Carrizo Oil & Gas Updates Second Quarter Operations

Carrizo Oil & Gas, Inc. on Monday announced its updated 2006 second quarter operational results.


Carrizo’s overall apparent drilling success rate in the second quarter 2006 was 90 percent, comprising of a total of 21 gross wells drilled—19 of which were successful.

In its Barnett Shale project area, Carrizo participated in the drilling of twelve gross horizontal wells in the second quarter, all of which were apparently successful. At the end of the second quarter, one of these successful wells had been completed to sales. A total of fifteen horizontal wells were in various stages of testing, completion or awaiting pipeline hook- up. Year to date 2006, the company has drilled 29 Barnett Shale horizontal wells with 29 apparent successes and is currently drilling four gross (3.4 net) horizontal wells.

In Carrizo’s onshore Gulf Coast of Texas and Louisiana operating areas, the company participated in the drilling of four gross exploratory wells in the second quarter of 2006--two of which were successful for an apparent 50 percent success rate. The successful wells have been completed and are currently producing. Year to date 2006, the company has drilled 12 wells with nine successes and is currently drilling four gross (1.7 net) wells.

In the Camp Hill field the company drilled five wells in the second quarter of 2006, with five apparent successes. Year to date it has drilled six wells with six apparent successes.

Year to date in all operating areas, Carrizo was successful on 44 of 47 gross wells drilled for an apparent success rate of 94 percent.

Four wells are currently drilling in the onshore Gulf Coast area; Carrizo operates three of them. One of these, the Galloway Gas Unit 2 Well #1 (Big Dawg East development prospect) in Liberty County, Texas, has reached a depth of approximately 11,100 feet with an estimated targeted depth of 15,500 feet. Carrizo has an 81-percent working interest in this well after casing point.

The Carrizo-operated Miller A-14 #1 well (Mega-Mata prospect) in Matagorda County, Texas, has reached a depth of 12,600 feet with a target depth of 22,000 feet. Carrizo is paying five percent of the risk capital for a 25-percent working interest in this well after casing point.

The Carrizo-operated Louisiana Delta Farms #3 well (LaRose prospect) in Lafourche Parish, La., has reached a depth of approximately 13,470 feet with an estimated targeted depth of 14,500 feet. Carrizo has a 37-percent working interest in this well after casing point.

Drilling should begin in late August on the Carrizo-generated Monterey prospect in the southern U.K. North Sea. The 13,100-foot well will be operated by Wintershall. Carrizo has no cost before casing point and a 25-percent interest after casing point.


Production during the second quarter of 2006 was estimated to be 2.42 Bcfe, or three percent greater than the 2.35 Bcfe of production in the second quarter of 2005. The production increase was primarily due to the increase in Carrizo’s Barnett Shale production. Second quarter 2006 production was 0.35 Bcfe lower than the previous 2006 quarter due primarily to mechanical problems with the Galloway #1 (154 MMcfe) and the Delta Farms #1 (60 MMcfe) and natural declines. Pipeline infrastructure delays in the Barnett Shale area delayed the anticipated start-up of six new wells, resulting in an estimated delay in production of 120 MMcfe. Also, drilling delays on the third-party operated Galloway #2 caused related production delays totaling an estimated 100 MMcfe. Current production is about 33 MMcfe per day, which includes 13.5 MMcfe per day from the Barnett Shale area and 2.5 MMcfe per day from the newly completed Galloway #2. A workover rig is working on the repair of the Galloway #1 and a barge rig is drilling at 13,470 feet on the above mentioned Delta Farms #3 which should recover the reserves left by the recently shut in Delta Farms #1.

Two of the delayed Barnett wells began sales in late June. Rather than wait on a third party, Carrizo has begun building its own gathering system to accelerate the connection of four new wells. The line should be completed by July 31. Another third-party pipeline is scheduled for completion by July 31 to connect two additional shut-in wells to sales in western Tarrant County, Texas.

Production tests on the Fraser Ranch 1H, the first Carrizo-operated downspacing pilot well in the Tier 1 area of the Barnett Shale reached 2.5 MMcfe per day. The Fraser Ranch 2H, spaced 1,000 feet away, is still flowing back frac water and gas. These two wells are at approximately 100-acre spacing in southwest Tarrant County. Both wells should be selling gas by mid-August. The test is significant because previous Carrizo horizontal wells have been drilled on 120-acre spacing.

In the Barnett Shale, there are currently 17 wells drilled and waiting on frac and/or pipeline, with estimated additional net initial production totaling 18 MMcfe per day. Three wells are being fracture-stimulated this week. Including the Galloway #1 workover, there are four Gulf Coast wells being completed or worked over with estimated production totaling an additional 3 MMcfe per day net.


Presently, Carrizo’s Barnett Shale leases in the Fort Worth area total 82,000 net acres. The company is still actively engaged in leasing activities, although the area has grown increasingly competitive.

The company continues to actively acquire acreage in other organic-rich shale plays based upon geological and geochemical criteria, accumulating more than 200,000 net acres to date. It currently has, under lease or option, 70,000 net acres in the Barnett/Woodford shale play in West Texas/New Mexico, 100,000 net acres in the Floyd/Neal shale play in Mississippi/Alabama, 18,000 net acres in the New Albany shale play in western Kentucky, and 12,000 net acres in the Fayetteville shale play in Arkansas. Drilling commitments on all of this acreage total two wells over the next 12 months.

“We are excited about the progress we are making in defining the company's upside potential with Barnett Shale downspacing, the Mega-mata well drilling, and imminent drilling in the North Sea,” said S.P. Johnson IV, Carrizo's president and CEO. “We are preparing to begin testing the Floyd Shale with a 3D survey and horizontal wells, and to drill horizontal Barnett Shale wells in ‘Tier 2’ Erath County, Texas, and high-potential ‘core’ wells in southeast Tarrant County, Texas.”

“We have responded quickly to drilling and pipeline delays, as well as downhole mechanical problems, to remediate production delays that developed in the latter part of the second quarter. We expect to end the third quarter at record production levels.”

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 and the Barnett Shale area in North Texas. Carrizo controls significant prospective acreage blocks and utilizes advanced 3D seismic techniques to identify potential oil and gas reserves and drilling opportunities.


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