Carrizo Oil & Gas Inc. (CRZO, Financial) filed Quarterly Report for the period ended 2010-03-31.
Carrizo Oil & Gas Inc. has a market cap of $624.5 million; its shares were traded at around $20.22 with a P/E ratio of 16.9 and P/S ratio of 5. CRZO is in the portfolios of John Keeley of Keeley Fund Management, NWQ Managers of NWQ Investment Management Co.
The net gain on derivatives of $22.8 million in the first quarter of 2010 was comprised of a $17.8 million of unrealized mark-to-market gain on natural gas derivatives and a $5.0 million of realized gain on settled natural gas derivatives. The net gain on derivatives of $30.1 million in the first quarter of 2009 was comprised of a $11.3 million net unrealized mark-to-market gain on derivatives and a $18.8 million realized gain on settled derivatives.
2010 Capital Budget and Funding Strategy. In connection with our recent equity offering and our new strategy to enter into crude oil and liquids-rich plays, we have increased our 2010 capital expenditure plan from $170 million to $225 million which currently includes $147 million for drilling, $76 million for land and seismic acquisitions and $2 million for the development of the North Sea. If our development plan for the Huntington Field is approved by our joint venture during 2010, we may be required to invest up to an additional $20.0 million in facilities and drilling to develop this field in 2010. We currently intend to project finance all or a portion of the additional Huntington field development costs. We intend to finance our 2010 capital and exploration budget primarily from cash flows from operations, the possible selective sale or monetization of non-core assets and available borrowings under the Senior Credit Facility. We may be required to reduce or defer part of our 2010 capital expenditures program if we are unable to obtain sufficient financing from these sources or if natural gas prices decline.
We currently believe that cash generated from our April 2010 equity offering and from operations, supplemented by borrowings under the Senior Credit Facility, will be sufficient to fund our immediate needs. Cash generated from operations is primarily driven by production and commodity prices. While we have steadily increased production over the last few years, natural gas prices declined significantly since the third quarter of 2008. In an effort to mitigate declining prices, we hedge a portion of our production and, as of March 31, 2010, we had hedged approximately 18,879,000 MMBtu (68.7 MMcf per day for the year, or 72% of our estimated production from April through December 2010) of our 2010 natural gas production at a weighted average floor or swap price of $5.63 per MMBtu relative to WAHA and Houston Ship Channel prices. On May 5, 2010, we amended the Senior Credit Facility to increase the borrowing base to $375 million from $350 million, representing an increase of $25 million. As of April 30, 2010, the outstanding balance under our credit facility was approximately $163 million (or 43% of a $375 million borrowing base) representing available liquidity of $212 million, subject to the terms of the covenants of the Senior Credit Facility.
During the first quarter of 2010, we entered into long-term transportation in the Marcellus Shale play that requires minimum volume commitments valued at $0.9 million for 2010, $1.5 million for 2011, $2.9 million for 2012, $5.9 million for 2013 and $11.7 million thereafter.
The full Cost Ceiling test cushion at March 31, 2010 was $91.7 million and was based upon average realized oil, natural gas liquids and natural gas prices of $64.51 per Bbl, $26.66 per Bbl and $3.69 per Mcf, respectively, or a volume weighted average price of $24.11 per BOE. A BOE means one barrel of oil equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids, which approximates the relative energy content of oil, condensate and natural gas liquids as compared to natural gas. In connection with our March 31, 2010 Full Cost Ceiling test computation, a price sensitivity study also indicated that a ten percent increase in the commodity prices used in the ceiling test at March 31, 2010 would have increased the Full Cost Ceiling test cushion by approximately $104.4 million and a ten percent decrease in such commodity prices would have resulted in a $13.3 million ceiling test impairment. The aforementioned price sensitivity is as of March 31, 2010 and, accordingly, does not include any potential changes in reserve values due to subsequent performance or events, such as commodity prices, reserve revisions and drilling results.
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Carrizo Oil & Gas Inc. has a market cap of $624.5 million; its shares were traded at around $20.22 with a P/E ratio of 16.9 and P/S ratio of 5. CRZO is in the portfolios of John Keeley of Keeley Fund Management, NWQ Managers of NWQ Investment Management Co.
Highlight of Business Operations:
Revenues from oil and gas production for the three months ended March 31, 2010 increased 27% to $39.0 million from $30.7 million for the same period in 2009 due to increased oil and gas prices. Production volumes for natural gas for the three months ended March 31, 2010 was 8.0 Bcf in 2010 and 2009. Average natural gas prices, excluding the impact attributable to a $5.0 million and a $16.0 million cash-settled gain for the quarters ended March 31, 2010 and 2009, respectively, increased to $4.49 per Mcf in the first quarter of 2010 from $3.63 per Mcf in the same period in 2009. Average oil prices, excluding the impact of our settled derivative gain of $2.8 million for the quarter ended March 31, 2009, increased 93% to $76.13 per barrel from $39.38 per barrel in the same period in 2009.The net gain on derivatives of $22.8 million in the first quarter of 2010 was comprised of a $17.8 million of unrealized mark-to-market gain on natural gas derivatives and a $5.0 million of realized gain on settled natural gas derivatives. The net gain on derivatives of $30.1 million in the first quarter of 2009 was comprised of a $11.3 million net unrealized mark-to-market gain on derivatives and a $18.8 million realized gain on settled derivatives.
2010 Capital Budget and Funding Strategy. In connection with our recent equity offering and our new strategy to enter into crude oil and liquids-rich plays, we have increased our 2010 capital expenditure plan from $170 million to $225 million which currently includes $147 million for drilling, $76 million for land and seismic acquisitions and $2 million for the development of the North Sea. If our development plan for the Huntington Field is approved by our joint venture during 2010, we may be required to invest up to an additional $20.0 million in facilities and drilling to develop this field in 2010. We currently intend to project finance all or a portion of the additional Huntington field development costs. We intend to finance our 2010 capital and exploration budget primarily from cash flows from operations, the possible selective sale or monetization of non-core assets and available borrowings under the Senior Credit Facility. We may be required to reduce or defer part of our 2010 capital expenditures program if we are unable to obtain sufficient financing from these sources or if natural gas prices decline.
We currently believe that cash generated from our April 2010 equity offering and from operations, supplemented by borrowings under the Senior Credit Facility, will be sufficient to fund our immediate needs. Cash generated from operations is primarily driven by production and commodity prices. While we have steadily increased production over the last few years, natural gas prices declined significantly since the third quarter of 2008. In an effort to mitigate declining prices, we hedge a portion of our production and, as of March 31, 2010, we had hedged approximately 18,879,000 MMBtu (68.7 MMcf per day for the year, or 72% of our estimated production from April through December 2010) of our 2010 natural gas production at a weighted average floor or swap price of $5.63 per MMBtu relative to WAHA and Houston Ship Channel prices. On May 5, 2010, we amended the Senior Credit Facility to increase the borrowing base to $375 million from $350 million, representing an increase of $25 million. As of April 30, 2010, the outstanding balance under our credit facility was approximately $163 million (or 43% of a $375 million borrowing base) representing available liquidity of $212 million, subject to the terms of the covenants of the Senior Credit Facility.
During the first quarter of 2010, we entered into long-term transportation in the Marcellus Shale play that requires minimum volume commitments valued at $0.9 million for 2010, $1.5 million for 2011, $2.9 million for 2012, $5.9 million for 2013 and $11.7 million thereafter.
The full Cost Ceiling test cushion at March 31, 2010 was $91.7 million and was based upon average realized oil, natural gas liquids and natural gas prices of $64.51 per Bbl, $26.66 per Bbl and $3.69 per Mcf, respectively, or a volume weighted average price of $24.11 per BOE. A BOE means one barrel of oil equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of oil, condensate or natural gas liquids, which approximates the relative energy content of oil, condensate and natural gas liquids as compared to natural gas. In connection with our March 31, 2010 Full Cost Ceiling test computation, a price sensitivity study also indicated that a ten percent increase in the commodity prices used in the ceiling test at March 31, 2010 would have increased the Full Cost Ceiling test cushion by approximately $104.4 million and a ten percent decrease in such commodity prices would have resulted in a $13.3 million ceiling test impairment. The aforementioned price sensitivity is as of March 31, 2010 and, accordingly, does not include any potential changes in reserve values due to subsequent performance or events, such as commodity prices, reserve revisions and drilling results.
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