OREANDA-NEWS. Carrizo Oil & Gas, Inc. (Nasdaq:CRZO) today announced the Company’s financial results for the second quarter of 2016 and provided an operational update, which includes the following highlights:

•  Oil Production of 23,942 Bbls/d, 7% above the second quarter of 2015

• Total Production of 41,533 Boe/d, 15% above the second quarter of 2015

• Loss From Continuing Operations of $262.1 million, or $4.46 per diluted share, and Adjusted Net Income of $17.1 million, or $0.29 per diluted share

• Adjusted EBITDA of $97.6 million

• Increasing de-risked Eagle Ford Shale drilling inventory to more than 1,000 net locations

• Increasing 2016 crude oil production growth target to 10%

Carrizo reported a second quarter of 2016 loss from continuing operations of $262.1 million, or $4.46 per basic and diluted share compared to a loss from continuing operations of $47.0 million, or $0.92 per basic and diluted share in the second quarter of 2015. The loss from continuing operations for the second quarter of 2016 includes certain items typically excluded from published estimates by the investment community, including the impairment of proved oil and gas properties recognized this quarter. Adjusted net income, which excludes the impact of these items as described in the non-GAAP reconciliation tables included below, for the second quarter of 2016 was $17.1 million, or $0.29 per basic and diluted share compared to $20.4 million, or $0.40 and $0.39 per basic and diluted share, respectively, in the second quarter of 2015.

For the second quarter of 2016, Adjusted EBITDA was $97.6 million, a decrease of 23% from the prior year quarter as the impact of lower commodity prices more than offset the impact of higher production volumes. The definition of Adjusted EBITDA and the reconciliation to loss from continuing operations are presented in the non-GAAP reconciliation tables included below.

Production volumes during the second quarter of 2016 were 3,780 MBoe, or 41,533 Boe/d, an increase of 15% versus the second quarter of 2015. The year-over-year production growth was driven by strong results from the Company’s Eagle Ford Shale assets. Oil production during the second quarter of 2016 averaged 23,942 Bbls/d, an increase of 7% versus the second quarter of 2015; natural gas and NGL production averaged 74,248 Mcf/d and 5,217 Bbls/d, respectively, during the second quarter of 2016. Second quarter of 2016 production exceeded the high end of Company guidance due primarily to stronger-than-expected gas and NGL production from the Company’s Eagle Ford Shale assets and a lower-than-planned level of voluntary production curtailments at the Company's Marcellus Shale assets.

Drilling and completion capital expenditures for the second quarter of 2016 were $103.3 million. Approximately 80% of the second 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 $6.4 million. Given the improvement in the commodity price outlook since the beginning of the year, Carrizo has elected to eliminate the drilling and completion holidays it had originally scheduled for a portion of the fourth quarter of 2016. Additionally, the Company has elected to temporarily add a second frac crew in the Eagle Ford Shale during the third quarter in order to simultaneously frac pads located in close proximity of each other, which should result in a more efficient development of the area. Primarily as a result of these changes plus an increase in forecast non-operated activity, Carrizo is increasing its 2016 drilling and completion capital expenditure guidance to $370-$380 million from $270-$290 million. The majority of the incremental activity is expected to occur in the fourth quarter, and is not expected to have a material impact on 2016 production. The Company is maintaining its land and seismic capital expenditure guidance of $20 million for the year.

Carrizo is increasing its 2016 oil production guidance to 25,150-25,400 Bbls/d from 24,800-25,300 Bbls/d previously. Using the midpoint of this range, the Company’s 2016 oil production growth guidance is 10%. For natural gas and NGLs, Carrizo is increasing its 2016 guidance to 64-66 MMcf/d and 4,600-4,700 Bbls/d, respectively, from 54-60 MMcf/d and 4,000-4,200 Bbls/d. For the third quarter of 2016, Carrizo expects oil production to be 24,000-24,400 Bbls/d, and natural gas and NGL production to be 56-60 MMcf/d and 4,100-4,300 Bbls/d, respectively. 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, “We delivered another strong quarter operationally, with production again exceeding our forecast and operating expenses coming in below our forecast. Financially, we remain in a strong position as we have an excellent hedge book through the middle of next year and ample liquidity available on our revolver.

“Despite the recent decline in crude oil prices, we remain cautiously optimistic on the outlook for crude oil in 2017 given the improving supply/demand fundamentals. And with the strong economics we generate on our world-class Eagle Ford Shale asset even at current strip prices, we have elected to remove the drilling and completion holidays we had originally planned to take in the fourth quarter. While this does not have a material impact on 2016 production, it positions the Company to be able to deliver double-digit crude oil production growth in 2017 while spending within cash flow in a $55/Bbl WTI environment.

“Throughout the commodity price downturn, we have sought to maintain both our financial as well as our operational flexibility in order to be able to respond quickly to changing commodity prices. The decision to increase our activity level this year does not reduce this flexibility as we have not entered into any additional long-term contracts as a result of the planned activity increase. Thus, if commodity prices decline materially from current levels, we could easily remove most of the added capital from the 2016 plan.

“Our inventory of de-risked drilling locations in the Eagle Ford Shale continues to expand as a result of our downspacing initiatives. Based on results to date, we are increasing our estimate of future de-risked drilling locations in the play to more than 1,000 net locations excluding stagger-stack potential, or more than 15 years of inventory at our current drilling pace. Over time we expect to continue to expand our drilling inventory on this world-class asset, which should fuel strong production growth for years to come.

“We continued to test our Delaware Basin acreage during the quarter and remain pleased with our recent results. We elected to gather additional production history on the Liberator State 1H well, which achieved a 30-day rate of approximately 1,400 Boe/d on a restricted choke after being brought back online. And in late July, we brought online our most recent well in the play, the Corsair State 3H. The well is still cleaning up, but the early results are encouraging.”

Operational Update

In the Eagle Ford Shale, Carrizo drilled 19 gross (18.3 net) operated wells during the second quarter and completed 19 gross (18.0 net) wells. Crude oil production from the play was approximately 21,200 Bbls/d for the quarter, down from the prior quarter as production was impacted by significant downtime associated with planned shut-ins for offsetting completion activity. The majority of the planned downtime occurred at Brown Trust and RPG, two of the Company's oilier areas within its Eagle Ford Shale position. At the end of the quarter, Carrizo had 33 gross (32.1 net) operated Eagle Ford wells waiting on completion, equating to net crude oil production potential of more than 12,000 Bbls/d. The Company is operating two rigs in the Eagle Ford and currently expects to drill approximately 67 gross (63 net) operated wells and complete 73 gross (68 net) operated wells in the play during 2016.

In the Lower Eagle Ford, Carrizo has been developing its acreage on 330 ft. spacing for more than two years, and has now tested a significant portion of its position. Based on the results to date, the Company believes that the majority of the acreage tested warrants development at this spacing.

The Company currently has three stagger stack pilots with more than six months of production history. The pilots are testing effective lateral spacing ranging from 165 ft. to 280 ft. On average, the pilot wells recorded a 30-day oil rate of approximately 500 Bbls/d on a restricted choke. Average cumulative production after 180 days was approximately 90 MBo and 70 MBo for the pilots at Brown Trust and Irvin Ranch, respectively, which is in line with the non-staggered wells drilled on the pilot pads. The Company currently has three additional stagger-stack pilots with less than six months of production history, and plans to test more stagger-stack pilots on its core acreage position later this year.

As a result of the inventory expansion initiatives to date, Carrizo is increasing its de-risked drilling inventory in the Lower Eagle Ford Shale by approximately 85 net locations to more than 1,000 net locations, equating to more than 15 years of inventory at its current drilling pace. This figure still does not include any potential from stagger-stack development given the limited data set the Company has at this time. Carrizo plans to continue testing multiple spacing initiatives across its acreage position in order to further expand its inventory of highly economical, de-risked drilling locations, and expects to provide updates once sufficient production history is available.

In the Delaware Basin, Carrizo completed its Corsair State 3H well in late July. The well was drilled with an approximate 8,400 ft. lateral and completed with 37 frac stages. The well was recently brought online, and the Company expects to provide an update once the well has cleaned-up. Carrizo operates the Corsair State 3H with a 100% working interest. The Company currently expects to spud one additional Delaware Basin well during 2016. As a result, Carrizo now plans to drill three operated wells and complete three operated wells in the Delaware Basin during 2016.

Additionally, the Company elected to further test its Liberator State 1H well during the quarter. Upon being brought back online, the well achieved a 30-day rate of approximately 1,400 Boe/d (35% oil, 40% NGL, 25% gas) on a restricted choke. Carrizo currently expects the well to be flowing to sales later this quarter once infrastructure has been completed. Carrizo operates the Liberator State 1H with a 100% working interest.

In the Niobrara Formation, Carrizo did not drill or complete any operated wells during the second quarter. Crude oil production from the Niobrara was approximately 2,000 Bbls/d for the quarter, down from the prior quarter due to the lack of activity. For 2016, Carrizo has allocated a small amount of capital to the Niobrara for the completion of 9 gross (5.2 net) 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 second quarter. Oil and condensate production from the Utica during the quarter was approximately 520 Bbls/d, up from approximately 465 Bbls/d in the prior quarter. In the dry gas window of the Marcellus, the Company's production was 39.1 MMcf/d, up from 36.2 MMcf/d in the prior quarter as the Company decreased its voluntary production curtailments due to stronger-than-expected local market prices. Carrizo expects to continue to vary its Marcellus production for the balance of 2016 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

As of June 30, 2016, Carrizo had total debt outstanding of $1,315.4 million and cash and cash equivalents of $2.2 million. Total Secured Debt to Adjusted EBITDA, calculated in accordance with the covenants on the Company's revolving credit facility, was 0.2x for the second quarter while Net Debt to Adjusted EBITDA, calculated using the same methodology, was 3.2x. As of July 29, 2016, Carrizo had $60.0 million drawn on the facility.

Hedging Activity

Carrizo currently has hedges in place for approximately 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 $14.4 million of cash flows 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 flows 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.)

(Financial Highlights to Follow)

CARRIZO OIL & GAS, INC.  
CONSOLIDATED BALANCE SHEETS  
(In thousands, except share and per share data)  
(Unaudited)  
           
    June 30,
2016		   December 31,
2015		  
 Assets          
 Current assets          
  Cash and cash equivalents   $ 2,158     $ 42,918    
  Accounts receivable, net      55,976        54,721    
  Derivative assets      34,256        131,100    
  Other current assets      6,484        3,443    
  Total current assets      98,874        232,182    
 Property and equipment          
  Oil and gas properties, full cost method          
  Proved properties, net      1,142,383        1,369,151    
  Unproved properties, not being amortized      195,609        335,452    
  Other property and equipment, net      11,475        12,258    
  Total property and equipment, net      1,349,467        1,716,861    
 Deferred income taxes    —      46,758    
 Derivative assets    —      1,115    
 Other assets      9,302        10,330    
 Total Assets   $ 1,457,643     $ 2,007,246    
           
 Liabilities and Shareholders' Equity (Deficit)          
 Current liabilities          
  Accounts payable    $ 41,595     $ 74,065    
  Revenues and royalties payable     52,912       67,808    
  Accrued capital expenditures      51,647        39,225    
  Accrued interest      21,989         21,981    
  Deferred income taxes    —      46,758    
  Other current liabilities      34,504        35,647    
  Total current liabilities      202,647        285,484    
 Long-term debt      1,298,196        1,236,017    
 Asset retirement obligations      16,955        16,183    
 Derivative liabilities      34,850        12,648    
 Other liabilities      15,412        12,860    
  Total liabilities      1,568,060        1,563,192    
 Commitments and contingencies          
 Shareholders' equity (deficit)          
  Common stock, $0.01 par value, 90,000,000 shares authorized; 58,974,437 issued and outstanding as of June 30, 2016 and 58,332,993 issued and outstanding as of December 31, 2015      590        583    
  Additional paid-in capital       1,430,124        1,411,081    
  Accumulated deficit      (1,541,131 )      (967,610 )  
  Total shareholders' equity (deficit)      (110,417 )      444,054    
 Total Liabilities and Shareholders' Equity (Deficit)   $ 1,457,643     $ 2,007,246    
           
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
      2016       2015       2016       2015  
Revenues                
  Crude oil   $ 91,608     $ 111,257     $ 159,604     $ 194,315  
  Natural gas liquids       6,063         3,799         9,503         8,272  
  Natural gas       9,653         8,438         19,479         20,957  
  Total revenues       107,324         123,494         188,586         223,544  
                 
Costs and Expenses                
  Lease operating       23,114         23,375         46,789         45,091  
  Production taxes       4,623         5,031         8,054         9,049  
  Ad valorem taxes       454         1,723         2,524         4,756  
  Depreciation, depletion and amortization       51,966         79,331         111,543         153,202  
  General and administrative, net       19,624         19,095         40,927         50,672  
  (Gain) loss on derivatives, net       52,235         12,595         41,682         (13,844 )
  Interest expense, net       19,010         16,999         37,723         35,195  
  Impairment of proved oil and gas properties       197,070      —       471,483      —
  Loss on extinguishment of debt    —       38,137      —       38,137  
  Other expense, net       1,162         281         1,069         7,273  
  Total costs and expenses       369,258         196,567         761,794         329,531  
                 
Loss From Continuing Operations Before Income Taxes       (261,934 )       (73,073 )       (573,208 )       (105,987 )
Income tax (expense) benefit       (192 )       26,103         (313 )       37,541  
Loss From Continuing Operations        (262,126 )       (46,970 )       (573,521 )       (68,446 )
Income From Discontinued Operations, Net of Income Taxes    —       838      —       1,104  
Net Loss   ($ 262,126 )   ($ 46,132 )   ($ 573,521 )   ($ 67,342 )
                 
Net Loss Per Common Share - Basic                
Loss from continuing operations   ($ 4.46 )   ($ 0.92 )   ($ 9.79 )   ($ 1.40 )
Income from discontinued operations, net of income taxes    —       0.02      —       0.02  
Net loss   ($ 4.46 )   ($ 0.90 )   ($ 9.79 )   ($ 1.38 )
                 
Net Loss Per Common Share - Diluted                
Loss from continuing operations   ($ 4.46 )   ($ 0.92 )   ($ 9.79 )   ($ 1.40 )
Income from discontinued operations, net of income taxes    —       0.02      —       0.02  
Net loss   ($ 4.46 )   ($ 0.90 )   ($ 9.79 )   ($ 1.38 )
                 
Weighted Average Common Shares Outstanding                
Basic     58,806       51,225       58,583       48,827  
Diluted     58,806       51,225       58,583       48,827  
                 
CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                   
    Three Months Ended   Six Months Ended  
    June 30,   June 30,  
      2016       2015       2016       2015    
                   
Cash Flows From Operating Activities                  
Net loss   ($ 262,126 )   ($ 46,132 )   ($ 573,521 )   ($ 67,342 )  
Income from discontinued operations, net of income taxes    —       (838 )    —       (1,104 )  
Adjustments to reconcile loss from continuing operations to net cash
provided by operating activities from continuing operations		                  
  Depreciation, depletion and amortization        51,966         79,331         111,543         153,202    
  Impairment of proved oil and gas properties       197,070      —       471,483      —  
  (Gain) loss on derivatives, net       52,235         12,595         41,682         (13,844 )  
  Cash received for derivative settlements, net       27,300         45,129         78,463         94,193    
  Loss on extinguishment of debt    —       38,137      —       38,137    
  Stock-based compensation expense, net       10,892         4,943         22,414         14,796    
  Deferred income taxes    —       (26,430 )    —       (37,961 )  
  Non-cash interest expense, net       904         816         2,064         2,787    
  Other, net       1,226         (2,864 )       2,342         5,384    
Changes in components of working capital and other assets
and liabilities-		                  
  Accounts receivable       673         (2,785 )       (1,392 )       3,732    
  Accounts payable       (489 )       (2,767 )       (19,200 )       (16,437 )  
  Accrued liabilities       (7,109 )       (4,614 )       (8,776 )       (6,605 )  
  Other assets and liabilities, net       (371 )       (2,336 )       (1,063 )       (3,286 )  
  Net cash provided by operating activities from
  continuing operations		       72,171         92,185         126,039         165,652    
  Net cash used in operating activities from
  discontinued operations		    —       (1,019 )    —       (1,220 )  
  Net cash provided by operating activities        72,171         91,166         126,039         164,432    
Cash Flows From Investing Activities                  
Capital expenditures - oil and gas properties       (113,872 )       (168,448 )       (239,861 )       (377,995 )  
Proceeds from sales of oil and gas properties, net       12,852      —       14,637         285    
Other, net       (256 )       (2,258 )       (873 )       (4,857 )  
  Net cash used in investing activities from
  continuing operations		       (101,276 )       (170,706 )       (226,097 )       (382,567 )  
  Net cash used in investing activities from
  discontinued operations		    —       (834 )    —       (937 )  
  Net cash used in investing activities        (101,276 )       (171,540 )       (226,097 )       (383,504 )  
Cash Flows From Financing Activities                  
Issuance of senior notes    —       650,000      —       650,000    
Tender and redemption of senior notes    —       (626,681 )    —       (626,681 )  
Payment of deferred purchase payment    —    —    —       (150,000 )  
Borrowings under credit agreement       217,005         356,939         290,652         800,939    
Repayments of borrowings under credit agreement       (186,555 )       (288,939 )       (229,652 )       (683,939 )  
Payments of debt issuance costs       (1,100 )       (11,214 )       (1,150 )       (11,443 )  
Sale of common stock, net of offering costs    —       (265 )    —       231,316    
Proceeds from stock options exercised     —    —    —       46    
Other, net       (245 )    —       (552 )    —  
  Net cash provided by financing activities from
  continuing operations		       29,105         79,840         59,298         210,238    
  Net cash provided by financing activities from
  discontinued operations		    —    —    —    —  
  Net cash provided by financing activities        29,105         79,840         59,298         210,238    
Net Decrease in Cash and Cash Equivalents    —       (534 )       (40,760 )       (8,834 )  
Cash and Cash Equivalents, Beginning of Period       2,158         2,538         42,918         10,838    
Cash and Cash Equivalents, End of Period   $ 2,158     $ 2,004     $ 2,158     $ 2,004    
                   
CARRIZO OIL & GAS, INC.
NON-GAAP FINANCIAL MEASURES
                   
                   
RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS (GAAP)
TO ADJUSTED NET INCOME (NON-GAAP)
(Unaudited)
                   
Adjusted net income is a non-GAAP financial measure which excludes certain items that are included in loss from continuing operations, the most directly comparable GAAP financial measure. Items excluded are those that the Company believes affect the comparability of operating results and include items whose timing and/or amount cannot be reasonably estimated or items that are non-recurring.  The non-GAAP financial measure of adjusted net income is presented because management believes it provides useful additional information to investors for analysis of the Company's fundamental business on a recurring basis. In addition, management believes that adjusted net income is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry. Adjusted net income should not be considered in isolation or as a substitute for loss from continuing operations or any other measure of a company's financial performance or profitability presented in accordance with GAAP.  A reconciliation of the differences between loss from continuing operations and adjusted net income is presented below.  Because adjusted net income excludes some, but not all, items that affect loss from continuing operations and may vary among companies, our calculation of adjusted net income may not be comparable to similarly titled measures of other companies.
                   
      Three Months Ended   Six Months Ended
      June 30,   June 30,
        2016       2015       2016       2015  
      (in thousands, except per share data)
Loss From Continuing Operations (GAAP)   ($ 262,126 )   ($ 46,970 )   ($ 573,521 )   ($ 68,446 )
Income tax (expense) benefit     (192 )     26,103       (313 )     37,541  
Loss From Continuing Operations Before Income Taxes     (261,934 )     (73,073 )     (573,208 )     (105,987 )
(Gain) loss on derivatives, net     52,235       12,595       41,682       (13,844 )
Cash received for derivative settlements, net     27,300       45,129       78,463       94,193  
Non-cash general and administrative expense, net     10,825       8,147       22,583       21,224  
Impairment of proved oil and gas properties     197,070     —     471,483     —
Loss on extinguishment of debt   —     38,137     —     38,137  
Other (income) expense, net     1,162       281       (109 )     7,273  
Adjusted income before income taxes     26,658       31,216       40,894       40,996  
Adjusted income tax expense (1)     (9,517 )     (10,832 )     (14,599 )     (14,226 )
Adjusted Net Income (Non-GAAP)   $ 17,141     $ 20,384     $ 26,295     $ 26,770  
Adjusted Net Income Per Common Share - Basic   $ 0.29     $ 0.40     $ 0.45     $ 0.55  
Adjusted Net Income Per Common Share - Diluted   $ 0.29     $ 0.39     $ 0.44     $ 0.54  
                   
Weighted Average Common Shares Outstanding                
Basic     58,806       51,225       58,583       48,827  
Diluted     59,469       51,887       59,226       49,564  
                   
                   
  (1 ) Adjusted income tax expense is calculated by applying the Company's estimated annual effective income tax rates to the year-to-date adjusted income before income taxes. The Company's estimated annual effective income tax rates were 35.7% and 34.7% for the three months ended June 30, 2016 and 2015, respectively, and 35.7% and 34.7% for the six months ended June 30, 2016 and 2015, respectively.
 
 
                   
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES FROM CONTINUING
OPERATIONS (GAAP) TO DISCRETIONARY CASH FLOWS (NON-GAAP)
(Unaudited)
                 
Discretionary cash flows is a non-GAAP financial measure which excludes certain items that are included in net cash provided by operating activities from continuing operations, the most directly comparable GAAP financial measure.  Items excluded are changes in components of working capital and other items that the Company believes affect the comparability of operating cash flows such as items whose timing and/or amount cannot be reasonably estimated or items that are non-recurring. The non-GAAP financial measure of discretionary cash flows is presented because management believes it provides useful additional information to investors for analysis of the Company's ability to generate cash to internally fund exploration and development. In addition, management believes that discretionary cash flows is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry. Discretionary cash flows should not be considered in isolation or as a substitute for net cash provided by operating activities from continuing operations or any other measure of a company's cash flows or liquidity presented in accordance with GAAP. A reconciliation of the differences between net cash provided by operating activities from continuing operations and discretionary cash flows is presented below. Because discretionary cash flows excludes some, but not all, items that affect net cash provided by operating activities from continuing operations and may vary among companies, our calculation of discretionary cash flows may not be comparable to similarly titled measures of other companies.
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
      2016       2015       2016       2015  
    (in thousands)
Net Cash Provided By Operating Activities From Continuing Operations (GAAP)   $ 72,171     $ 92,185     $ 126,039     $ 165,652  
  Changes in components of working capital and other       8,022         16,891         29,979         26,985  
Discretionary Cash Flows (Non-GAAP)   $ 80,193     $ 109,076     $ 156,018     $ 192,637  
                 
RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS (GAAP)
TO ADJUSTED EBITDA (NON-GAAP)
(Unaudited)
                 
Adjusted EBITDA is a non-GAAP financial measure which excludes certain items that are included in loss from continuing operations, the most directly comparable GAAP financial measure. Items excluded are interest expense, depreciation, depletion and amortization and items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or items that are non-recurring. The non-GAAP financial measure of adjusted EBITDA is presented because management believes it provides useful additional information to investors for analysis of the Company's financial and operating performance on a recurring basis. In addition, management believes that adjusted EBITDA is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry. Adjusted EBITDA should not be considered in isolation or as a substitute for loss from continuing operations or any other measure of a company's financial performance or profitability presented in accordance with GAAP. A reconciliation of the differences between loss from continuing operations and adjusted EBITDA is presented below. Because adjusted EBITDA excludes some, but not all, items that affect loss from continuing operations and may vary among companies, our calculation of adjusted EBITDA may not be comparable to similarly titled measures of other companies.
                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
      2016       2015       2016       2015  
    (in thousands)
Loss From Continuing Operations (GAAP)   ($ 262,126 )   ($ 46,970 )   ($ 573,521 )   ($ 68,446 )
Income tax (expense) benefit     (192 )     26,103       (313 )     37,541  
Loss From Continuing Operations Before Income Taxes     (261,934 )     (73,073 )     (573,208 )     (105,987 )
  Depreciation, depletion and amortization     51,966       79,331       111,543       153,202  
  Interest expense, net     19,010       16,999       37,723       35,195  
  (Gain) loss on derivatives, net     52,235       12,595       41,682       (13,844 )
  Cash received for derivative settlements, net     27,300       45,129       78,463       94,193  
  Non-cash general and administrative expense, net     10,825       8,147       22,583       21,224  
  Impairment of proved oil and gas properties     197,070     —     471,483     —
  Loss on extinguishment of debt   —     38,137     —     38,137  
  Other (income) expense, net     1,162       281       (109 )     7,273  
Adjusted EBITDA (Non-GAAP)   $ 97,634     $ 127,546     $ 190,160     $ 229,393  
                 
CARRIZO OIL & GAS, INC.
PRODUCTION VOLUMES AND REALIZED PRICES
(Unaudited)
                 
     Three Months Ended     Six Months Ended 
    June 30,   June 30,
      2016       2015       2016       2015  
                 
Total production volumes -                
  Crude oil (MBbls)     2,179       2,028       4,527       3,951  
  NGLs (MBbls)     475       318       889       636  
  Natural gas (MMcf)     6,757       5,646       13,130       10,880  
Total barrels of oil equivalent (MBoe)     3,780       3,287       7,604       6,400  
                 
Daily production volumes by product -                
  Crude oil (Bbls/d)     23,942       22,284       24,874       21,831  
  NGLs (Bbls/d)     5,217       3,494       4,882       3,512  
  Natural gas (Mcf/d)     74,248       62,042       72,141       60,111  
Total barrels of oil equivalent (Boe/d)     41,533       36,118       41,779       35,361  
                 
Daily production volumes by region (Boe/d) -                 
  Eagle Ford     30,233       24,976       30,602       24,741  
  Niobrara     2,775       3,428       2,980       3,230  
  Marcellus      6,511       6,054        6,269       6,014  
  Utica      1,491       1,480       1,357       1,105  
  Delaware Basin and other     523       180       571       271  
Total barrels of oil equivalent (Boe/d)     41,533       36,118       41,779       35,361  
                 
Realized prices -                
  Crude oil ($ per Bbl)   $ 42.04     $ 54.86     $ 35.26     $ 49.18  
  Crude oil ($ per Bbl) - including impact of derivative settlements   $ 54.57     $ 74.89     $ 52.61     $ 70.99  
  NGLs ($ per Bbl)   $ 12.76     $ 11.95     $ 10.69     $ 13.01  
  Natural gas ($ per Mcf)   $ 1.43     $ 1.49     $ 1.48     $ 1.93  
  Natural gas ($ per Mcf) - including impact of derivative settlements   $ 1.43     $ 2.29     $ 1.48     $ 2.66  
                 
  CARRIZO OIL & GAS, INC.  
  COMMODITY DERIVATIVE CONTRACTS - AS OF JULY 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)  
  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 $9.3 million was received in the second 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 Adjusted EBITDA related to the transactions described in this footnote as follows:  
   
   
   
   
   
   
                     
FIXED ADJUSTED EBITDA
FROM PRIOR HEDGE TRANSACTIONS
                     
              Net Cash from Derivative Settlements  
      Period       (in thousands)  
      Q3 2016     $ 6,458    
      Q4 2016     $ 7,912    
               
      Q1 - Q2 2017     $ 1,766    
CARRIZO OIL & GAS, INC.
THIRD QUARTER AND FULL YEAR 2016 GUIDANCE SUMMARY
           
      Third Quarter 2016   Full Year 2016
Daily Production Volumes -        
  Crude oil (Bbls/d)    24,000 - 24,400    25,150 - 25,400
  NGLs (Bbls/d)    4,100 - 4,300    4,600 - 4,700
  Natural gas (Mcf/d)   56,000 - 60,000   64,000 - 66,000
  Total (Boe/d)   37,433 - 38,700   40,417 - 41,100
           
Unhedged Commodity Price Realizations -         
  Crude oil (% of NYMEX oil)   92.0% - 94.0%   N/A
  NGLs (% of NYMEX oil)   24.0% - 27.0%   N/A
  Natural gas (% of NYMEX gas)   50.0% - 55.0%   N/A
           
Cash received for derivative settlements, net (in millions)   $20.0 - $23.0   N/A
           
Costs and Expenses -        
  Lease operating ($/Boe)   $6.75 - $7.25   $6.25 - $6.75
  Production taxes (% of total revenues)   4.25% - 4.50%   4.25% - 4.50%
  Ad valorem taxes (in millions)   $1.5 - $2.0   $5.5 - $6.5
  Cash general and administrative, net (in millions)   $10.0 - $10.5   $40.0 - $41.0
  DD&A ($/Boe)   $12.50 - $13.50   $13.50 - $14.50
  Interest expense, net (in millions)   $21.0 - $22.0   N/A
           
Capitalized Items -         
  Drilling and completion capital expenditures (in millions)   N/A   $370.0 - $380.0
  Capitalized interest (in millions)   $2.5 - $3.0   N/A