Energy Prospectus

Carrizo Oil & Gas, Inc. (CRZO) is still considered a “gasser” by many Wall Street analysts, but it has successfully transitioned to an oil company. In fact, oil revenues now make up over 70% of the company’s revenues. Their focus on the Eagle Ford and Niobrara made this happen. I like Carrizo because it is now on-track to significantly increase liquids production and it gives us the right kind of exposure to increasing natural gas prices.

The fact that natural gas prices are drifting higher makes CRZO even more attractive to me. They reported a loss in the 3rd quarter that was due to a large non-cash mark-to-market adjustment on their hedges. Investors should ignore those adjustments but they tend to overreact to reported earnings per share announcements. In my opinion, the recent selloff gives us a nice buying opportunity on a company that is well positioned in the Eagle Ford and the Marcellus Shale.

An updated Net Income & Cash Flow Forecast model for Carrizo Oil & Gas (CRZO) has been posted under the Sweet 16 Tab.

complete article at----

http://seekingalpha.com/article/1027371 ... urce=yahoo

Does Carrizo Oil & Gas Confuse Investors Too Much?

November 26, 2012 | 1 commentby: Stone Fox Capital | about: CRZO Disclosure: I am long CRZO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
After reporting earnings back on November 6th, Carrizo Oil & Gas, Inc (CRZO) plunged over the next week. While the company beat earnings estimates, the market was clearly disappointed with some of the reduced production estimates even if it was due to previously announced joint ventures.

The company is an oil and natural gas exploration and production company focused on the shale plays: Eagle Ford, Niobrara, Marcellus, and now the Utica.

One has to wonder if Carrizo isn't running into some of the investor's frustrations as with Halcon Resources (HK) and SandRidge Energy (SD). The numerous joint ventures along with previous sales of Barnett Shale assets make the company difficult to value. With Wall Street focused specifically on quarterly production growth numbers, the constant shifting of assets leads to confusion.

Q3 2012 Highlights

The company reported the following highlights for Q3 2012:

Record Oil Production of 8,652 Boe/d, a 14% sequential increase over the second quarter of 2012 and a 257% increase over the third quarter of 2011
Natural Gas and NGL Production of 101,576 Mcfe/d
Total Production of 2,354 Mboe, or 25,587 Boe/d
Record Oil Revenue of $76.9 million, amounting to 80% of total revenue, a 12% sequential increase over the second quarter of 2012 and a 286% increase over the third quarter of 2011
Record Revenue of $96.2 million, or adjusted revenue of $105.9 million, including the impact of realized hedges, a 15% sequential increase over the second quarter of 2012
Net Loss of $0.9 million, $0.02 per diluted share, primarily attributable to a $24.7 million unrealized loss on derivatives, or Adjusted Net Income, (as defined below) of $17.8 million, $0.44 per diluted share
Record EBITDA, (as defined below) of $86.5 million, a 25% sequential increase over the second quarter of 2012 and a 108% increase over the third quarter of 2011
Analysts expected earnings of $0.39 so the reported earnings of $0.44 easily beat analyst numbers. Forward-looking estimates for 2013 remain intact at $3.24 providing for a very cheap forward PE of 6.5.

Guidance

The company provided the following updated guidance for the rest of 2012 and 2013 as follows:

Q4 oil production of 8,400 Boe/d.
Full year oil production of 7,584 to 7,734 with a 28-30% increase in 2013. If kept, the Huntington North Sea project would allow oil production to increase 80-85%.
Q4 natural gas production of 88 to 99 Mcfe/d.
Full year natural gas/NGLs production of 105 to 107 Mcfe/d with a 3% decline in 2013.
The market didn't like the slight decline in Q4 oil production forecasts over Q3 numbers.

I agree that significant transactions (acquistions, sales, joint ventures, etc.) confuse a lot of investors and the analysts that cover these companies. I often causes investors to sell and move on to something else until the outlook clears up. I have seen this happen time and time over the years.

That said, I think CRZO looks very promising heading into 2013.