UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):  May 4, 2016
 
CARRIZO OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Texas
 
000-29187-87
 
76-0415919
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
 
 
500 Dallas Street
Suite 2300
Houston, Texas
 
77002
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code: (713) 328-1000
Not applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 1.01. Entry into a Material Definitive Agreement.
On May 3, 2016, Carrizo Oil & Gas, Inc. (the “Company”) entered into the Eighth Amendment to its senior secured revolving credit facility (the “Amendment”) among the Company, Wells Fargo Bank, National Association, as administrative agent, and the guarantors and lenders party thereto to, among other things (i) replace the Total Debt to EBITDA ratio covenant with a Total Secured Debt to EBITDA ratio covenant that requires such ratio not to exceed 2.00 to 1.00, (ii) add a covenant requiring a minimum EBITDA to Interest Expense ratio of at least 2.50 to 1.00, (iii) reduce the Borrowing Base under the credit facility from $685.0 million to $600.0 million until the next redetermination thereof, (iv) increase the required mortgage coverage on the total value of the oil and gas properties included in the Company’s most recent reserve report from 80% to 90%, (v) require that the Company’s deposit accounts and securities accounts (subject to certain exclusions) become subject to control agreements, (vi) limit the amount of additional senior notes that can be issued by the Company to $400.0 million, (vii) restrict the Company from making borrowings under the credit facility if the Company has or, after giving effect to the borrowing, will have a Consolidated Cash Balance in excess of $50.0 million, (viii) require mandatory prepayment of borrowings to the extent the Consolidated Cash Balance exceeds $50.0 million if either (a) the Company’s ratio of Total Debt to EBITDA exceeds 3.50 to 1.00 or (b) the availability under the credit facility is equal to or less than 20% of the then effective Borrowing Base, (ix) increase the margin on all loans by 0.50% and (x) increase the commitment fee from 0.375% to 0.50% when utilization of lender commitments is less than 50%.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K. Each of the capitalized terms used but not defined in this Item 1.01 shall have the meaning given to such terms in the credit agreement governing the Company’s revolving credit facility.
Item 2.02. Results of Operations and Financial Condition.
The press release dated May 4, 2016 concerning financial results of the Company for the quarter ended March 31, 2016 , furnished as Exhibit 99.1 to this report, is incorporated by reference herein.
The press release contains measures which may be deemed “non-GAAP financial measures” as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended. We present Adjusted EBITDA, as defined in the press release, on a total and a per share basis for the quarters ended March 31, 2016 and 2015 . We believe Adjusted EBITDA, as defined, may provide investors and analysts useful information relative to the valuation, comparison, rating and investment recommendations of companies in the oil and gas industry. Adjusted EBITDA, as defined, is a financial measure commonly used in the oil and gas industry and should not be considered in isolation or as a substitute for income (loss) from continuing operations or any other measure of a company's financial performance or profitability presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Because Adjusted EBITDA, as defined, excludes some, but not all, items that affect income (loss) from continuing operations, the Adjusted EBITDA, as defined, presented in the press release may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, loss from continuing operations, and information reconciling the GAAP and non-GAAP financial measures were included in the press release.
We present Adjusted Net Income, as defined in the press release, on a total and a per share basis for the quarters ended March 31, 2016 and 2015 . We believe that this information will assist investors and analysts to compare results between periods and identify operating trends that would otherwise be masked by the inclusion of certain items typically excluded from published estimates by the investment community. Adjusted Net Income should not be considered in isolation or as a substitute for income (loss) from continuing operations or any other measure of a company's financial performance or profitability presented in accordance with GAAP. Because Adjusted Net Income excludes some, but not all, items that affect income (loss) from continuing operations, the Adjusted Net Income presented in the press release may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, loss from continuing operations, and information reconciling the GAAP and non-GAAP measures were included in the press release.
We present adjusted total revenues, which includes the net cash from derivative settlements for the quarters ended March 31, 2016 and 2015 . We believe that this information will assist investors and analysts to understand our actual results, which are impacted by the net cash from derivative settlements. The most comparable GAAP financial measure, total revenues, and information reconciling the GAAP and non-GAAP measures were included in the press release.
We present discretionary cash flows from continuing operations for the quarters ended March 31, 2016 and 2015 . We believe that this information may provide additional information about our ability to meet our future requirements for debt service, capital expenditures and working capital. Discretionary cash flows from continuing operations should not be considered in isolation or as a substitute for net cash provided by operating activities from continuing operations or any other cash flow or liquidity measure under GAAP. Our computation of discretionary cash flows from continuing operations may differ significantly from the computation used by other companies to compute similar measures. As a result, our discretionary

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cash flows from continuing operations may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, net cash provided by operating activities from continuing operations, and information reconciling the GAAP and non-GAAP measures were included in the press release.
None of the information furnished in this Item 2.02 and the accompanying exhibit will be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor will it be incorporated by reference into any registration statement filed by the Company under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this Item 2.02 and the accompanying exhibit is not intended to, and does not, constitute a determination or admission by the Company, that the information in this Item 2.02 and the accompanying exhibit is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Company.

Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
Number
  
Description
 
 
 
10.1
 
Eighth Amendment to Credit Agreement, dated as of May 3, 2016, among Carrizo Oil & Gas, Inc., as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lender parties thereto.
99.1
  
Press Release dated May 4, 2016 announcing financial results for the first quarter 2016.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
                            
Carrizo Oil & Gas, Inc.
 
 
By:
/s/ David L. Pitts
Name:
David L. Pitts
Title:
Vice President and Chief Financial Officer
Date:  May 4, 2016













































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EXHIBIT INDEX
10.1
Eighth Amendment to Credit Agreement, dated as of May 3, 2016, among Carrizo Oil & Gas, Inc., as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lender parties thereto.
99.1    Press Release dated May 4, 2016 announcing financial results for the first quarter 2016 .



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Exhibit 10.1


EIGHTH AMENDMENT
TO
CREDIT AGREEMENT
DATED AS OF MAY 3, 2016
AMONG
CARRIZO OIL & GAS, INC.,
AS BORROWER,
THE GUARANTORS PARTY HERETO,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS ADMINISTRATIVE AGENT,
AND
THE LENDERS PARTY HERETO

WELLS FARGO SECURITIES, LLC,
AS SOLE LEAD ARRANGER AND BOOKRUNNER



        


EIGHTH AMENDMENT TO CREDIT AGREEMENT
THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (this “ Eighth Amendment ”) dated as of May 3, 2016, among CARRIZO OIL & GAS, INC., a Texas corporation (the “ Borrower ”); each of the undersigned guarantors (the “ Guarantors ”); the Lenders listed on the signature pages hereto; and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”).
R E C I T A L S
WHEREAS, the Borrower, the Administrative Agent, the Lenders and the other Agents party thereto are parties to that certain Credit Agreement dated as of January 27, 2011 (as amended by that certain First Amendment dated as of March 26, 2012, that certain Resignation, Consent and Appointment Agreement dated as of April 20, 2012, that certain Second Amendment dated as of September 4, 2012, that certain Third Amendment dated as of September 27, 2012, that certain Fourth Amendment dated as of October 9, 2013, that certain Fifth Amendment dated as of October 7, 2014, that certain Sixth Amendment dated as of May 5, 2015, that certain Seventh Amendment dated as of October 30, 2015, and as otherwise amended, supplemented or modified, the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit and other financial accommodations available to and on behalf of the Borrower.
WHEREAS, the Borrower has requested that the Lenders amend certain provisions of the Credit Agreement, and the Lenders are willing to do so on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, to induce the Administrative Agent and the Lenders to enter into this Eighth Amendment, and in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Defined Terms . Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement, as amended by this Eighth Amendment. Unless otherwise indicated, all section and article references in this Eighth Amendment refer to sections and articles of the Credit Agreement.
Section 2.      Amendments to Credit Agreement .
2.1      Amendments to Section 1.02 : Section 1.02 is hereby amended by:
(a)      adding, amending or restating, as the case may be, the following defined terms as follows:
“‘ Agreement ’ means this Credit Agreement, as amended by that certain First Amendment to Credit Agreement dated as of March 26, 2012, that certain Resignation, Consent and Appointment Agreement dated as of

        


April 20, 2012, that certain Second Amendment to Credit Agreement dated as of September 4, 2012, that certain Third Amendment to Credit Agreement dated as of September 27, 2012, that certain Fourth Amendment to Credit Agreement dated as of October 9, 2013, that certain Fifth Amendment to Credit Agreement dated as of October 7, 2014, that certain Sixth Amendment to Credit Agreement dated as of May 5, 2015, that certain Seventh Amendment to Credit Agreement dated as of October 30, 2015, and that certain Eighth Amendment to Credit Agreement dated as of May 3, 2016, as the same may from time to time be further amended, modified, supplemented or restated.
‘ Bail-In Action ’ means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

‘ Bail-In Legislation ’ means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

‘ Cash Collateral ’ means any cash or deposit account balances or other credit support pledged, deposited with or delivered to the Administrative Agent, for the benefit of one or more of the Issuing Banks or Lenders, as collateral for LC Exposure or obligations of Lenders to fund participations in respect of LC Disbursements.
‘ Cash Equivalents ’ means Investments of the type permitted under Sections 9.05(c), (d), (e), and (f) whether or not such Investment complies with such Sections.
‘ Consolidated Cash Balance ’ means, at any time, the aggregate amount of cash and Cash Equivalents, in each case, owned by (whether directly or indirectly), credited to the account of, or would otherwise be required to be reflected as an asset on the balance sheet of, the Borrower and its Consolidated Subsidiaries, other than, in each case, (i) any amounts held in Excluded Accounts, (ii) any cash set aside to pay royalty obligations, working interest obligations, production payments, severance taxes and similar obligations of the Borrower or any Subsidiary which is or may become due and owing to third parties and for which the Borrower or such Subsidiary has issued checks or has initiated wires or ACH transfers (or will issue checks or initiate wires or ACH transfers within one (1) Business Day) in order to pay such obligations, (iii) any cash set aside to pay in the ordinary course of business amounts (other than obligations described in clause (ii) above) of the Borrower or any Subsidiary then due and owing to unaffiliated third

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parties and for which the Borrower or such Subsidiary has issued checks or has initiated wires or ACH transfers in order to pay such amounts, (iv) any cash or Cash Equivalents of the Borrower or any Subsidiary constituting purchase price deposits or other contractual or legal requirements to deposit money and such money is held by an unaffiliated third party, (v) deposits from unaffiliated third parties that are subject to return pursuant to binding agreements with such third parties, (vi) any Excluded Equity Proceeds held in the Excluded Proceeds Account, (vii) any Excluded Asset Disposition Proceeds held in the Excluded Proceeds Account, (viii) the amount of any Cash Collateral and (ix) cash to be used to Redeem Debt pursuant to a binding and enforceable commitment or notice of prepayment or tender offer to Redeem such Debt within three (3) Business Days; provided that cash excluded pursuant to this clause (ix) shall not be excluded for more than three (3) consecutive Business Days at any time.
‘ Consolidated Cash Balance Threshold ’ means $50,000,000.
‘ Control Agreement ’ means a deposit account control agreement or securities account control agreement (or similar agreement), as applicable, in form and substance reasonably satisfactory to the Administrative Agent, executed by the Borrower or any of its Restricted Subsidiaries, as applicable, the Administrative Agent and the relevant financial institution party thereto. Such agreement shall provide (a) a first priority perfected Lien in favor of the Administrative Agent, for the benefit of the Guaranteed Creditors, in the Borrower’s or such Subsidiary’s, as applicable, deposit account and/or securities account and (b) that the Administrative Agent may exercise exclusive control only upon an Event of Default.
‘ Controlled Account ’ means (a) a deposit account or securities account that is subject to a Control Agreement or (b) in the sole discretion of the Administrative Agent, a deposit account or securities account maintained with the Administrative Agent.
‘ Defaulting Lender ’ means any Lender that has (a) failed to fund any portion of its Loans or participations in Letters of Credit or Swing Line Loans within three (3) Business Days of the date required to be funded by it hereunder unless such Lender notifies Administrative Agent and Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in such writing) has not been satisfied, (b) notified the Borrower, the Administrative Agent, the Issuing Bank, the Swing Line Lender or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding

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obligations under this Agreement unless such writing or public statement relates to such Lenders’ obligation to fund a Loan hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent, together with the applicable default, if any, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) failed, within three (3) Business Days after request by the Administrative Agent or the Borrower, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Line Loans, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e) become the subject of a Bail-In Action, bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has a parent company that has become the subject of a Bail-In Action, bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it or, in the good faith determination of the Administrative Agent or the Borrower, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that a Lender shall not become a Defaulting Lender solely as the result of the acquisition or maintenance of an ownership interest in such Lender or any Person controlling such Lender or the exercise of control over such Lender or any Person controlling such Lender by a Governmental Authority or an instrumentality thereof.

‘ EEA Financial Institution ’ means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

‘ EEA Member Country ’ means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

‘ EEA Resolution Authority ’ means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

‘ Eighth Amendment Effective Date ’ means May 4, 2016.

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‘ EU Bail-In Legislation Schedule ’ means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

‘ Excess Cash ’ means, at any time, the amount of the Consolidated Cash Balance in excess of the Consolidated Cash Balance Threshold.
‘ Excluded Accounts ’ means (a) any deposit account all or substantially all of the deposits in which consist of amounts utilized to fund payroll, employee benefit or tax obligations of the Borrower and its Subsidiaries, (b) fiduciary or trust accounts, (c) escrow accounts, (d) deposit accounts that are zero balance accounts and (e) deposit accounts with a balance at all times of less than $500,000 individually or $2,000,000 in the aggregate.
‘ Excluded Asset Disposition Proceeds ’ means, so long as no Default, Event of Default or Borrowing Base Deficiency exists or will result therefrom (after giving effect to any payments made by the Borrower under Section 3.04(c)(iii)), cash proceeds received by the Borrower or any Subsidiary pursuant to a Sale permitted by Section 9.11, less the amount of any unpaid Borrowing Base Deficiency that then exists or which results from such Sale pursuant to the terms hereof, as such amount is certified to the Administrative Agent by a Responsible Officer of the Borrower.
‘ Excluded Equity Proceeds ’ means cash proceeds from an equity contribution made to, or for the account of, or otherwise received by, the Borrower or its Restricted Subsidiaries, as such amount is certified to the Administrative Agent by a Responsible Officer of the Borrower.
‘ Excluded Proceeds Account ’ means a segregated deposit account or securities account established and maintained with, and subject to a Control Agreement in favor of, the Administrative Agent, for the benefit of the Guaranteed Creditors, which deposit account or securities account contains only Excluded Equity Proceeds and/or Excluded Asset Disposition Proceeds.
‘ Guaranteed Creditors ’ shall have the meaning set forth in the Guaranty Agreement.
‘ Interest Expense ’ means, for any period, the sum (determined without duplication) of the aggregate interest expense of the Borrower and the Consolidated Subsidiaries for such period paid in cash, including (a) the portion of any payments or accruals under Capital Leases to the extent included in interest expense under GAAP, plus (b) the portion of any payments or accruals under Synthetic Leases allocable to interest expense, whether or not the same constitutes interest expense under GAAP.

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‘ Total Secured Debt ’ means the aggregate amount of all Debt of the types described in clauses (a) and (b) (but, with respect to letters of credit, only to the extent of any unreimbursed drawings thereunder) of the definition thereof of the Borrower and its Consolidated Subsidiaries that is secured by a Lien on any asset of the Borrower and its Consolidated Subsidiaries (other than Liens on the Equity Interests of any Unrestricted Subsidiary).
‘ Write-Down and Conversion Powers ’ means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.”

(b)      deleting the Borrowing Base Utilization Grid in the defined term “Applicable Margin” and replacing it with the following:
Borrowing Base Utilization Grid
Utilization Percentage
<25%
≥  25% but <50%
≥  50% but <75%
≥  75% but <90%
≥  90%
Eurodollar Loans
2.00%
2.25%
2.50%
2.75%
3.00%
ABR Loans
1.00%
1.25%
1.50%
1.75%
2.00%
Commitment Fee Rate
0.50%
0.50%
0.50%
0.50%
0.50%

2.2      Amendment to Section 2.03 . Section 2.03 is hereby amended by deleting the “and” at the end of Section 2.03(v), renumbering Section 2.03(vi) as Section 2.03(vii) and adding the following new Section 2.03(vi):
“(vi)    the reasonably estimated Consolidated Cash Balance as of the date of the Borrowing Request (without regard to the requested Borrowing) and the reasonably estimated pro forma Consolidated Cash Balance (giving effect to the requested Borrowing and the use of proceeds thereof); and”

2.3      Amendment to Section 3.04(c) . Section 3.04(c) is hereby amended by renumbering Sections 3.04(c)(iv) and (v) as Sections 3.04(c)(v) and (vi), respectively, and adding the following new Section 3.04(c)(iv):
“(iv)    If, on any Business Day, (A) Borrowings are outstanding, (B) the Borrower has any Excess Cash as of the close of business on such day, and (C) either (I) the Borrower’s ratio of Total Debt as of such date to EBITDA for four fiscal quarters ending on the last day of the fiscal quarter immediately preceding the date of determination for which financial statements are available is greater than 3.5 to 1.0 or (II) the availability on such date is equal to or less than 20% of the then effective Borrowing Base, then the Borrower shall, on the next succeeding Business Day, to

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the extent it then has Excess Cash, prepay the Borrowings in an aggregate principal amount equal to the amount of such Excess Cash.”

2.4      Amendment to Section 6.02 . Section 6.02 is hereby amended by:
(a)      renumbering Section 6.02(c) as 6.02(d) and adding the following new Section 6.02(c):
“(c)    At the time of and immediately after giving effect to such Borrowing, the Borrower and its Subsidiaries do not have any Excess Cash.”

(b)      deleting the paragraph at the end thereof and replacing it with the following:
“Each request for a Borrowing and each request for the issuance, amendment (to increase the amount or extend the term), renewal or extension of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in Sections 6.02(a), (b) and (c).”

2.5      Amendment to Article VII . Article VII is hereby amended by adding the following new Section 7.24:
“Section 7.24    EEA Financial Institutions . Neither the Borrower nor any of its Subsidiaries is an EEA Financial Institution.”

2.6      Amendment to Section 8.01 . Section 8.01 is hereby amended by renumbering Section 8.01(o) as Section 8.01(p) and adding the following new Section 8.01(o):
“(o)     Consolidated Cash Balance Information . If any Borrowings are outstanding, then (i) upon the request of the Administrative Agent (within one (1) Business Day of such request) or (ii) on any Business Day on which the Borrower has any Excess Cash, the Borrower shall provide to the Administrative Agent, summary and balance statements for each deposit account, securities account, commodity account or other account in which any Consolidated Cash Balance is held or to which any Consolidated Cash Balance is credited, together with an officer’s certificate of the Borrower including the amount of the Consolidated Cash Balance on such day and attaching a written statement setting forth a reasonably detailed calculation of amounts excluded from the Consolidated Cash Balance pursuant to the definition thereof.”

2.7      Amendment to Section 8.12 . Section 8.12 is hereby amended by deleting the term “75%” in each instance of its use therein and replacing it with the term “80%”.
2.8      Amendment to Section 8.13(a) . Section 8.13(a) is hereby amended by deleting the term “80%” in each instance of its use and replacing it with the term “90%”. For the avoidance of doubt, the Borrower shall have 30 days from the date of this Eighth Amendment to deliver the initial

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mortgages to satisfy the 90% requirement under Section 8.13(a), as amended by this Eighth Amendment.
2.9      Amendment to Article VIII . Article VIII is hereby amended by adding the following Section 8.18:
“Section 8.18     Control Agreements and Excluded Proceeds Account .

(a)    For each deposit account or securities account that Borrower or any of its Restricted Subsidiaries maintains as of the Eighth Amendment Effective Date (other than Excluded Accounts), the Borrower will, by no later than 60 days after the Eighth Amendment Effective Date, either (i) cause such account to be subject to a Control Agreement, or (ii) close such account and transfer any funds therein to an account that otherwise meets the requirements of this Section 8.18(a). From and after the Eighth Amendment Effective Date, the Borrower shall not open, nor allow any of its Restricted Subsidiaries to open, any deposit or securities account (other than Excluded Accounts) unless such deposit or securities account is subject to a Control Agreement.

(b)    The Borrower will, and will cause each of its Restricted Subsidiaries to, until the proceeds of any Loans are used or transferred in accordance with the Loan Documents, hold the proceeds of any Loans made under this Agreement in a deposit account and/or a securities account that is a Controlled Account.

(c)    Notwithstanding anything herein to the contrary, any use of funds held in the Excluded Proceeds Account permitted under this Agreement: (a) in the case of any such funds that are used, directly or indirectly, to fund a Restricted Payment, shall be deemed to be a utilization of Excluded Equity Proceeds until no Excluded Equity Proceeds remain in such Excluded Proceeds Account, and thereafter shall be deemed to be a utilization of Excluded Asset Disposition Proceeds until no Excluded Asset Disposition Proceeds remain in such Excluded Proceeds Account and (b) in the case of any such funds that are used, directly or indirectly, for any purpose other than to fund a Restricted Payment, shall be deemed to be a utilization of Excluded Asset Disposition Proceeds until no Excluded Asset Disposition Proceeds remain in such Excluded Proceeds Account, and thereafter shall be deemed to be a utilization of Excluded Equity Proceeds until no Excluded Equity Proceeds remain in such Excluded Proceeds Account. In connection with each use of amounts in the Excluded Proceeds Account at a time when there are outstanding Borrowings, the Borrower shall deliver an officer’s certificate to the Administrative Agent certifying (i) such use is not prohibited by this Agreement, (ii) the amount of such use and (iii) the amounts of Excluded Asset Disposition Proceeds and Excluded Equity Proceeds remaining in the Excluded Proceeds Account after such use.”


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2.10      Amendment to Section 9.01(a) . Section 9.01(a) is hereby amended by deleting such Section in its entirety and replacing it with the following:
“(a)     Ratio of Total Secured Debt to EBITDA . The Borrower will not, as of the last day of any fiscal quarter, permit its ratio of Total Secured Debt as of such date to EBITDA for the period of four consecutive fiscal quarters ending on such date to be greater than 2.00 to 1.00.”

2.11      Amendment to Section 9.01 . Section 9.01 is hereby amended by adding the following Section 9.01(c):
“(c)     Minimum Ratio of EBITDA to Interest Expense . The Borrower will not permit, as of the last day of any fiscal quarter, its ratio of EBITDA for the period of four consecutive fiscal quarters ending on such date to Interest Expense for the period of four consecutive fiscal quarters ending on such date to be less than 2.50 to 1.00.

2.12      Amendment to Section 9.02(f) . Section 9.02(f) is hereby amended by deleting such Section in its entirety and replacing it with the following:
“(f)    Senior Notes issued by the Borrower and any guarantees of such Debt by the Borrower or any other Guarantor, provided that (i) at the time of incurring such Debt (A) no Default has occurred and is then continuing and (B) no Default would result from the incurrence of such Debt after giving effect to the incurrence of such Debt (and any concurrent repayment of Debt with the proceeds of such incurrence), (ii) such Debt does not have any scheduled amortization prior to 91 days after the Maturity Date, (iii) such Debt does not mature sooner than 91 days after the Maturity Date, (iv) the covenants applicable to such Debt are not materially more onerous, taken as a whole, than the covenants applicable to the Loans, (v) the Borrowing Base is reduced pursuant to Section 2.07(e), and prepayment is made to the extent required by Section 3.04(c)(iii), (vi) the principal amount of such Debt issued from and after the Eighth Amendment Effective Date and outstanding at any time does not exceed $400,000,000, and (vii) after giving pro forma effect to the issuance of such Debt the Borrower is in compliance with Section 9.01.”

2.13      Amendment to Article XII . Article XII is hereby amended by adding the following Section 12.17:
“Section 12.17         Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

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(a)    the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)    the effects of any Bail-In Action on any such liability, including, if applicable:

(i)    a reduction in full or in part or cancellation of any such liability;

(ii)    a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)    the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.”

2.14      Amendment to Exhibit B . Exhibit B is hereby amended and replaced in its entirety with Exhibit B attached to this Eighth Amendment.
Section 3.      Borrowing Base and Aggregate Elected Commitment Amount . From and after the Eighth Amendment Effective Date, the Borrowing Base is affirmed to be, and hereby is, equal to the amount of $600,000,000 and the Aggregate Elected Commitment Amount is affirmed to be $600,000,000, which Borrowing Base and Aggregate Elected Commitment Amount shall remain in effect until with respect to the Borrowing Base, the next Scheduled Redetermination or the Borrowing Base is otherwise redetermined or adjusted in accordance with the Credit Agreement and with respect to the Aggregate Elected Commitment Amount any adjustment pursuant to Section 2.07A. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.07(e), Section 8.12(c) or Section 9.11. Each of the Borrower, on the one hand, and the Administrative Agent and the Lenders, on the other hand, agree that the redetermination of the Borrowing Base pursuant to this Section 3 shall constitute the Scheduled Redetermination for May 1, 2016. This Section 3 constitutes notice of the redetermined Borrowing Base in accordance with Section 2.07(d) of the Credit Agreement.
Section 4.      Conditions Precedent . This Eighth Amendment shall become effective on the date when each of the following conditions is satisfied (or waived in accordance with Section 12.02) (such date, the “ Eighth Amendment Effective Date ”):
4.1      The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Eighth Amendment Effective Date and all other fees the Borrower has

- 10 -
        


agreed to pay in connection with this Eighth Amendment, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.
4.2      The Administrative Agent shall have received from the Required Lenders, the Borrower and the Guarantors, counterparts (in such number as may be requested by the Administrative Agent) of this Eighth Amendment signed on behalf of such Person.
4.3      No Default shall have occurred and be continuing as of the date hereof, after giving effect to the terms of this Eighth Amendment.
4.4      The Administrative Agent shall have received such other documents as the Administrative Agent or its counsel may reasonably require in connection with the transactions contemplated hereby.
The Administrative Agent is hereby authorized and directed to declare this Eighth Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4 or the waiver of such conditions as permitted in Section 12.02. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.
Section 5.      Miscellaneous .
5.1      Confirmation . The provisions of the Credit Agreement, as amended by this Eighth Amendment, shall remain in full force and effect following the effectiveness of this Eighth Amendment.
5.2      Ratification and Affirmation; Representations and Warranties . Each Credit Party hereby (a) acknowledges the terms of this Eighth Amendment; (b) ratifies and affirms (i) its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended hereby, and (ii) that the Liens created by the Loan Documents to which it is a party are valid and continuing and secure the Obligations in accordance with the terms thereof, after giving effect to this Eighth Amendment; and (c) represents and warrants to the Lenders that on and as of the date hereof, and immediately after giving effect to the terms of this Eighth Amendment:
(i)      all of the representations and warranties of the Borrower and the Guarantors contained in the Loan Documents are true and correct in all material respects, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date, and
(ii)      no Default or Event of Default has occurred and is continuing.

- 11 -
        


5.3      Loan Document . This Eighth Amendment is a Loan Document.
5.4      Counterparts . This Eighth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Eighth Amendment by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
5.5      NO ORAL AGREEMENT . THIS EIGHTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
5.6      GOVERNING LAW . THIS EIGHTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
5.7      Payment of Expenses . In accordance with Section 12.03, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with this Eighth Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.
5.8      Severability . Any provision of this Eighth Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
5.9      Successors and Assigns . This Eighth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
[SIGNATURES BEGIN NEXT PAGE]


- 12 -
        


IN WITNESS WHEREOF, the parties hereto have caused this Eighth Amendment to be duly executed as of the date first written above.

BORROWER:    CARRIZO OIL & GAS, INC.


By: /s/ David L. Pitts    
David L. Pitts
Vice President and Chief Financial Officer


GUARANTORS:
BANDELIER PIPELINE HOLDING, LLC,
CARRIZO (EAGLE FORD) LLC,
CARRIZO (MARCELLUS) LLC,
CARRIZO (MARCELLUS) WV LLC,
CARRIZO MARCELLUS HOLDING INC.,
CARRIZO (NIOBRARA) LLC,
CARRIZO (PERMIAN) LLC,
CARRIZO (UTICA) LLC,
CLLR, INC.,
HONDO PIPELINE, INC.,
And
MESCALERO PIPELINE, LLC,


By: /s/ David L. Pitts    
David L. Pitts
Vice President

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


LENDERS:    WELLS FARGO BANK, NATIONAL
    ASSOCIATION , as Administrative Agent
    and a Lender


By: /s/ Greg Smothers    
Name: Greg Smothers
Title: Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


ROYAL BANK OF CANADA , as a Lender


By: /s/ Matthias Wong    
Name: Matthias Wong
Title: Authorized Signatory


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender


By: /s/ Michael Willis    
Name: Michael Willis
Title: Managing Director


By: /s/ Sharada Manne    
Name: Sharada Manne
Title: Managing Director


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


COMPASS BANK, as a Lender


By: /s/ Kathleen J. Bowen    
Name: Kathleen J. Bowen
Title: Managing Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


CAPITAL ONE, N.A ., as a Lender


By: /s/ Daryl Stafford    
Name: Daryl Stafford
Title: Vice President


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


CITIBANK, N.A., as a Lender


By: /s/ Saqeeb Ludhi    
Name: Saqeeb Ludhi
Title: Vice President


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


GOLDMAN SACHS BANK USA, as a Lender


By: /s/ Jerry Li    
Name: Jerry Li
Title: Authorized Signatory


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


SOCIETE GENERALE, as a Lender


By: /s/ Max Sonnonstine    
Name: Max Sonnonstine
Title: Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


REGIONS BANK, as a Lender


By: /s/ Kelly L. Elmore III    
Name: Kelly L. Elmore III
Title: Managing Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender

By: /s/ Nupur Kumar    
Name: Nupur Kumar
Title: Authorized Signatory


By: /s/ Warren Van Heyst    
Name: Warren Van Heyst
Title: Authorized Signatory

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


MUFG UNION BANK, N.A. f/k/a UNION BANK, N.A., as a Lender


By: /s/ David Helffrich    
Name: David Helffrich
Title: Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


ASSOCIATED BANK, N.A., as a Lender


By: /s/ Brian Caddell    
Name: Brian Caddell
Title: Senior Vice President

KEYBANK NATIONAL ASSOCIATION, as a Lender


By: /s/ John Dravenstott    
Name: John Dravenstott
Title: Vice President

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


IBERIABANK, as a Lender


By: /s/ W. Bryan Chapman    
Name: W. Bryan Chapman
Title: Executive Vice President


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


BANK OF AMERICA, N.A., as a Lender


By: /s/ Ronald E. McKaig    
Name: Ronald E. McKaig
Title: Managing Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


PNC BANK, NATIONAL ASSOCIATION, as a Lender


By: /s/ Jonathan Luchansky    
Name: Jonathan Luchansky
Title: Vice President

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


BMO HARRIS BANK, N.A., as a Lender


By: /s/ James V. Ducote    
Name: James V. Ductoe
Title: Managing Director    

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


THE BANK OF NOVA SCOTIA, as a Lender


By: /s/ Mark Sparrow    
Name: Mark Sparrow
Title: Director

Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


COMERICA BANK, as a Lender


By: /s/ William Robinson    
Name: William Robinson
Title: Senior Vice President


Signature Page to Eighth Amendment
Carrizo Oil & Gas, Inc.

        


EXHIBIT B
[FORM OF] BORROWING REQUEST
[ ], 201[ ]
Carrizo Oil & Gas, Inc., a corporation duly formed and existing under the laws of the State of Texas (the “ Borrower ”), pursuant to Section 2.03 of the Credit Agreement dated as of January 27, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among the Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and the other agents and lenders from time to time party thereto (unless otherwise defined herein, each capitalized term used herein shall have the same meaning given to it in the Credit Agreement), hereby requests a Borrowing as follows:
(i)    the aggregate amount of the requested Borrowing is $[ ];
(ii)    the date of such Borrowing is [ ], 201[ ];
(iii)    the requested Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];
(iv)    [the initial Interest Period applicable thereto is [ ]] 1 ;
(v)    the amount of the Borrowing Base in effect on the date hereof is $[ ];
(vi)    the total Revolving Credit Exposures on the date hereof (without regard to this requested Borrowing) is $[ ];
(vii)    the pro forma total Revolving Credit Exposures (giving effect to this requested Borrowing) is $[ ];
(viii)    the reasonably estimated Consolidated Cash Balance as of the date of the Borrowing Request (without regard to the requested Borrowing) is $[______________] and the reasonably estimated pro forma Consolidated Cash Balance (giving effect to the requested Borrowing and the use of proceeds thereof) is $[______________]; and
(ix)    the location and number of the Borrower’s account to which funds are to be disbursed are as follows:
[                  ]
[                  ]
[                  ]
[                  ]
[                  ]


                
1 Include in the case of a Eurodollar Borrowing.

        


The undersigned certifies that he/she is the [ ] of the Borrower and that as such he/she is authorized to execute this Borrowing Request on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled to receive the requested Borrowing under the terms and conditions of the Credit Agreement.
 
CARRIZO OIL & GAS, INC.
 
 
 
 
 
By: ______________________
 
Name:   ____________________
 
Title: _____________________




     Exhibit 99.1
CARRIZO OIL & GAS, INC.                      News         


PRESS RELEASE    Contact:    Jeffrey P. Hayden, CFA, VP - Investor Relations
(713) 328-1044    
Kim Pinyopusarerk, Manager - Investor Relations
    (713) 358-6430

CARRIZO OIL & GAS, INC. ANNOUNCES FIRST QUARTER RESULTS AND INCREASES 2016 PRODUCTION GUIDANCE

HOUSTON, May 4, 2016 - Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today announced the Company’s financial results for the first quarter of 2016 and provided an operational update, which includes the following highlights:
 
•
Record Oil Production of 25,806 Bbls/d, 21% above the first quarter of 2015

•
Record Total Production of 42,025 Boe/d, 21% above the first quarter of 2015

•
Loss From Continuing Operations of $311.4 million, or ($5.34) per diluted share, and Adjusted Net Income (as defined below) of $9.2 million, or $0.16 per diluted share

•
Adjusted EBITDA (as defined below) of $92.5 million

•
Acquired 4,000 net bolt-on acres in the Eagle Ford Shale

•
Reduced Eagle Ford well cost expectations to $4.1 million

•
Increasing 2016 crude oil production growth target to 9%

Carrizo reported a first quarter of 2016 loss from continuing operations of $311.4 million, or $5.34 per basic and diluted share compared to a loss from continuing operations of $21.5 million, or $0.46 per basic and diluted share in the first quarter of 2015 . The loss from continuing operations for the first quarter of 2016 includes certain items typically excluded from published estimates by the investment community, including the full cost ceiling test impairment recognized this quarter. Adjusted net income, which excludes the impact of these items as described in the statements of operations included below, for the first quarter of 2016 was $9.2 million, or $0.16 per basic and diluted share compared to $6.4 million, or $0.14 per basic and diluted share in the first quarter of 2015 .

For the first quarter of 2016 , adjusted earnings before interest, income taxes, depreciation, depletion, and amortization, as described in the statements of operations included below (“Adjusted EBITDA”), was $92.5 million, a decrease of 9% from the prior year quarter as the impact of lower commodity prices more than offset the impact of higher production volumes.

Production volumes during the first quarter of 2016 were 3,824 MBoe, or 42,025 Boe/d, an increase of 21% versus the first quarter of 2015 . The year-over-year production growth was driven by strong results from the Company’s Eagle Ford assets. Oil production during the first quarter of 2016 averaged 25,806 Bbls/d, an increase of 21% versus the first quarter of 2015 and 3% versus the prior quarter; natural gas and NGL production averaged 70,033 Mcf/d and 4,547 Bbls/d, respectively, during the first quarter of 2016 . First quarter of 2016 production exceeded the high end of Company guidance due primarily to stronger-than-expected performance from the Company’s Eagle Ford Shale assets as well as higher-than-expected non-operated production.

Drilling and completion capital expenditures for the first quarter of 2016 were $84.8 million. More than 85% of the first quarter drilling and completion spending was in the Eagle Ford Shale, with the balance weighted towards the Delaware Basin. Land and seismic expenditures during the quarter were $5.9 million. For the year, Carrizo is maintaining its drilling and completion capital expenditure guidance of $270-$290 million. However, given additional efficiencies and cost reductions realized during the first




quarter, the Company has been able to increase its planned drilling activity in the Eagle Ford Shale and Delaware Basin during the year. As the Company does not currently plan to increase completion activity in 2016, the additional activity is not expected to have a material impact on 2016 production. The Company is increasing its land and seismic capital expenditure guidance to $20 million from $15 million for the year based on its outlook for continued bolt-on acquisitions. Additionally, the Company recently acquired approximately 4,000 net bolt-on acres in the Eagle Ford Shale, which was funded by the simultaneous sale of undeveloped acreage in a non-core exploration play.

Carrizo is increasing its 2016 oil production guidance to 24,800-25,300 Bbls/d from 24,700-25,300 Bbls/d previously. Using the midpoint of this range, the Company’s 2016 oil production growth guidance is 9%. For natural gas and NGLs, Carrizo is increasing its 2016 guidance to 54-60 MMcf/d and 4,000-4,200 Bbls/d, respectively, from 45-60 MMcf/d and 3,700-4,000 Bbls/d. For the second quarter of 2016, Carrizo expects oil production to be 23,600-24,000 Bbls/d, and natural gas and NGL production to be 56-60 MMcf/d and 3,700-3,900 Bbls/d, respectively. The forecast sequential decline in production during the second quarter results from the planned shut-in of a significant number of wells in the Eagle Ford Shale due to offsetting completion activity coupled with a limited number of wells brought online in the prior quarter. A summary of Carrizo’s production, commodity price realization, and cost guidance is provided in the attached tables.

S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented on the results, “We delivered another strong quarter operationally, with production again exceeding our forecast and operating expenses coming in below our forecast. Additionally, we remain well positioned to prudently manage the current commodity price downturn. We have a strong financial position with an excellent 2016 hedge book and ample liquidity available on our revolver. This, coupled with our deep inventory of economical drilling locations, should allow us to quickly ramp up our activity and production once we get an appropriate commodity price signal.

“Our focus on reducing costs and increasing efficiencies continues to pay off. Well cost expectations in the Eagle Ford are now down to $4.1 million from $4.6 million previously. This has allowed us to increase our activity in the Delaware Basin and Eagle Ford Shale without increasing our planned capex for the year. In the Delaware Basin, we now plan to drill two additional wells this year, with one expected to be completed during 2016. One of the new wells is an offset to our recent Liberator State 1H well that tested at a peak 24-hour rate of 1,950 Boe/d. In the Eagle Ford, we now plan to drill eight additional wells during 2016; while we do not currently plan to complete any of the additional wells during the year, we could easily increase completion activity if commodity prices continue to strengthen.

“During the quarter, we added approximately 4,000 high-quality net acres to our Eagle Ford Shale position in LaSalle County, which should increase net drilling locations in our Core acreage position by 5%-10%. The deal also highlights the creativity of our team as we were able to fund the acquisition by selling undeveloped acreage in a non-core exploration play. We continue to seek quality acquisition opportunities during the current commodity price downturn as we believe these will result in the creation of significant long-term value for our shareholders.”

Operational Update

In the Eagle Ford Shale, Carrizo drilled 18 gross (17.0 net) operated wells during the first quarter and completed 14 gross (12.5 net) wells. Crude oil production from the play rose to approximately 22,800 Bbls/d for the quarter, up 2% versus the prior quarter. At the end of the quarter, Carrizo had 33 gross (31.8 net) operated Eagle Ford wells waiting on completion, equating to net crude oil production potential of more than 11,900 Bbls/d. The Company is operating two rigs in the Eagle Ford and currently expects to drill approximately 57 gross (53 net) operated wells and complete 55 gross (52 net) operated wells in the play during 2016.

Due to a combination of further efficiency gains and service cost reductions, the Company has been able to reduce well costs in the Eagle Ford Shale since year-end. Completed well costs for a 6,100 ft. lateral well are currently expected to average approximately $4.1 million, down from $4.6 million previously.

Carrizo continues to test multiple initiatives aimed at significantly increasing its Lower Eagle Ford drilling inventory, which is currently based on a combination of 330 ft. and 500 ft. spacing. The most potentially impactful of these are the Company's stagger-stack tests, which have the potential to add approximately 220-880 net locations to the Company's inventory. Carrizo currently has three pilots online that are testing effective lateral spacing ranging from 165 ft. to 280 ft., and is currently completing two additional pilots. Early results are in line with the Company's expectations and Carrizo plans to provide a detailed update on the results of these initiatives later this year.

Since year-end, Carrizo has added approximately 4,000 net acres to its position in the Eagle Ford, bringing it to approximately 88,000 net acres. The acquired acreage is contiguous to the Company's North LaSalle acreage position, where Carrizo estimates wells to have a NYMEX PV10 breakeven price of less than $35/Bbl. Carrizo estimates that the new acreage block adds approximately 45 net high-quality locations to its drilling inventory assuming 500 ft. spacing, which is the current inventory assumption for its




nearby acreage, and an approximate 7,300 ft. lateral (or approximately 55 net locations if the planned lateral length was normalized to the Company's Eagle Ford average of 6,100 ft.).
 
In the Delaware Basin, Carrizo completed its third operated well, the Liberator State 1H, during the quarter. The well was drilled with an approximate 7,000 ft. lateral and completed with 31 frac stages. The Company produced the well for 23 days before shutting it in pending infrastructure and the full restart of a third-party operated midstream facility that had been offline due to a fire in December. While the Liberator State well was still cleaning up prior to being shut-in, it tested at a peak 24-hour rate of approximately 1,950 Boe/d (37% oil, 37% NGL, 26% gas). Carrizo operates the Liberator State 1H with a 100% working interest. The Company currently expects to drill two wells and complete three wells in the Delaware Basin during 2016.

Carrizo recently acquired an interest in two sections offsetting the Liberator State 1H well that had a near-term drilling obligation. As a result, one of the Company's incremental wells, the Corsair State 3H, is planned to be spud on the acreage later this quarter. Carrizo expects to hold a 100% working interest in the Corsair State 3H.

Due to the third-party operated midstream facility being offline, crude oil production from the Company's initial two wells in the Delaware Basin was shut-in during the first quarter. In early April, the facility had a limited restart, which allowed Carrizo to return its Mustang State 1H well to production. Production from the well resumed at similar rates to what it was producing prior to being shut-in.

In the Niobrara Formation, Carrizo did not drill or complete any operated wells during the first quarter. Crude oil production from the Niobrara was more than 2,400 Bbls/d for the quarter, up from approximately 1,900 Bbls/d in the prior quarter due to increased non-operated production. For 2016, Carrizo has allocated a small amount of capital to the Niobrara for the completion of several drilled-but-uncompleted wells in addition to continued non-operated activity.

In Appalachia, which encompasses the Company's Utica Shale and Marcellus Shale positions, Carrizo did not drill or complete any operated wells during the first quarter. Oil and condensate production from the Utica during the quarter was approximately 465 Bbls/d, roughly flat with the fourth quarter as no new operated wells were added in the play. In the dry gas window of the Marcellus, the Company's production was 36.2 MMcf/d, down from 41.6 MMcf/d in the prior quarter as the Company increased its voluntary production curtailments. Carrizo expects to vary its 2016 Marcellus production based on local market pricing. If pricing deteriorates materially from current levels, the Company would expect to increase its level of voluntary curtailments. However, if regional pricing were to materially improve, the Company could significantly ramp up its Marcellus production. Carrizo does not currently plan to drill or complete any operated wells in Appalachia during 2016.

Financial Position and Liquidity

On May 3, 2016, Carrizo's banking syndicate, led by Wells Fargo as administrative agent, completed its semi-annual borrowing base redetermination, resulting in a borrowing base of $600.0 million, down from $685.0 million previously. The reduction in the borrowing base results primarily from a bank price deck significantly below the one used in the prior redetermination. In connection with the redetermination, the Company's Net Debt to Adjusted EBITDA covenant was removed, while a Secured Debt to Adjusted EBITDA covenant of no more than 2.0x and an Adjusted EBITDA to Interest Expense covenant of no less than 2.5x were added. For the first quarter, the ratios of Secured Debt to Adjusted EBITDA and Adjusted EBITDA to Interest Expense were 0.1x and 4.8x, respectively. The next redetermination of the borrowing base is expected in the fall of 2016.

As of March 31, 2016 , Carrizo had total debt outstanding of $1,285.0 million and cash and cash equivalents of $2.2 million. Net Debt to Adjusted EBITDA was 2.9x for the first quarter. As of April 29, 2016, Carrizo had $51.0 million drawn on the facility.

Hedging Activity

Carrizo currently has hedges in place for more than 55% of estimated crude oil production for the balance of 2016 (based on the midpoint of guidance). For the remainder of the year, the Company has hedges covering 13,750 Bbls/d of crude oil (comprised of 9,750 Bbls/d of swaps at an average price of $60.03/Bbl and 4,000 Bbls/d of collars at a weighted average floor price of $50.00/Bbl and a weighted average ceiling price of $76.50/Bbl). Additionally, Carrizo will receive $20.8 million of cash flow for the remainder of 2016 relating to prior commodity derivative transactions.

For the first half of 2017, Carrizo has swaps covering 12,000 Bbls/d of crude oil at an average fixed price of $50.13 /Bbl. Additionally, Carrizo will receive $1.8 million of cash flow during the first half of 2017 relating to prior commodity derivative transactions. (Please refer to the attached tables for a detailed summary of the Company’s derivative contracts.)






Conference Call Details

The Company will hold a conference call to discuss 2016 first quarter financial results on Wednesday, May 4, 2016 at 10:00 AM Central Daylight Time. To participate in the call, please dial (800) 706-4417 (U.S. & Canada) or +1 (303) 223-4367 (Intl.) ten minutes before the call is scheduled to begin. A replay of the call will be available through Wednesday, May 11, 2016 at 12:00 PM Central Daylight Time at (800) 633-8284 (U.S. & Canada) or +1 (402) 977-9140 (Intl.). The reservation number for the replay is 21810200 for U.S., Canadian, and International callers.

A simultaneous webcast of the call may be accessed over the internet by visiting our website at http://www.carrizo.com , clicking on “Upcoming Events”, and then clicking on the “First Quarter 2016 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.

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, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, the Utica Shale in Ohio, and the Marcellus Shale in Pennsylvania.

Statements in this release that are not historical facts, including but not limited to those related to capital requirements, capital expenditure and other spending plans, economical basis of wells or inventory, rig program, effect of transactions offsetting hedge positions, production, average well returns, acquisitions, effects of transactions, targeted ratios and other metrics, the ability to acquire additional acreage, midstream infrastructure availability and capacity, timing, levels of and potential production, downspacing, crude oil production potential and growth, oil and gas prices, drilling and completion activities, drilling inventory, including timing thereof, resource potential, well costs, breakeven prices, production mix, development plans, growth, midstream matters, use of proceeds, hedging activity, the ability to maintain a sound financial position, 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, expected income tax rates and other statements that are not historical facts are forward-looking statements that are based on current expectations. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that these expectations will prove correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements include assumptions regarding well costs, estimated recoveries, pricing and other factors affecting average well returns, results of wells and testing, failure of actual production to meet expectations, performance of rig operators, spacing test results, availability of gathering systems, costs of oilfield services, actions by governmental authorities, joint venture partners, industry partners, lenders and other third parties, actions by purchasers or sellers of properties, satisfaction of closing conditions, integration and effects of acquisitions, market and other conditions, 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, weather, and other risks described in the Company’s Form 10-K for the year ended December 31, 2015 and its other filings with the U.S. Securities and Exchange Commission. There can be no assurance any transaction described in this press release will occur on the terms or timing described, or at all.


(Financial Highlights to Follow)




CARRIZO OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 
 
 
 
 
 Three Months Ended March 31,
 
2016
 
2015
Revenues
 
 
 
   Crude oil

$67,996

 

$83,058

   Natural gas liquids
3,440

 
4,473

   Natural gas
9,826

 
12,519

Total revenues
81,262

 
100,050

Cash received for derivative settlements, net
51,163

 
49,064

Adjusted total revenues
132,425

 
149,114

Costs and Expenses
 
 
 
   Lease operating
23,675

 
21,716

   Production taxes
3,431

 
4,018

   Ad valorem taxes
2,070

 
3,033

   Cash general and administrative, net
10,723

 
18,500

Total costs and expenses
39,899

 
47,267

Adjusted EBITDA, as defined

$92,526

 

$101,847

Adjusted EBITDA per common share-Basic

$1.59

 

$2.19

Adjusted EBITDA per common share-Diluted

$1.57

 

$2.16

 
 
 
 
Other items of expense included in Adjusted Net Income, as defined
 
 
 
   Depreciation, depletion and amortization

$59,577

 

$73,871

   Interest expense, net
18,713

 
18,196

Adjusted income before income taxes
14,236

 
9,780

Adjusted income tax expense
(5,082
)
 
(3,403
)
Adjusted Net Income, as defined

$9,154

 

$6,377

Adjusted net income per common share-Basic

$0.16

 

$0.14

Adjusted net income per common share-Diluted

$0.16

 

$0.14

 
 
 
 
Other items of income (expense) included in Loss From Continuing Operations
 
 
 
   Non-cash gain (loss) on derivatives, net

($40,610
)
 

($22,625
)
   Non-cash general and administrative expense, net
(11,758
)
 
(13,077
)
Impairment of proved oil and gas properties
(274,413
)
 
—

Other income (expense), net
1,271

 
(6,992
)
Loss From Continuing Operations Before Income Taxes
(311,274
)
 
(32,914
)
Income tax (expense) benefit
(121
)
 
11,438

Loss From Continuing Operations

($311,395
)
 

($21,476
)
Income From Discontinued Operations, Net of Income Taxes
—

 
266

Net Loss

($311,395
)
 

($21,210
)
 
 
 
 
Net Loss Per Common Share - Basic
 
 
 
Loss from continuing operations

($5.34
)
 

($0.46
)
Income from discontinued operations, net of income taxes
—

 
—

Net loss

($5.34
)
 

($0.46
)
 
 
 
 
Net Loss Per Common Share - Diluted
 
 
 
Loss from continuing operations

($5.34
)
 

($0.46
)
Income from discontinued operations, net of income taxes
—

 
—

Net loss

($5.34
)
 

($0.46
)
 
 
 
 
Weighted Average Common Shares Outstanding
 
 
 
Basic
58,360

 
46,403

Diluted
58,985

 
47,227





CARRIZO OIL & GAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(Unaudited)
 
 
 
 
 
 
 
March 31, 2016
 
December 31, 2015
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 

$2,158

 

$42,918

Accounts receivable, net
 
56,557

 
54,721

Derivative assets
 
96,175

 
131,100

Other current assets
 
3,665

 
3,443

Total current assets
 
158,555

 
232,182

Property and equipment
 
 
 
 
Oil and gas properties, full cost method
 
 
 
 
Proved properties, net
 
1,160,698

 
1,369,151

Unproved properties, not being amortized
 
310,859

 
335,452

Other property and equipment, net
 
12,031

 
12,258

  Total property and equipment, net
 
1,483,588

 
1,716,861

Deferred income taxes
 
—

 
46,758

Derivative assets
 
—

 
1,115

Other assets
 
8,789

 
10,330

Total Assets
 

$1,650,932

 

$2,007,246

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 

$32,716

 

$74,065

Revenues and royalties payable
 
56,557

 
67,808

Accrued capital expenditures
 
45,081

 
39,225

Accrued interest
 
20,941

 
21,981

Deferred income taxes
 
—

 
46,758

Other current liabilities
 
36,331

 
35,647

     Total current liabilities
 
191,626

 
285,484

Long-term debt
 
1,267,151

 
1,236,017

Asset retirement obligations
 
16,911

 
16,183

Derivative liabilities
 
17,235

 
12,648

Other liabilities
 
13,105

 
12,860

Total liabilities
 
1,506,028

 
1,563,192

Commitments and contingencies
 
 
 
 
Shareholders’ equity
 
 
 
 
Common stock, $0.01 par value, 90,000,000 shares authorized; 58,778,280 issued and outstanding as of March 31, 2016 and 58,332,993 issued and outstanding as of December 31, 2015
 
588

 
583

Additional paid-in capital
 
1,423,321

 
1,411,081

Retained earnings (Accumulated deficit)
 
(1,279,005
)
 
(967,610
)
Total shareholders’ equity
 
144,904

 
444,054

Total Liabilities and Shareholders’ Equity
 

$1,650,932

 

$2,007,246





CARRIZO OIL & GAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FROM OPERATING ACTIVITIES
(in thousands)
(Unaudited)
 
 
 
 
 
 Three Months Ended March 31,
 
2016
 
2015
 
 
 
 
Cash Flows From Operating Activities
 
 
 
Net loss

($311,395
)
 

($21,210
)
Income from discontinued operations, net of income taxes
—

 
(266
)
Adjustments to reconcile loss from continuing operations to net cash provided by operating activities from continuing operations
 
 
 
Depreciation, depletion and amortization
59,577

 
73,871

Impairment of proved oil and gas properties
274,413

 
—

(Gain) loss on derivatives, net
(10,553
)
 
(26,439
)
Cash received for derivative settlements, net
51,163

 
49,064

Stock-based compensation expense, net
11,522

 
9,853

Deferred income taxes
—

 
(11,531
)
Non-cash interest expense, net
1,160

 
1,971

Other, net
1,116

 
8,248

Changes in operating assets and liabilities-
 
 
 
Accounts receivable
(2,065
)
 
6,517

Accounts payable
(18,711
)
 
(13,670
)
Accrued liabilities
(1,667
)
 
(1,991
)
Other, net
(692
)
 
(950
)
Net cash provided by operating activities from continuing operations

$53,868

 

$73,467

Changes in working capital attributable to operating activities and other non-recurring items, net
21,957

 
10,094

Discretionary cash flows from continuing operations

$75,825

 

$83,561






CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND REALIZED PRICES
(Unaudited)
 
 
 
 Three Months Ended March 31,
 
 
2016
 
2015
Total production volumes -
 
 
 
 
    Crude oil (MBbls)
 
2,348

 
1,924

    NGLs (MBbls)
 
414

 
318

    Natural gas (MMcf)
 
6,373

 
5,234

    Total barrels of oil equivalent (MBoe)
 
3,824

 
3,114

 
 
 
 
 
Daily production volumes by product -
 
 
 
 
    Crude oil (Bbls/d)
 
25,806

 
21,373

    NGLs (Bbls/d)
 
4,547

 
3,529

    Natural gas (Mcf/d)
 
70,033

 
58,159

    Total barrels of oil equivalent (Boe/d)
 
42,025

 
34,595

 
 
 
 
 
Daily production volumes by region (Boe/d) -
 
 
 
 
    Eagle Ford
 
30,971

 
24,504

    Niobrara
 
3,186

 
3,028

    Marcellus
 
6,026

 
5,973

    Utica
 
1,223

 
726

    Delaware Basin and other
 
619

 
364

    Total barrels of oil equivalent (Boe/d)
 
42,025

 
34,595

 
 
 
 
 
Realized prices -
 
 
 
 
    Crude oil ($ per Bbl)
 

$28.96

 

$43.17

    Crude oil ($ per Bbl) - including impact of derivative settlements
 

$50.75

 

$66.84

    NGLs ($ per Bbl)
 

$8.31

 

$14.07

    Natural gas ($ per Mcf)
 

$1.54

 

$2.39

Natural gas ($ per Mcf) - including impact of derivative settlements
 

$1.54

 

$3.06







CARRIZO OIL & GAS, INC.
COMMODITY DERIVATIVE CONTRACTS - AS OF APRIL 29, 2016
(Unaudited)
 
 
 
 
 
 
 
 
 
CRUDE OIL DERIVATIVE CONTRACTS (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average
 
Weighted Average
 
 
 
 
Volume
 
Floor Price
 
Ceiling Price
Period
 
Type of Contract
 
(in Bbls/d)
 
($/Bbl)
 
($/Bbl)
Q2 2016
 
Fixed Price Swaps
 
9,750
 
$60.03
 
 
 
 
Costless Collars
 
4,000
 
$50.00
 
$76.50
Q3 2016
 
Fixed Price Swaps
 
9,750
 
$60.03
 
 
 
 
Costless Collars
 
4,000
 
$50.00
 
$76.50
Q4 2016
 
Fixed Price Swaps
 
9,750
 
$60.03
 
 
 
 
Costless Collars
 
4,000
 
$50.00
 
$76.50
 
 
 
 
 
 
 
 
 
Q1 - Q2 2017
 
Fixed Price Swaps
 
12,000
 
$50.13
 
 
 
 
 
 
 
 
 
 
 
FY 2018
 
Sold Call Options
 
3,388
 
 
 
$63.98
 
 
 
 
 
 
 
 
 
FY 2019
 
Sold Call Options
 
3,875
 
 
 
$65.98
 
 
 
 
 
 
 
 
 
FY 2020
 
Sold Call Options
 
4,575
 
 
 
$67.95

NATURAL GAS DERIVATIVE CONTRACTS
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted Average
 
 
 
 
Volume
 
Ceiling Price
Period
 
Type of Contract
 
(in MMBtu/d)
 
($/MMBtu)
FY 2017
 
Sold Call Options
 
33,000
 
$3.00
 
 
 
 
 
 
 
FY 2018
 
Sold Call Options
 
33,000
 
$3.25
 
 
 
 
 
 
 
FY 2019
 
Sold Call Options
 
33,000
 
$3.25
 
 
 
 
 
 
 
FY 2020
 
Sold Call Options
 
33,000
 
$3.50
 
(1)
On February 11, 2015, Carrizo entered into derivative transactions offsetting its existing crude oil derivative contracts covering the periods from March 2015 through December 2016 locking in $166.4 million of cash flows, of which $18.3 million was received in the first quarter of 2016. Both the existing crude oil derivative contracts as well as the offsetting positions have been excluded from the table above. In the fourth quarter of 2015 and the first quarter of 2016, Carrizo entered into derivative transactions (volumes are included in the table above) which included premiums to be paid in future periods. In addition to the net cash to be paid or received from settlements of the derivative contracts shown in the tables above, Carrizo will receive net cash and will recognize revenue and Adjusted EBITDA related to the transactions described in this footnote as follows:

FIXED REVENUE AND ADJUSTED EBITDA
FROM PRIOR HEDGE TRANSACTIONS
 
 
 
Period
 
Net Cash from Derivative Settlements
(in thousands)
Q2 2016
 
$6,444
Q3 2016
 
$6,458
Q4 2016
 
$7,912
 
 
 
Q1 - Q2 2017
 
$1,766




CARRIZO OIL & GAS, INC.
SECOND QUARTER AND FULL YEAR 2016 GUIDANCE SUMMARY
 
 
 
 
 
 
 
 
 
Second Quarter 2016
 
Full Year 2016
Daily Production Volumes -
 
 
 
 
 
Crude oil (Bbls/d)
 
23,600 - 24,000
 
24,800 - 25,300
 
NGLs (Bbls/d)
 
3,700 - 3,900
 
4,000 - 4,200
 
Natural gas (Mcf/d)
 
56,000 - 60,000
 
54,000 - 60,000
 
Total (Boe/d)
 
36,633 - 37,900
 
37,800 - 39,500
 
 
 
 
 
 
Unhedged Commodity Price Realizations -
 
 
 
 
 
Crude oil (% of NYMEX oil)
 
90.0% - 92.0%
 
N/A
 
NGLs (% of NYMEX oil)
 
20.0% - 25.0%
 
N/A
 
Natural gas (% of NYMEX gas)
 
60.0% - 65.0%
 
N/A
 
 
 
 
 
 
Cash received for derivative settlements, net (in millions)
 
$26.5 - $29.5
 
N/A
 
 
 
 
 
 
Costs and Expenses -
 
 
 
 
 
Lease operating ($/Boe)
 
$6.50 - $7.00
 
$6.50 - $7.25
 
Production taxes (% of total revenues)
 
4.25% - 4.50%
 
4.25% - 4.75%
 
Ad valorem taxes (in millions)
 
$2.0 - $2.5
 
$8.5 - $10.5
 
Cash general and administrative, net (in millions)
 
$9.5 - $10.0
 
$41.0 - $42.5
 
DD&A ($/Boe)
 
$14.25 - $15.25
 
$14.00 - $16.00
 
Interest expense, net (in millions)
 
$19.0 - $21.0
 
N/A
 
 
 
 
 
 
Capitalized Items -
 
 
 
 
 
Drilling and completion capital expenditures (in millions)

 
N/A
 
$270.0 - $290.0
 
Capitalized interest (in millions)
 
$4.0 - $5.0
 
N/A