EXHIBIT 99.1
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. COMPLETES DEBT FINANCING AND UPDATES THIRD QUARTER
OPERATIONS
HOUSTON, November 3, 2004 - Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) announced
today that it has entered into a debt agreement, issuing $18 million of 10%
secured senior subordinated Notes due in December 2008 (the "Notes"). The Notes
and Carrizo's Senior Subordinated Notes are held by affiliates of HBK
Investments L.P. (the "Purchaser"). The Company's obligations under the Notes
are (1) secured by a 2nd lien on Carrizo's assets and (2) subordinated to
Carrizo's senior bank debt.
Net of a 10% discount on the face amount of the Notes (before debt issuance
costs), the Company received proceeds of approximately $16.2 million which will
primarily be used in its aggressive Barnett Shale development which has now
grown to more than 20,000 net acres. Current Barnett Shale operations include
the drilling of four horizontal wells (Operated: - in Wise County - 73% W.I. and
Parker County - 63% W.I.; and Non-operated: - in Denton County - 22% W.I. and
Tarrant County 22% W.I.). These wells will bring Carrizo's well count in the
four counties to 59 gross (22 net).
The debt agreement also provides Carrizo the option to issue up to $10 million
of additional Notes to the Purchaser over the next two years under the same
terms. Certain terms and conditions of the Notes and other Carrizo options,
include: (1) no mandatory amortization before maturity in 2008, (2) the option,
subject to certain conditions, to make interest payments, principal prepayments
and payments at maturity with Carrizo's common stock (issuable at 90 percent of
an average market price as determined prior to issuance), (3) the option at any
time to redeem all or any portion of the outstanding Notes with no prepayment
penalty and (4) a "PIK" interest option, during the period ended June 5, 2006,
to pay-in-kind 50% of the interest due each period by increasing the principal
balance by a like amount.
Paul F. Boling, Carrizo's Vice President and Chief Financial Officer, commented,
"This new financing provides significant flexibility along with improved
liquidity for the Company, funds to continue aggressive development of our
Barnett Shale play and helps optimize the level of borrowing capacity with our
senior bank facility. Other than our option to use common stock as a source of
repayment, Carrizo has been able to obtain this financing without issuing common
equity."
Carrizo also today announced the operating results for the third quarter of
2004. In South Texas and Louisiana, the Company participated in the drilling of
eight gross exploratory wells, six of which were successful, resulting in a 75
percent apparent success rate for the quarter. One of the wells went to sales in
September, four more went online in October and one well is waiting on a
pipeline hookup. As of the end of the third quarter, drilling operations were
underway on four additional wells. Through the first nine months of the year,
Carrizo drilled 29 wells, 23 of which were successful, for an apparent 79
percent success rate in South Texas and Louisiana. In the Company's Barnett
Shale play in North Texas, Carrizo participated in the drilling of eight gross
wells in the third quarter, all of which were successful. Two wells have been
completed to sales and six wells are in the process of being completed. Drilling
operations are currently underway on four additional wells, all of which are
horizontals. Since the beginning of the year, Carrizo has drilled 27 gross
Barnett Shale wells, all of which were successful, bringing our total to 59
gross wells with 32 wells on production.
Production during the third quarter of 2004 was estimated to be 2.04 Bcfe, or
three percent above the 1.99 Bcfe of production in the second quarter of 2004.
Third quarter 2004 production would have been 2.08 Bcfe or five percent above
the previous quarter if not for the impact of (1) shutdowns on four wells in
South Louisiana for Hurricane Ivan and (2) the six-day workover of the Carrizo
operated Shadyside #1 well in September. The Shadyside #1 was placed back on
production on September 28, 2004. Estimated production during the first nine
months of 2004 has reached a level of 5.89 Bcfe or five percent above the 5.61
Bcfe of production in the first nine months of 2003.
Natural gas comprised 79 percent of total third quarter 2004 production
equivalent. Carrizo estimates that third quarter 2004 sales prices averaged
approximately $5.70 per Mcf and $43.57 per barrel. These prices include the
effects of hedging activities, which resulted in a decrease of the realized
price of natural gas by approximately $0.13 per Mcf and a decrease in the
realized price of oil by approximately $2.44 per barrel.
"While production in the third quarter continued our sequential growth, it would
have been more favorable without the impact of Hurricane Ivan, the Shadyside #1
workover and delays in completions," commented S.P. Johnson IV, Carrizo's
President and Chief Executive Officer. "We are quite encouraged by the rapid
increase in production in the second half of October. Production is currently
26.0 Mmcfe per day compared to the average 22.2 Mmcfe per day in the third
quarter. In addition, we expect additional production from three Gulf Coast
wells and several Barnett Shales currently being completed to sales."
Carrizo Oil & Gas, Inc., is a Houston-based energy company actively engaged in
the exploration, development, exploitation and production of oil and natural gas
primarily in proven onshore trends 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.
Additional information regarding the Notes and related transactions is included
in the Company's Current Report on Form 8-K, expected to be filed soon with the
SEC.
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 the use of proceeds, options to issue common stock or Notes,
potential effects or timing, cash flow, reserve growth and shareholder value,
the expected timing of drilling of additional wells, plans for the drilling
program and other statements 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 satisfaction of required conditions for
the exercise of the option for the Company to issue additional Notes or to issue
common stock, 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, 2003 and its other filings with the Securities and
Exchange Commission.