Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) today announced the Company's financial results for the fourth quarter of 2014 and provided an operational update, which included the following highlights:
Record Oil Production of 22,130 Bbls/d, 70% above the fourth quarter of 2013
Record Total Production of 37,696 Boe/d, 52% above the fourth quarter of 2013
Oil Revenue of $140.9 million, representing 86% of total revenue, and 28% above the fourth quarter of 2013
Total Revenue of $163.3 million, 26% above the fourth quarter of 2013
Income From Continuing Operations of $129.5 million, or $2.79 per diluted share, and Adjusted Net Income (as defined below) of $14.8 million, or $0.32 per diluted share
Adjusted EBITDA of $128.5 million, 27% above the fourth quarter of 2013
Delivered 513% reserve replacement from all sources with a drill-bit F&D cost of $15.73 per Boe
Reiterating 2015 crude oil production growth target of 17%
Updating my forecast model now.
CRZO
Re: CRZO
While 2014 was a record year for Carrizo as we delivered crude oil production growth of approximately 63%, this year is shaping up to be a more challenging environment given the sell-off in commodity prices. However, with our combination of high-return assets, operational flexibility, and a strong balance sheet, we believe we are well positioned to manage the downturn and take advantage of quality opportunities that may arise.
"We currently have a deep inventory of drilling locations that are economical even at today's depressed commodity prices, with more than half of our inventory being economical below $50/Bbl oil. And in the Eagle Ford Shale, where we plan to spend most of our capital this year, over 80% of the more than 930 net wells we have in inventory are expected to be economical below $44/Bbl oil. Despite the low breakeven cost of our assets, we think the prudent thing to do in this environment is to downshift our production growth until commodity prices recover. Our 2015 drilling and completion plan currently calls for us to spend approximately 35% less capital than last year and hold our oil production roughly flat with the fourth quarter of 2014. This should maintain our strong balance sheet and also position us to quickly resume rapid oil production growth once commodity prices recover.
"We remain focused on cost savings in the current environment, and continue to make good progress on this front. Currently, we have achieved drilling cost reductions of approximately 8% and completion cost reductions of approximately 19% from late 2014 levels, which puts us ahead of the projected cost savings pace we outlined at our recent analyst conference."
"We currently have a deep inventory of drilling locations that are economical even at today's depressed commodity prices, with more than half of our inventory being economical below $50/Bbl oil. And in the Eagle Ford Shale, where we plan to spend most of our capital this year, over 80% of the more than 930 net wells we have in inventory are expected to be economical below $44/Bbl oil. Despite the low breakeven cost of our assets, we think the prudent thing to do in this environment is to downshift our production growth until commodity prices recover. Our 2015 drilling and completion plan currently calls for us to spend approximately 35% less capital than last year and hold our oil production roughly flat with the fourth quarter of 2014. This should maintain our strong balance sheet and also position us to quickly resume rapid oil production growth once commodity prices recover.
"We remain focused on cost savings in the current environment, and continue to make good progress on this front. Currently, we have achieved drilling cost reductions of approximately 8% and completion cost reductions of approximately 19% from late 2014 levels, which puts us ahead of the projected cost savings pace we outlined at our recent analyst conference."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO
The Company's proved reserves as of December 31, 2014 were 151.1 MMBoe, a 49% increase over year-end 2013, including a record 100.7 MMBbls of crude oil, a 62% increase over year-end 2013. The Company's PV-10 value was a record $3.3 billion as of December 31, 2014.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO
As of December 31, 2014, Carrizo had total debt outstanding of $1,354.4 million and cash and cash equivalents of $10.8 million. Net Debt to Adjusted EBITDA (as defined by the agreement governing the revolving credit facility and based on the trailing four quarters) was 2.3x for the fourth quarter. The borrowing base on the Company's senior credit facility is currently $800.0 million, with an elected commitment of $685.0 million, and as of February 20, 2015, Carrizo had $210.0 million drawn on the facility, which includes the payment of the remaining balance of approximately $150.0 million for the recent Eagle Ford Minerals acquisition.
CRZO has more than enough cash flow from operations and liquidity to fund their 2015 capital program. - Dan
CRZO has more than enough cash flow from operations and liquidity to fund their 2015 capital program. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO
Carrizo currently has hedges in place for approximately 55% of estimated crude oil production for 2015 (based on the midpoint of guidance). For the year, the Company has hedged approximately 12,200 Bbls/d of crude oil at a weighted average floor price of $56.91/Bbl (comprised of 1,697 Bbls/d of swaps at an average price of $92.98/Bbl and 10,503 Bbls/d of collars with an average floor price of $50.99/Bbl).
Carrizo also has hedges in place for over 40% of estimated natural gas and NGL production for 2015 (based on the midpoint of guidance). For the year, the Company has swaps on approximately 30,000 MMBtu/d at a weighted average price of $4.29/MMBtu. (Please refer to the attached tables for a detailed summary of the Company's derivative contracts.)
Carrizo also has hedges in place for over 40% of estimated natural gas and NGL production for 2015 (based on the midpoint of guidance). For the year, the Company has swaps on approximately 30,000 MMBtu/d at a weighted average price of $4.29/MMBtu. (Please refer to the attached tables for a detailed summary of the Company's derivative contracts.)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: CRZO
I have updated my forecast model for CRZO and Sabrina will be posting it to the website this afternoon.
My Fair Value Estimate has been adjusted to $54.35, compared to First Call's Price Target of $54.87.
Carrizo will probably report losses for the first two quarters of 2015. Production will dip a bit in Q1 then ramp up into year-end. Cash flow from operations should be in the $320 to $360 million range this year. If oil gets back to $70/bbl by year-end (as I am expecting), CRZO should be in great shape a year from now. If gas market in the Marcellus improves, there is a lot of upside beyond my valuation.
IMO this one is PRIME TAKEOVER TARGET. A nice "bolt on" for EOG.
My Fair Value Estimate has been adjusted to $54.35, compared to First Call's Price Target of $54.87.
Carrizo will probably report losses for the first two quarters of 2015. Production will dip a bit in Q1 then ramp up into year-end. Cash flow from operations should be in the $320 to $360 million range this year. If oil gets back to $70/bbl by year-end (as I am expecting), CRZO should be in great shape a year from now. If gas market in the Marcellus improves, there is a lot of upside beyond my valuation.
IMO this one is PRIME TAKEOVER TARGET. A nice "bolt on" for EOG.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group