Carrizo Reports 38-Percent Reserves Increase

Carrizo Oil & Gas, Inc. announced the operating results for the fourth quarter and full year 2005 and updated operations, reserves, and accounting matters.


Year-end proved reserves were a record 150.6 Bcfe based on reports from Carrizo's third-party reserve engineers. This is an increase of 38 percent (net of 2005 production of 9.6 Bcfe) over the year-end 2004 proved reserves of 109.3 Bcfe. Year-end PV-10 value was $404 million as compared to $209 million at year-end 2004.

These additions resulted in the Company replacing 527 percent of 2005 production.

Barnett Shale reserves increased 50.4 Bcfe, or 159 percent, to 82.1 Bcfe. Gulf Coast reserves decreased slightly from 26.2 Bcfe to 26.0 Bcfe, almost replacing production of 7.5 Bcfe. Camp Hill reserves decreased 8.95 Bcfe, or 17 percent, from 51.5 Bcfe to 42.5 Bcfe, primarily due to a conservative reduction in the expected recovery efficiency of original oil in place. Additional information regarding Carrizo's Camp Hill project will be included in an upcoming Current Report on Form 8-K to be filed with the SEC.


Production during the fourth quarter of 2005 was estimated to be a record 2.75 Bcfe, or 13.2 percent above the 2.43 Bcfe of production in the fourth quarter 2004 and 26.3 percent above the third quarter 2005 production. Part of the third quarter 2005 and the first two weeks of the fourth quarter 2005 were impacted by hurricanes Katrina and Rita. Estimated annual production for 2005 reached a record level of 9.63 Bcfe, or 15.8 percent higher than the 8.32 Bcfe of production in 2004. The Company estimates that fourth quarter 2005 sales prices, including the effect of hedging activities, averaged approximately $9.78 per Mcf and $58.27 per barrel. The natural gas sales price was negatively affected $0.66 per Mcf by hedging activities. The oil sales price was negatively affected $0.16 per Bbl by hedging activities. Approximately 88 percent of fourth quarter production was natural gas, with 85 percent of total 2005 production being natural gas.

Current production is an estimated 31 MMcfe/d, including over 14 MMcfe/d in the Barnett Shale with 14 net horizontal wells already drilled but waiting on completion and/or pipeline connection.


In the Company's onshore Gulf Coast of Texas and Louisiana operating areas, the Company participated in the drilling of five gross exploratory wells in the fourth quarter of 2005, four of which were successful for an apparent 80 percent success rate. All of the successful wells have been completed and are currently producing. As of year end 2005, drilling operations were underway on three wells. Year to date 2006, the Company has drilled five wells with four successes and is currently drilling three wells.

In its Barnett Shale project area, the Company participated in the drilling of eight gross (five net) horizontal wells in the fourth quarter, all of which were successful. As of year-end 2005, two of these successful wells had been completed. Thirteen additional horizontal wells were in various stages of testing, completion or awaiting pipeline hook-up. As of that date, drilling was underway on six gross (four net) horizontal wells.

The Company's overall apparent drilling success rate in the fourth quarter 2005 was 92 percent, comprised of a total of 13 gross wells drilled, twelve of which were successful.

For the entire year, Carrizo participated in 21 gross wells in its onshore Gulf Coast area with 17 successes for an apparent 81 percent drilling success rate. In its Barnett Shale area, the Company participated in 37 gross wells in 2005 (comprised of 30 horizontal and seven vertical wells), all of which were apparently successful. In the Camp Hill field in Anderson County, Texas, the Company drilled seven gross wells with seven apparent successes. All seven are producing. Overall, the Company was successful on 61 of 65 gross wells drilled for an apparent success rate of 94 percent.

Two wells are currently drilling in the onshore Gulf Coast area. One of these, the Chesapeake-operated Fuller #1 (Destaroyah prospect) has reached a depth of approximately 15,200 feet with an estimated targeted depth of 16,500 feet. Carrizo has a 22 percent working interest in this Wilcox test in Goliad County, Texas.

The Carrizo-operated 22,000 foot Miller A-14 #1 (Mega-Mata prospect) in Matagorda County, Texas spudded on March 7, 2006. Carrizo is paying five percent of the risk capital for a 25 percent working interest in this well after casing point.


Barnett Shale leases in the Fort Worth, Texas area totaled 80,000 net acres at year-end 2005, up 167 percent from the year-end 2004 total of approximately 30,000 net acres. The Company is still actively engaged in leasing activities.

The Company has also begun actively acquiring acreage in other organic rich shale plays based upon geological and geochemical criteria. We currently have, under lease or option, 51,000 net acres in the Barnett/Woodford shale play in West Texas/New Mexico, 85,000 net acres in the Floyd/Neal shale play in Mississippi/Alabama, 17,000 net acres in the western New Albany shale play in Kentucky, and 4,400 net acres in the Fayetteville shale play in Arkansas. Drilling commitments on all of this acreage total two wells over the next 17 months.

S.P. Johnson IV, Carrizo's President and Chief Executive Officer, commented, "We had an outstanding year in 2005 by all benchmarks. Our transition is complete to a more balanced exploration company with a steady resource play development in the Barnett Shale underlying an exploration program with higher potential reserve and production targets in the onshore Gulf Coast. Leveraging off of these successful programs we have moved into other shale resource plays and also completed the sale of two high impact prospects we generated in the UK North Sea, both of which should be drilling in 2006. We are very excited about spudding the Mega-Mata well sooner than expected and anticipate that this will be one of the deepest, highest potential wells drilled by industry this year in the onshore Gulf Coast area."