Carrizo Oil & Gas Reports Fourth Quarter & 2003 Results

Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) reported the Company's financial results for the fourth quarter and year ended December 31, 2003.

Fourth Quarter 2003 Results --

The fourth quarter 2003 results included the following highlights:

  • Production of 1.9 Bcfe.
  • Oil and gas revenue of $8.9 million.
  • Net income available to common shareholders of $0.8 million.
  • EBITDA of $5.9 million.


  • Revenues for the three months ended December 31, 2003 decreased four percent to $8.9 million as compared to $9.2 million during the quarter ended December 31, 2002. The decreased level of revenues was driven primarily by a 12 percent decrease in production partially offset by higher prevailing oil and natural gas prices. Production volumes during the three months ended December 31, 2003 were 1.9 Bcfe as compared to 2.1 Bcfe during the fourth quarter of 2002. Carrizo's average oil sales price increased one percent to $28.17 per barrel from $27.93 per barrel during the fourth quarter of 2002, while the average natural gas sales price increased 14 percent to $4.83 per Mcf from $4.24 per Mcf. The above prices include the effects of hedging activities.

    After dividends and accretion of discount on preferred stock, the Company reported net income of $0.8 million, or $0.06 and $0.05 per basic and diluted share, respectively, for the three months ended December 31, 2003, as compared to $2.2 million, or $0.16 and $0.14 per basic and diluted share, respectively, for the same quarter during 2002.

    EBITDA (earnings before interest, income tax, depreciation and amortization expenses, and certain other non-cash items) during the fourth quarter of 2003 decreased to $5.9 million, or $0.40 and $0.34 per basic and fully diluted share, respectively, as compared to $7.0 million, or $0.49 and $0.43 per basic and fully diluted share, respectively, during the fourth quarter of 2002. The decrease in EBITDA was due mainly to the decrease in revenues and increases in lease operating and general and administrative costs.

    Oil and gas operating expenses, including production taxes, increased to $1.7 million during the three months ended December 31, 2003 as compared to $1.2 million during the fourth quarter of 2002, due to higher production taxes, as a result of higher oil and gas prices, and the incremental cost of operating an increased number of wells.

    Depreciation, depletion and amortization expenses ("DD&A") were $3.1 million ($1.69 per Mcfe) during the three months ended December 31, 2003 as compared to $3.2 million ($1.55 per Mcfe) during the fourth quarter of 2002. The rise in DD&A per Mcfe was primarily due to an increase in the proved property cost base from exploration and development drilling and transfers of cost from the unproved property pool.

    General and administrative expenses ("G&A") increased to $1.4 million during the three months ended December 31, 2003 from $1.1 million during the same quarter of 2002. The increase in G&A was due primarily to non-recurring charges for legal and professional fees and printing costs in connection with certain special projects.

    By year-end 2003, Pinnacle Gas Resources, Inc. ("Pinnacle"), a minority- owned subsidiary formed on June 23, 2003, had drilled 124 gross wells in its coalbed methane play in Wyoming. A majority of these wells were in various stages of completion, or were dewatering at year-end and, accordingly, operating losses during the early months of Pinnacle's development program were expected. As a result, using the equity method of accounting, Carrizo recorded a charge of $0.7 million (after tax), or $0.04 and $0.04 per basic and fully diluted share, respectively, during the three months ended December 31, 2003 in connection with Carrizo's equity ownership in Pinnacle's financial results for the period.

    Results for the Year Ended December 31, 2003 --

    The full year 2003 results included the following highlights:

  • Record production of 7.5 Bcfe
  • Record revenues of $38.5 million.
  • Net income available to common shareholders of $7.2 million.
  • Record EBITDA of $25.7 million.


  • Production volumes during the year ended December 31, 2003 reached a record level of 7.5 Bcfe as compared to 7.2 Bcfe during 2002. Revenues for the year ended December 31, 2003 were a record $38.5 million as compared to $26.8 million during the year ended December 31, 2002 primarily due to a 39 percent increase in the average sales price per Mcfe realized by the Company. The Company's average natural gas sales price increased 53 percent to $5.35 per Mcf from $3.50 per Mcf during 2002, while the average oil sales price increased 16 percent to $28.90 per barrel from $24.94 per barrel a year ago. The above prices include the effects of hedging activities.

    After dividends, accretion of discount on dividends and the cumulative effect of change in accounting principle, the Company reported net income of $7.2 million, or $0.50 and $0.43 per basic and diluted share, respectively, for the year ended December 31, 2003, as compared to $4.2 million, or $0.30 and $0.26 per basic and diluted share, respectively, for 2002.

    EBITDA in the year ended December 31, 2003 reached a record level of $25.7 million, or $1.80 and $1.54 per basic and fully diluted share, respectively, as compared to $18.2 million, or $1.28 and $1.12 per basic and fully diluted share, respectively, during the year ended December 31, 2002. The increase in EBITDA was due mainly to the increase in revenues partially offset by higher lease operating and general and administrative costs.

    Oil and gas operating expenses, including production taxes, increased to $6.7 million during the year ended December 31, 2003, as compared to $4.9 million during 2002, due to a combination of higher production taxes from increased commodity prices and higher lifting costs as a result of workovers and the incremental cost of operating an increased number of wells.

    DD&A expenses were $11.9 million ($1.59 per Mcfe) during year ended December 31, 2003 as compared to $10.6 million ($1.47 per Mcfe) during 2002. The increase in DD&A expense was due to an increase in the DD&A rate related to the increase to the proved property cost base from exploration and development drilling and transfers of cost from the unproved property pool and in part to higher production.

    G&A expenses increased to $5.6 million during the year ended December 31, 2003 from $4.1 million during the same period of 2002. The increase in G&A was due primarily to higher incentive compensation, executive severance expense, increased legal and professional fees related to certain special projects and higher insurance costs.

    Using the equity method of accounting, Carrizo recorded a charge of $0.8 million (after tax), or $0.06 and $0.05 per basic and fully diluted share, respectively, in connection with Carrizo's equity ownership in Pinnacle's financial results for the period.

    "We were very pleased with our performance in 2003, particularly regarding our record production, EBITDA and drilling success, and the additions to our exploration prospect inventory from our growing 3-D seismic database," commented S.P. Johnson IV, Carrizo's President and Chief Executive Officer. "These factors, in combination with the capital we recently raised, put us in an excellent position to execute a much larger drilling program than in any previous year. We have already ramped up our drilling program with five wells currently drilling with an average working interest of 51 percent, four of which have significant targets."
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