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EXHIBIT 99.2
March 11, 1999
Carrizo Oil & Gas, Inc.
14811 St. Mary's Lane, Suite 148
Houston, Texas 77079
Re: Reserves Evaluation to the Interests of Carrizo Oil & Gas Corp.
Heavy Oil Properties, Anderson County, Texas
Gentlemen:
At your request, Fairchild, Ancell & Wells, Inc. (FAW) has performed an
evaluation to estimate proved reserves and future cash flows attributable to
Carrizo's proposed "high grade" development program for the subject properties.
This development plan targets only the thicker regions of the oil sand and
thereby provides for better heat utilization, improved recovery and fewer
overall patterns to be developed and operated.
Our resulting estimate of proved reserves and cash flows as of January 1, 1999
is summarized below. These estimates have incorporated Carrizo's most recent
fuel and oil prices, operating costs and development costs.
SUMMARY
ESTIMATED PROVED RESERVES AND FUTURE CASH FLOWS
CAMP HILL FIELD - ANDERSON COUNTY, TEXAS
TO THE INTERESTS OF CARRIZO OIL AND GAS CORP.
(HIGH GRADE DEVELOPMENT PLAN)
EFFECTIVE 1/1/99
Future
Net Cash Flows (M$)
------------------------------------------------
Reserves Mbbls Undiscounted Discounted at 10%
-------------- ------------ -----------------
Proved Producing
18 Pattern Leases 691.8 2,794.8 2,334.9
10 Pattern Lease 145.2 414.9 350.8
------- ------- -------
Total Proved Producing 837.0 3,209.7 2,685.7
Proved Undeveloped
Delaney A Lease 329.2 362.1 182.1
Temple Eastex C Lease 1,448.3 2,880.3 1,806.4
C. Rosson Lease 675.2 1,756.4 925.4
------- ------- -------
Total Proved Undeveloped 2,452.7 4,998.9 2,913.9
Total Proved 3,289.7 8,208.6 5,599.6
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Carrizo Oil & Gas, Inc.
March 11 1999
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FUTURE CASH FLOW - TOTAL PROJECT BY YEAR
Future
Cash Flows (M$)
------------------------------------------------------
Year Undiscounted Discounted at 10%
---- ------------ -----------------
1999 -101.0 -96.3
2000 232.3 201.4
2001 1,814.8 1,430.0
2002 2,272.8 1,628.1
2003 1,921.0 1,251.0
2004 1,419.0 840.1
2005 560.4 301.6
2006 89.3 43.7
2007 0.0 0.0
TOTAL 8,208.6 5,599.6
The reserves and future cash flows to the evaluated interests were based on
economic parameters and operating conditions considered applicable and are
pursuant to the financial reporting requirements of the Securities and Exchange
Commission (SEC). Hydrocarbon prices in effect on 1/1/99 were used in the
preparation of this report and current costs were held constant throughout the
life of the properties.
The estimated reserves and future cash flows shown in this report are for proved
developed producing and proved undeveloped reserves. Our estimates do not
include any value which might be attributed to interests in undeveloped acreage
beyond those tracts for which reserves have been assigned.
In performance of this evaluation, we have relied upon information furnished by
Carrizo with respect to property interests owned, production from such
properties, current costs of operation and development, current prices for
production, agreements relating to current and future operations and sale of
production. With respect to the technical files supplied by Carrizo, we have
accepted the authenticity and sufficiency of the data contained therein.
Future cash flow is presented after deducting production taxes and after
deducting future capital costs and operating expenses, but before consideration
of Federal income taxes. The future cash
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Carrizo Oil & Gas, Inc.
March 11 1999
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flow has been discounted at an annual rate of 10 percent to determine its
"present worth." The present worth is shown to indicate the effect of time on
the value of money and should not be construed as being the fair market value of
the properties. Our estimates of future revenue do not include any salvage value
for the lease and well equipment nor the costs of abandoning the properties.
Fairchild, Ancell & Wells, Inc. expresses no opinion as to the fair market value
of the evaluated properties.
The reserves included in this report are estimates only and should not be
construed as being exact quantities. They may or may not be actually recovered,
and if recovered, the revenues therefrom and the actual costs related thereto
could be more or less than the estimated amounts. Because of governmental
policies and uncertainties of supply and demand, the actual sales rates and the
prices actually received for the reserves along with the costs incurred in
recovering such reserves may vary from those assumptions included in this
report. Also, estimates of reserves may increase or decrease as a result of
future operations.
In evaluating the information at our disposal concerning this report, we have
excluded from our consideration all matters as to which legal or accounting,
rather than engineering, interpretation may be controlling. As in all aspects of
oil and gas evaluation, there are uncertainties inherent in the interpretation
of engineering data and, therefore, our conclusions necessarily represent only
informed professional judgments.
The titles to the properties have not been examined by Fairchild, Ancell &
Wells, Inc. nor has the actual degree or type of interest owned been
independently confirmed. We are independent petroleum engineers and geologists;
we do not own an interest in these properties and are not employed on a
contingent basis. Basic geologic and field performance data together with our
engineering worksheets are maintained on file in our office and are available
for review.
We appreciate this opportunity to provide our services.
Yours very truly,
FAIRCHILD, ANCELL & WELLS, INC.