Carrizo Oil & Gas Amends Financial Covenants in Secured Credit Facility

Carrizo Oil & Gas has significantly improved its financial flexibility through an amendment to the financial covenants in its secured credit facility ("Credit Facility") by (1) increasing the maximum total debt leverage ratio through 2010 (to as high as 4.75 to 1), (2) refining the definition of Net Debt in the leverage ratio to exclude a portion of Carrizo's Convertible Notes (starting at $51 million in 2009) and (3) adding a senior debt leverage ratio which is less restrictive than the total debt leverage ratio. The amendment is described in more detail below.

The maximum total net debt to EBITDAX leverage ratio ("Leverage Ratio") in the Credit Facility has been amended as follows: Second Quarter 2009 - 4.25 to 1; Third Quarter 2009 - 4.50 to 1; Fourth Quarter 2009 - 4.75 to 1; First Three Quarters 2010 - 4.75 to 1; and Fourth Quarter 2010 - 4.25 to 1. The Leverage Ratio reverts back to 4.0 to 1 thereafter.

For purposes of calculating the Leverage Ratio, the definition of Net Debt was also revised to exclude the following debt amounts (which will be deemed to be an equity component of the Company's 4.375% Senior Convertible Notes due 2028 - under a newly adopted accounting pronouncement described below): approximately $51.3 million for all of 2009; approximately $38.9 million for all of 2010; approximately $26.0 million for all of 2011; approximately $12.7 million for the duration in 2012.

This new accounting pronouncement, FASB Staff Position (FSP) Accounting Principles Board (APB) 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion", effective January 1, 2009, specifies that Carrizo should bifurcate and separately account for that portion of the 4.375% Senior Convertible Notes due 2028 ("Convertible Notes") deemed to be an equity component and in a manner that the interest expense relative to the debt component will reflect an implied interest rate equal to Carrizo's nonconvertible debt interest rate as of the original note issuance date.

The Credit Facility was also amended to add a new senior debt to EBITDAX covenant (with a maximum ratio of 2.25 to 1) which excludes debt attributable to the Convertible Notes and is less restrictive than the Leverage Ratio.

Paul Boling, Vice President and CFO, commented, "We are pleased that our bank syndicate has provided this strong vote of confidence in our asset base and business strategy by relaxing these financial covenants through 2010. The amendment significantly improves our financial flexibility and removes much of the uncertainty surrounding our future ability to remain compliant with these financial covenants. We will remain vigilant during these challenging times in our industry and remain focused on the Company's continuing strategy to limit the capital expenditures to the level of our 2009 free cash flow."



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