Carrizo Boasts Record Production, Updates Guidance
Carrizo Oil & Gas' total production for the fourth quarter of 2009 was a better than expected 8.7 Bcfe or an average of 94.4 MMcfe/day, representing the highest quarterly rate in the company's history. This rate is a 20% increase over the same period in 2008 and a 6% increase over the third quarter of 2009 rate of 89.2 MMcfe/day. A shorter lag between well completion and connection to pipelines was largely responsible for the higher than expected production. During the fourth quarter, the company drilled 9.2 net Barnett Shale wells, frac'd 15.9 net wells, and put 7.8 net wells on production. Carrizo finished the year with a backlog of 32.7 net horizontal Barnett Shale wells drilled but waiting on completion or pipeline connection.
As of the date of this release, Carrizo has drilled three of the five vertical wells scheduled to be drilled on its West Virginia Marcellus Shale leasehold, with the fourth currently drilling and the fifth waiting on permitting. These evaluation wells have been logged and cased for future completion.
Carrizo also provided an update to its capital expenditure and production guidance for 2010. The company currently plans to invest approximately $170 million in capital expenditures during the course of the year. This will include the frac'ing and completion of 20 additional wells out of its inventory of uncompleted wells in the Barnett Shale.
CEO S.P. "Chip" Johnson commented, "Our 2010 capital expenditures plan provides for (1) three operated horizontal drilling rigs in the Barnett Shale all year; (2) a continuing pilot well drilling program in targeted areas of the Marcellus Shale; and (3) development drilling with a horizontal rig in the Susquehanna County area of the Marcellus Shale, starting in the second half of 2010.
"We have a substantial volume of gas currently waiting on completion in the Barnett Shale, amounting to an estimated aggregate initial production rate of over 73 MMcfe/day. We are currently frac'ing this backlog inventory and putting the wells on line. The planned capital expenditure budget lets us reduce the backlog to 11 to 15 wells by year end. Due to these additional well completions, we now project our daily production rate to range between 130 and 140 MMcfe/day by the end of the year with the majority of the incremental production being added in the second half.
"We are pleased with the initial drilling results from our Marcellus Shale appraisal wells in all three major acreage areas. The company has gathered valuable rock quality and other geotechnical data from our West Virginia acreage which we will incorporate into our future development plans. We look forward to production testing these wells later in the year. Carrizo will soon be participating in its first Marcellus horizontal well, currently planned to spud in April. The Stone Energy operated Loomis #4 (CRZO 12% WI) will be drilled near the western border of Susquehanna County, PA in proximity to some impressive competitor wells. We continue to lease acreage in the Marcellus Shale. We and our partner, Avista Capital, each control 50% of 218,000 prospective acres."
The 2010 capital expenditure plan is currently comprised as follows: $130 million dedicated to Barnett Shale drilling and completion activities, $31 million to be spent on the Marcellus Shale, including the drilling of nine horizontal wells, and the remaining $9 million to be invested in activities in other areas.
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