Carrizo Oil & Gas (CRZO) is a strong candidate to move back into the Sweet 16. It is trading at a deep discount to my valuation (see my forecast model on the EPG website) and the company has several projects that can add upside to my valuation. Comments below are from a detailed report that I get from Raymond James' energy sector team.
> Carrizo is testing various density pilots in the Eagle Ford, with six stagger-stack density pilots currently on production testing effective lateral spacing, both single and multi-layer, ranging from 330’ down to 165’. Downspacing could increase program drilling inventory by up to 185%, relative to our model.
> Carrizo is testing optimized completion techniques, such as shorter stage spacing, in the Eagle Ford. To date, it has completed 15 wells utilizing 200’ stage spacing, down from the prior 240’, which are exhibiting a 15% productivity increase to offset wells (using a lesser design) over the first 60 days. Current EUR assumptions do not reflect the productivity gains seen to date and could provide upside to the NAV.
> Delaware Basin: The company has ~22,200 net acres in the Delaware Basin, specifically in Culberson and Reeves counties. The company is in the very early stages of delineation in the basin, with only seven wells drilled to-date. Carrizo is currently de-risking its position, which could drive inventory higher. Alternatively, it is an attractive divestiture option.