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. ANNOUNCES THIRD QUARTER 2004 FINANCIAL RESULTS INCLUDING
RECORD REVENUES AND EBITDA
HOUSTON, November 11, 2004 -- Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
reported the Company's financial results for the third quarter of 2004, which
included the following highlights:
Third Quarter 2004 Results --
The third quarter 2004 results included the following highlights:
o Production of 2.04 Bcfe.
o Record quarterly revenue of $12.3 million.
o Net Income of $3.4 million.
o Record EBITDA, as defined below, of $9.4 million.
Revenues for the three months ended September 30, 2004 increased 21 percent to
$12.3 million as compared to $10.1 million during the quarter ended September
30, 2003. The increase in revenues was driven by higher natural gas production
and higher prevailing oil and natural gas prices. Production volumes during the
three months ended September 30, 2004 increased three percent to 2.04 Bcfe as
compared to 1.99 Bcfe during the third quarter of 2003. The increase was largely
due to new production contributions from the Beach House #1, Shadyside #1, the
Lopez #13, the Peal Ranch wells and the Barnett Shale wells partially offset by
natural declines. Carrizo's average oil sales price increased 49 percent to
$43.57 per barrel from $29.15 per barrel during the third quarter of 2003, while
the average natural gas sales price increased nine percent to $5.69 per Mcf from
$5.21 per Mcf in the third quarter of 2003. The above prices include the effect
of hedging activities.
After dividends, accretion of discount on preferred stock and the cumulative
effect of change in accounting principle, the Company reported net income
available to common shares ("Net Income") of $3.4 million, or $0.15 and $0.15
per basic and diluted share, respectively, for the three months ended September
30, 2004, as compared to $1.9 million, or $0.13 and $0.11 per basic and diluted
share, respectively, for the same quarter during 2003. Excluding the $0.1
million non-cash after-tax impact of (1) a stock option compensation benefit
($0.1 million - related to employee stock options repriced in 2000) and (2) the
equity in the loss of Pinnacle Gas Resources ($0.2 million - primarily
attributable to dividends on Pinnacle preferred stock), Net Income for the
quarter ended September 30, 2004 was $3.5 million, or $0.16 and $0.15 per basic
and diluted share, respectively.
EBITDA (earnings before interest, income tax, depreciation and amortization
expenses, and certain other non-cash items) during the third quarter of 2004 was
$9.4 million, or $0.43 and $0.41 per basic and diluted share, respectively, as
compared to $6.9 million, or $0.48 and $0.41 per basic and diluted share,
respectively, during the third quarter of 2003.
Oil and natural gas operating expenses (excluding production taxes) increased to
$1.4 million during the three months ended September 30, 2004 as compared to
$0.9 million for the third quarter of 2003. The increase was primarily due to
higher workover expense and higher lifting costs due to the increased well count
comprised of the Barnett Shale wells (including the Wolverine acquisition) and
other new wells mentioned above.
Depreciation, depletion and amortization expenses ("DD&A") were $3.7 million
during the three months ended September 30, 2004 as compared to $3.1 million
during the third quarter of 2003. The increase in DD&A expense was due to (1) an
increase in the DD&A rate primarily due to additions to the proved property cost
base and (2) an increase in the production volumes.
General and administrative expenses ("G&A") decreased to $1.3 million during the
three months ended September 30, 2004 from $1.6 million during the same quarter
of 2003. The decrease in G&A was largely due to executive severance of $0.3
million in the third quarter of 2003.
Non-cash stock option compensation benefit was $0.1 million ($0.1 million after
tax) for the three months ended September 30, 2004. This represents the decrease
in value of employee stock options that were repriced in 2000.
Other income and expense for the third quarter of 2004 was a net benefit of $0.3
million comprised of (1) the non-cash equity in the loss of Pinnacle Gas
Resources, Inc. ("Pinnacle") of $0.2 million (both before and after tax) and (2)
the sale of our Enron Claim for a gain of $0.5 million, which was fully reserved
for in prior years. Other income and expense for the third quarter of 2003 was a
net charge of $0.2 million largely attributable to the non-cash equity in the
loss of Pinnacle. Net losses are expected in this early phase of Pinnacle's
development of its coalbed methane play, initiated in the third quarter of 2003.
Carrizo has no cash requirements for the Pinnacle development program.
Results for the Nine Months Ended September 30, 2004 --
The results for the nine months ended September 30, 2004 include the following
highlights:
o Record Production of 5.89 Bcfe.
o Record revenues of $35.1 million.
o Net income of $7.4 million.
o Record EBITDA, as defined below, of $24.7 million.
Revenues for the nine months ended September 30, 2004 increased 19 percent to
$35.1 million from $29.6 million during the nine months ended September 30,
2003. The increase in revenues was driven by higher prevailing oil and natural
gas prices and higher production. Production volumes
during the nine months ended September 30, 2004 increased five percent to 5.89
Bcfe as compared to 5.61 Bcfe during the first nine months of 2003. Carrizo's
average oil sales price increased 28 percent to $37.14 per barrel from $29.08
per barrel during the first nine months of 2003, while the average natural gas
sales price increased six percent to $5.89 per Mcf from $5.56 per Mcf in the
first nine months of 2003. The above prices include the effect of hedging
activities.
The Company reported Net Income of $7.4 million, or $0.38 and $0.36 per basic
and diluted share, respectively, for the nine months ended September 30, 2004,
as compared to $6.3 million, or $0.45 and $0.38 per basic and diluted share,
respectively, for the same period during 2003. Excluding the $1.2 million
non-cash after-tax impact of (1) stock option compensation expense ($0.4 million
- - related to employee stock options repriced in 2000) and (2) equity in the loss
of Pinnacle Gas Resources ($0.8 million - comprised primarily of dividends on
Pinnacle preferred stock), Net Income for the nine months ended September 30,
2004, was $8.6 million, or $0.45 and $0.42 per basic and diluted share,
respectively.
EBITDA during the nine months of 2004 was $24.7 million, or $1.28 and $1.22 per
basic and diluted share, respectively, as compared to $20.2 million, or $1.42
and $1.22 per basic and diluted share, respectively, during the nine months of
2003.
Oil and natural gas operating expenses (excluding production taxes) increased to
$3.7 million during the nine months ended September 30, 2004 as compared to $3.1
million in the first nine months of 2003. The increase was primarily due to the
increased well count comprised of the Barnett Shale wells and other new wells.
Depreciation, depletion and amortization expenses ("DD&A") were $10.6 million
during the nine months ended September 30, 2004 as compared to $8.7 million
during the first nine months of 2003. The increase in DD&A expense was due to
(1) an increase in the DD&A rate primarily due to additions to the proved
property cost base and (2) in part to increased production volumes.
General and administrative expenses ("G&A") increased to $5.1 million during the
nine months ended September 30, 2004 from $4.3 million during the same period of
2003. The increase in G&A was due primarily to higher incentive compensation
costs, higher professional fees in connection with the 2003 year-end audit,
costs related to Sarbanes-Oxley compliance, higher professional fees in
connection with the subordinated debt amendments and in part to higher salary
and benefit costs.
Non-cash stock option compensation expense was $0.6 million ($0.4 million after
tax) for the nine months ended September 30, 2004.
Other income and expense for the first nine months of 2004 was a net charge of
$0.3 million largely comprised of (1) non-cash equity in the loss of Pinnacle of
$0.8 million (both before and after tax) partially offset by (2) the sale of our
Enron claim for a gain of $0.5 million, which was fully reserved for in prior
years.
"We are pleased with our financial performance year-to-date including record
revenues and record EBITDA," commented S.P. Johnson IV, Carrizo's President and
Chief Executive Officer. "Operationally we have had an excellent year, reaching
record production levels while building a large acreage position in the Barnett
Shale. We are continuing to accelerate our investment in our drilling program,
both in the Gulf Coast and the Barnett Shale. With Carrizo's improved liquidity,
due to record EBITDA and our recent debt financing, we are very excited about
capitalizing on our Gulf Coast drilling success and rapidly expanding Barnett
Shale position."
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.
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, cash flow, drilling program,
reserve growth, effect of financing, growth in Barnett Shale, the expected
timing of drilling of additional wells 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, 2003 and
its other filings with the Securities and Exchange Commission.
(Financial Highlights to Follow)
CARRIZO OIL & GAS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
2004 2003 2004 2003
--------------- --------------- --------------- ---------------
Oil and natural gas revenues $ 12,273,980 $ 10,123,461 $ 35,106,951 $ 29,615,100
--------------- --------------- --------------- ---------------
Costs and expenses:
Oil and natural gas operating expenses 1,369,169 924,989 3,659,489 3,100,944
Production taxes 757,066 662,442 2,189,284 1,969,512
Depreciation, depletion and amortization 3,708,441 3,086,393 10,561,427 8,727,313
General and administrative expenses 1,295,803 1,624,326 5,075,243 4,273,995
Accretion expense related to asset
retirement obligations 8,008 10,758 20,892 28,676
Stock option compensation expense (benefit) (138,704) 295,867 617,280 319,237
--------------- --------------- --------------- ---------------
Total costs and expenses 6,999,783 6,604,775 22,123,615 18,419,677
--------------- --------------- --------------- ---------------
Operating income 5,274,197 3,518,686 12,983,336 11,195,423
--------------- --------------- --------------- ---------------
Other income and expenses, net 268,885 (185,294) (313,896) (164,357)
Interest income 21,790 13,095 44,717 50,252
Interest expense, net of amounts capitalized (95,672) (5,460) (181,917) (15,732)
--------------- --------------- --------------- ---------------
Income before income taxes 5,469,200 3,341,027 12,532,240 11,065,586
--------------- --------------- --------------- ---------------
Income tax expense 2,078,796 1,259,240 4,820,360 4,052,835
--------------- --------------- --------------- ---------------
Net income before cumulative effect of change
in accounting principle 3,390,404 2,081,787 7,711,880 7,012,751
--------------- --------------- --------------- ---------------
Dividends and accretion of discount
on preferred stock - 189,309 350,720 551,454
--------------- --------------- --------------- ---------------
Net income available to common shares
before cumulative effect of
change in accounting principle 3,390,404 1,892,478 7,361,160 6,461,297
--------------- --------------- --------------- ---------------
Cumulative effect of change in accounting
principle - - - 128,374
--------------- --------------- --------------- ---------------
Net income available to common shares $ 3,390,404 $ 1,892,478 7,361,160 6,332,923
=============== =============== =============== ===============
EBITDA (see table below) $ 9,364,841 $ 6,894,233 24,713,697 20,154,741
=============== =============== =============== ===============
Basic net income per common share:
Net income before cumulative effect of
change in accounting principle $ 0.15 $ 0.13 $ 0.38 $ 0.46
Cumulative effect of change in
accounting principle - - - (0.01)
--------------- --------------- --------------- ---------------
Basic net income per common share $ 0.15 $ 0.13 $ 0.38 $ 0.45
=============== =============== =============== ===============
Diluted net income per common share:
Net income before cumulative effect of
change in accounting principle $ 0.15 $ 0.11 $ 0.36 $ 0.39
Cumulative effect of change in
accounting principle - - - (0.01)
--------------- --------------- --------------- ---------------
Diluted net income per common share $ 0.15 $ 0.11 $ 0.36 $ 0.38
=============== =============== =============== ===============
Basic weighted average common shares outstanding 21,909,855 14,264,639 19,255,156 14,224,893
--------------- --------------- --------------- ---------------
Diluted weighted average common shares outstanding 22,969,833 16,890,630 20,253,905 16,574,238
--------------- --------------- --------------- ---------------
(more)
CARRIZO OIL & GAS, INC.
CONDENSED BALANCE SHEET
09/30/04 12/31/03
--------------- ---------------
(unaudited)
ASSETS:
Cash and cash equivalents $ 3,542,169 $ 3,322,057
Other current assets 15,363,667 11,003,512
Property and equipment, net 184,736,422 135,273,200
Other assets 1,216,391 567,755
Investment in Pinnacle Gas Resources, Inc. 5,783,719 6,636,589
--------------- ---------------
TOTAL ASSETS $ 210,642,368 $ 156,803,113
=============== ===============
LIABILITIES AND EQUITY:
Accounts payable and accrued liabilities $ 30,578,024 $ 24,001,971
Current maturities of long-term debt 304,968 2,139,549
Long-term notes payable 19,049,590 7,121,646
Long-term subordinated notes payable, net 28,178,183 26,991,413
Deferred income taxes 16,364,246 12,479,553
Other liabilities 1,086,440 883,117
Convertible participating preferred stock - 7,114,103
Equity 115,080,917 76,071,761
--------------- ---------------
TOTAL LIABILITIES AND EQUITY $ 210,642,368 $ 156,803,113
=============== ===============
(1) Income tax expense for the three and nine months ended September 30, 2004
includes a $1,999,624 and $4,651,188, respectively, provision for deferred
income taxes and a $79,172 and $169,172, respectively, provision for
currently payable franchise taxes. Income tax expense for the three and
nine months ended September 30, 2003 includes a $1,214,240 and $3,917,835,
respectively, provision for deferred income taxes and a $40,935 and
$122,805, respectively, provision for currently payable franchise taxes.
(2) Long-term notes payable at December 31, 2003 includes a note in the
principal amount $863,246 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 September 30, 2004 and December 31, 2003 current maturities of
long-term debt include $194,001 and $863,246, respectively, related to the
CCBM, Inc. note.
(3) Subordinated notes payable are presented net of discounts of $277,457 and
$342,012 as of September 30, 2004 and December 31, 2003, 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. All of the convertible participating preferred stock was
converted into 1,318,125 shares of common stock during the three months
ended June 30, 2004.
(6) During the six months ended June 30, 2004, 2,298,611 warrants were
converted into 2,003,070 shares of common stock.
(7) 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.
(more)
CARRIZO OIL & GAS, INC.
NON-GAAP DISCLOSURES
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------------- ---------------------------------
Reconciliation of Net Income to EBITDA 2004 2003 2004 2003
- ---------------------------------------------------- --------------- --------------- --------------- ---------------
Net income before cumulative effect of
change in accounting principle $ 3,390,404 $ 2,081,787 $ 7,711,880 $ 7,012,751
--------------- --------------- --------------- ---------------
Cumulative effect of change in accounting principle - - - 128,374
--------------- --------------- --------------- ---------------
Net Income $ 3,390,404 $ 2,081,787 $ 7,711,880 $ 6,884,377
--------------- --------------- --------------- ---------------
Adjustments:
Depreciation, depletion and amortization 3,708,441 3,086,393 10,561,427 8,727,313
Interest expense, net of amounts capitalized
and interest income 73,882 (7,635) 137,200 (34,520)
Income taxes 2,078,796 1,259,240 4,820,360 4,052,835
Equity in loss of Pinnacle Gas Resources, Inc. 244,014 167,823 844,658 176,823
Stock option compensation expense (benefit) (138,704) 295,867 617,280 319,237
Accretion expense related to asset
retirement obligations 8,008 10,758 20,892 28,676
--------------- --------------- --------------- ---------------
EBITDA, as defined $ 9,364,841 $ 6,894,233 $ 24,713,697 $ 20,154,741
=============== =============== =============== ===============
EBITDA per basic common share $ 0.43 $ 0.48 $ 1.28 $ 1.42
=============== =============== =============== ===============
EBITDA per diluted common share $ 0.41 $ 0.41 $ 1.22 $ 1.22
=============== =============== =============== ===============
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND PRICES
(unaudited)
Production volumes-
Oil and condensate (Bbls) 72,634 105,111 243,145 362,643
Natural gas (Mcf) 1,601,708 1,355,022 4,427,309 3,431,638
Natural gas equivalent (Mcfe) 2,037,512 1,985,688 5,886,179 5,607,496
Average sales prices-
Oil and condensate (per Bbl) $ 43.57 $ 29.15 $ 37.14 $ 29.08
Natural gas (per Mcf) $ 5.69 $ 5.21 $ 5.89 $ 5.56
Natural gas equivalent (per Mcfe) $ 6.02 $ 5.10 $ 5.96 $ 5.28
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