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Carrizo Oil & Gas announced better than expected second quarter earnings before the market open Tuesday. However stock fell over 8% on concerns over Delaware and other Texas basin bottlenecks.


Carrizo Oil and Gas (NASDAQ: $CRZO) Beat Earnings Before Open Tuesday

$0.79 Beat $00.67 EPS and $264 million beating $236.80 million forecast in revenue 

Earnings

Carrizo Oil & Gas Inc. reported second-quarter profit of $35.3 million oe EPS of  36 cents. Earnings, adjusted for non-recurring costs, came to 79 cents per share beating expectations for earnings  of  67 cents per share. Revenue of $264 million beating forecastsof $236.8 million.

Carrizo Oil and Gas NASDAQ: $CRZO

Market Reaction  > Close $25.22 −$2.28 (-8.29%)

Highlights

  • Total production of 57,077 Boe/d, 12% above the second quarter of 2017 and above the high-end of the Company’s guidance range Crude oil production of 37,860 Bbls/d, 13% above the second quarter of 2017 and 11% above the first quarter of 2018
  • Net income attributable to common shareholders of $30.1 million, or $0.36 per diluted share, and Net cash provided by operating activities of $137.1 million
  • Adjusted net income attributable to common shareholders of $66.6 million, or $0.79 per diluted share, and Adjusted EBITDA of $178.9 million
  • Multiple Delaware Basin Wolfcamp A wells that achieved crude oil production rates of more than 1,000 Bbls/d on restricted chokes
  • Signed a deal with a major crude purchaser that provides 100% flow assurance for Delaware Basin crude oil production through mid-2020 with no minimum volume commitments
  • Shifting capital to the Eagle Ford Shale from the Delaware Basin in order to capitalize on the superior margins and rates of return being generated

S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented “While our new plan should result in higher EBITDA during 2018, the bigger benefit should be realized in 2019. Our new plan allows us to build our inventory of drilled, uncompleted wells in the Eagle Ford Shale up to more than 40 by year-end, setting us up for strong growth from the play in 2019. We currently expect the Eagle Ford Shale to be the primary driver of our production growth next year. And with the higher margins that are expected to be generated by Eagle Ford Shale production based on current strip prices, we believe our new plan should result in more than $100 million of incremental EBITDA through the end of 2019. This should accelerate our leverage reduction as well as enhance our ROCE."

Carrizo Eagle Ford Q2Carrizo Dellaware Q2

Outlook

  • High-end of guidance range maintained despite the impact of a non-operated divestiture in the Delaware Basin and expected acceleration of Brown Trust payout (650-700 Boe/d combined negative impact for FY 2018)
  • Exposure of Eagle Ford production to premium LLS market expected to result in continued strong oil price realizations Lowering FY unit LOE guidance to $7.15-$7.50 from $7.50-$8.25
  • Capex guidance range increased from $750-$800 million to account for DUC build in the Eagle Ford Shale to prepare for 2019 activity

Source: Carrizo

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