbls/d. Additionally, Carrizo has hedges in
place for approximately 45% and 30% 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 third
quarter financial results on Tuesday, November 6, 2018 at 10:00 AM
Central Standard Time. To participate in the call, please dial
(877) 256-6033 (U.S. & Canada) or +1 (303) 223-4376
(Intl.) ten minutes before the call is scheduled to begin. A replay
of the call will be available through Tuesday, November 13, 2018 at
12:00 PM Central Standard Time at (800) 633-8284 (U.S. &
Canada) or +1 (402) 977-9140 (Intl.). The reservation number
for the replay is 21897149 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 “Third 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, generation and use of free cash flow,
weighting of activity among basins, maximization of value, goals,
leverage metrics, capital expenditure, infrastructure program,
resource potential, 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. The information regarding the
Devon acquisition described in this press release assumes that the
party to a joint operating agreement with the Company covering
acreage in the vicinity of the acquired properties does not
exercise its right to purchase 20% of the acreage covered by an
area of mutual interest provision under that agreement.
(Financial Highlights to Follow)
CARRIZO OIL & GAS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per
share amounts)
(Unaudited)
September 30, 2018
December 31, 2017
Assets Current assets Cash and cash equivalents $ 2,415 $
9,540 Accounts receivable, net 128,780 107,441 Derivative assets
10,258 — Other current assets 9,636 5,897
Total current assets 151,089 122,878
Property and equipment Oil and gas properties, full cost
method Proved properties, net 2,124,767 1,965,347 Unproved
properties, not being amortized 579,275 660,287 Other property and
equipment, net 10,885 10,176 Total
property and equipment, net 2,714,927 2,635,810 Deposit for pending
acquisition of oil and gas properties 21,500 — Other assets
23,482 19,616
Total Assets $ 2,910,998
$ 2,778,304
Liabilities and Shareholders’
Equity Current liabilities Accounts payable $ 147,670 $ 74,558
Revenues and royalties payable 52,975 52,154 Accrued capital
expenditures 117,556 119,452 Accrued interest 23,748 28,362
Derivative liabilities 162,895 57,121 Other current liabilities
50,918 41,175 Total current liabilities
555,762 372,822 Long-term debt
1,327,689 1,629,209 Asset retirement obligations 17,071 23,497
Derivative liabilities 102,103 112,332 Deferred income taxes 4,699
3,635 Other liabilities 8,703 51,650
Total liabilities 2,016,027 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 September 30, 2018 and 250,000
issued and outstanding as of December 31, 2017 173,629 214,262
Shareholders’ equity Common stock, $0.01 par value,
180,000,000 shares authorized; 91,619,733 issued and outstanding as
of September 30, 2018 and 81,454,621 issued and outstanding as of
December 31, 2017 916 815 Additional paid-in capital 2,132,253
1,926,056 Accumulated deficit (1,411,827 ) (1,555,974
) Total shareholders’ equity 721,342 370,897
Total Liabilities and Shareholders’ Equity $
2,910,998 $ 2,778,304
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2018 2017 2018 2017 Revenues
Crude oil $ 254,525 $ 152,101 $ 679,242 $ 422,999 Natural gas
liquids 33,798 12,467 71,969 27,678 Natural gas 15,052
16,711 41,417 48,440
Total revenues 303,375 181,279 792,628 499,117
Costs and Expenses Lease operating 41,022 34,874 115,446
100,767 Production taxes 14,516 7,741 37,578 21,092 Ad valorem
taxes 2,588 1,736 8,201 5,776 Depreciation, depletion and
amortization 80,108 67,564 217,005 181,018 General and
administrative, net 12,811 16,029 58,368 49,328 (Gain) loss on
derivatives, net 55,388 24,377 152,698 (27,004 ) Interest expense,
net 15,406 20,673 46,522 62,350 Loss on extinguishment of debt — —
8,676 — Other (income) expense, net (690 ) 462
2,305 1,640 Total costs and expenses
221,149 173,456 646,799 394,967
Income Before Income
Taxes 82,226 7,823 145,829 104,150 Income tax expense
(880 ) — (1,682 ) —
Net
Income $ 81,346 $ 7,823 $ 144,147 $
104,150 Dividends on preferred stock (4,457 ) (2,249 )
(13,794 ) (2,249 ) Accretion on preferred stock (771 ) — (2,264 ) —
Loss on redemption of preferred stock — —
(7,133 ) —
Net Income Attributable
to Common Shareholders $ 76,118 $ 5,574 $ 120,956
$ 101,901
Net Income Attributable to Common
Shareholders Per Common Share Basic $ 0.88 $ 0.07 $ 1.45 $ 1.44
Diluted $ 0.85 $ 0.07 $ 1.42 $ 1.43
Weighted Average
Common Shares Outstanding Basic 86,727 81,053 83,461 70,728
Diluted 89,039 81,138 85,221 71,147
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 — — 15,701 — 15,701 Issuance of common stock
upon grants of restricted stock awards and vestings of restricted
stock units and performance shares, net of forfeitures 665,112 6
(75 ) — (69 ) Sale of common stock, net of offering costs 9,500,000
95 213,762 — 213,857 Dividends on preferred stock — — (13,794 ) —
(13,794 ) Accretion on preferred stock — — (2,264 ) — (2,264 ) Loss
on redemption of preferred stock — — (7,133 ) — (7,133 ) Net income
— — — 144,147
144,147
Balance as of September 30, 2018 91,619,733
$ 916 $ 2,132,253 ($1,411,827 ) $ 721,342
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2018 2017 2018
2017 Cash Flows From Operating
Activities Net income $ 81,346 $ 7,823 $ 144,147 $ 104,150
Adjustments to reconcile net income to net cash provided by
operating activities Depreciation, depletion and amortization
80,108 67,564 217,005 181,018 (Gain) loss on derivatives, net
55,388 24,377 152,698 (27,004 ) Cash received (paid) for derivative
settlements, net (26,262 ) 6,456 (64,710 ) 7,714 Loss on
extinguishment of debt — — 8,676 — Stock-based compensation
expense, net 3,062 4,866 13,786 8,462 Deferred income taxes 534 —
1,063 — Non-cash interest expense, net 616 887 1,878 2,961 Other,
net 125 1,482 4,100 4,249 Changes in components of working capital
and other assets and liabilities- Accounts receivable (15,200 )
(17,791 ) (12,763 ) (25,885 ) Accounts payable 6,985 262 10,863
14,748 Accrued liabilities 3,547 6,320 (9,336 ) 11,970 Other assets
and liabilities, net (829 ) (804 ) (2,115 )
(1,786 ) Net cash provided by operating activities
189,420 101,442 465,292
280,597
Cash Flows From Investing Activities Capital
expenditures (231,820 ) (142,936 ) (662,459 ) (433,561 )
Acquisitions of oil and gas properties — (600,473 ) — (692,006 )
Deposit paid for pending acquisition (received for pending
divestiture) of oil and gas properties (21,500 ) 6,200 (21,500 )
6,200 Proceeds from divestitures of oil and gas properties 31,904
11 377,693 18,212 Other, net (1,591 ) (1,325 )
(2,687 ) (3,804 ) Net cash used in investing activities
(223,007 ) (738,523 ) (308,953 )
(1,104,959 )
Cash Flows From Financing Activities Issuance
of senior notes — 250,000 — 250,000 Redemptions of senior notes and
other long-term debt — — (330,435 ) — Redemption of preferred stock
— — (50,030 ) — Borrowings under credit agreement 1,288,352 392,778
2,415,208 1,311,875 Repayments of borrowings under credit agreement
(1,463,515 ) (459,478 ) (2,396,671 ) (1,183,275 ) Payments of debt
issuance costs and credit facility amendment fees — (4,596 ) (627 )
(8,964 ) Sale of common stock, net of offering costs 213,857
222,378 213,857 222,378 Sale of preferred stock, net of issuance
costs — 241,404 — 236,404 Payments of dividends on preferred stock
(4,457 ) (2,249 ) (13,794 ) (2,249 ) Other, net (334 )
(292 ) (972 ) (909 ) Net cash provided by
(used in) financing activities 33,903 639,945
(163,464 ) 825,260
Net Increase
(Decrease) in Cash and Cash Equivalents 316 2,864 (7,125 ) 898
Cash and Cash Equivalents, Beginning of Period 2,099
2,228 9,540 4,194
Cash and Cash Equivalents, End of Period $ 2,415 $
5,092 $ 2,415 $ 5,092
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 Ended September
30,
Nine Months Ended September
30,
2018 2017 2018
2017 (In thousands, except per share
amounts) Net Income Attributable to Common Shareholders
(GAAP) $ 76,118 $ 5,574 $ 120,956 $ 101,901 Loss on redemption
of preferred stock — — 7,133 — Income tax expense 880 — 1,682 —
(Gain) loss on derivatives, net 55,388 24,377 152,698 (27,004 )
Cash received (paid) for derivative settlements, net (26,262 )
6,456 (64,710 ) 7,714 Non-cash general and administrative, net
3,183 5,494 13,907 9,090 Loss on extinguishment of debt — — 8,676 —
Non-recurring and other (income) expense, net (1,091 )
462 4,366 1,640 Adjusted
income before income taxes 108,216 42,363 244,708 93,341 Adjusted
income tax expense (1) (24,132 ) (15,632 )
(54,570 ) (34,443 )
Adjusted Net Income Attributable to
Common Shareholders (Non-GAAP) $ 84,084 $ 26,731
$ 190,138 $ 58,898
Net Income Attributable
to Common Shareholders Per Diluted Common Share (GAAP) $ 0.85 $
0.07 $ 1.42 $ 1.43 Loss on redemption of preferred stock — — 0.08 —
Income tax expense 0.01 — 0.02 — (Gain) loss on derivatives, net
0.62 0.30 1.79 (0.38 ) Cash received (paid) for derivative
settlements, net (0.29 ) 0.08 (0.76 ) 0.11 Non-cash general and
administrative, net 0.04 0.06 0.16 0.13 Loss on extinguishment of
debt — — 0.10 — Non-recurring and other (income) expense, net
(0.01 ) 0.01 0.06 0.02
Adjusted income before income taxes 1.22 0.52 2.87 1.31
Adjusted income tax expense (0.28 ) (0.19 )
(0.64 ) (0.48 )
Adjusted Net Income Attributable to
Common Shareholders Per Diluted Common Share (Non-GAAP) $ 0.94
$ 0.33 $ 2.23 $ 0.83
Diluted
Weighted Average Shares Outstanding 89,039 81,138 85,221 71,147
________________________
(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 September 30, 2018 and
2017, respectively, as well as for the nine months ended September
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 Ended September
30,
Nine Months Ended September
30,
2018 2017 2018
2017 (In thousands, except per Boe amounts) Net
Income Attributable to Common Shareholders (GAAP) $ 76,118 $
5,574 $ 120,956 $ 101,901 Dividends on preferred stock 4,457 2,249
13,794 2,249 Accretion on preferred stock 771 — 2,264 — Loss on
redemption of preferred stock — — 7,133 — Income tax expense 880 —
1,682 — Depreciation, depletion and amortization 80,108 67,564
217,005 181,018 Interest expense, net 15,406 20,673 46,522 62,350
(Gain) loss on derivatives, net 55,388 24,377 152,698 (27,004 )
Cash received (paid) for derivative settlements, net (26,262 )
6,456 (64,710 ) 7,714 Non-cash general and administrative, net
3,183 5,494 13,907 9,090 Loss on extinguishment of debt — — 8,676 —
Non-recurring and other (income) expense, net (1,091 )
462 4,366 1,640
Adjusted EBITDA (Non-GAAP) $ 208,958 $ 132,849 $ 524,293 $
338,958 Cash interest expense, net (14,791 ) (19,786 ) (44,644 )
(59,389 ) Dividends on preferred stock (4,457 ) (2,249 ) (13,794 )
(2,249 ) Other cash and non-cash adjustments, net (34 )
392 922 1,981
Discretionary Cash Flows (Non-GAAP) $ 189,676 $ 111,206 $
466,777 $ 279,301 Changes in components of working capital and
other (256 ) (9,764 ) (1,485 ) 1,296
Net Cash Provided By Operating Activities (GAAP) $
189,420 $ 101,442 $ 465,292 $ 280,597
Adjusted EBITDA (Non-GAAP) $ 208,958 $ 132,849 $
524,293 $ 338,958 Total barrels of oil equivalent 5,946
5,080 15,753 13,896
Adjusted EBITDA Margin ($ per Boe) (Non-GAAP) $ 35.14
$ 26.15 $ 33.28 $ 24.39
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND REALIZED
PRICES
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2018 2017 2018
2017 Total production volumes - Crude oil (MBbls)
3,755 3,211 10,272 8,867 NGLs (MBbls) 1,055 623 2,648 1,482 Natural
gas (MMcf) 6,815 7,476 16,996
21,279
Total barrels of oil equivalent (MBoe)
5,946 5,080 15,753
13,896
Daily production volumes by product - Crude
oil (Bbls/d) 40,813 34,903 37,628 32,481 NGLs (Bbls/d) 11,469 6,777
9,699 5,430 Natural gas (Mcf/d) 74,072 81,265
62,258 77,946
Total barrels of oil
equivalent (Boe/d) 64,627 55,224
57,703 50,902
Daily production
volumes by region (Boe/d) - Eagle Ford 39,024 39,002 37,241
36,569 Delaware Basin 25,577 6,994 20,236 3,871 Other 26
9,228 226 10,462
Total
barrels of oil equivalent (Boe/d) 64,627
55,224 57,703 50,902
Realized
prices - Crude oil ($ per Bbl) $ 67.78 $ 47.37 $ 66.13 $ 47.70
NGLs ($ per Bbl) $ 32.04 $ 20.01 $ 27.18 $ 18.68 Natural gas ($ per
Mcf) $ 2.21 $ 2.24 $ 2.44 $ 2.28
CARRIZO OIL & GAS, INC. COMMODITY DERIVATIVE
CONTRACTS - AS OF NOVEMBER 2, 2018 (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 4Q18
Price Swaps NYMEX WTI 6,000 $ 49.55 — — — — Crude oil 4Q18
Three-Way Collars NYMEX WTI 24,000 — $ 39.38 $ 49.06 $ 60.14 —
Crude oil 4Q18 Basis Swaps LLS-WTI Cushing 18,000 — — — — $ 5.11
Crude oil 4Q18 Basis Swaps WTI Midland-WTI Cushing 6,000 — — — —
($0.10 ) Crude oil 4Q18 Sold Call Options NYMEX WTI 3,388 — — — $
71.33 — Crude oil 2019 Three-Way Collars NYMEX WTI 27,000 —
$ 41.67 $ 50.96 $ 73.40 — Crude oil 2019 Basis Swaps LLS-WTI
Cushing 4,000 — — — — $ 4.87 Crude oil 2019 Basis Swaps WTI
Midland-WTI Cushing 7,389 — — — — ($4.82 ) Crude oil 2019 Sold Call
Options NYMEX WTI 3,875 — — — $ 73.66 — Crude oil 2020 Basis
Swaps WTI Midland-WTI Cushing 13,000 — — — — ($1.27 ) Crude oil
2020 Sold Call Options NYMEX WTI 4,575 — — — $ 75.98 — Crude
oil 2021 Basis Swaps WTI Midland-WTI Cushing 6,000 — — — — $ 0.03
Fixed Fixed Sub-Floor Floor
Ceiling Price Volumes Price (1)
Price Price Price Differential
(Bbls ($ per ($ per ($ per ($
per ($ per Commodity Period Type of
Contract Index (per day) Bbl) Bbl)
Bbl) Bbl) Bbl) NGLs 4Q18 Price Swaps
OPIS-Ethane 2,200 $ 12.01 — — — — NGLs 4Q18 Price Swaps
OPIS-Propane 1,500 $ 34.23 — — — — NGLs 4Q18 Price Swaps
OPIS-Butane 200 $ 38.85 — — — — NGLs 4Q18 Price Swaps
OPIS-Isobutane 600 $ 38.98 — — — — NGLs 4Q18 Price Swaps
OPIS-Natural Gasoline 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.
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
4Q18 Fixed Price Swaps NYMEX Henry Hub 25,000 $ 3.01 — — — —
Natural gas 4Q18 Sold Call Options NYMEX Henry Hub 33,000 — — — $
3.25 — Natural gas 2019 Sold Call Options NYMEX Henry Hub
33,000 — — — $ 3.25 — Natural gas 2020 Sold Call Options
NYMEX Henry Hub 33,000 — — — $ 3.50 —
CARRIZO OIL &
GAS, INC. FOURTH QUARTER AND FULL YEAR 2018 GUIDANCE
SUMMARY Fourth Quarter 2018
Full Year 2018 Daily Production Volumes (Boe/d)
67,700 - 68,700 60,200 - 60,500 Crude oil 63% 64% - 65% NGLs 17%
17% Natural gas 20% 18% - 19%
Unhedged Commodity Price
Realizations Crude oil (% of NYMEX oil) 99.0% - 101.0% N/A NGLs
(% of NYMEX oil) 38.0% - 40.0% N/A Natural gas (% of NYMEX gas)
75.0% - 77.0% N/A Cash paid for derivative settlements, net
($MM) ($36.5) - ($32.5) N/A
Costs and Expenses -
Lease operating ($/Boe) $7.00 - $7.50 $7.25 - $7.40 Production
taxes (% of total revenues) 4.75% - 5.00% 4.75% - 4.85% Ad valorem
taxes (% of total revenues) 0.50% - 0.75% 0.85% - 0.95% Cash
general and administrative, net ($MM) $10.6 - $11.1 $53.0 - $53.5
Depreciation, depletion and amortization ($/Boe) $13.50 - $14.50
$13.70 - $14.00 Interest expense, net ($MM) $14.8 - $15.8 N/A
Capital Expenditures - Drilling, completion, and
infrastructure ($MM) N/A $800.0 - $825.0 Interest ($MM) $8.5 - $9.0
N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181105005953/en/
Carrizo Oil & Gas, Inc.Jeffrey P. Hayden,
CFAVP - Investor Relations(713)
328-1044orManager - Investor RelationsKim
Pinyopusarerk(713) 358-6430
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