Carrizo cuts drilling, completion spending by 35%

Carrizo Oil & Gas Inc., Houston, is cutting its drilling and completion capital expenditure plan for the year by 35% to $450-470 million, but expects to keep oil production roughly flat with last year’s fourth quarter.

Preliminary estimates of production volumes during the fourth quarter were 37,699 boe/d. Preliminary estimates of oil production during the quarter averaged 22,130 b/d, while preliminary estimates of natural gas and NGL production averaged 93.413 MMcfd of gas equivalent. During the year, the company saw oil production growth of 63%.

For the first quarter, Carrizo expects oil production of 20,300-20,700 b/d and natural gas and NGL production of 63-73 MMcfed.

Carrizo’s oil production guidance for 2015 is 21,800-22,400 b/d. Using the midpoint of this range, the company's oil production growth guidance for the year is 17%.

The company for the year is providing initial guidance of 65-75 MMcfed for natural gas and NGLs, assuming Carrizo voluntarily curtails a larger amount of volumes in the Marcellus shale in 2015 vs. 2014 due to depressed local market prices.

S.P. Johnson IV, Carrizo’s president and chief executive officer, said, “Given the decline in commodity prices, we have been working diligently to reduce our service costs. As an example, we have achieved cost savings of 12% from late 2014 levels in the Eagle Ford shale, and expect this to increase to 20% by yearend. If commodity prices stay at depressed levels, we would expect service costs to decline further."

Carrizo says the reduced capital budget should allow the company to run three rigs in the Eagle Ford during the year as well as participate in lease maintenance activity in the Niobrara and Utica shales. The company’s initial 2015 land and seismic capital expenditure plan is $35 million.

The company is increasing its type curve estimated ultimate recovery EUR in the Eagle Ford to 510,000 boe/well from 499,000 boe/well due to continued strong performance across its position. Through the combination of continued improvements in operating efficiency and service cost reductions, Carrizo now expects completed well costs to average $5.8 million by this year’s fourth quarter.

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