PRESS RELEASE CONTACT: CARRIZO OIL & GAS, INC.
B. ALLEN CONNELL, DIRECTOR OF INVESTOR RELATIONS
PAUL F. BOLING, CHIEF FINANCIAL OFFICER
(281) 496-1352
CARRIZO OIL & GAS, INC. REPORTS FINANCIAL RESULTS FOR SECOND QUARTER 2003
HOUSTON, AUGUST 14, 2003 -- CARRIZO OIL & GAS, INC. (NASDAQ: CRZO) today
reported the Company's financial results for the second quarter of 2003, which
included the following highlights:
o REVENUES OF $8.8 MILLION, 30 PERCENT ABOVE THE SECOND QUARTER 2002 LEVEL.
o NET INCOME OF $2.0 MILLION BEFORE DIVIDENDS AND ACCRETION OF DISCOUNT ON
PREFERRED STOCK, 82 PERCENT ABOVE THE SECOND QUARTER 2002 LEVEL.
o EBITDA OF $5.7 MILLION OR $0.40 PER BASIC SHARE, 31 PERCENT ABOVE THE
SECOND QUARTER 2002 LEVEL OF $4.3 MILLION.
Revenues for the quarter ended June 30, 2003 were $8.8 million as compared to
$6.8 million during the quarter ended June 30, 2002. Production volumes during
the quarter ended June 30, 2003 were 1,684 MMcfe, or 18.5 MMcfe per day, as
compared to 1,877 MMcfe, or 20.6 MMcfe per day, during the second quarter of
2002. This lower production is largely due to mechanical difficulties on the
Delta Farms #1 and production delays on the Pauline Huebner #2 due to testing
and the Hankamer #1 due to delays in acquiring a pipeline right-of-way. All
these matters have been resolved and the estimated daily production has been 22
MMcfe per day since early July. Carrizo's average oil sales price increased 16
percent to $28.23 per barrel from $24.35 per barrel a year ago, and the
Company's average natural gas sales price increased 65 percent to $5.64 per Mcf
from $3.42 per Mcf during the second quarter of 2002. The above prices include
the effects of hedging activities.
The Company reported net income available to common shares (after dividends and
accretion of discount on preferred stock) of $1.8 million, or $0.13 and $0.11
per basic and diluted common share, respectively, for the quarter ended June 30,
2003, as compared to $0.9 million, or $0.06 and $0.06 per basic and diluted
common share, respectively, for the same quarter during 2002. Net income
available to common shares for the quarter ended June 30, 2003 was net of
deferred federal income tax expense of $1.1 million, as compared to $0.6 million
of deferred federal income tax expense during the quarter ended June 30, 2002.
EBITDA during the second quarter of 2003 was $5.68 million, or $0.40 and $0.34
per basic and diluted common share, respectively, as compared to $4.34 million,
or $0.31 and $0.25 per basic and diluted common share, respectively, during the
second quarter of 2002. The increase in EBITDA was due mainly to the increase in
revenues partially offset by higher lease operating expenses.
Oil and gas operating expenses, including severance taxes, were $1.76 million
during the quarter ended June 30, 2003, as compared to $1.34 million during the
second quarter of 2002. On a per unit basis, oil and gas operating expenses
increased to $1.05 per Mcfe from $0.71 per Mcfe during the
second quarter of 2002 due primarily to higher severance taxes from increased
oil and gas prices and non-recurring workover costs.
DD&A expenses were unchanged at $2.6 million during our 2003 second quarter
($1.55 per Mcfe), as compared to $2.6 million ($1.40 per Mcfe) during the second
quarter of 2002. The increase in the DD&A rate per Mcfe was due to the relative
increase in the proved property cost base compared to the net proved reserve
additions.
General and administrative expenses ("G&A") increased to $1.27 million during
the quarter ended June 30, 2003 from $1.14 million during the same quarter of
2002. The increase in G&A was due primarily to the addition of staff to handle
increased drilling and production activities and higher insurance costs.
Revenues for the first half of 2003 were $19.5 million, as compared to $10.8
million during the same period in 2002. Revenues increased due to significantly
higher oil and gas prices than those prevailing in 2002. The average oil and
natural gas prices received increased by 26 percent and 88 percent,
respectively, in combination with a 10 percent increase in production levels.
Production volumes during the six months ended June 30, 2003 were 3,622 MMcfe as
compared to 3,295 MMcfe during the first half of 2002. For the six months,
Carrizo's average natural gas sales price increased to $5.78 per Mcf from $3.08
per Mcf a year ago. The Company's average oil sales price increased to $29.04
per barrel from $22.97 per barrel during the first half of 2002. The above
prices include the effects of hedging activities.
The Company reported net income available to common shares of $4.4 million, or
$0.31 and $0.27 per basic and diluted common share, respectively, for the six
months ended June 30, 2003, as compared to net income available to common shares
of $1.0 million, or $0.07 and $0.07 per basic and diluted common share,
respectively, for the same period during 2002. The first half 2003 results are
net of $2.7 of deferred federal income tax expense, as compared to $0.7 million
of deferred federal income tax expense during the first half of 2002. EBITDA
during the first six months of 2003 was $13.23 million, or $0.93 and $0.80 per
basic and diluted common share, respectively, as compared to $6.58 million, or
$0.47 and $0.39 per basic and diluted common share, respectively, during the
first half of 2002. EBITDA increased primarily as a result of higher revenues.
Oil and gas operating expenses, including severance taxes, increased to $3.48
million during the six months ended June 30, 2003, as compared to $2.35 million
in the first half of 2002 primarily as a result of higher severance taxes from
increased oil and gas prices, non-recurring workover costs and the higher cost
of operating an increased number of wells. On a per unit basis, oil and gas
operating expenses increased to $0.96 per Mcfe from $0.71 per Mcfe during the
first half of 2002.
DD&A expenses were $5.64 million during the six months ended June 30, 2003
($1.56 per Mcfe) as compared to $4.61 million ($1.40 per Mcfe) during the first
half of 2002. The increase in DD&A was due to increased production levels and
additions to the proved property cost base.
G&A increased to $2.65 million during the six months ended June 30, 2003 from
$2.06 million during the same period of 2002. On a per unit basis, G&A expenses
increased to $0.73 per Mcfe during the first half of 2003, as compared to $0.63
per Mcfe during the same period during 2002. The increase in G&A expense was due
primarily to the addition of staff to handle increased drilling and production
activities and higher insurance costs.
"The second quarter of 2003 was very successful for Carrizo", commented S.P.
Johnson IV, Carrizo's President and Chief Executive Officer. "Despite the lower
average production in the second quarter of 2003 due to the reasons discussed
above, the drilling success in the second quarter has significantly improved our
daily production in early July. The successful drilling of all 12 gross
exploratory wells, in the Company's core areas in South Texas and Louisiana,
that Carrizo participated in during the second quarter has already raised the
Company's estimated daily production to 22 MMcfe per day. This is higher than
the 21.6 MMcfe per day average of the first quarter of 2003 or the 18.5 MMcfe
per day average of the second quarter of 2003. An addition to this daily rate
should come from the Carrizo operated "Beachhouse #1" well in Chambers County,
Texas which is currently being completed and should be placed on production by
next week. Carrizo owns a 28.8 percent working interest in this well.
"Carrizo is currently participating in the drilling of six exploratory wells,
three of which are considered by the Company to have high impact potential. The
wells are located in Goliad County, Texas, St. Mary Parish, Louisiana and
Terrebonne Parish, Louisiana and all three wells are expected to reach total
depth in September.
"We are very pleased with the continued success of our geological team which has
developed numerous prospects from the new seismic data that Carrizo has acquired
in the past 12 months. This acquisition of an additional 2,500 square miles of
seismic data in our core areas has greatly increased our ability to add to our
already substantial inventory of high quality prospects for future drilling.
"We are also pleased to announce that Paul F. Boling has joined Carrizo as Vice
President and Chief Financial Officer. Paul has over 22 years of financial and
managerial experience in the oil and gas industry, serving most recently as Vice
President of Finance for Cabot Oil & Gas Corporation in 2001. Paul is a CPA and
holds a B.B.A. degree from Baylor University. He replaces Frank A. Wojtek who
has left Carrizo to pursue other interests. Frank's contribution to the success
of Carrizo since its inception in 1993 has been invaluable and we wish him
continued success in his future endeavors. He will continue to be a Director and
shareholder of the Company."
Carrizo Oil & Gas, Inc., is a Houston-based energy company engaged in the
exploration, development, exploitation and production of oil and natural gas in
proven onshore trends primarily along the Texas and Louisiana Gulf Coast
regions. Carrizo controls significant prospective acreage blocks and utilizes
advanced 3-D seismic techniques to identify potential oil and gas reserves and
drilling opportunities.
Statements in this news release, including but not limited to those relating to
the Company's or management's intentions, beliefs, expectations, hopes,
projections, assessment of risks, estimations, plans or predictions for the
future including potential effects or timing, expected completion and
commencement of production of the Beachhouse #1 well, expected potential and
timing of completion of the wells in Goliad County, St. Mary Parish and
Terrebonne Parish 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 the results and dependence on exploratory drilling
activities, operating risks, oil and gas price levels, land issues, availability
of equipment, weather and other risks described in the Company's Form 10-K for
the year ended December 31, 2002 and its other filings with the Securities and
Exchange Commission.
CARRIZO OIL & GAS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Oil and natural gas revenues $ 8,828,186 $ 6,779,886 $ 19,491,639 $ 10,806,778
------------ ------------ ------------ ------------
Costs and expenses:
Oil and natural gas operating expenses 1,763,214 1,340,606 3,483,025 2,353,261
Depreciation, depletion and amortization 2,605,034 2,636,110 5,640,920 4,605,832
General and administrative expenses 1,266,998 1,143,374 2,649,669 2,059,327
Accretion expense related to asset retirement obligations 9,917 -- 17,918 --
Stock option compensation expense (benefit) 32,850 (14,220) 23,370 (56,255)
------------ ------------ ------------ ------------
Total costs and expenses 5,678,013 5,105,870 11,814,902 8,962,165
------------ ------------ ------------ ------------
Operating income 3,150,173 1,674,016 7,676,737 1,844,613
------------ ------------ ------------ ------------
Other income and expenses, net (81,943) 33,666 17,972 127,440
Interest income 22,379 7,864 40,122 27,891
Interest expense, net of amounts capitalized (5,308) -- (10,272) --
------------ ------------ ------------ ------------
Income before income taxes 3,085,301 1,715,546 7,724,559 1,999,944
------------ ------------ ------------ ------------
Income tax expense 1,124,855 641,376 2,793,595 781,850
------------ ------------ ------------ ------------
Net income before cumulative effect of change in accounting principle 1,960,446 1,074,170 4,930,964 1,218,094
------------ ------------ ------------ ------------
Dividends and accretion of discount on preferred stock 181,100 167,767 362,145 242,025
------------ ------------ ------------ ------------
Net income available to common shares before cumulative effect of
change in accounting principle 1,779,346 906,403 4,568,819 976,069
------------ ------------ ------------ ------------
Cumulative effect of change in accounting principle -- -- 128,374 --
------------ ------------ ------------ ------------
Net income available to common shares $ 1,779,346 $ 906,403 $ 4,440,445 $ 976,069
============ ============ ============ ============
EBITDA (see table below) $ 5,683,181 $ 4,343,792 $ 13,225,173 $ 6,577,885
============ ============ ============ ============
Basic net income per common share:
Net income before cumulative effect of change in accounting principle $ 0.13 $ 0.06 $ 0.32 $ 0.07
Cumulative effect of change in accounting principle 0.00 0.00 (0.01) 0.00
------------ ------------ ------------ ------------
Basic net income per common share $ 0.13 $ 0.06 $ 0.31 $ 0.07
============ ============ ============ ============
Diluted net income per common share:
Net income before cumulative effect of change in accounting principle $ 0.11 $ 0.06 $ 0.28 $ 0.07
Cumulative effect of change in accounting principle 0.00 0.00 (0.01) 0.00
------------ ------------ ------------ ------------
Diluted net income per common share $ 0.11 $ 0.06 $ 0.27 $ 0.07
============ ============ ============ ============
Basic weighted average common shares outstanding 14,211,173 14,151,011 14,204,690 14,139,894
------------ ------------ ------------ ------------
Diluted weighted average common shares outstanding 16,595,815 17,269,545 16,464,990 16,982,887
------------ ------------ ------------ ------------
</Table>
(more)
CARRIZO OIL & GAS, INC.
CONDENSED BALANCE SHEET
<Table>
<Caption>
06/30/03 12/31/02
-------------- --------------
(unaudited)
ASSETS:
Cash and cash equivalents $ 4,059,782 $ 4,743,459
Other current assets 9,679,446 9,358,716
Net property and equipment 119,985,970 120,526,484
Other assets 678,703 759,524
Investment in Pinnacle Gas Resources, Inc. 7,256,464
-------------- --------------
TOTAL ASSETS $ 141,660,365 $ 135,388,183
============== ==============
LIABILITIES AND EQUITY:
Accounts payable and accrued liabilities $ 18,352,445 $ 13,935,460
Current maturities of long-term debt 785,925 1,608,744
Long-term notes payable 7,699,600 12,408,186
Long-term subordinated notes payable 26,225,015 25,477,844
Deferred income taxes 10,111,896 7,666,048
Other liabilities 669,488 1,102,941
Convertible participating preferred stock 6,735,417 6,373,273
Equity 71,080,579 66,815,687
-------------- --------------
TOTAL LIABILITIES AND EQUITY $ 141,660,365 $ 135,388,183
============== ==============
</Table>
(1) Income tax expense for the three and six months ended June 30, 2003
includes a $1,079,855 and $2,703,595, respectively, provision for
deferred income taxes and a $45,000 and $90,000, respectively, provision
for currently payable franchise taxes. Income tax expense for the three
and six months ended June 30, 2002 includes a $600,441 and $699,980,
respectively, provision for deferred income taxes and a $40,935 and
$81,870, respectively, provision for currently payable franchise taxes.
(2) Long-term notes payable at June 30, 2003 and December 31, 2002 includes a
note in the principal amount of $1,180, 075 and $5,250,000, respectively,
payable by CCBM, Inc. (a wholly-owned subsidiary of the Company) to Rocky
Mountain Gas, Inc. recourse solely to CCBM, Inc.'s interests in certain
undeveloped oil and natural gas leases in Wyoming and Montana. At June
30, 2003 and December 31, 2002 current maturities of long-term debt
include $633,658 and $1,500,000, respectively, related to the CCBM, Inc.
note.
(3) Subordinated notes payable are presented net of discounts of $385,088 and
$428,079 as of June 30, 2003 and December 31, 2002, respectively.
(4) Stock option compensation expense (benefit) is a non-cash charge
(benefit) resulting from the change in the price of the stock underlying
employee stock options that were repriced in February 2000.
(5) In February 2002, the Company consummated the sale of $6 million of
convertible participating preferred stock and warrants to purchase the
Company's common stock. Convertible preferred stock is presented net of
discounts.
(6) The Company adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations" on January 1, 2003, resulting in a charge of
$128,374 for the quarter ended March 31, 2003 to record the cumulative
effect of the change in accounting principle.
CARRIZO OIL & GAS, INC.
NON-GAAP DISCLOSURES
(unaudited)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
Reconciliation of Net Income to EBITDA JUNE 30, JUNE 30,
-------------------------------------- ---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Net income before cumulative effect of change in accounting principle $ 1,960,446 $ 1,074,170 $ 4,930,964 $ 1,218,094
------------ ------------
Cumulative effect of change in accounting principle -- -- 128,374 --
------------ ------------ ------------ ------------
Net Income $ 1,960,446 $ 1,074,170 $ 4,802,590 $ 1,218,094
------------ ------------ ------------ ------------
Adjustments:
Depreciation, depletion and amortization 2,605,034 2,636,110 5,640,920 4,605,832
Interest expense, net of amounts capitalized and interest income (17,071) (7,864) (29,850) (27,891)
Income taxes 1,124,855 641,376 2,793,595 781,850
Accretion expense related to asset retirement obligations 9,917 -- 17,918 --
------------ ------------ ------------ ------------
EBITDA, as defined $ 5,683,181 $ 4,343,792 $ 13,225,173 $ 6,577,885
============ ============ ============ ============
EBITDA per basic common share $ 0.40 $ 0.31 $ 0.93 $ 0.47
============ ============ ============ ============
EBITDA per diluted common share $ 0.34 $ 0.25 $ 0.80 $ 0.39
============ ============ ============ ============
</Table>
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND PRICES
(unaudited)
<Table>
<Caption>
Production volumes-
Oil and condensate (Bbls) 118,462 94,879 257,532 148,088
Natural gas (Mcf) 973,014 1,307,589 2,076,616 2,406,205
Natural gas equivalent (Mcfe) 1,683,786 1,876,863 3,621,808 3,294,733
Average sales prices-
Oil and condensate (per Bbl) $ 28.23 $ 24.35 $ 29.04 $ 22.97
Natural gas (per Mcf) $ 5.64 $ 3.42 $ 5.78 $ 3.08
Natural gas equivalent (per Mcfe) $ 5.24 $ 3.61 $ 5.38 $ 3.28
</Table>
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