Carrizo Oil & Gas Announces Fourth Quarter and Year-End Results and Provides 2018 Guidance

HOUSTON–(BUSINESS WIRE)–Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today announced the
Company’s financial results for the fourth quarter and full-year 2017
and provided an operational update, which includes the following
highlights:

• Total production of 62,417 Boe/d, 39% above the fourth quarter of
  2016 and above the high-end of the Company's guidance range
• Crude oil production of 40,206 Bbls/d, 40% above the fourth quarter
  of 2016
• Net loss attributable to common shareholders of $23.4 million, or
  $0.29 per diluted share, and Net cash provided by operating activities
  of $142.4 million
• Adjusted net income attributable to common shareholders of $47.9
  million, or $0.58 per diluted share, and Adjusted EBITDA of $184.1
  million
• Adjusted EBITDA margin of $32/Boe, an increase of 23% versus the
  prior quarter
• Proved reserves of 261.7 MMBoe, a 31% increase over year-end 2016
• 564% reserve replacement from all sources at a finding,
  development, and acquisition (FD&A) cost of $13.47 per Boe
• 2018 capital expenditure guidance of $750-$800 million, which
  reflects an increase in oilfield service costs
• 2018 production guidance of 58,500-60,100 Boe/d, equivalent to pro
  forma annual growth of more than 30%

Carrizo reported fourth quarter of 2017 net loss attributable to common
shareholders of $23.4 million, or $0.29 per basic and diluted share,
compared to a net loss attributable to common shareholders of $0.8
million, or $0.01 per basic and diluted share in the fourth quarter of
2016. The net loss attributable to common shareholders for the fourth
quarter of 2017 and the fourth quarter of 2016 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 included below, for the fourth quarter of 2017 was $47.9 million,
or $0.58 per diluted share, compared to $28.4 million, or $0.44 per
diluted share, in the fourth quarter of 2016.

For the fourth quarter of 2017, Adjusted EBITDA was $184.1 million, an
increase of 56% from the prior-year quarter primarily due to higher
production volumes and commodity prices. This represents the highest
level of quarterly Adjusted EBITDA that the Company has reported.
Adjusted EBITDA and the reconciliation to net income (loss) attributable
to common shareholders are presented in the non-GAAP reconciliation
tables included below.

Production volumes during the fourth quarter of 2017 were 5,742 MBoe, or
62,417 Boe/d, an increase of 39% versus the fourth quarter of 2016. The
year-over-year production growth was driven by drilling activity in the
Eagle Ford Shale and Delaware Basin plus the addition of production from
the Sanchez property acquisition in late 2016 and the ExL property
acquisition during the third quarter, partially offset by the
divestiture of the Company's Appalachian operations during the quarter.
Crude oil production during the fourth quarter of 2017 averaged 40,206
Bbls/d, an increase of 40% versus the fourth quarter of 2016; natural
gas and NGL production were 78,182 Mcf/d and 9,181 Bbls/d, respectively,
during the fourth quarter of 2017. Fourth quarter of 2017 production
exceeded the high end of the Company's guidance range of 60,933-62,200
Boe/d.

Drilling, completion, and infrastructure capital expenditures for the
fourth quarter of 2017 were $210.4 million. Approximately 49% of the
fourth quarter drilling, completion, and infrastructure spending was in
the Delaware Basin, while approximately 48% was in the Eagle Ford Shale.
Land and seismic expenditures during the quarter were $4.5 million, and
were primarily focused in the Delaware Basin.

2017 Proved Reserves

The Company’s proved reserves as of December 31, 2017 were 261.7 MMBoe,
a 31% increase over year-end 2016, including 167.4 MMBbls of crude oil,
a 30% increase over year-end 2016. This represents the highest level of
crude oil reserves Carrizo has reported. The Company’s PV-10 value was
$2.6 billion as of December 31, 2017.

The table below summarizes the Company’s year-end 2017 proved reserves
and PV-10 by region as determined by the Company’s independent reservoir
engineers, Ryder Scott Company, L.P., in accordance with Securities and
Exchange Commission guidelines, using pricing for the twelve months
ended December 31, 2017 based on the West Texas Intermediate benchmark
crude oil price of $51.34/Bbl and the Henry Hub benchmark natural gas
price of $2.98/MMBtu, before adjustment for differentials.

The table below summarizes the changes in the Company’s proved reserves
during 2017.

The following table summarizes the Company’s costs incurred in oil and
gas property acquisition, exploration, and development activities for
the year ended December 31, 2017.

(1) Total costs incurred includes capitalized general and administrative
expense and asset retirement obligations and excludes capitalized
interest.

2017 highlights include:

• Total reserve replacement was 564% at an all-sources FD&A cost of
  $13.47 per Boe
• Drill-bit reserve replacement was 330% at an F&D cost of $10.23 per Boe
• Total proved reserves increased to 261.7 MMBoe, a 31% increase versus
  year-end 2016
• Eagle Ford reserves increased to 167.0 MMBoe, a 3% increase versus
  year-end 2016
• Delaware Basin reserves increased to 90.9 MMBoe, a 677% increase
  versus year-end 2016
• Crude oil represents 64% of total proved reserves and 83% of the total
  PV-10 value at December 31, 2017
• Proved developed reserves increased to 109.0 MMBoe at year-end 2017, a
  19% increase versus year-end 2016

2018 Capital Program and Guidance

For 2018, Carrizo is providing initial drilling, completion, and
infrastructure capital expenditure guidance of $750-$800 million, which
incorporates an assumed double-digit increase in oilfield service costs.
In recent months, Carrizo has been negotiating with oilfield service
companies, and has currently fixed pricing on approximately 50% of its
services for the majority of 2018. While the Company expects to
partially offset some of the service cost increase with future
efficiency gains, it has not factored these potential savings into its
2018 capital expenditure guidance. Carrizo currently plans to operate
two rigs in the Eagle Ford Shale and three to four rigs in the Delaware
Basin during 2018, as well as two to three completion crews during the
year. Based on this level of activity, the Company expects to drill
93-103 gross (82-91 net) operated wells and complete 113-123 gross
(96-105 net) operated wells during the year.

In order to continue driving operational efficiencies, Carrizo is
seeking to complete "multipads" whenever possible in the Eagle Ford
Shale. This incorporates using multiple completion crews simultaneously
to fill in undeveloped areas. During the first quarter of 2018, Carrizo
is completing a 16-well multipad in the Eagle Ford Shale utilizing three
completion crews. In order to facilitate this, the Company has
temporarily moved its Delaware Basin completion crew to the Eagle Ford
Shale. While this development strategy should result in enhanced project
returns, it is also likely to result in more uneven quarterly production
growth.

In the Delaware Basin, Carrizo plans to allocate approximately 75%-80%
of its development activity to its Phantom area, where it continues to
be pleased with the well results it has seen. The Company expects to
drive operational efficiencies in this area during 2018 by shifting to
pad drilling. The remainder of the 2018 development activity is expected
to be on the northern portion of the Company's legacy acreage, where
offset operators have recently drilled strong wells.

The 2018 program also includes approximately $90 million for
infrastructure expenditures. One of the key goals of the Company's 2018
infrastructure program is expanding its water disposal capacity in the
Delaware Basin in order to facilitate the strong growth it expects from
the region. The Company plans to do this via a combination of
Carrizo-owned wells, access to third-party disposal systems, and
eventually recycling. As a result of the 2018 activity, Carrizo
currently expects more than a three-fold increase in its Phantom area
water disposal capacity by year-end 2018.

Based on this activity plan, Carrizo is providing initial 2018
production guidance of 58,500-60,100 Boe/d. Crude oil production is
expected to account for 65%-67% of the Company's production for the
year, while total liquids are expected to account for 80%-84%. This
equates to annual production growth of approximately 10% using the
midpoint of the range. Pro forma for the Company's acquisition and
divestiture activity, the 2018 guidance equates to year-over-year
production growth of more than 30%, with crude oil production growth of
more than 20%.

For the first quarter of the year, Carrizo expects production to be
48,600-49,800 Boe/d; crude oil is expected to account for 65%-67% of
production, while total liquids are expected to account for 80%-84%.
First quarter production was negatively impacted by prolonged freezing
temperatures in January. Shut-in production and operational delays
during the month are expected to result in an impact of 500-600 Boe/d
for the first quarter. First quarter production is also being impacted
by the Company's current multipad development in the Eagle Ford Shale,
as these wells are not expected to have a material impact on production
until the second quarter. As a result, Carrizo expects to see a
significant increase in production between the first and second quarters
of the year.

A full summary of Carrizo’s guidance is provided in the attached tables.

S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented on the
results, “2017 was a transformational year for Carrizo. We highgraded
our portfolio by announcing the divestiture of non-core assets in the DJ
Basin and Appalachia, as well as our downdip assets in the Eagle Ford
Shale, and acquiring a core acreage position in the Delaware Basin. This
leaves us with a deep inventory of core locations in two of the
highest-return basins in North America, the Eagle Ford Shale and
Delaware Basin. We believe these assets are highly complementary. The
Eagle Ford Shale is currently free cash flow positive at the field
level, and we are able to use this excess cash flow to help fund the
strong growth we expect to deliver from the Delaware Basin. At the
corporate level, we remain committed to achieving cash flow neutrality
and expect to be able to deliver this by the fourth quarter of 2018 at
an oil price of $55-$60/Bbl, while still generating strong production
growth.

“We remain pleased with the results we have seen from our Phantom area
acreage in the Delaware Basin. During the fourth quarter, we continued
to deliver strong results from both the Wolfcamp A and Wolfcamp B, with
multiple wells delivering peak three-stream 90-day rates in excess of
1,500 Boe/d. Our production from the area is currently constrained by
water takeaway capacity via pipeline, but we expect this to be remedied
by next quarter, and expect significant growth after that. While our
2018 development program is expected to remain focused on the Wolfcamp A
and B, we also plan to test the Wolfcamp C during the year.

“The fourth quarter was another excellent quarter for the Company.
Production increased by 13% and exceeded our guidance, price
realizations were stronger than expected as our Eagle Ford production
benefited from the LLS premium to WTI, and operating costs were in the
lower half of our expected range. As a result, our Adjusted EBITDA
margin expanded by more than 20% versus the prior quarter.

“During 2017, we once again delivered strong reserve growth. This was
led by the Delaware Basin, where proved reserves increased by more than
675% during the year, and now account for approximately 35% of our total
proved reserves, up from just 6% at year-end 2016. As a result, we were
able to increase our total proved reserves by more than 30% during the
year.”

Operational Update

In the Eagle Ford Shale, Carrizo drilled 20 gross (16 net) operated
wells during the fourth quarter and completed 14 gross (13 net) operated
wells. Production from the play was approximately 41,600 Boe/d, a 7%
increase versus the prior quarter. Crude oil production was more than
31,900 Bbls/d, accounting for approximately 77% of the Company's
production from the play. During the fourth quarter, Carrizo turned 21
net wells to sales in the Eagle Ford Shale, which had an average lateral
length of approximately 7,000 ft. The average peak 30-day rate from
these wells was approximately 700 Boe/d (88% oil, 94% liquids) on
restricted chokes. At the end of the quarter, Carrizo had 37 gross (31
net) operated Eagle Ford Shale wells in progress or waiting on
completion, equating to net crude oil production potential of more than
11,700 Bbls/d. The Company is currently operating two rigs in the Eagle
Ford Shale, and expects to drill 60-65 gross (56-61 net) operated wells
and complete 80-85 gross (71-76 net) operated wells in the play during
2018.

Subsequent to the sale of its Tier 1 assets in January, Carrizo sees
more than 700 net remaining locations in the Core of the Eagle Ford
Shale spaced at 330-500 ft., depending upon the geologic characteristics
of the specific project areas. An additional 100-150 net locations have
also been identified at tighter well spacing in areas the Company has
currently tested. While still profitable, the cash flow profile from
these wells is not consistent with Carrizo's free cash flow target and
as such, the Company does not currently plan on drilling additional
stagger-stack development wells in 2018 at forecasted commodity price
and oilfield service cost levels. The Company does plan to continue to
test wells spaced tighter than 330 ft. with stage spacing as short as
150 ft., as outlined below. Additionally, Carrizo has been successful in
its efforts to extend the average lateral length of its future wells.
While longer laterals are expected to enhance the returns generated by
the Company's Eagle Ford Shale position, they also result in an
approximate 5% reduction in the future well count.

As the Company’s number of producing wells continues to grow, and a
larger percentage of new wells are drilled in areas with significant
existing production, Carrizo has seen an increased impact from
parent-child relationships on the new wells immediately offsetting the
existing wells. This has also resulted in a higher ratio of existing
wells requiring shut-in during completion operations as well as longer
shut-in periods in some instances. In order to minimize these impacts,
the Company plans to move to a multipad development whenever possible in
the Eagle Ford Shale. This involves using multiple completion crews
simultaneously to complete a large number of wells on multiple
contiguous pads, thereby reducing future parent-child impacts. This
should lead to higher average EURs over time for the new wells and less
downtime for the parent wells. The Company's initial multipad is located
in its Brown Trust area. The multipad includes 16 wells on three pads,
with well spacing of 250-330 ft., and frac stage spacing of 150-180 ft.
Production from the multipad is expected to begin in late March, and
should reach gross oil rates of more than 10,000 Bbls/d once all of the
wells are online.

Carrizo has been testing multiple concepts in order to optimize its
completion design in the Eagle Ford Shale, including tighter stage
spacing, increased proppant, and amount and type of fluid. To date, the
data indicates that tighter stage spacing is resulting in improved
performance, while data on the other variables appears less conclusive.
As a result of the Company's completion optimization work, it has seen
more than a 10% improvement in the lateral-normalized performance of its
2017 wells relative to its 2016 wells. Carrizo has recently been testing
stage spacing as tight as 150 ft., with the tighter-stage-spaced wells
continuing to outperform nearby wells with wider stage spacing. In a
recent test in the Company's North LaSalle area, two pads completed with
150-180 ft. stage spacing are outperforming the area typecurve by
15%-20% after approximately 110 days.

In the Delaware Basin, Carrizo drilled 9 gross (7 net) operated wells
during the fourth quarter and completed 9 gross (7 net) operated wells.
Production from the play was more than 15,100 Boe/d for the quarter, up
more than 115% versus the prior quarter as a number of new wells were
brought online and the Company got the benefit of a full quarter of
production from the ExL acquisition. Crude oil production was
approximately 6,500 Bbls/d, accounting for approximately 43% of the
Company's production from the play. At the end of the quarter, Carrizo
had 6 gross (5 net) operated Delaware Basin wells in progress or waiting
on completion. The Company is currently operating four rigs in the
Delaware Basin, but plans to reduce this to three later in the year.
Carrizo expects to drill 33-38 gross (26-30 net) operated wells and
complete 33-38 gross (25-29 net) operated wells in the play during 2018.

In the Phantom area, Carrizo continued to focus on the Wolfcamp B in
order to further confirm its productivity across the acreage as well as
ensure all depths were held. To date, more than 75% of the wells the
Company has drilled since acquiring the asset have targeted the Wolfcamp
B. Carrizo has been very pleased with the results it has seen, as
production from the wells has met targeted levels, but with higher
flowing wellhead pressures than expected. This could lead to a shallower
decline than the Company is currently assuming in its Wolfcamp B
typecurve.

While the production from the Wolfcamp B wells has been very
encouraging, the wells have also produced at a higher initial
water-oil-ratio than Wolfcamp A wells, resulting in produced water
volumes temporarily exceeding the Company’s acquisition forecast. Delays
in forecasted upgrade projects to third-party disposal systems combined
with these higher volumes have resulted in the Company’s production
being temporarily constrained by the available water-takeaway
infrastructure. Carrizo has been working diligently to alleviate this
bottleneck by putting firm agreements in place with third-party
providers in addition to installing a company-owned water management
system; combined, this should allow Carrizo to double its water takeaway
capacity by the beginning of the second quarter and more than triple it
by year-end. While the infrastructure bottleneck has delayed the
Company's planned production ramp in the basin by a quarter, Carrizo
expects to have the infrastructure in place to support significant
production growth from the area during 2018.

Hedging Activity

Carrizo currently has hedges in place for approximately 75% of estimated
crude oil production for 2018 (based on the midpoint of guidance). For
the year, Carrizo currently has hedges covering 30,000 Bbls/d of crude
oil production, consisting of three-way collars covering 24,000 Bbls/d
of crude oil with an average floor price of $49.06/Bbl, ceiling price of
$60.14/Bbl, and sub-floor price of $39.38/Bbl, and swaps covering 6,000
Bbls/d at an average fixed price of $49.55/Bbl. For 2019, Carrizo
currently has three-way collars covering 12,000 Bbls/d of crude oil with
an average floor price of $48.40/Bbl, ceiling price of $60.29/Bbl, and
sub-floor price of $40.00/Bbl.

Carrizo has hedges in place for more than 50% of estimated NGL
production for 2018. For the year, Carrizo has swaps covering 2,200
Bbls/d of ethane, 1,500 Bbls/d of propane, 200 Bbls/d of butane, 600
Bbls/d of isobutane, and 600 Bbls/d of natural gasoline at average fixed
prices of $12.01/Bbl, $34.23/Bbl, $38.85/Bbl, $38.98/Bbl, and
$55.23/Bbl, respectively.

Carrizo also has hedges in place for approximately 35% of estimated
natural gas production for 2018. For March 2018-December 2018, the
Company has swaps covering 25,000 MMBtu/d of natural gas at an average
fixed price of $3.01/MMBtu. (Please refer to the attached tables for
details of the Company’s derivative contracts.)

Conference Call Details

The Company will hold a conference call to discuss 2017 fourth quarter
financial results on Tuesday, February 27, 2018 at 10:00 AM Central
Standard Time. To participate in the call, please dial (877) 256-3271
(U.S. & Canada) or +1 (212) 231-2939 (Intl.) ten minutes before the call
is scheduled to begin. A replay of the call will be available through
Tuesday, March 6, 2018 at 12:00 PM Central Standard Time at
(800) 633-8284 (U.S. & Canada) or +1 (402) 977-9140 (Intl.). The
reservation number for the replay is 21882319 for U.S., Canadian, and
International callers.

A simultaneous webcast of the call may be accessed over the internet by
visiting the Carrizo website at http://www.carrizo.com,
clicking on “Upcoming Events”, and then clicking on the “Fourth Quarter
2017 Earnings Call” link. To listen, please go to the website in time to
register and install any necessary software. The webcast will be
archived for replay on the Carrizo website for 7 days. A slide deck will
also be posted to the website to accompany the conference call.

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.

Statements in this release that are not historical facts, including
but not limited to those related to capital requirements, free cash flow
positive program, the ExL acquisition (including effects thereof),
dispositions, contingent payment amounts, monetization process matters
and results, capital expenditure, infrastructure program, guidance, rig
program, production, average well returns, the estimated production
results and financial performance, effects of transactions, targeted
ratios and other metrics, timing, levels of and potential production,
expectations regarding significant growth, expectations regarding higher
average EURs, downspacing, crude oil production potential and
growth, oil and gas prices, drilling and completion activities, drilling
inventory, including timing thereof, well costs, break-even prices,
production mix, development plans, growth, hedging activity, the
Company’s or management’s intentions, beliefs, expectations, hopes,
projections, assessment of risks, estimations, plans or predictions for
the future, results of the Company’s strategies and other statements
that are not historical facts are forward-looking statements that are
based on current expectations.

Contacts

Carrizo Oil & Gas, Inc.
Jeffrey P. Hayden, CFA
VP
– Investor Relations
(713) 328-1044
or
Kim
Pinyopusarerk
Manager – Investor Relations
(713)
358-6430

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