Carrizo Oil & Gas Inc. (NasdaqGS: CRZO) plans to spend about $75 million in oil and gas acquisitions in 2014, with most capital devoted to deals in the Eagle Ford and Utica shales.
Carrizo’s drilling and completion capital expenditures for the fourth quarter of 2013 were $124.1 million. About 68% of drilling and completion spending was in the Eagle Ford.
The company spent $90.7 million on land and seismic data, with the majority of the spending used to acquire Avista Capital LP's interest in a portion of the Utica.
On Oct. 31, Carrizo paid $73.2 million for about 5,900 net acres in the Utica, primarily in Guernsey and northern Noble Counties, Ohio. The acquisition increased Carrizo’s position in the play to roughly 21,700 net acres. The properties acquired were subject to Carrizo’s Utica joint venture with Avista.
For 2014, Carrizo's drilling and completion capital expenditure plan is unchanged at $650 million-$670 million. The company's 2014 land and seismic capital expenditure plan is also unchanged at $75 million.
Carrizo was sometimes in a bidding war in the Utica, and attempted to acquire more acreage unsuccessfully. The company was outbid on three recent deals to an unknown party. Management thinks Aubrey McClendon’s American Energy Partners LP might have been the winner, said David Tameron, Wells Fargo Securities LLC senior analyst, in a Jan. 28 report.
The company gave a positive reserves update, with year-end 2013 proved reserves of 101.5 million barrels of oil equivalent (MMBOE), an increase from 2012 of 60% after divestitures.
Fourth quarter production hit 24.8 MMBOE/d, in line with Wells Fargo and Wall Street. The company did not announce changes to first quarter 2014 of 24.1-25.5 MMBOE/d.
“Carrizo upped its 2014 crude growth estimate to 50% year-over-year from 40% in conjunction with their inaugural analyst day,” Tameron said.
S.P. “Chip” Johnson IV, Carrizo's president and CEO, said the company’s fourth quarter capped one of the best years in its history.
“For the quarter, we once again delivered crude oil production growth that exceeded our forecast despite challenging winter weather,” Johnson said. “This brought our full-year 2013 crude oil production growth to 48%.”
Carrizo Operations Update
2014 net well drilling plan
500 barrels condensate/d
The company began to shift from to oil from gas in 2010.
“I'm pleased to say that we've now completed the transition,” he said. “Crude oil now accounts for more than 60% of our proved reserves.”
The company also was able to increase its PV-10 by 44% in 2013, despite selling nearly 45% of its 2012 U.S. reserve base in the Barnett shale and other non-core divestitures.
"We are well positioned to deliver continued strong production growth,” Johnson said. “We have a deep inventory of oily drilling locations in the Eagle Ford shale, Utica shale, and Niobrara formation and the balance sheet to develop them.”
At year-end the company had more than $150 million cash on hand.