1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30 1998
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number 000-22915.
CARRIZO OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0415919
----- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
14811 ST. MARY'S LANE, SUITE 148, HOUSTON, TEXAS 77079
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
(281) 496-1352
--------------
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X* No
--- ---
* The registrant became subject to the reporting requirements of Section 13 of
the Securities Act of 1933 on August 5, 1997.
The number of shares outstanding of the registrant's common stock, par value
$0.01 per share, as of November 10, 1998, the latest practicable date, was
10,375,000.
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CARRIZO OIL & GAS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Condensed Balance Sheets
- As of September 30, 1998 and December 31, 1997 2
Condensed Statements of Operations
- For the three-month and nine-month periods ended
September 30, 1998 and 1997 3
Condensed Statements of Cash Flows
- For the nine-month periods ended September 30, 1998
and 1997 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Items 1-6. 13
SIGNATURES 16
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CARRIZO OIL & GAS, INC.
CONDENSED BALANCE SHEETS
December 31, September 30,
1997 1998
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,674,837 $ 3,435,197
Accounts receivable 3,635,504 4,584,359
Advances to operators 1,817,990 1,425,986
Other current assets 108,633 581,503
------------ ------------
Total current assets 8,236,964 10,027,045
PROPERTY AND EQUIPMENT, net (full-cost method of accounting for oil and
gas properties) 45,082,833 71,003,122
OTHER ASSETS 338,638 394,210
------------ ------------
$ 53,658,435 $ 81,424,377
============ ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Bank loan (Note 3) $ -- $ 3,500,000
Accounts payable, trade 10,433,479 10,023,455
Dividends payable -- 704,509
Other current liabilities 79,328 155,626
------------ ------------
Total current liabilities 10,512,807 14,383,590
LONG-TERM DEBT (Note 3) 7,950,000 4,100,000
DEFERRED INCOME TAXES 2,300,267 2,076,036
MANDATORILY REDEEMABLE PREFERRED STOCK (10,000,000 shares
authorized with none and 313,091.72 issued and outstanding at December 31,
1997 and September 30, 1998, respectively) (Note 4) -- 29,974,454
SHAREHOLDERS' EQUITY:
Warrants (Note 4) -- 300,000
Common Stock (40,000,000 shares authorized with 10,375,000 issued and
outstanding at December 31, 1997 and September 30, 1998) 103,750 103,750
Additional paid-in capital 32,845,727 32,845,727
Retained earnings (deficit) 365,690 (2,219,270)
Deferred compensation (419,806) (139,910)
------------ ------------
32,895,364 30,890,297
------------ ------------
$ 53,658,435 $ 81,424,377
============ ============
The accompanying notes are an integral part of these financial statements.
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CARRIZO OIL & GAS, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
---------------------------- ----------------------------
1997 1998 1997 1998
----------- ----------- ----------- -----------
OIL AND NATURAL GAS REVENUES $ 2,069,237 $ 1,508,897 $ 6,234,261 $ 5,696,543
COSTS AND EXPENSES:
Oil and natural gas operating expenses 583,361 732,208 1,779,154 2,015,017
Depreciation, depletion and amortization 647,295 862,998 1,635,319 2,483,365
General and administrative 388,227 661,608 992,988 2,054,240
----------- ----------- ----------- -----------
Total costs and expenses 1,618,883 2,256,814 4,407,461 6,552,622
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 450,354 (747,917) 1,826,800 (856,079)
OTHER INCOME AND EXPENSES:
Interest income 43,784 12,150 43,784 285,687
Interest expense (172,261) (46,564) (641,921) (49,649)
Interest expense, related parties (51,664) -- (137,067) --
Capitalized interest 162,767 41,062 627,547 41,062
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 432,980 (741,269) 1,719,143 (578,979)
TAX EXPENSE (BENEFIT) 151,543 (246,080) 2,086,115 (162,551)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 281,437 $ (495,189) $ (366,972) $ (416,428)
=========== =========== =========== ===========
LESS: DIVIDENDS AND ACCRETION ON PREFERRED SHARES -- (756,595) -- (2,168,533)
----------- ----------- ----------- -----------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 281,437 $(1,251,784) $ (366,972) $(2,584,961)
=========== =========== =========== ===========
BASIC EARNINGS (LOSS) PER COMMON SHARE (Note 2) $ .04 $ (.12) $ (.05) $ (.25)
=========== =========== =========== ===========
DILUTED EARNINGS (LOSS) PER COMMON SHARE (Note 2) $ .04 $ (.12) $ (.05) $ (.25)
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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CARRIZO OIL & GAS, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Nine
Months Ended
September 30,
------------------------------
1997 1998
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (366,972) $ (416,428)
Adjustment to reconcile net income (loss) to net cash provided by
operating activities-
Depreciation, depletion and amortization 1,635,319 2,483,365
Deferred income taxes 2,086,115 (224,231)
Changes in assets and liabilities-
Accounts receivable (860,949) (948,855)
Other current assets (96,461) (472,870)
Other assets -- (163,519)
Accounts payable, trade (618,303) (1,180,837)
Interest payable to related parties and other current liabilities (259,242) 76,298
------------ ------------
Net cash provided by (used in)
operating activities 1,519,507 (847,077)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, accrual basis (21,951,646) (28,015,811)
Adjustment to cash basis 4,862,620 770,813
Advance to operators (1,618,929) 392,004
------------ ------------
Net cash used in
investing activities (18,707,955) (26,852,994)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of stock 28,243,054 --
Net proceeds from sale of preferred stock -- 28,810,431
Proceeds from bank loan -- 3,500,000
Proceeds from long-term debt 10,594,454 4,100,000
Debt repayments (20,408,934) (7,950,000)
Proceeds from related-party notes payable 130,545 --
Distributions (90,000) --
------------ ------------
Net cash provided by
financing activities 18,469,119 28,460,431
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,280,671 760,360
CASH AND CASH EQUIVALENTS, beginning of period 1,492,603 2,674,837
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 2,773,274 $ 3,435,197
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest (net of amounts capitalized) $ 151,441 $ 8,587
============ ============
The accompanying notes are an integral part of these financial statements.
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CARRIZO OIL & GAS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. NATURE OF OPERATIONS, COMBINATION
AND OFFERING:
The condensed financial statements included herein have been prepared by Carrizo
Oil & Gas, Inc. (the Company), and are unaudited, except for the balance sheet
at December 31, 1997, which has been prepared from the audited financial
statements at that date. The financial statements reflect necessary adjustments,
all of which were of a recurring nature, and are in the opinion of management
necessary for a fair presentation. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). The Company
believes that the disclosures presented are adequate to allow the information
presented not to be misleading. The condensed financial statements included
herein should be read in conjunction with the audited financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
The Company was formed in 1993 and is the surviving entity after a series of
combination transactions (the Combination). The Combination included the
following transactions: (a) Carrizo Production, Inc. (a Texas corporation and an
affiliated entity with ownership substantially the same as Carrizo), was merged
into Carrizo and the outstanding shares of capital stock of Carrizo Production,
Inc., were exchanged for an aggregate of 343,000 shares of common stock of
Carrizo; (b) Carrizo acquired Encinitas Partners Ltd. (a Texas limited
partnership of which Carrizo Production, Inc., served as the general partner) as
follows: Carrizo acquired from the shareholders who serve as directors of
Carrizo their limited partner interests in Encinitas Partners Ltd. for an
aggregate consideration of 468,533 shares of common stock and, on the same date,
Encinitas Partners Ltd. was merged into Carrizo and the outstanding limited
partner interests in Encinitas Partners Ltd. were exchanged for an aggregate of
860,699 shares of common stock; (c) La Rosa Partners Ltd. (a Texas limited
partnership of which Carrizo served as the general partner) was merged into
Carrizo and the outstanding limited partner interests in La Rosa Partners Ltd.
were exchanged for an aggregate of 48,700 shares of common stock; and (d)
Carrizo Partners Ltd. (a Texas limited partnership of which Carrizo served as
the general partner) was merged into Carrizo and the outstanding limited partner
interests in Carrizo Partners Ltd. were exchanged for an aggregate of 569,068
shares of common stock.
Simultaneous with the Combination, the Company completed its initial public
offering (the Offering) of 2,875,000 shares of its common stock at a public
offering price of $11.00 per share. The Offering provided the Company with
proceeds of approximately $28.1 million, net of expenses.
The Combination was accounted for as a reorganization of entities as prescribed
by Securities and Exchange Commission (SEC) Staff Accounting Bulletin 47 because
of the high degree of common ownership among, and the common control of, the
combining entities. Accordingly, the accompanying financial statements have been
prepared using the historical costs and results of operations of the affiliated
entities. There were no significant differences in accounting methods or their
application among the combining entities. All intercompany balances have been
eliminated. Certain reclassifications have been made to prior period amounts to
conform to the current period's financial statement presentation.
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2. EARNINGS PER COMMON SHARE:
Supplemental earnings per share information is provided below:
For the Three Months Ended September 30
-----------------------------------------------------------------------------------------
Income (Loss) Shares Per-Share Amount
1997 1998 1997 1998 1997 1998
------------- ------------- ------------- ------------- ------ ------
Net Income (loss) $ 281,437 $ (495,189)
Less: Dividends and
accretion on preferred
stock (756,595)
-------------
Basic Earnings per Share
Net Income (loss)
available to common
shareholders 281,437 (1,251,784) 7,500,000 10,375,000 $ .04 $(.12)
====== =====
Stock Options -- -- 222,120 28,270
------------- ------------- ------------- -------------
Diluted Earnings per Share
Net Income (loss)
available to common
shareholders plus
assumed conversions $ 281,437 $ (1,251,784) 7,722,120 10,403,270 $ .04 $(.12)
============= ============= ============= ============= ====== =====
For the Nine Months Ended September 30
-----------------------------------------------------------------------------------------
Income (Loss) Shares Per-Share Amount
1997 1998 1997 1998 1997 1998
------------- ------------- ------------- ------------- ------ ------
Net Income (loss) $ (366,972) $ (416,428)
Less: Dividends and
accretion on preferred
stock -- (2,168,533)
------------- -------------
Basic Earnings per Share
Net Income (loss)
available to common
shareholders (366,972) (2,584,961) 7,500,000 10,375,000 $ (.05) $ (.25)
====== ======
Stock Options -- -- 222,120 76,732
------------- ------------- ------------- -------------
Diluted Earnings per Share
Net Income (loss)
available to common
shareholders plus
assumed conversions $ (366,972) $ (2,584,961) 7,722,120 10,451,732 $ (.05) $ (.25)
============= ============= ============= ============= ====== ======
Net income (loss) per common share has been computed by dividing net income
(loss) by the weighted average number of shares of common stock outstanding
during the periods. During the nine months ended September 30, 1998, the Company
had outstanding 250,000 stock options and warrants to purchase 1,000,000 shares
of common stock, which were antidilutive and were not included in the
calculation as the exercise price exceeded the market value. The Company adopted
SFAS No. 128, "Earnings per Share," effective December 31, 1997. This accounting
change had no effect on previously reported earnings per share (EPS) data.
3. FINANCING ARRANGEMENTS
In connection with the Initial Public Offering, the Company entered into an
amended revolving credit agreement with Compass Bank, (the "Company Credit
Facility"), which provides for a maximum loan amount of $25 million, subject to
borrowing base limitations. Prior to the Offering, the Company utilized various
credit facilities as well as borrowings from certain directors and officers of
the Company. Except for the Company Credit Facility, all of these facilities
and borrowings were terminated with the close of the Offering. Under the
Company Credit Facility, the principal outstanding is due and payable upon
maturity in June 1999 with interest due monthly. The interest rate for
borrowings is calculated at a floating rate based on the Compass index rate or
LIBOR plus 2 percent. The Company's obligations are secured by certain of its
oil and gas properties and cash or cash equivalents included in the borrowing
base.
Under the Company Credit Facility, Compass, in its sole discretion, will make
semiannual borrowing base determinations based upon the proved oil and natural
gas properties of the Company. Compass may redetermine the borrowing base and
the monthly borrowing base reduction at any time and from time to time. The
Company may also request borrowing base redeterminations in addition to its
required semiannual reviews at the Company's cost. At September 30, 1998, the
borrowing base amounted to $5,750,000 with $4.1 million outstanding.
The Company is subject to certain covenants under the terms of the Company
Credit Facility, including, but not limited to, (a) maintenance of specified
tangible net worth and (b) maintenance of a ratio of quarterly cash flow (net
income plus depreciation and other noncash charges, less noncash income) to
quarterly debt service (payments made for principal in connection with the
credit facility plus payments made for principal other than in connection with
such credit facility) of no less than 1.25 to 1.00. The Company Credit Facility
also places restrictions on, among other things, (a) incurring additional
indebtedness, loans and liens, (b) changing the nature of business or business
structure, (c) selling assets and (d) paying dividends.
In December 1997, the Company and Compass entered into an amendment to the
Company Credit Facility that provided for a term loan of $3 million. Interest
for borrowings under the term loan was calculated at a floating rate based on
the Compass index rate plus 2 percent. The amount outstanding under the term
loan as of December 31, 1997 was $3 million. Amounts outstanding under the term
loan were repaid in January 1998.
In September 1998, the Company and Compass Bank entered into an amendment for
the Company Credit Facility that provides for a term loan of $7 million, which
is due on the earlier of (i) the date of closing of the sale by the Company of
convertible subordinated debt or of equity of the Company, (ii) the repayment
of the Company Credit Facility and (iii) September 30, 1999. Interest for
borrowings under the term loan is calculated at a floating rate based on the
Compass index rate plus 2 percent. The amount outstanding under the term loan
as of September 30, 1998 was $3.5 million, and the Company's ability to borrow
additional amounts under the term loan terminates on December 31, 1998. This
loan is guaranteed by certain members of the Board of Directors.
4. SALES OF PREFERRED STOCK AND WARRANTS:
In January 1998, the Company consummated the sale of 300,000 shares of Preferred
Stock and Warrants to purchase 1,000,000 shares of Common Stock to affiliates of
Enron Corp. The net proceeds received by the Company from this transaction were
approximately $28.8 million. A portion of the proceeds were used to repay
indebtedness of $7.95 million.
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The remaining proceeds are being used primarily for oil and natural gas
exploration and development activities in Texas and Louisiana. The Preferred
Stock provides for annual cumulative dividends of $9.00 per share, payable
quarterly in cash or, at the option of the Company until January 15, 2002, in
additional shares of Preferred Stock. Payments for the three and nine months
ended September 30, 1998 were made by the issuance of an additional 7,018.81 and
20,110.53 shares of Preferred Stock, respectively. As of October 15, 1998, there
were 320,110.53 shares of Preferred Stock outstanding. The Warrants, which had a
fair value at issuance of $.30 per share, will be accreted through the term of
the Preferred Stock.
The Preferred Stock is required to be redeemed by the Company (i) on January 8,
2005, or (ii) after a request for redemption from the holders of at least 30,000
shares of the Preferred Stock (or, if fewer than such number of shares of
Preferred Stock are outstanding, all of the outstanding shares of Preferred
Stock) and the occurrence of certain events. Included among those events is for
two consecutive fiscal quarterly periods the quarterly Cash Flow (as defined
below) of the Company is less than the amount of the dividends accrued with
respect to the Preferred Stock. "Cash Flow" means net income prior to preferred
dividends and accretion (i) plus (to the extent included in net income prior to
preferred dividends and accretion) depreciation, depletion and amortization and
other non-cash charges and losses on the sale of property (ii) minus non-cash
income items and required principal payments on indebtedness for borrowed money
with a maturity from the original date of incurrence of such indebtedness of
six months or greater (excluding voluntary prepayments and refinancings, but
including prepayments (other than in connection with refinancings) which would
otherwise be due under such indebtedness within a 60-day period following the
date of such prepayments). The Preferred Stock also may be redeemed at the
option of the Company at any time in whole or in part. All redemptions are at a
price per share, together with dividends accumulated and unpaid to the date of
redemption, decreasing over time from an initial rate of $104.50 per share to
$100 per share. The Warrants (i) enable the holders to purchase 1,000,000 share
of Common Stock at a price of $11.50 per share (payable in cash, by "cashless
exercise" and certain other methods), subject to adjustments, (ii) expire after
a seven-year term, and (iii) are exercisable after one year. If the Company
fails to meet its redemption obligations, the holders of the Preferred Stock
will generally have the right, voting as a class, to elect additional
directors, which in most cases will constitute a majority of the board.
The Company's Cash Flow (as defined above) for the three months ended September
30, 1998 was less than the amount of the dividends accrued with respect to the
Preferred Stock. There can be no assurance that the Company's Cash Flow for the
three months ended December 31, 1998 will exceed the amount of the dividends to
be accrued with respect to the Preferred Stock.
5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 130, "Reporting Comprehensive Income" ("Statement No. 130") and
Statement No. 131, "Disclosures About Segments of an Enterprise and Related
Information ("Statement No. 131"). In February 1998, the FASB issued Statement
No. 132 "Employers' Disclosure About Pension and Other Post-retirement
Benefits" ("Statement No. 132") that revised disclosure requirements for
pension and other post-retirement benefits. Statement No. 132 does not impact
Carrizo's disclosure or reporting. During the first quarter of 1998, the
Accounting Standards Executive Committee of the American Institute of Certified
Public Accounts issued two Statements of Position ("SOP"), SOP 98-5 "Reporting
on the Costs of Start-up Activities" and SOP 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use".
Statement No. 130 established standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. This standard does not currently alter the Company's
reporting or disclosure.
Statement No. 131 established standards for the way public enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also established standards
for related disclosure about products and services, geographic areas and major
customers. Statement No. 131 will not currently impact the Company's disclosure
or reporting.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The Statement establishes accounting and reporting
standards requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded in the balance
sheet as either an asset or liability measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting.
Statement No. 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the Statement as of the beginning of any fiscal
quarter after issuance. Statement No. 133 cannot be applied retroactively.
Statement No. 133 must be applied to (a) derivative instruments and (b) certain
derivative instruments embedded in hybrid contracts that were issued, acquired,
or substantively modified after December 31, 1997 and, at the company's
election, before January 1, 1998. The Company routinely enters into financial
instrument contracts to hedge price risks associated with the sale of crude oil
and natural gas. Statement No. 133 amends, modifies and supercedes significantly
all of the authoritative literature governing the accounting for and disclosure
of derivative financial instruments and hedging activities. As a result,
adoption of Statement No. 133 will impact the accounting for and disclosure of
the Company's operations. The Company is assessing the impact Statement No. 133
will have on its financial accounting and disclosures and intends to adopt the
provisions of such statement in accordance with the requirements provided by the
statement.
SOP 98-1 establishes guidance on the accounting for the costs of computer
software developed or obtained for internal use. The Company's current
accounting policies adhere to the provisions of the SOP. SOP 98-5 provides
guidance on the accounting for start up costs and organization costs, and must
be adopted for fiscal years beginning after December 15, 1998. At adoption, the
Company will be required to record the cumulative effect of a change in
accounting principle to write off any unamortized start up or organization costs
remaining on the balance sheet. The Company plans to adopt the SOP in the first
quarter of 1999.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected certain aspects of the Company's financial position
and results of operations during the periods included in the accompanying
unaudited condensed financial statements. This discussion should be read in
conjunction with the discussion under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the annual financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 and the unaudited condensed financial statements
included elsewhere herein. Unless otherwise indicated by the context, references
herein to "Carrizo" or "Company" mean Carrizo Oil & Gas, Inc., a Texas
corporation that is the registrant.
GENERAL OVERVIEW
The Company began operations in September 1993 and initially focused on the
acquisition of producing properties. As a result of the increasing availability
of economic onshore 3-D seismic surveys, the Company began to obtain 3-D
seismic data and options to lease substantial acreage in 1995 and began to
drill its 3-D based prospects in 1996. The Company drilled 70 wells in 1997. As
a result of unexpected delays in settling certain land issues, lower than
expected commodity prices, poor weather, and delays of other parties in
non-operated areas, the Company drilled 49 gross wells in the nine months ended
September 30, 1998 which is fewer than number contemplated in the initial
budget. During the fourth quarter, the Company plans to drill between 10
and 20 gross wells, however, the actual number of which may vary depending
upon weather delays and other factors. Depreciation, depletion and
amortization, oil and gas operating expenses and production are expected to
increase. The Company has typically retained the majority of its interests in
shallow, normally pressured prospects and sold a portion of its interests in
deeper, overpressured prospects.
The financial statements are prepared on the basis of a combination of Carrizo
and the entities that were a party to the Combination Transactions. Carrizo and
the entities combined with it in the Combination Transactions were not required
to pay federal income taxes due to their status as partnerships or Subchapter S
corporations, which are not subject to federal income taxation. Instead, taxes
for such periods were paid by the shareholders and partners of such entities. On
May 16, 1997, Carrizo terminated its status as an S corporation and thereafter
became subject to federal income taxes. In accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
the Company established a deferred tax liability in the second quarter of 1997
which resulted in a noncash charge to income of approximately $1.6 million.
The Company has primarily grown through the internal development of properties
within its exploration project areas, although the Company acquired properties
with existing production in the Camp Hill Project in late 1993, the Encinitas
Project in early 1995 and the La Rosa Project in 1996. The Company made these
acquisitions through the use of limited partnerships with Carrizo or Carrizo
Production, Inc. as the general partner. However, as operations have expanded,
the Company has increasingly funded its activities through bank borrowings and
cash flow from operations in order to retain a greater portion of the interests
it develops.
The Company's revenues, profitability, future growth and ability to borrow funds
or obtain additional capital, and the carrying value of its properties are
substantially dependent on the success of the Company's exploration program and
the prevailing prices of oil and natural gas. It is impossible to predict future
oil and natural gas price movements with certainty. Declines in prices received
for oil and natural gas may have an adverse effect on the Company's financial
condition, liquidity, ability to finance capital expenditures, and results of
operations. Lower prices may also impact the amount of reserves that can be
produced economically by the Company.
Due to the instability of oil and natural gas prices, in 1995 the Company began
utilizing, from time to time, certain hedging instruments (e.g., NYMEX futures
contracts) for a portion of its oil and gas production to achieve a more
predictable cash flow, as well as to reduce the exposure to price fluctuations.
The Company's hedging arrangements apply to only a portion of its production,
provide only partial price protection against declines in oil and natural gas
prices and limit potential gains from future increases in prices. Such hedging
arrangements may expose the Company to risk of financial loss in certain
circumstances, including instances where production is less than expected, the
Company's customers fail to purchase contracted quantities of oil or natural
gas, or a sudden unexpected event materially impacts oil or natural gas prices.
The Company accounts for all these transactions as hedging activities and,
accordingly, gains and losses from hedging activities are included in oil and
gas revenues during the period the hedged transactions occur. Historically,
gains and losses from hedging activities have not been material. The Company
expects that the amount of hedges that it has in place will vary
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from time to time. The Company had outstanding hedge positions as of
September 30, 1998 covering 1,092 Mmcf for October 1998 through March 1999 at
an average price of $2.27 (Houston Ship Channel).
The Company uses the full-cost method of accounting for its oil and gas
properties. Under this method, all acquisition, exploration and development
costs, including any general and administrative costs that are directly
attributable to the Company's acquisition, exploration and development
activities, are capitalized in a "full-cost pool" as incurred. The Company
records depletion of its full-cost pool using the unit-of-production method. To
the extent that such capitalized costs in the full-cost pool (net of
depreciation, depletion and amortization and related deferred taxes) exceed the
present value (using a 10 percent discount rate) of estimated future net
after-tax cash flows from proved oil and gas reserves, such excess costs are
charged to operations. The Company has not been required to make any such
write-downs. Once incurred, a write-down of oil and gas properties is not
reversible at a later date. The ceiling test for many full cost companies,
including Carrizo, could be negatively impacted by prolonged unfavorable oil
and gas prices, potentially resulting in the Company recording a non-cash
charge to earnings related to its oil and gas properties during 1998.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1998,
Compared to the Three Months Ended September 30, 1997
Oil and natural gas revenues for the three months ended September 30, 1998
decreased 27 percent to $1,509,000 from $2,069,000 for the same period in 1997.
Production volumes for natural gas during the three months ended September 30,
1998 decreased 13 percent to 604,860 Mcf from 694,873 Mcf for the same period
in 1997. Average gas prices decreased 15 percent to $1.81 per Mcf in the third
quarter of 1998 from $2.14 per Mcf in the same period in 1997. Production
volumes for oil in the third quarter of 1998 decreased 5 percent to 31,317 Bbls
from 33,104 Bbls for the same period in 1997. Average oil prices decreased 25
percent to $13.31 per barrel in the third quarter of 1998 from $17.66 per
barrel in the same period in 1997. The decrease in natural gas production was
due primarily to the curtailment of production as a result of regulatory action
from the Company's Wheeler wells and declines in production from the Company's
Encinitas wells combined with the delay in commencement of production from
several wells drilled during the second quarter of 1998. The decrease in oil
production was due primarily to normal declines in existing wells partially
offset by production from new wells.
The following table summarizes production volumes, average sales prices and
operating revenues for the Company's oil and natural gas operations for the
three months ended September 30, 1997 and 1998:
1998 Period
Compared to 1997 Period
September 30 --------------------------
------------------------- Increase % Increase
1997 1998 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Production volumes-
Oil and condensate (Bbls) 33,104 31,317 (1,787) (5%)
Natural gas (Mcf) 694,873 604,860 (90,013) (13%)
Average sales prices-(1)
Oil and condensate (per Bbl) $ 17.66 $ 13.31 $ (4.35) (25%)
Natural gas (per Mcf) 2.14 1.81 (.33) (15%)
Operating revenues-
Oil and condensate $ 584,457 $ 416,767 $ (167,690) (29%)
Natural gas 1,484,780 1,092,130 (392,650) (26%)
---------- ---------- ----------
Total $2,069,237 $1,508,897 $ (560,340) (27%)
========== ========== ==========
- -----------------
(1) Includes impact of hedging activities.
Oil and natural gas operating expenses for the three months ended September 30,
1998 increased 26 percent to $732,000 from $583,000 for the same period in
1997. Operating expenses per equivalent unit increased to $.92 per Mcfe in the
third quarter of 1998 from $.65 per in the same period in 1997 primarily
as a result of decreased production of natural gas.
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11
Depreciation, depletion and amortization (DD&A) expense for the three months
ended September 30, 1998 increased 33 percent to $863,000 from $647,000 for the
same period in 1997. This increase was due to additional seismic and drilling
costs and depreciation on 3-D computer equipment and related software. General
and administrative expense for the three months ended September 30, 1998
increased 70 percent to $662,000 from $388,000 for the same period in 1997 as a
result of increases in the number of employees and related benefits and
increased office space as well as other costs related to being a public company.
Interest income for the three months ended September 30, 1998 decreased to
$12,000 from $44,000 in the third quarter of 1997. Net interest expense for the
three months ended September 30, 1998, decreased to $6,000 from $61,000 in the
same period in 1997. Capitalized interest decreased to $41,000 in the third
quarter of 1998 from $163,000 in the third quarter of 1997.
Income (loss) before income taxes for the three months ended September 30, 1998
decreased 271 percent to a loss of $741,000 from income of $433,000 in the same
period in 1997. Net income (loss) for the three months ended September 30, 1998
decreased to a loss of $495,000 from income of $281,000 for the same period in
1997 primarily as a result of decreased revenue and increased DD&A and general
and administrative expense.
Nine Months Ended September 30, 1998,
Compared to the Nine Months Ended September 30, 1997
Oil and natural gas revenues for the nine months ended September 30, 1998
decreased 9 percent to $5,697,000 from $6,234,000 for the same period in 1997.
Production volumes for natural gas during the nine months ended September 30,
1998 decreased 9 percent to 1,936,029 Mcf from 2,123,056 Mcf for the same period
in 1997. Average gas prices increased 2 percent to $2.26 per Mcf for the nine
months ended September 30, 1998 from $2.21 per Mcf in the same period in 1997.
Production volumes for oil for the nine months ended September 30, 1998
increased 24 percent to 101,131 Bbls from 81,654 Bbls for the same period in
1997. Average oil prices decreased 31 percent to $13.02 per barrel for the nine
months ended September 30, 1998 from $18.97 per barrel in the same period in
1997. The increase in oil production was due primarily to production from new
wells drilled and completed during 1997 and 1998.
The following table summarizes production volumes, average sales prices and
operating revenues for the Company's oil and natural gas operations for the nine
months ended September 30, 1997 and 1998:
1998 Period
Compared to 1997 Period
September 30 --------------------------
------------------------- Increase % Increase
1997 1998 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Production volumes-
Oil and condensate (Bbls) 81,654 101,131 19,477 24%
Natural gas (Mcf) 2,123,056 1,936,029 (187,027) (9%)
Average sales prices-(1)
Oil and condensate (per Bbl) $ 18.97 $ 13.02 $ (5.95) (31%)
Natural gas (per Mcf) 2.21 2.26 .05 2%
Operating revenues-
Oil and condensate $1,549,056 $1,316,453 $ (232,603) (15%)
Natural gas 4,685,205 4,380,090 (305,115) (7%)
---------- ---------- ----------
Total $6,234,261 $5,696,543 $ (537,718) (9%)
========== ========== ==========
- ----------
(1) Includes impact of hedging activities.
Oil and natural gas operating expenses for the nine months ended September 30,
1998 increased 13 percent to $2,015,000 from $1,779,000 for the same period in
1997 primarily due to the addition of new wells offset by a reduction in costs
on older producing fields. Operating expenses per equivalent unit increased to
$.79 per Mcfe for the nine months ended September 30, 1998 from $.68 per Mcfe in
the same period in 1997 reflecting the cost of operating more wells and as a
result of declining production of natural gas.
Depreciation, depletion and amortization (DD&A) expense for the nine months
ended September 30, 1998 increased 52 percent to $2,483,000 from $1,635,000 for
the same period in 1997. This increase was due to additional seismic and
drilling costs. General and administrative expense for the nine months ended
September 30, 1998 increased 107 percent to $2,054,000 from $993,000 for the
same period in 1997 as a result of increases in the number of employees and
related benefits and increased office space.
-10-
12
Interest income for the nine months ended September 30, 1998 increased to
$286,000 from $44,000 for the same period in 1997. Net interest expense for the
nine months ended September 30, 1998, decreased to $9,000 from $151,000 in the
same period in 1997. Capitalized interest decreased to $41,000 for the nine
months ended September 30, 1998 from $628,000 for the same period in 1997 as
total interest paid decreased as a result of debt retirement using proceeds from
the Initial Public Offering and the Preferred Stock and Warrants sale.
Income (loss) before income taxes for the nine months ended September 30, 1998
decreased 134 percent to a loss of $579,000 from income of $1,719,000 in the
same period in 1997. Net loss for the nine months ended September 30, 1998
increased to $416,000 from $367,000 for the same period in 1997 primarily as a
result of decreased production and oil prices and increased DD&A and general and
administrative expense. The 1997 period also included a one-time charge for
income taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have included proceeds for the
Offering and from the sale of shares of Preferred Stock and the Warrants (each
as defined below), funds generated by operations, equity capital contributions
and borrowings, primarily under revolving credit facilities.
Cash flows provided by (used in) operations (after changes in working capital)
were $1,520,000 and $(847,000) for the nine months ended September 30, 1997
and 1998, respectively. The decrease in cash flows provided by operations in
1998 as compared to 1997 was due primarily to decreases in trade accounts
payable.
The Company has continued to reinvest a substantial portion of its cash flows
into increasing its 3-D prospect portfolio, improving its 3-D seismic
interpretation technology and funding its drilling program. Oil and gas capital
expenditures were $28.3 million for the nine months ended September 30, 1998.
The Company's drilling efforts resulted in the successful completion of 46 gross
wells (17.5 net) during the year ended December 31, 1997 and 30 gross wells (9.5
net) during the nine months ended September 30, 1998. During the fourth quarter,
the Company plans to drill between 10 and 20 wells, however, the actual number
of wells may vary depending upon weather delays and other factors.
The Company has experienced and expects to continue to experience substantial
working capital requirements primarily due to the Company's active exploration
and development programs and, to a much lesser extent, its technology
enhancement programs. While the Company believes that the net proceeds from the
Offering, net proceeds for the sale of shares of Preferred Stock and the
Warrants, cash flow from operations and borrowings under the Company's credit
facilities should allow the Company to implement its current capital
commitments, the Company is exploring alternatives for additional financing to
ensure to the Company's continued growth, and fund its aggressive development
and exploration program and continued technological enhancement. In the event
such capital resources are not available to the Company, its exploration and
other activities may be curtailed.
FINANCING ARRANGEMENTS
In connection with the Offering, the Company entered into an amended revolving
credit agreement with Compass Bank, (the "Company Credit Facility"), which
provides for a maximum loan amount of $25 million, subject to borrowing base
limitations. Prior to the Offering, the Company utilized various credit
facilities as well as borrowings from certain directors and officers of the
Company. Except for the Company Credit Facility, all of these facilities and
borrowings were terminated with the close of the Offering. Under the Company
Credit Facility, the principal outstanding is due and payable upon maturity in
June 1999 with interest due monthly. The interest rate for borrowings is
calculated at a floating rate based on the Compass index rate or LIBOR plus 2
percent. The Company's obligations are secured by certain of its oil and gas
properties and cash or cash equivalents included in the borrowing base.
Under the Company Credit Facility, Compass, in its sole discretion, will make
semiannual borrowing base determinations based upon the proved oil and natural
gas properties of the Company. Compass may redetermine the borrowing base and
the monthly borrowing base reduction at any time and from time to time. The
Company may also request borrowing base redeterminations in addition to its
required semiannual reviews at the Company's cost. At September 30, 1998, the
borrowing base amounted to $5,750,000 with $4.1 million outstanding.
The Company is subject to certain covenants under the terms of the Company
Credit Facility, including, but not limited to, (a) maintenance of specified
tangible net worth and (b) maintenance of a ratio of quarterly cash flow (net
income plus depreciation and other noncash charges, less noncash income) to
quarterly debt service (payments made for principal in connection with the
credit facility plus payments made for principal other than in connection with
such credit facility) of no less than 1.25 to 1.00. The Company Credit Facility
also places restrictions on, among other things, (a) incurring additional
indebtedness, loans and liens, (b) changing the nature of business or business
structure, (c) selling assets and (d) paying dividends.
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13
In December 1997, the Company and Compass entered into an amendment to the
Company Credit Facility that provided for a term loan of $3 million. Interest
for borrowings under the term loan was calculated at a floating rate based on
the Compass index rate plus 2 percent. The amount outstanding under the term
loan as of December 31, 1997 was $3 million. Amounts outstanding under the term
loan were repaid in January 1998.
In September 1998, the Company and Compass Bank entered into an amendment for
the Company Credit Facility that provides for a term loan of $7 million, which
is due on the earlier of (i) the date of closing of the sale by the Company of
convertible subordinated debt or of equity of the Company, (ii) the repayment of
the Company Credit Facility and (iii) September 30, 1999. Interest for
borrowings under the term loan is calculated at a floating rated based on the
Compass index rate plus 2 percent. The amount outstanding under the term loan as
of September 30, 1998 was $3.5 million, and the Company's ability to borrow
additional amounts under the term loan terminates on December 31, 1998. This
loan is guaranteed by certain members of the Board of Directors.
In January 1998, the Company consummated the sale of 300,000 shares of Preferred
Stock and Warrants to purchase 1,000,000 shares of Common Stock to affiliates of
Enron Corp. The net proceeds received by the Company from this transaction were
approximately $28.8 million. A portion of the proceeds was used to repay
indebtedness, as described above. The remaining balance is expected to be used
primarily for oil and natural gas exploration and development activities in
Texas and Louisiana. The Preferred Stock provides annual cumulative dividends of
$9.00 per share, payable quarterly in cash, or, at the option of the Company
until January 15, 2002, in additional shares of Preferred Stock. Payments for
the three and nine months ended September 30, 1998 were made by the issuance of
an additional 7,018.81 and 20,110.53 shares of Preferred Stock, respectively. As
of October 15, 1998 there were 320,110.53 shares of Preferred Stock outstanding.
The Preferred Stock is required to be redeemed by the Company (i) on January 8,
2005, or (ii) after the occurrence of certain events, including (a) certain
failures to declare and pay any two dividends, (b) certain breaches of
provisions relating to the Preferred Stock, (c) for two consecutive fiscal
quarterly periods the quarterly Cash Flow (as defined below) of the Company is
less than the amount of the dividends accrued with respect to the Preferred
Stock, (d) certain failures to pay or accelerations with respect to indebtedness
for borrowed money, (e) certain violations of the shareholders' agreement
relating to the Preferred Stock and (f) certain sales or dispositions of
substantially all of the Company's assets. "Cash Flow" means net income prior to
preferred dividends and accretion (i) plus (to the extent included in net income
prior to preferred dividends and accretion) depreciation, depletion and
amortization and other non-cash charges and losses on the sale of property (ii)
minus non-cash income items and required principal payments on indebtedness for
borrowed money with a maturity from the original date of incurrence of such
indebtedness of six months or greater (excluding voluntary prepayments and
refinancings, but including prepayments (other than in connection with
refinancings) which would otherwise be due under such indebtedness within a
60-day period following the date of such prepayments). The Preferred Stock also
may be redeemed at the option of the Company at any time in whole or in part.
All redemptions are at a price per share, together with dividends accumulated
and unpaid to the date of redemption, decreasing over time from an initial rate
of $104.50 per share to $100.00 per share. If the Company fails to meet its
redemption obligations, the holders of the Preferred Stock will generally have
the right, voting separately as a class, to elect additional directors, which
in most cases will constitute a majority of the board.
The Company's Cash Flow (as defined above) for the three months ended September
30, 1998 was less than the amount of the dividends accrued with respect to the
Preferred Stock. There can be no assurance that the Company's Cash Flow for the
three months ended December 31, 1998 will exceed the amount of the dividends to
be accrued with respect to the Preferred Stock.
EFFECTS OF INFLATION AND CHANGES IN PRICE
The Company's results of operations and cash flows are affected by changing oil
and gas prices. If the price of oil and gas increases (decreases), there could
be a corresponding increase (decrease) in the operating cost that the Company is
required to bear for operations, as well as an increase (decrease) in revenues.
Inflation has had a minimal effect on the Company.
YEAR 2000 DISCLOSURE
The "Year 2000 Issue" is a general term used to refer to certain business
implications of the arrival of the new millennium. In simple terms, on January
1, 2000, all computerized systems that use the two-digit convention to identify
the applicable year, including both information technology systems and
non-information technology systems that use embedded technology could fail
completely or create erroneous data as a result of the system failing to
recognize the two digit internal date "00" as representing the year 2000.
-12-
14
The Company has completed its initial assessment of Year 2000 compliance of its
internal information technology systems, which consist primarily of financial
and accounting systems and geological evaluation systems, and does not believe
that these systems have any material issues with respect to Year 2000
compliance. The Company's internal information technology systems are all new
and widely utilized. Its vendors have advised the Company that all of these
systems are either Year 2000 compliant or can be easily upgraded to be Year 2000
compliant. The Company anticipates that its Year 2000 remediation efforts for
information technology systems, consisting primarily of software upgrades, will
continue through 1999, and anticipates incurring less than $10,000 in connection
with these efforts. The Company is aware of its exposure to embedded technology
and assessment is ongoing.
The Company has not identified any non-information technology systems that use
embedded technology on which it relies, however such assessment is expected to
continue through 1999.
Through communications with industry partners and others, the Company is also
evaluating the risk presented by potential Year 2000 non-compliance of third
parties. Because such risks vary substantially, companies are being contacted
based on the estimated magnitude of the risk posed to the Company by their
potential Year 2000 non-compliance. The Company anticipates that these efforts
will continue through 1999 and will not result in significant costs to the
Company. At this time the Company is unaware of situations where material
disruptions of its business activities are likely to occur because of Year 2000
non-compliance by third parties.
The Company's assessment of its Year 2000 issues involves many assumptions
concerning future events. There can be no assurance that the Company's
assumptions will prove accurate, and actual results could differ significantly
from the assumptions. In conduction its Year 2000 compliance efforts, the
Company has relied primarily on vendor representations with respect to its
internal computerized systems and representations from third parties with which
the Company has business relationships and has not independently verified these
representations. There can be no assurance that these representations will prove
to be accurate. A Year 2000 failure could result in a business disruption that
adversely effects the Company's business, financial condition or results of
operations. Although it is not currently aware of any likely business
disruption, the Company is developing contingency plans to address Year 2000
failures and expects this work to continue through 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not required or not applicable.
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PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
From time to time the Company is a party to various legal proceedings
arising in the ordinary course of business. The Company is not
currently a party to any litigation that it believes could have a
material adverse effect on the financial position of the Company.
Item 2 - Changes in Securities and Use of Proceeds
None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
FORWARD LOOKING STATEMENTS
The statements contained in all parts of this document, including, but not
limited to, those relating to the Company's schedule, targets, estimates or
results of future drilling, budgeted wells, increases in wells, budgeted and
other future capital expenditures, use of offering proceeds, effects of
litigation, expected production or reserves, increases in reserves, acreage
working capital requirements, hedging activities, the ability of expected
sources of liquidity to implement its business strategy, and any other
statements regarding future operations, financial results, business plans and
cash needs and other statements that are not historical facts are forward
looking statements. When used in this document, the words "anticipate,"
"estimate," "expect," "may," "project," "believe" and similar expression are
intended to be among the statements that identify forward looking statements.
Such statements involve risks and uncertainties, including, but not limited to,
those relating to the Company's dependence on its exploratory drilling
activities, the volatility of oil and natural gas prices, the need to replace
reserves depleted by production, operating risks of oil and natural gas
operations, the Company's dependence on its key personnel, factors that affect
the Company's ability to manage its growth and achieve its business strategy,
risks relating to, limited operating history, technological changes, significant
capital requirements of the Company, the potential impact of government
regulations, litigation, competition, the uncertainty of reserve information and
future net revenue estimates, property acquisition risks and other factors
detailed in the Registration Statement and the Company's other filings with the
Securities and Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated.
Item 6 - Exhibits and Reports on Form 8-K
Exhibits
Exhibit
Number Description
- ------- -----------
+2.1 -- Combination Agreement by and among the Company, Carrizo Production,
Inc., Encinitas Partners Ltd., La Rosa Partners Ltd., Carrizo Partners
Ltd., Paul B. Loyd, Jr., Steven A. Webster, S.P. Johnson IV, Douglas
A.P. Hamilton and Frank A. Wojtek dated as of June 6, 1997
(Incorporated herein by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-1 (Registration No. 333-29187)).
+3.1 -- Amended and Restated Articles of Incorporation of the Company
(Incorporated herein by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).
-14-
16
+3.2 -- Statement of Resolution Establishing Series of Shares Designated 9%
Series A Preferred Stock (Incorporated herein by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997).
+3.3 -- Amended and Restated Bylaws of the Company, as amended by Amendment
No. 1 (incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form 8-A (Registration No.
000-22915)).
4.1 -- Limited Guaranty by Douglas A. P. Hamilton for the benefit of Compass
Bank.
4.2 -- Notice of Final Agreement with respect to a term loan from Compass
Bank.
4.3 -- Limited Guaranty by Paul B. Loyd, Jr. for the benefit of Compass Bank.
4.4 -- Limited Guaranty by Steven A. Webster for the benefit of Compass Bank.
4.5 -- Fourth Amendment to First Amended, Restated, and Combined Loan
Agreement by and between Carrizo Oil & Gas, Inc. and Compass Bank.
27.1 -- Financial Data Schedule.
+ Incorporated herein by reference as indicated.
Reports on Form 8-K
The Company did not file any reports on a Form 8-K during the quarter
ended September 30, 1998.
-15-
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Carrizo Oil & Gas, Inc.
(Registrant)
Date: November 16, 1998 By: /s/ S. P. Johnson IV
------------------------
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 16, 1998 By: /s/ Frank A. Wojtek
-----------------------
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
+2.1 -- Combination Agreement by and among the Company, Carrizo Production,
Inc., Encinitas Partners Ltd., La Rosa Partners Ltd., Carrizo Partners
Ltd., Paul B. Loyd, Jr., Steven A. Webster, S.P. Johnson IV, Douglas
A.P. Hamilton and Frank A. Wojtek dated as of June 6, 1997
(Incorporated herein by reference to Exhibit 2.1 to the Company's
Registration Statement on Form S-1 (Registration No. 333-29187)).
+3.1 -- Amended and Restated Articles of Incorporation of the Company
(Incorporated herein by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).
+3.2 -- Statement of Resolution Establishing Series of Shares Designated 9%
Series A Preferred Stock (Incorporated herein by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997).
+3.3 -- Amended and Restated Bylaws of the Company, as amended by Amendment
No. 1 (incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form 8-A (Registration No.
000-22915).
4.1 -- Limited Guaranty by Douglas A. P. Hamilton for the benefit of Compass
Bank.
4.2 -- Notice of Final Agreement with respect to a term loan from Compass
Bank.
4.3 -- Limited Guaranty by Paul B. Loyd, Jr. for the benefit of Compass Bank.
4.4 -- Limited Guaranty by Steven A. Webster for the benefit of Compass Bank.
4.5 -- Fourth Amendment to First Amended, Restated, and Combined Loan
Agreement by and between Carrizo Oil & Gas, Inc. and Compass Bank.
27.1 -- Financial Data Schedule.
+ Incorporated herein by reference as indicated.