Carrizo Oil & Gas: New Forecast

[dan_s]

I have adjusted my forecast/valuation model for CRZO based on their new production guidance and the terms of the acquisition announced today. It will be posted to the EPG website under the Sweet 16 tab this evening.

Carrizo now has a lot more running room, but they also have more shares and more debt. The debt is not a problem because their proven reserve base supports it.

I have lowered the multiple of cash flow used to value the stock.

My valuation is reduced to $42.00/share, which compares to First Call's price target of $37.52/share. It will take a few weeks before First Call adjusts their forecasts.

As I posted earlier, Q2 results should crush the current First Call EPS forecast. That should help calm a few nervous investors.

Chip has a good team at Carrizo and they now have a lot of good stuff to work on. It will be interesting to see what their Northeast assets sell for (Utica/Marcellus). I do expect natural gas prices and NGL prices to be much better in a few months. Their package should draw a lot of interest. Take a look at what EQT just paid for Rice Energy.

[dan_s]

HOUSTON, June 28, 2017 (GLOBE NEWSWIRE) -- Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) announced today that it has priced an underwritten public offering of 15,600,000 shares of its common stock at a price to the public of $14.60 per share. Carrizo intends to use the net proceeds from this offering to fund a portion of the purchase price for the pending acquisition of approximately 16,488 net acres located in the Delaware Basin (the "Pending Acquisition") and for general corporate purposes. Pending the closing of the Pending Acquisition, Carrizo intends to use the net proceeds from this offering to reduce borrowings under its revolving credit facility. Carrizo intends to use net proceeds from this offering not used to pay the purchase price for the Pending Acquisition, including in the event it does not consummate the Pending Acquisition, for general corporate purposes, including to fund future potential acquisitions or a portion of its 2017 and 2018 capital expenditure plans.