Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today
announced the Company’s financial results for the third quarter of
2019 and provided an operational update. Highlights include:
- Total production of 69,971 Boe/d, 8% above the third quarter of
2018 and 7% above the prior quarter
- Crude oil production of 45,587 Bbls/d, 12% above the third
quarter of 2018 and 3% above the prior quarter
- Net income attributable to common shareholders of $103.0
million, or $1.11 per diluted share, and Net cash provided by
operating activities of $176.3 million
- Adjusted net income attributable to common shareholders of
$63.7 million, or $0.69 per diluted share, and Adjusted EBITDA of
$186.8 million
Carrizo reported third quarter of 2019 net income attributable
to common shareholders of $103.0 million, or $1.11 per basic and
diluted share, compared to net income attributable to common
shareholders of $76.1 million, or $0.88 and $0.85 per basic and
diluted share, respectively, in the third quarter of 2018. The net
income attributable to common shareholders for the third quarter of
2019 and the third quarter of 2018 include certain items typically
excluded from published estimates by the investment community.
Adjusted net income attributable to common shareholders, which
excludes the impact of these items as described in the non-GAAP
reconciliation tables below, for the third quarter of 2019 was
$63.7 million, or $0.69 per diluted share, compared to $84.1
million, or $0.94 per diluted share, in the third quarter of
2018.
For the third quarter of 2019, Adjusted EBITDA was $186.8
million. Adjusted EBITDA and the reconciliation to net income
attributable to common shareholders and net cash provided by
operating activities are presented in the non-GAAP reconciliation
tables below.
Production volumes during the third quarter of 2019 were 6,437
MBoe, or 69,971 Boe/d, 8% higher than the third quarter of 2018 and
7% above the prior quarter. Crude oil production during the third
quarter of 2019 averaged 45,587 Bbls/d, 12% higher than the third
quarter of 2018 and 3% above the prior quarter; natural gas and NGL
production were 76,630 Mcf/d and 11,612 Bbls/d, respectively,
during the third quarter of 2019.
Drilling, completion, and infrastructure (DC&I) capital
expenditures for the third quarter of 2019 were $119.0 million.
Approximately 59% of the third quarter DC&I spending was in the
Eagle Ford Shale, with the balance in the Delaware Basin. Land and
seismic capital expenditures during the quarter were approximately
$4.0 million.
In light of the pending merger with Callon Petroleum Company
(“Callon”), Carrizo does not, in general, plan to provide or update
guidance during the pendency of the merger. In addition, investors
are cautioned not to rely on any prior forward-looking statements
regarding these items, as they spoke only as of the date provided
and were subject to the specific risks and uncertainties that
accompanied such statements.
S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented
on the results, “The third quarter was another strong quarter for
Carrizo. We increased production by 7% sequentially while reducing
our unit operating costs and capital expenditure run rate. Our team
continues to deliver efficiency gains, and recently drilled an
approximate 10,000-ft. lateral well in the Delaware Basin in under
19 days. These operational results provide us with significant
momentum as we approach the potential closing of our merger with
Callon.
“We remain excited about our pending merger, which should create
a premier, oily mid-cap E&P company, with strong positions in
the Permian Basin and Eagle Ford Shale. The combined company should
be well positioned to continue to build on the efficiencies that
each company has generated on a stand-alone basis, putting it in a
strong position to generate free cash flow and create value for
shareholders in the current market environment.”
Proposed Merger with Callon Petroleum
As previously announced on July 15, 2019, Carrizo and Callon
entered into a definitive merger agreement, pursuant to which
Callon will acquire Carrizo in an all-stock transaction valued at
approximately $3.2 billion inclusive of Carrizo’s net debt (based
on Callon’s stock price at the time of announcement). Shareholders
of Carrizo will receive 2.05 shares of Callon common stock in
exchange for each share of Carrizo common stock, and will own
approximately 46% of the combined company, on a fully-diluted
basis, immediately following the close of the merger. The Carrizo
Special Meeting of Shareholders to vote on the transaction is
scheduled for November 14, 2019 at 9:00 AM Central Standard Time.
The Carrizo Board of Directors unanimously recommends that common
shareholders vote “FOR” the proposal to approve the merger.
Operational Update
In the Eagle Ford Shale, where the Company holds approximately
76,000 net acres, Carrizo drilled 11 gross (9 net) operated wells
during the third quarter and completed 15 gross (15 net) operated
wells. Production from the play was approximately 42,900 Boe/d for
the quarter, up 4% versus the prior quarter; crude oil accounted
for 81% of the Company’s production from the play. At the end of
the quarter, Carrizo had 16 gross (13 net) operated Eagle Ford
Shale wells in progress or waiting on completion. The Company is
currently operating two rigs in the Eagle Ford Shale.
In the Delaware Basin, where it holds approximately 46,000 net
acres, Carrizo drilled 7 gross (6 net) operated wells during the
third quarter and completed 7 gross (6 net) wells. Production from
the play was approximately 27,000 Boe/d for the quarter, up 11%
versus the prior quarter; crude oil accounted for 40% of the
Company’s production from the play. At the end of the quarter,
Carrizo had 10 gross (8 net) operated Delaware Basin wells in
progress or waiting on completion. The Company is currently
operating two rigs in the Delaware Basin.
Carrizo continued to drive operational efficiencies in both
plays during the third quarter. In the Delaware Basin, Carrizo set
a Company drilling record at its Griffin State Unit 1922 11H well.
The well targeted the Wolfcamp A with an approximate 10,000-ft.
lateral and was drilled in under 19 days, equating to more than
1,115 ft./day. Total drilling cost for the well was less than $3.2
million, nearly 20% below the Company’s target. Based on the
efficiency gains achieved to date, Carrizo currently expects well
costs in the Delaware Basin to be $6.7-$7.1 million for a 7,000-ft.
effective lateral well, down from $7.8-$8.2 million previously. In
the Eagle Ford Shale, the Company currently expects well costs to
be $3.6-$3.8 million for a 6,600-ft. effective lateral well, down
from $3.9-$4.1 million previously.
Hedging Activity
Hedging continues to be an important element of Carrizo’s
strategy to protect its balance sheet and provide predictable cash
flows. As part of this strategy, the Company maintains an active
hedging program while retaining the flexibility to benefit from
commodity price increases. Carrizo currently has hedges in place
covering 32,000 Bbls/d of crude oil production for the fourth
quarter of 2019, consisting of swaps covering 5,000 Bbls/d of crude
oil at an average fixed price of $64.80/Bbl and three-way collars
covering 27,000 Bbls/d of crude oil with an average floor price of
$50.96/Bbl, ceiling price of $74.23/Bbl, and sub-floor price of
$41.67/Bbl.
For 2020, the Company currently has swaps covering 3,000 Bbls/d
of crude oil at an average fixed price of $55.06/Bbl and three-way
collars covering 22,000 Bbls/d with an average floor price of
$55.34/Bbl, ceiling price of $65.16/Bbl, and sub-floor price of
$45.34/Bbl.
Please refer to the attached tables for full details of the
Company’s commodity derivative contracts.
About Carrizo
Carrizo Oil & Gas, Inc. is a Houston-based energy company
actively engaged in the exploration, development, and production of
oil and gas from resource plays located in the United States. Our
current operations are principally focused in proven, producing oil
and gas plays primarily in the Eagle Ford Shale in South Texas and
the Permian Basin in West Texas.
Additional Information and Where to Find It
This communication is for information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any proxy, vote or approval
with respect to the proposed transaction or otherwise, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No money, securities or other consideration is being
solicited, and, if sent in response to the information contained
herein, will not be accepted. The information contained herein
should not be considered as a recommendation that any person should
subscribe for or purchase any securities.
This communication shall not constitute a notice of redemption
with respect to or an offer to purchase or sell (or the
solicitation of an offer to purchase or sell) any preferred stock
of Carrizo.
In connection with the proposed transaction, Callon filed a
Registration Statement on Form S-4 on October 4, 2019 (the
“Registration Statement”) with the U.S. Securities and Exchange
Commission (the “SEC”), that included a joint proxy statement of
Carrizo and Callon, which also constitutes a prospectus of Callon.
The Registration Statement was declared effective by the SEC on
October 9, 2019, and Carrizo and Callon commenced mailing the
definitive proxy statement/prospectus to their respective
shareholders on or about October 11, 2019. This communication is
not a substitute for the joint proxy statement/prospectus or the
Registration Statement or for any other document that Carrizo or
Callon may file with the SEC and/or send to Carrizo’s shareholders
and/or Callon’s shareholders in connection with the proposed
transaction. INVESTORS AND SECURITY HOLDERS OF CARRIZO AND CALLON
ARE URGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY
STATEMENT/PROSPECTUS, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM
TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED BY CARRIZO AND
CALLON WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CARRIZO, CALLON AND
THE PROPOSED TRANSACTION.
Investors can obtain free copies of the Registration Statement
and joint proxy statement/prospectus, as each may be amended from
time to time, and other relevant documents filed by Carrizo and
Callon with the SEC (when they become available) through the
website maintained by the SEC at https://www.sec.gov. Copies of
documents filed with the SEC by Carrizo will be available free of
charge from Carrizo’s website at https://www.carrizo.com or by
contacting Carrizo’s Investor Relations Department at 713-328-1055.
Copies of documents filed with the SEC by Callon will be available
free of charge from Callon’s website at https://www.callon.com or
by contacting Callon’s Investor Relations Department at
281-589-5200.
Participants in the Proxy Solicitation
Carrizo, Callon and their respective directors and certain of
their executive officers and other members of management and
employees may be deemed, under SEC rules, to be participants in the
solicitation of proxies from Carrizo’s and Callon’s shareholders in
connection with the proposed transaction. Information regarding the
executive officers and directors of Carrizo is included in its
definitive proxy statement for its 2019 annual meeting filed with
the SEC on April 2, 2019. Information regarding the executive
officers and directors of Callon is included in its definitive
proxy statement for its 2019 annual meeting filed with the SEC on
March 27, 2019. Additional information regarding the persons who
may be deemed participants and their direct and indirect interests,
by security holdings or otherwise, will be set forth in the
Registration Statement and joint proxy statement/prospectus and
other materials when they are filed with the SEC in connection with
the proposed transaction. Free copies of these documents may be
obtained as described in the paragraphs above.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this communication concerning the proposed
business combination between Carrizo and Callon, including any
statements regarding momentum, the expected timetable for
completing the proposed transaction, the results, effects, benefits
and synergies of the proposed transaction, future opportunities for
the combined company, future financial performance and condition,
capital expenditure, production and other guidance, anticipated
production and production growth, enhancements to shareholder
value, returns on capital, future project development, free cash
flow growth and improved free cash flow break-even levels, future
supply costs, opportunity to capitalize on technical advances,
improved capital efficiency, future capital allocation and capital
expenditures, balanced cash conversion cycles, improved well uptime
and incremental well reduction costs, reduction in operating cost
structure, benefits from a larger production base, monetization of
water assets and any other statements regarding Carrizo’s or
Callon’s future expectations, beliefs, plans, objectives, financial
conditions, assumptions or future events or performance, and
statements related to capital requirements, expectations or
projections, cost reductions, drilling, fracking and capital
efficiencies, cycle times, growth within cash flow and goal of free
cash flow generation, activity among basins, goals, leverage
metrics, capital expenditure, infrastructure program, resource
potential, guidance, results of tests, rig program, production,
average well returns, estimated production results and financial
performance, effects of transactions, targeted ratios and other
metrics, timing, levels of and potential production, expectations
regarding growth, oil and gas prices, drilling and completion
activities and optimization, benefits of certain well completion
designs, well spacing, landing zone optimization, drilling
techniques, including multi-pad and multi-zone drilling, completion
and development techniques, drilling inventory, including timing
thereof, well costs, break-even prices, production mix, development
plans, hedging activity, Carrizo’s or management’s intentions,
beliefs, expectations, hopes, projections, assessment of risks,
estimations, plans or predictions for the future, results of
Carrizo’s strategies and other statements that are not historical
facts are “forward-looking” statements based on assumptions
currently believed to be valid. Forward-looking statements are all
statements other than statements of historical facts. The words
“anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,”
“estimate,” “probable,” “project,” “forecasts,” “predict,”
“outlook,” “aim,” “will,” “could,” “should,” “would,” “potential,”
“may,” “might,” “anticipate,” “likely” “plan,” “positioned,”
“strategy,” and similar expressions or other words of similar
meaning, and the negatives thereof, are intended to identify
forward-looking statements. The forward-looking statements are
intended to be subject to the safe harbor provided by Section 27A
of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934, and the Private Securities Litigation Reform
Act of 1995.
These forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those anticipated, including, but not limited to, failure to
obtain the required votes of Carrizo’s shareholders or Callon’s
shareholders to approve the transaction and related matters;
whether any redemption of Carrizo’s preferred stock will be
necessary or will occur prior to the closing of the transaction;
the risk that a condition to closing of the proposed transaction
may not be satisfied, that either party may terminate the merger
agreement or that the closing of the proposed transaction might be
delayed or not occur at all; potential adverse reactions or changes
to business or employee relationships, including those resulting
from the announcement or completion of the transaction; the
diversion of management time on transaction-related issues; the
ultimate timing, outcome and results of integrating the operations
of Carrizo and Callon; the effects of the business combination of
Carrizo and Callon, including the combined company’s future
financial condition, results of operations, strategy and plans; the
ability of the combined company to realize anticipated synergies
and other benefits in the timeframe expected or at all; changes in
capital markets and the ability of the combined company to finance
operations in the manner expected; regulatory approval of the
transaction; the effects of commodity price changes; the risks of
oil and gas activities; assumptions regarding well costs; Delaware
Basin constraints; estimated recoveries; pricing and other factors
affecting average well returns; results of wells and testing;
failure of actual production to meet expectations; results of
infrastructure program; failure to reach significant growth;
performance of rig operators; spacing test results; availability of
gathering systems; pipeline and other transportation issues; costs
and availability of oilfield services; actions by governmental
authorities; joint venture partners; industry partners; lenders and
other third parties; actions by purchasers or sellers of
properties; risks and effects of acquisitions and dispositions;
market and other conditions; risks regarding financing; capital
needs; availability of well connects; capital needs and uses;
commodity price changes; effects of the global economy on
exploration activity; results of and dependence on exploratory
drilling activities; operating risks; right-of-way and other land
issues; availability of capital and equipment; and weather.
Expectations regarding business outlook, including changes in
revenue, pricing, capital expenditures, cash flow generation,
strategies for our operations, oil and natural gas market
conditions, legal, economic and regulatory conditions, and
environmental matters are only forecasts regarding these
matters.
Additional factors that could cause results to differ materially
from those described above can be found in Carrizo’s Annual Report
on Form 10-K for the year ended December 31, 2018 and in its
subsequent Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2019 and June 30, 2019, each of which is on file with the
SEC and available from Carrizo’s website at https://www.carrizo.com
and in other documents Carrizo files with the SEC, and in Callon’s
Annual Report on Form 10-K for the year ended December 31, 2018 and
in its subsequent Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2019 and June 30, 2019, each of which is on file
with the SEC and available from Callon’s website at
https://www.callon.com and in other documents Callon files with the
SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither Carrizo nor Callon assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
(Financial Highlights to Follow)
CARRIZO OIL & GAS,
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share amounts)
(Unaudited)
September 30, 2019
December 31, 2018
Assets
Current assets
Cash and cash equivalents
$2,280
$2,282
Accounts receivable, net
98,161
99,723
Derivative assets
31,125
39,904
Other current assets
7,298
8,460
Total current assets
138,864
150,369
Property and equipment
Oil and gas properties, full cost
method
Proved properties, net
2,648,601
2,333,470
Unproved properties, not being
amortized
649,347
673,833
Other property and equipment, net
11,022
11,221
Total property and equipment, net
3,308,970
3,018,524
Deferred income taxes
172,632
—
Operating lease right-of-use assets
55,873
—
Other long-term assets
13,885
16,207
Total Assets
$3,690,224
$3,185,100
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$79,744
$98,811
Revenues and royalties payable
59,140
49,003
Accrued capital expenditures
33,757
60,004
Accrued interest
23,640
18,377
Derivative liabilities
56,233
55,205
Operating lease liabilities
30,301
—
Other current liabilities
48,912
40,609
Total current liabilities
331,727
322,009
Long-term debt
1,755,378
1,633,591
Asset retirement obligations
22,876
18,360
Operating lease liabilities
31,723
—
Deferred income taxes
8,845
8,017
Other long-term liabilities
13,946
47,797
Total liabilities
2,164,495
2,029,774
Commitments and contingencies
Preferred stock
Preferred stock, $0.01 par value,
10,000,000 shares authorized; 200,000 issued and outstanding as of
September 30, 2019 and December 31, 2018
176,925
174,422
Shareholders’ equity
Common stock, $0.01 par value, 180,000,000
shares authorized; 92,610,669 issued and outstanding as of
September 30, 2019 and 91,627,738 issued and outstanding as of
December 31, 2018
926
916
Additional paid-in capital
2,132,276
2,131,535
Accumulated deficit
(784,398
)
(1,151,547
)
Total shareholders’ equity
1,348,804
980,904
Total Liabilities and Shareholders’
Equity
$3,690,224
$3,185,100
CARRIZO OIL & GAS,
INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share amounts)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues
Crude oil
$236,153
$254,525
$684,109
$679,242
Natural gas liquids
12,824
33,798
43,820
71,969
Natural gas
8,017
15,052
27,072
41,417
Total revenues
256,994
303,375
755,001
792,628
Costs and Expenses
Lease operating
45,213
41,022
131,758
115,446
Production and ad valorem taxes
14,549
17,104
47,236
45,779
Depreciation, depletion and
amortization
82,195
80,108
238,283
217,005
General and administrative, net
13,467
12,811
55,500
58,368
(Gain) loss on derivatives, net
(31,554
)
55,388
31,281
152,698
Interest expense, net
17,721
15,406
52,196
46,522
Loss on extinguishment of debt
—
—
—
8,676
Other (income) expense, net
1,125
(690
)
2,717
2,305
Total costs and expenses
142,716
221,149
558,971
646,799
Income Before Income Taxes
114,278
82,226
196,030
145,829
Income tax (expense) benefit
(5,977
)
(880
)
171,119
(1,682
)
Net Income
$108,301
$81,346
$367,149
$144,147
Dividends on preferred stock
(4,474
)
(4,457
)
(13,286
)
(13,794
)
Accretion on preferred stock
(869
)
(771
)
(2,503
)
(2,264
)
Loss on redemption of preferred stock
—
—
—
(7,133
)
Net Income Attributable to Common
Shareholders
$102,958
$76,118
$351,360
$120,956
Net Income Attributable to Common
Shareholders Per Common Share
Basic
$1.11
$0.88
$3.81
$1.45
Diluted
$1.11
$0.85
$3.79
$1.42
Weighted Average Common Shares
Outstanding
Basic
92,561
86,727
92,269
83,461
Diluted
92,762
89,039
92,625
85,221
CARRIZO OIL & GAS,
INC.
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS’ EQUITY
(In thousands, except share
amounts)
(Unaudited)
Three Months Ended September
30, 2019 and 2018
Common Stock
Additional Paid-in
Capital
Accumulated Deficit
Total Shareholders’
Equity
Shares
Amount
Balance as of June 30, 2019
92,552,930
$926
$2,132,131
($892,699
)
$1,240,358
Stock-based compensation expense
—
—
5,488
—
5,488
Issuance of common stock upon grants of
restricted stock awards and vestings of restricted stock units and
performance shares
57,739
—
—
—
—
Dividends on preferred stock
—
—
(4,474
)
—
(4,474
)
Accretion on preferred stock
—
—
(869
)
—
(869
)
Net income
—
—
—
108,301
108,301
Balance as of September 30,
2019
92,610,669
$926
$2,132,276
($784,398
)
$1,348,804
Balance as of June 30, 2018
82,107,544
$821
$1,918,820
($1,493,173
)
$426,468
Stock-based compensation expense
—
—
4,944
—
4,944
Issuance of common stock upon grants of
restricted stock awards and vestings of restricted stock units and
performance shares
12,189
—
(45
)
—
(45
)
Sale of common stock, net of offering
costs
9,500,000
95
213,762
—
213,857
Dividends on preferred stock
—
—
(4,457
)
—
(4,457
)
Accretion on preferred stock
—
—
(771
)
—
(771
)
Net income
—
—
—
81,346
81,346
Balance as of September 30,
2018
91,619,733
$916
$2,132,253
($1,411,827
)
$721,342
Nine Months Ended September
30, 2019 and 2018
Common Stock
Additional Paid-in
Capital
Accumulated Deficit
Total Shareholders’
Equity
Shares
Amount
Balance as of December 31, 2018
91,627,738
$916
$2,131,535
($1,151,547
)
$980,904
Stock-based compensation expense
—
—
16,540
—
16,540
Issuance of common stock upon grants of
restricted stock awards and vestings of restricted stock units and
performance shares
982,931
10
(10
)
—
—
Dividends on preferred stock
—
—
(13,286
)
—
(13,286
)
Accretion on preferred stock
—
—
(2,503
)
—
(2,503
)
Net income
—
—
—
367,149
367,149
Balance as of September 30,
2019
92,610,669
$926
$2,132,276
($784,398
)
$1,348,804
Balance as of December 31, 2017
81,454,621
$815
$1,926,056
($1,555,974
)
$370,897
Stock-based compensation expense
—
—
15,701
—
15,701
Issuance of common stock upon grants of
restricted stock awards and vestings of restricted stock units and
performance shares
665,112
6
(75
)
—
(69
)
Sale of common stock, net of offering
costs
9,500,000
95
213,762
—
213,857
Dividends on preferred stock
—
—
(13,794
)
—
(13,794
)
Accretion on preferred stock
—
—
(2,264
)
—
(2,264
)
Loss on redemption of preferred stock
—
—
(7,133
)
—
(7,133
)
Net income
—
—
—
144,147
144,147
Balance as of September 30,
2018
91,619,733
$916
$2,132,253
($1,411,827
)
$721,342
CARRIZO OIL & GAS,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Cash Flows From Operating
Activities
Net income
$108,301
$81,346
$367,149
$144,147
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and
amortization
82,195
80,108
238,283
217,005
(Gain) loss on derivatives, net
(31,554
)
55,388
31,281
152,698
Cash paid for commodity derivative
settlements, net
(1,779
)
(26,262
)
(8,939
)
(64,710
)
Loss on extinguishment of debt
—
—
—
8,676
Stock-based compensation expense, net
3,723
3,062
11,692
13,786
Deferred income tax (benefit) expense
5,718
534
(171,803
)
1,063
Non-cash interest expense, net
679
616
1,950
1,878
Other, net
1,426
125
3,505
4,100
Changes in components of working capital
and other assets and liabilities-
Accounts receivable
392
(15,200
)
(7,432
)
(12,763
)
Accounts payable
5,792
6,985
(752
)
10,863
Accrued liabilities
3,577
3,547
16,310
(9,336
)
Other assets and liabilities, net
(2,219
)
(829
)
(3,197
)
(2,115
)
Net cash provided by operating
activities
176,251
189,420
478,047
465,292
Cash Flows From Investing
Activities
Capital expenditures
(194,826
)
(231,820
)
(557,304
)
(662,459
)
Acquisitions of oil and gas properties
—
(21,500
)
8,222
(21,500
)
Proceeds from divestitures of oil and gas
properties
317
31,904
6,351
377,693
Other, net
(246
)
(1,591
)
(284
)
(2,687
)
Net cash used in investing activities
(194,755
)
(223,007
)
(543,015
)
(308,953
)
Cash Flows From Financing
Activities
Redemptions of senior notes
—
—
—
(330,435
)
Redemption of preferred stock
—
—
—
(50,030
)
Borrowings under credit agreement
381,890
1,288,352
1,280,780
2,415,208
Repayments of borrowings under credit
agreement
(358,406
)
(1,463,515
)
(1,160,399
)
(2,396,671
)
Payments of credit facility amendment
fees
—
—
(613
)
(627
)
Sale of common stock, net of offering
costs
—
213,857
—
213,857
Payments of dividends on preferred
stock
(4,474
)
(4,457
)
(13,286
)
(13,794
)
Cash paid for settlements of contingent
consideration arrangements, net
—
—
(40,000
)
—
Other, net
(508
)
(334
)
(1,516
)
(972
)
Net cash provided by (used in) financing
activities
18,502
33,903
64,966
(163,464
)
Net Increase (Decrease) in Cash and
Cash Equivalents
(2
)
316
(2
)
(7,125
)
Cash and Cash Equivalents, Beginning of
Period
2,282
2,099
2,282
9,540
Cash and Cash Equivalents, End of
Period
$2,280
$2,415
$2,280
$2,415
CARRIZO OIL & GAS, INC. NON-GAAP
FINANCIAL MEASURES (Unaudited)
Reconciliation of Net Income Attributable to Common
Shareholders (GAAP) to Adjusted Net Income Attributable to Common
Shareholders (Non-GAAP)
Adjusted net income attributable to common shareholders is a
non-GAAP financial measure which excludes certain items that are
included in net income attributable to common shareholders, the
most directly comparable GAAP financial measure. Items excluded are
those which the Company believes affect the comparability of
operating results and are typically excluded from published
estimates by the investment community, including items whose timing
and/or amount cannot be reasonably estimated or are
non-recurring.
Adjusted net income attributable to common shareholders is
presented because management believes it provides useful additional
information to investors for analysis of the Company’s fundamental
business on a recurring basis. In addition, management believes
that adjusted net income attributable to common shareholders is
widely used by professional research analysts and others in the
valuation, comparison, and investment recommendations of companies
in the oil and gas exploration and production industry.
Adjusted net income attributable to common shareholders should
not be considered in isolation or as a substitute for net income
attributable to common shareholders or any other measure of a
company’s financial performance or profitability presented in
accordance with GAAP. A reconciliation of the differences between
net income attributable to common shareholders and adjusted net
income attributable to common shareholders is presented below.
Because adjusted net income attributable to common shareholders
excludes some, but not all, items that affect net income
attributable to common shareholders and may vary among companies,
our calculation of adjusted net income attributable to common
shareholders may not be comparable to similarly titled measures of
other companies.
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands, except per
share amounts)
Net Income Attributable to Common
Shareholders (GAAP)
$102,958
$76,118
$351,360
$120,956
Loss on redemption of preferred stock
—
—
—
7,133
Income tax expense (benefit)
5,977
880
(171,119
)
1,682
(Gain) loss on derivatives, net
(31,554
)
55,388
31,281
152,698
Cash paid for commodity derivative
settlements, net
(1,779
)
(26,262
)
(8,939
)
(64,710
)
Non-cash general and administrative,
net
3,723
3,183
11,692
13,907
Loss on extinguishment of debt
—
—
—
8,676
Non-recurring and other (income) expense,
net
2,177
(1,091
)
7,456
4,366
Adjusted income before income taxes
81,502
108,216
221,731
244,708
Adjusted income tax expense (1)
(17,816
)
(24,132
)
(48,470
)
(54,570
)
Adjusted Net Income Attributable to
Common Shareholders (Non-GAAP)
$63,686
$84,084
$173,261
$190,138
Net Income Attributable to Common
Shareholders Per Diluted Common Share (GAAP)
$1.11
$0.85
$3.79
$1.42
Loss on redemption of preferred stock
—
—
—
0.08
Income tax expense (benefit)
0.07
0.01
(1.85
)
0.02
(Gain) loss on derivatives, net
(0.34
)
0.62
0.34
1.79
Cash paid for commodity derivative
settlements, net
(0.02
)
(0.29
)
(0.10
)
(0.76
)
Non-cash general and administrative,
net
0.04
0.04
0.13
0.16
Loss on extinguishment of debt
—
—
—
0.10
Non-recurring and other (income) expense,
net
0.02
(0.01
)
0.08
0.06
Adjusted income before income taxes
0.88
1.22
2.39
2.87
Adjusted income tax expense
(0.19
)
(0.28
)
(0.52
)
(0.64
)
Adjusted Net Income Attributable to
Common Shareholders Per Diluted Common Share (Non-GAAP)
$0.69
$0.94
$1.87
$2.23
Diluted Weighted Average Shares
Outstanding
92,762
89,039
92,625
85,221
__________
(1)
For the three and nine months ended
September 30, 2019, adjusted income tax expense was calculated
using a rate of 21.9%, which approximates the Company’s statutory
tax rate adjusted for ordinary permanent differences. For the three
and nine months ended September 30, 2018, adjusted income tax
expense was calculated using a rate of 22.3%, which approximates
the Company’s statutory rate adjusted for ordinary permanent
differences.
CARRIZO OIL & GAS, INC. NON-GAAP
FINANCIAL MEASURES (Unaudited)
Reconciliation of Net Income Attributable to Common
Shareholders (GAAP) to Adjusted EBITDA (Non-GAAP) to Net Cash
Provided by Operating Activities (GAAP)
Adjusted EBITDA is a non-GAAP financial measure which excludes
certain items that are included in net income attributable to
common shareholders, the most directly comparable GAAP financial
measure. Items excluded are interest, income taxes, depreciation,
depletion and amortization, impairments, dividends and accretion on
preferred stock and items that the Company believes affect the
comparability of operating results such as items whose timing
and/or amount cannot be reasonably estimated or are
non-recurring.
Adjusted EBITDA is presented because management believes it
provides useful additional information to investors and analysts,
for analysis of the Company’s financial and operating performance
on a recurring basis and the Company’s ability to internally
generate funds for exploration and development, and to service
debt. In addition, management believes that adjusted EBITDA is
widely used by professional research analysts and others in the
valuation, comparison, and investment recommendations of companies
in the oil and gas exploration and production industry.
Adjusted EBITDA should not be considered in isolation or as a
substitute for net income attributable to common shareholders, net
cash provided by operating activities, or any other measure of a
company’s profitability or liquidity presented in accordance with
GAAP. A reconciliation of net income attributable to common
shareholders to adjusted EBITDA to net cash provided by operating
activities is presented below. Because adjusted EBITDA excludes
some, but not all, items that affect net income attributable to
common shareholders, our calculations of adjusted EBITDA may not be
comparable to similarly titled measures of other companies.
Reconciliation of Net Cash Provided by Operating Activities
(GAAP) to Discretionary Cash Flows (Non-GAAP)
Discretionary cash flows are a non-GAAP financial measure which
excludes certain items that are included in net cash provided by
operating activities, the most directly comparable GAAP financial
measure. Items excluded are changes in the components of working
capital and other items that the Company believes affect the
comparability of operating cash flows such as items that are
non-recurring.
Discretionary cash flows are presented because management
believes it provides useful additional information to investors for
analysis of the Company’s ability to generate cash to fund
exploration and development, and to service debt. In addition,
management believes that discretionary cash flows is widely used by
professional research analysts and others in the valuation,
comparison, and investment recommendations of companies in the oil
and gas exploration and production industry.
Discretionary cash flows should not be considered in isolation
or as a substitute for net cash provided by operating activities or
any other measure of a company’s cash flows or liquidity presented
in accordance with GAAP. A reconciliation of net cash provided by
operating activities to discretionary cash flows is presented
below. Because discretionary cash flows excludes some, but not all,
items that affect net cash provided by operating activities and may
vary among companies, our calculation of discretionary cash flows
may not be comparable to similarly titled measures of other
companies.
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
(In thousands, except per Boe
amounts)
Net Income Attributable to Common
Shareholders (GAAP)
$102,958
$76,118
$351,360
$120,956
Dividends on preferred stock
4,474
4,457
13,286
13,794
Accretion on preferred stock
869
771
2,503
2,264
Loss on redemption of preferred stock
—
—
—
7,133
Income tax expense (benefit)
5,977
880
(171,119
)
1,682
Depreciation, depletion and
amortization
82,195
80,108
238,283
217,005
Interest expense, net
17,721
15,406
52,196
46,522
(Gain) loss on derivatives, net
(31,554
)
55,388
31,281
152,698
Cash paid for commodity derivative
settlements, net
(1,779
)
(26,262
)
(8,939
)
(64,710
)
Non-cash general and administrative,
net
3,723
3,183
11,692
13,907
Loss on extinguishment of debt
—
—
—
8,676
Non-recurring and other (income) expense,
net
2,177
(1,091
)
7,456
4,366
Adjusted EBITDA (Non-GAAP)
$186,761
$208,958
$527,999
$524,293
Cash interest expense, net
(17,042
)
(14,791
)
(50,246
)
(44,644
)
Dividends on preferred stock
(4,474
)
(4,457
)
(13,286
)
(13,794
)
Other cash and non-cash adjustments,
net
(167
)
(34
)
(3,015
)
922
Discretionary Cash Flows
(Non-GAAP)
$165,078
$189,676
$461,452
$466,777
Changes in components of working capital
and other
11,173
(256
)
16,595
(1,485
)
Net Cash Provided By Operating
Activities (GAAP)
$176,251
$189,420
$478,047
$465,292
Adjusted EBITDA (Non-GAAP)
$186,761
$208,958
$527,999
$524,293
Total barrels of oil equivalent
6,437
5,946
17,988
15,753
Adjusted EBITDA Margin ($ per Boe)
(Non-GAAP)
$29.01
$35.14
$29.35
$33.28
CARRIZO OIL & GAS,
INC.
PRODUCTION VOLUMES AND
REALIZED PRICES
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Total production volumes -
Crude oil (MBbls)
4,194
3,755
11,901
10,272
NGLs (MBbls)
1,068
1,055
2,909
2,648
Natural gas (MMcf)
7,050
6,815
19,065
16,996
Total barrels of oil equivalent
(MBoe)
6,437
5,946
17,988
15,753
Daily production volumes by product
-
Crude oil (Bbls/d)
45,587
40,813
43,594
37,628
NGLs (Bbls/d)
11,612
11,469
10,654
9,699
Natural gas (Mcf/d)
76,630
74,072
69,836
62,258
Total barrels of oil equivalent
(Boe/d)
69,971
64,627
65,887
57,703
Daily production volumes by region
(Boe/d) -
Eagle Ford
42,946
39,024
41,295
37,241
Delaware Basin
27,025
25,577
24,592
20,236
Other
—
26
—
226
Total barrels of oil equivalent
(Boe/d)
69,971
64,627
65,887
57,703
Realized prices -
Crude oil ($ per Bbl)
$56.31
$67.78
$57.48
$66.13
NGLs ($ per Bbl)
$12.01
$32.04
$15.06
$27.18
Natural gas ($ per Mcf)
$1.14
$2.21
$1.42
$2.44
CARRIZO OIL & GAS,
INC.
COMMODITY DERIVATIVE CONTRACTS
- AS OF OCTOBER 31, 2019
(Unaudited)
Fixed
Fixed
Sub-Floor
Floor
Ceiling
Price
Volumes
Price
Price
Price
Price
Differential
(Bbls
($ per
($ per
($ per
($ per
($ per
Commodity
Period
Type of Contract
Index
per day)
Bbl)
Bbl)
Bbl)
Bbl)
Bbl)
Crude oil
4Q19
Price Swaps
NYMEX WTI
5,000
$64.80
—
—
—
—
Crude oil
4Q19
Three-Way Collars
NYMEX WTI
27,000
—
$41.67
$50.96
$74.23
—
Crude oil
4Q19
Basis Swaps
WTI Midland-WTI Cushing
9,200
—
—
—
—
($4.64
)
Crude oil
4Q19
Sold Call Options
NYMEX WTI
3,875
—
—
—
$81.07
—
Crude oil
2020
Price Swaps
NYMEX WTI
3,000
$55.06
—
—
—
—
Crude oil
2020
Three-Way Collars
NYMEX WTI
22,000
—
$45.34
$55.34
$65.16
—
Crude oil
2020
Basis Swaps
WTI Midland-WTI Cushing
10,658
—
—
—
—
($1.68
)
Crude oil
2020
Sold Call Options
NYMEX WTI
4,575
—
—
—
$75.98
—
Crude oil
2021
Basis Swaps
WTI Midland-WTI Cushing
8,000
—
—
—
—
$0.18
Crude oil
2021
Sold Call Options
NYMEX WTI
8,220
—
—
—
$64.00
—
Fixed
Fixed
Sub-Floor
Floor
Ceiling
Price
Volumes
Price
Price
Price
Price
Differential
(MMBtu
($ per
($ per
($ per
($ per
($ per
Commodity
Period
Type of Contract
Index
per day)
MMBtu)
MMBtu)
MMBtu)
MMBtu)
MMBtu)
Natural gas
4Q19
Basis Swaps
Waha-NYMEX Henry Hub
42,500
—
—
—
—
($1.30
)
Natural gas
4Q19
Sold Call Options
NYMEX Henry Hub
33,000
—
—
—
$3.25
—
Natural gas
2020
Basis Swaps
Waha-NYMEX Henry Hub
36,005
—
—
—
—
($0.93
)
Natural gas
2020
Sold Call Options
NYMEX Henry Hub
33,000
—
—
—
$3.50
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191104005888/en/
Carrizo Oil & Gas, Inc. Jeffrey P. Hayden, CFA VP
- Financial Planning and Analysis (713) 328-1044
or Kim Pinyopusarerk Manager - Investor
Relations (713) 358-6430
Carrizo Oil and Gas (NASDAQ:CRZO)
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Carrizo Oil and Gas (NASDAQ:CRZO)
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