<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number 000-22915.
CARRIZO OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 76-0415919
----- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
14811 ST. MARY'S LANE, SUITE 148, HOUSTON, TEXAS 77079
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
</TABLE>
(281) 496-1352
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]*. No [ ]
* The registrant became subject to the reporting requirements of Section 13 of
the Securities Act of 1933 on August 5, 1997.
The number of shares outstanding of the registrant's common stock, par value
$0.01 per share, as of May 11, 1998, the latest practicable date, was
10,375,000.
<PAGE> 2
CARRIZO OIL & GAS, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C> <C> <C>
Item 1. Condensed Balance Sheets
- As of March 31, 1998 and December 31, 1997 2
Condensed Statements of Operations
- For the three-month periods ended March 31, 1998 and 1997 3
Condensed Statements of Cash Flows
- For the three-month periods ended March 31, 1998 and 1997 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Items 1-6. 13
SIGNATURES 18
</TABLE>
<PAGE> 3
CARRIZO OIL & GAS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
---------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,674,837 $ 11,800,235
Accounts receivable 3,635,504 3,100,382
Advances to operators 1,817,990 1,914,846
Other current assets 108,633 116,613
------------- ------------
Total current assets 8,236,964 16,932,076
PROPERTY AND EQUIPMENT, net (full-cost method of accounting for oil and gas
properties 45,082,833 53,276,520
OTHER ASSETS 338,638 303,791
------------- ------------
$ 53,658,435 $ 70,512,387
============= ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable, trade $ 10,433,479 $ 6,014,823
Dividends payable -- 622,500
Other current liabilities 79,328 66,131
------------- ------------
Total current liabilities 10,512,807 6,703,454
LONG-TERM DEBT 7,950,000 --
DEFERRED INCOME TAXES 2,300,267 2,400,170
MANDATORILY REDEEMABLE PREFERRED STOCK (10,000,000 shares authorized
with none and 300,000 issued and outstanding at December 31, 1997
and March 31, 1998, respectively)(Note 4) -- 28,558,424
SHAREHOLDERS' EQUITY:
Warrants (Note 4) -- 300,000
Common Stock (40,000,000 shares authorized with 10,375,000 issued
and outstanding at December 31, 1997 and March 31, 1998) 103,750 103,750
Additional paid-in capital 32,845,727 32,845,727
Retained earnings (deficit) 365,690 (119,268)
Deferred compensation (419,806) (279,870)
------------- ------------
32,895,361 32,850,339
------------- ------------
$ 53,658,435 $ 70,512,387
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 4
CARRIZO OIL & GAS, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
----------------------------
1997 1998
------------- -------------
<S> <C> <C>
OIL AND NATURAL GAS REVENUES $ 1,853,170 $ 2,338,882
COSTS AND EXPENSES:
Oil and natural gas operating expenses 557,464 629,446
Depreciation, depletion and amortization 382,475 759,504
General and administrative 197,615 834,352
----------- ------------
Total costs and expenses 1,137,554 2,223,302
----------- ------------
OPERATING INCOME 715,616 115,580
OTHER INCOME AND EXPENSES:
Interest income -- 193,503
Interest expense (146,447) (57,731)
Interest expense, related parties (42,051) --
Capitalized interest 188,498 54,646
----------- ------------
INCOME BEFORE INCOME TAXES 715,616 305,998
INCOME TAX EXPENSE (Note 3) -- 120,463
----------- ------------
NET INCOME $ 715,616 $ 185,535
=========== ============
LESS: DIVIDENDS AND ACCRETION ON
PREFERRED SHARES -- (670,494)
----------- ------------
NET INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS $ 715,616 (484,959)
=========== ============
BASIC EARNINGS (LOSS) PER COMMON
SHARE (Note 2) $ .06 (.05)
=========== ============
DILUTED EARNINGS (LOSS) PER COMMON
SHARE (Note 2) $ .06 (.05)
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 5
CARRIZO OIL & GAS, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
-----------------------------
1997 1998
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 715,616 $ 185,535
Adjustment to reconcile net income (loss) to net cash provided by
operating activities
Depreciation, depletion and amortization 382,475 759,504
Deferred income taxes -- 99,903
Changes in assets and liabilities-
Accounts receivable (818,190) 535,122
Other current assets (42,452) (7,980)
Accounts payable, trade 1,538,883 (5,013,493)
Interest payable to related parties and other current liabilities 60,165 (13,197)
------------- -------------
Net cash provided by (used in)
operating activities 1,836,497 (3,454,606)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, accrual basis (4,416,945) (8,918,344)
Adjustment to cash basis 63,338 734,773
Advance to operators -- (96,856)
------------- -------------
Net cash used in
investing activities (4,353,607) (8,280,427)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of preferred stock -- 28,810,431
Proceeds from long-term debt 2,965,000 --
Debt repayments (500,000) (7,950,000)
Proceeds from related-party notes payable 105,000 --
Distributions (45,000) --
------------- -------------
Net cash provided by
financing activities 2,525,000 20,860,431
------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,890 9,125,398
CASH AND CASH EQUIVALENTS, beginning of period 1,492,603 2,674,837
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 1,500,493 $ 11,800,235
============= =============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest (net of amounts capitalized) $ -- $ --
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 6
CARRIZO OIL & GAS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. NATURE OF OPERATIONS, COMBINATION AND OFFERING
The condensed financial statements included herein have been prepared by
Carrizo Oil & Gas, Inc. (the Company), and are unaudited, except for the
balance sheet at December 31, 1997, which has been prepared from the audited
financial statements at that date. The financial statements reflect necessary
adjustments, all of which were of a recurring nature, and are in the opinion of
management necessary for a fair presentation. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC). The
Company believes that the disclosures presented are adequate to allow the
information presented not to be misleading. The condensed financial statements
included herein should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
The Company was formed in 1993 and is the surviving entity after a series of
combination transactions (the Combination). The Combination included the
following transactions: (a) Carrizo Production, Inc. (a Texas corporation and
an affiliated entity with ownership substantially the same as Carrizo), was
merged into Carrizo and the outstanding shares of capital stock of Carrizo
Production, Inc., were exchanged for an aggregate of 343,000 shares of common
stock of Carrizo; (b) Carrizo acquired Encinitas Partners Ltd. (a Texas limited
partnership of which Carrizo Production, Inc., served as the general partner)
as follows: Carrizo acquired from the shareholders who serve as directors of
Carrizo their limited partner interests in Encinitas Partners Ltd. for an
aggregate consideration of 468,533 shares of common stock and, on the same
date, Encinitas Partners Ltd. was merged into Carrizo and the outstanding
limited partner interests in Encinitas Partners Ltd. were exchanged for an
aggregate of 860,699 shares of common stock; (c) La Rosa Partners Ltd. (a Texas
limited partnership of which Carrizo served as the general partner) was merged
into Carrizo and the outstanding limited partner interests in La Rosa Partners
Ltd. were exchanged for an aggregate of 48,700 shares of common stock; and (d)
Carrizo Partners Ltd. (a Texas limited partnership of which Carrizo served as
the general partner) was merged into Carrizo and the outstanding limited
partner interests in Carrizo Partners Ltd. were exchanged for an aggregate of
569,068 shares of common stock.
Simultaneous with the Combination, the Company completed its initial public
offering (the Offering) of 2,875,000 shares of its common stock at a public
offering price of $11.00 per share. The Offering provided the Company with
proceeds of approximately $28.1 million, net of expenses.
The Combination was accounted for as a reorganization of entities as prescribed
by Securities and Exchange Commission (SEC) Staff Accounting Bulletin 47
because of the high degree of common ownership among, and the common control
of, the combining entities. Accordingly, the accompanying financial statements
have been prepared using the historical costs and results of operations of the
affiliated entities. There were no significant differences in accounting
methods or their application among the combining entities. All intercompany
balances have been eliminated. Certain reclassifications have been made to
prior period amounts to conform to the current period's financial statement
presentation.
-5-
<PAGE> 7
2. EARNINGS PER COMMON SHARE:
Supplemental earnings per share information is provided below:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,1997
------------------------------------------------
Per-Share
Income Shares Amount
-------------- ------------- ---------------
<S> <C> <C> <C>
Net Income (pro forma), see Note 3 $ 457,994
Basic Earnings per Share
Net Income available to common shareholders $ 457,994 7,500,000 $0.06
=====
Stock Options -- 222,120
----------- ------------
Diluted Earnings per Share
Net Income available to common
shareholders plus assumed conversions $ 457,994 7,722,120 $0.06
========== ============ =====
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1998
------------------------------------------------
Per-Share
Income Shares Amount
-------------- ------------- ---------------
<S> <C> <C> <C>
Net Income $ 185,535
Less: Dividends and accretion on preferred stock $(670,494)
---------
Basic Earnings per Share
Net Loss available to common shareholders $(484,959) 10,375,000 $(0.05)
======
Stock Options -- 112,769
--------- -----------
Diluted Earnings per Share
Net Loss available to common shareholders plus
assumed conversions $ (484,959) 10,487,769 $(0.05)
========== ========== ======
</TABLE>
Net income (loss) per common share has been computed by dividing net income
(loss) by the weighted average number of shares of common stock outstanding
during the periods. During the three months ended March 31, 1998, the Company
had outstanding 250,000 stock options and warrants to purchase 1,000,000 shares
of common stock, which were antidillutive and were not included in the
calculation as the exercise price exceeded the market value. In 1997, the
Company adopted SFAS No. 128, "Earnings per Share," effective December 31, 1997.
There was no effect for this accounting change on previously reported earnings
per share (EPS) data.
3. INCOME TAXES:
The following includes pro forma income taxes and net income for the three-month
period ended March 31, 1997, using the incremental statutory federal income tax
rate which would have been provided had the Company been a taxpaying entity for
all periods presented. The Company was not a taxpaying entity until June, 1997.
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
---------------
1997
----
<S> <C>
Income before income taxes $715,616
Pro forma income taxes 257,622
-------
Pro forma net income $457,994
========
</TABLE>
-6-
<PAGE> 8
4. SALES OF PREFERRED STOCK AND WARRANTS:
In January 1998, the Company consummated the sale of 300,000 shares of Preferred
Stock and Warrants to purchase 1,000,000 shares of Common Stock to affiliates of
Enron Corp. The net proceeds received by the Company from this transaction were
approximately $28.8 million. A portion of the proceeds were used to repay
indebtedness of $7.95 million. The remaining proceeds are expected to be used
primarily for oil and natural gas exploration and development activities in
Texas and Louisiana. The Preferred Stock provides for annual cumulative
dividends of $9.00 per share, payable quarterly in cash or, at the option of the
Company until January 15, 2002, in additional shares of Preferred Stock.
Payments for the quarter ended March 31, 1998 were made by the issuance of an
additional 6,225 shares of Preferred Stock. As of April 15, 1998, there were
306,225 shares of Preferred Stock outstanding. The Warrants, which had a fair
value at issuance of $.30 per share, will be accreted through the term of the
Preferred Stock.
The Preferred Stock is required to be redeemed by the Company (i) on January 8,
2005, or (ii) after a request for redemption from the holders of at least
30,000 shares of the Preferred Stock (or, if fewer than such number of shares
of Preferred Stock are outstanding, all of the outstanding shares of Preferred
Stock) and the occurrence of certain events. The Preferred Stock also may be
redeemed at the option of the Company at any time in whole or in part. All
redemptions are at a price per share, together with dividends accumulated and
unpaid to the date of redemption, decreasing over time from an initial rate of
$104.50 per share to $100 per share. The Warrants (i) enable the holders to
purchase 1,000,000 share of Common Stock at a price of $11.50 per share
(payable in cash, by "cashless exercise" and certain other methods), subject to
adjustments, (ii) expire after a seven-year term, and (iii) are exercisable
after one year.
5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement No. 130, "Reporting Comprehensive Income" (Statement No. 130") and
Statement No. 131, "Disclosures About Segments of an Enterprise and Related
Information ("Statement No. 131"). In February 1998, the FASB issued Statement
No. 132 "Employers' Disclosure About Pension and Other Post-retirement
Benefits" ("Statement No. 132") that revised disclosure requirements for
pension and other post- retirement benefits. Statement No. 132 does not impact
Carrizo's disclosure or reporting. During the first quarter of 1998, the
Accounting Standards Executive Committee of the American Institute of Certified
Public Accounts issued two Statements of Position ("SOP"), SOP 98-5 "Reporting
on the Costs of Start-up Activities and SOP 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use".
Statement No. 130 established standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. This standard does not currently alter the Company's
reporting or disclosure.
Statement No. 131 established standards for the way public enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to share holders. It also
established standards for related disclosure about products and services,
geographic areas and major customers. Statement No. 131 will not currently
impact the Company's disclosure or reporting.
SOP 98-1 establishes guidance on the accounting for the costs of computer
software developed or obtained for internal use. The Company's current
accounting policies adhere to the provisions of the SOP.
SOP 98-5 provides guidance on the accounting for start up costs and
organization costs, and must be adopted for fiscal years beginning after
December 15, 1998. At adoption, the Company will be required to record the
cumulative effect of a change in accounting principle to write off any
unamortized start up or organization costs remaining on the balance sheet. The
Company plans to adopt the SOP in the first quarter of 1999.
-7-
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected certain aspects of the Company's financial position
and results of operations during the periods included in the accompanying
unaudited condensed financial statements. This discussion should be read in
conjunction with the discussion under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the annual financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 and the unaudited condensed financial statements
included elsewhere herein. Unless otherwise indicated by the context,
references herein to "Carrizo" or "Company" mean Carrizo Oil & Gas, Inc., a
Texas corporation that is the registrant.
GENERAL OVERVIEW
The Company began operations in September 1993 and initially focused on the
acquisition of producing properties. As a result of the increasing availability
of economic onshore 3-D seismic surveys, the Company began to obtain 3-D seismic
data and options to lease substantial acreage in 1995 and began to drill its 3-D
based prospects in 1996. The Company drilled 70 wells in 1997 and ten wells
through the three months ended March 31, 1998. The Company had initially
budgeted to drill a total of 150 gross wells in 1998. As a result of unexpected
delays in settling certain land issues and poor weather, the Company drilled ten
wells in the three months ended March 31, 1998 which is fewer than number
contemplated in the initial budget. The Company anticipates accelerating the
drilling schedule for the remainder of the year and accordingly still hopes to
achieve its goal of drilling a total of 150 gross wells (including the ten wells
drilled during the three months ended March 31, 1998) in 1998. However,
considering the unexpected delays which were encountered in the first quarter,
there is an increased risk that this goal will not be achieved. Depreciation,
depletion and amortization, oil and gas operating expenses and production are
expected to increase. The Company has typically retained the majority of its
interests in shallow, normally pressured prospects and sold a portion of its
interests in deeper, overpressured prospects.
The financial statements are prepared on the basis of a combination of Carrizo
and the entities that were a party to the Combination Transactions. Carrizo
and the entities combined with it in the Combination Transactions were not
required to pay federal income taxes due to their status as partnerships or
Subchapter S corporations, which are not subject to federal income taxation.
Instead, taxes for such periods were paid by the shareholders and partners of
such entities. On May 16, 1997, Carrizo terminated its status as an S
corporation and thereafter became subject to federal income taxes. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," the Company established a deferred tax liability
in the second quarter of 1997 which resulted in a noncash charge to income of
approximately $1.6 million.
The Company has primarily grown through the internal development of properties
within its exploration project areas, although the Company acquired properties
with existing production in the Camp Hill Project in late 1993, the Encinitas
Project in early 1995 and the La Rosa Project in 1996. The Company made these
acquisitions through the use of limited partnerships with Carrizo or Carrizo
Production, Inc. as the general partner. However, as operations have expanded,
the Company has increasingly funded its activities through bank borrowings and
cash flow from operations in order to retain a greater portion of the interests
it develops.
The Company's revenues, profitability, future growth and ability to borrow
funds or obtain additional capital, and the carrying value of its properties
are substantially dependent on the success of the Company's exploration program
and the prevailing prices of oil and natural gas. It is impossible to predict
future oil and natural gas price movements with certainty. Declines in prices
received for oil and natural gas may have an adverse effect on the Company's
financial condition, liquidity, ability to finance capital expenditures, and
results of operations. Lower prices may also impact the amount of reserves
that can be produced economically by the Company.
Due to the instability of oil and natural gas prices, in 1995 the Company began
utilizing, from time to time, certain hedging instruments (e.g., NYMEX futures
contracts) for a portion of its oil and gas production to achieve a more
predictable cash flow, as well as to reduce the exposure to price fluctuations.
The Company's hedging arrangements apply to only a portion of its production,
provide only partial price protection against declines in oil and natural gas
prices and limit potential gains from future increases in prices. Such hedging
arrangements may expose the Company to risk of financial loss in certain
circumstances, including instances where production is less than expected, the
Company's customers fail to purchase contracted quantities of oil or natural
gas, or a sudden unexpected event materially impacts oil or natural gas prices.
The Company accounts for all these transactions as hedging activities and,
accordingly, gains and losses from hedging activities are included in oil and
gas revenues during the period the hedged transactions occur. Historically,
gains and losses from hedging activities have not been material. The Company
expects that the amount of hedges that it has in place will vary from time to
time. The Company entered in hedging transactions covering 180 Mmcf for the
first quarter of 1998 at an average price (Houston Ship Channel) of $2.99
resulting in a net gain of
-8-
<PAGE> 10
$150,000. The Company had outstanding hedge positions as of March 31, 1998
covering 488 Mmcf for April-July 1998 at an average price of $2.15 (Houston
Ship Channel).
The Company uses the full-cost method of accounting for its oil and gas
properties. Under this method, all acquisition, exploration and development
costs, including any general and administrative costs that are directly
attributable to the Company's acquisition, exploration and development
activities, are capitalized in a "full-cost pool" as incurred. The Company
records depletion of its full-cost pool using the unit-of-production method. To
the extent that such capitalized costs in the full-cost pool (net of
depreciation, depletion and amortization and related deferred taxes) exceed the
present value (using a 10 percent discount rate) of estimated future net
after-tax cash flows from proved oil and gas reserves, such excess costs are
charged to operations. The Company has not been required to make any such
write-downs. Once incurred, a write-down of oil and gas properties is not
reversible at a later date. The ceiling test for many full cost companies,
including Carrizo, could be negatively impacted by prolonged unfavorable oil and
gas prices, potentially resulting in the Company recording a non-cash charge to
earnings related to its oil and gas properties during 1998.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998,
Compared to the Three Months Ended March 31, 1997
Oil and natural gas revenues for the three months ended March 31, 1998
increased 26 percent to $2,339,000 from $1,853,000 for the same period in 1997.
Production volumes for natural gas during the three months ended March 31, 1998
increased 19 percent to 707,171 Mcf from 592,274 Mcf for the same period in
1997. Average gas prices increased 12 percent to $2.64 per Mcf in the first
quarter of 1998 from $2.35 per Mcf in the same period in 1997. Production
volumes for oil in the first quarter of 1998 increased 55 percent to 33,175
Bbls from 21,382 Bbls for the same period in 1997. Average oil prices
decreased 34 percent to $14.19 per barrel in the first quarter of 1998 from
$21.51 per barrel in the same period in 1997. The increase in natural gas
production was due primarily to production from new wells drilled and completed
during 1997.
The following table summarizes production volumes, average sales prices and
operating revenues for the Company's oil and natural gas operations for the
three months ended March 31, 1997 and 1998:
<TABLE>
<CAPTION>
1998 Period
Compared to 1997 Period
-----------------------
March 31 Increase % Increase
1997 1998 (Decrease) (Decrease)
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Production volumes-
Oil and condensate (Bbls) 21,382 33,175 11,793 55%
Natural gas (Mcf) 592,274 707,171 114,897 19%
Average sales prices-(1)
Oil and condensate (per Bbl) $ 21.51 $ 14.19 $ (7.32) (34)%
Natural gas (per Mcf) 2.35 2.64 .29 12%
Operating revenues-
Oil and condensate $ 459,975 $ 470,689 $ 10,714 2%
Natural gas 1,393,195 1,868,193 474,998 34 %
----------- ----------- -----------
Total $ 1,853,170 $ 2,338,882 $ 485,712 26 %
=========== =========== ===========
</TABLE>
- ------------------
(1) Includes impact of hedging activities.
Oil and natural gas operating expenses for the three months ended March 31,
1998 increased 13 percent to $629,000 from $557,000 for the same period in 1997
primarily due to the addition of new production offset by a reduction in costs
on older producing fields. Operating expenses per equivalent unit decreased to
$.69 per Mcfe in the first quarter of 1998 from $.77 per Mcfe in the same
period in 1997 as a result of increased production of natural gas which had
lower per unit operating costs.
Depreciation, depletion and amortization (DD&A) expense for the three months
ended March 31, 1998 increased 99 percent to $760,000 from $382,000 for the
same period in 1997. This increase was due to increased production and
additional seismic and drilling costs. General and administrative expense for
the three months ended March 31, 1998 increased 322 percent to $834,000 from
$197,000 for the same period in 1997 as a result of increases in the number of
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<PAGE> 11
employees and related benefits, increased office space and legal fees,
professional fees and other expenses relating to year-end SEC reporting.
Interest income for the three months ended March 31, 1998 increased to $194,000
from zero in the first quarter of 1997. Net interest expense for the three
months ended March 31, 1998, increased to $3,000 from zero in the same period
in 1997. Capitalized interest decreased to $55,000 in the first quarter of
1998 from $188,000 in the first quarter of 1997 as total interest paid
decreased as a result of debt retirement using proceeds from the Offering.
Income before income taxes for the three months ended March 31, 1998 decreased
57 percent to $306,000 from $716,000 in the same period in 1997. Net income
for the three months ended March 31, 1998 decreased to income of $186,000 from
$716,000 for the same period in 1997 primarily as a result of the increased
DD&A, income taxes and general and administrative expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have included proceeds for the
Offering and from the sale of shares of Preferred Stock and the Warrants (each
as defined below), funds generated by operations, equity capital contributions
and borrowings, primarily under revolving credit facilities.
Cash flows (used in) provided by operations (after changes in working capital)
were $1,836,497 and $(2,928,962) for the three months ended March 31, 1997 and
1998, respectively. The decrease in cash flows provided by operations in 1998
as compared to 1997 was due primarily to decreases in trade accounts payable.
The Company has budgeted capital expenditures in 1998 of approximately $43.3
million. Of this amount, $18.6 million is expected to be used to fund 3-D
seismic surveys and land acquisitions and $24.7 million is expected to be used
for drilling activities in the Company's project areas. The Company has
budgeted to drill approximately 150 gross wells (71.8 net) in 1998. Actual
amounts of capital expenditures and number of wells drilled may differ
significantly from such estimates.
The Company has continued to reinvest a substantial portion of its cash flows
into increasing its 3-D prospect portfolio, improving its 3-D seismic
interpretation technology and funding its drilling program. Oil and gas
capital expenditures were $8.9 million for the three months ended March 31,
1998. The Company's drilling efforts resulted in the successful completion of
46 gross wells (17.5 net) during the year ended December 31, 1997 and 9 gross
wells (3.0 net) during the three months ended March 31, 1998.
The Company has experienced and expects to continue to experience substantial
working capital requirements primarily due to the Company's active exploration
and development programs and, to a much lesser extent, its technology
enhancement programs. While the Company believes that the net proceeds from
the Offering, net proceeds for the sale of shares of Preferred Stock and the
Warrants, cash flow from operations and borrowings under the Company's credit
facility should allow the Company to implement its present business strategy
during 1998, additional financing may be required in the future to fund the
Company's growth, development and exploration program and continued
technological enhancement. In the event such capital resources are not
available to the Company, its exploration and other activities may be
curtailed.
FINANCING ARRANGEMENTS
In connection with the Offering, the Company entered into an amended revolving
credit agreement with Compass Bank, (the "Company Credit Facility"), which
provides for a maximum loan amount of $25 million, subject to borrowing base
limitations. Prior to the Offering, the Company utilized various credit
facilities as well as borrowings from certain directors and officers of the
Company. Except for the Company Credit Facility, all of these facilities and
borrowings were terminated with the close of the Offering. Under the Company
Credit Facility, the principal outstanding is due and payable upon maturity in
June 1999 with interest due monthly. The interest rate for borrowings is
calculated at a floating rate based on the Compass index rate or LIBOR plus 2
percent. The Company's obligations are secured by certain of its oil and gas
properties and cash or cash equivalents included in the borrowing base.
Under the Company Credit Facility, Compass, in its sole discretion, will make
semiannual borrowing base determinations based upon the proved oil and natural
gas properties of the Company. Compass may redetermine the borrowing base and
the monthly borrowing base reduction at any time and from time to time. The
Company may also request borrowing base redeterminations in addition to its
required semiannual reviews at the Company's cost.
-10-
<PAGE> 12
The Company is subject to certain covenants under the terms of the Company
Credit Facility, including, but not limited to, (a) maintenance of specified
tangible net worth and (b) maintenance of a ratio of quarterly cash flow (net
income plus depreciation and other noncash charges, less noncash income) to
quarterly debt service (payments made for principal in connection with the
credit facility plus payments made for principal other than in connection with
such credit facility) of no less than 1.25 to 1.00. The Company Credit Facility
also places restrictions on, among other things, (a) incurring additional
indebtedness, loans and liens, (b) changing the nature of business or business
structure, (c) selling assets and (d) paying dividends.
In December 1997, the Company and Compass entered into an amendment to the
Company Credit Facility that provided for a term loan of $3 million. Interest
for borrowings under the term loan was calculated at a floating rate based on
the Company's index rate plus 2 percent. The amount outstanding under the term
loan as of December 31, 1997 was $3 million. Amounts outstanding under the
term loan were repaid in January 1998.
In January 1998, the Company consummated the sale of 300,000 shares of
Preferred Stock and Warrants to purchase 1,000,000 shares of Common Stock to
affiliates of Enron Corp. The net proceeds received by the Company from this
transaction were approximately $28.8 million. A portion of the proceeds were
used to repay indebtedness, as described above. The remaining balance is
expected to be used primarily for oil and natural gas exploration and
development activities in Texas and Louisiana. The Preferred Stock provides
annual cumulative dividends of $9.00 per share, payable quarterly in cash, or,
at the option of the Company until January 15, 2002, in additional shares of
Preferred Stock. Payments for the quarter ended March 31, 1998 were made by
the issuance of an additional 6,225 shares of Preferred Stock. As of April 15,
1998 there were 306,225 shares of Preferred Stock outstanding.
The Preferred Stock is required to be redeemed by the Company (i) on January 8,
2005, or (ii) after the occurrence of certain events, including (a) certain
failures to declare and pay any two dividends, (b) certain breaches of
provisions relating to the Preferred Stock, (c) for two consecutive fiscal
quarterly periods the quarterly Cash Flow (as defined below) of the Company is
less than the amount of the dividends accrued with respect to the Preferred
Stock, (d) certain failures to pay or accelerations with respect to
indebtedness for borrowed money, (e) certain violations of the shareholders'
agreement relating to the Preferred Stock and (f) certain sales or dispositions
of substantially all of the Company's assets. "Cash Flow" means net income
prior to preferred dividends and accretion (i) plus (to the extent included in
net income prior to preferred dividends and accretion) depreciation, depletion
and amortization and other non-cash charges and losses on the sale of property
(ii) minus non-cash income items and required principal payments on
indebtedness for borrowed money with a maturity from the original date of
incurrence of such indebtedness of six months or greater (excluding voluntary
prepayments and refinancings, but including prepayments (other than in
connection with refinancings) which would otherwise be due under such
indebtedness within a 60-day period following the date of such prepayments).
The Preferred Stock also may be redeemed at the option of the Company at any
time in whole or in part. All redemptions are at a price per share, together
with dividends accumulated and unpaid to the date of redemption, decreasing
over time from an initial rate of $104.50 per share to $100.00 per share.
EFFECTS OF INFLATION AND CHANGES IN PRICE
The Company's results of operations and cash flows are affected by changing oil
and gas prices. If the price of oil and gas increases (decreases), there could
be a corresponding increase (decrease) in the operating cost that the Company
is required to bear for operations, as well as an increase (decrease) in
revenues. Inflation has had a minimal effect on the Company.
-11-
<PAGE> 13
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
From time to time the Company is a party to various legal proceedings
arising in the ordinary course of business. The Company is not
currently a party to any litigation that it believes could have a
material adverse effect on the financial position of the Company.
Item 2 - Changes in Securities and Use of Proceeds
On January 8, 1998, the Company consummated the transactions
contemplated by the Stock Purchase Agreement dated January 8, 1998
(the "Purchase Agreement") among the Company, Enron Capital & Trade
Resources Corp., a Delaware corporation ("Enron"), and Joint Energy
Development Investments II, a Delaware limited partnership ("JEDI
II"). Such transactions include (i) the payment by Enron and JEDI II
of an aggregate purchase price of $30,000,000, (ii) the sale of 75,000
shares of 9% Series A Preferred Stock, par value $.01 per share (the
"Preferred Stock"), the terms of which are set forth in the Statement
of Resolution Establishing Series of Shares designated 9% Series A
Preferred Stock (the "Statement of Resolution"), to Enron and 225,000
shares of Preferred Stock to JEDI II, (iii) the grant of warrants (the
"Warrants") to purchase 250,000 and 750,000 shares of Common Stock to
Enron and JEDI II, respectively, and (iv) the execution and delivery
of the Shareholders' Agreement dated January 8, 1998 among the
Company, S.P. Johnson IV, Frank A. Wojtek, Steven A. Webster, Paul B.
Loyd, Jr., Douglas A.P. Hamilton, DAPHAM Partnership L.P., the Douglas
A.P. Hamilton 1997 GRAT, Enron and JEDI II.
The sale of the shares of Preferred Stock and the Warrants pursuant to
the purchase Agreement is exempt from the registration requirements of
the Securities Act of 1933, as amended, by virtue of Section 4(2)
thereof as a transaction not involving any public offering.
PREFERRED STOCK
The Statement of Resolution establishes a series of 500,000 shares
(300,000 of which were initially issued to Enron and JEDI II under the
Purchase Agreement) of the Company's preferred stock, designated as 9%
Series A Preferred Stock with preferences, limitations and relative
rights that include the following:
Dividends. Holders of Preferred Stock are entitled to receive
cumulative dividends at the rate of $9.00 per year on each share of
Preferred Stock, payable quarterly. Dividends will be paid, at the
option of the Company, (i) in cash or (ii) until and including the
January 15, 2002 dividend due date, by issuing additional shares of
Preferred Stock at the annual rate of 0.09 of a share of Preferred
Stock on each share of Preferred Stock.
Redemption. The Preferred Stock is required to be redeemed by the
Company (i) on January 8, 2005, or (ii) after a request for redemption
from the holders of at least 30,000 shares of the Preferred Stock (or,
if fewer than such number of shares of Preferred Stock are
outstanding, all of the outstanding shares of Preferred Stock) and the
occurrence of the following events: (a) the Company has failed at any
point in time to declare and pay any two dividends in the amount then
due and payable on or before the date the second of such dividends is
due and such dividends remain unpaid at such time, (b) the Company
breaches certain other covenants concerning the payment of dividends
or other distributions on or redemption or acquisition of shares of
its capital stock ranking at parity with or junior to the Preferred
Stock, (c) for two consecutive fiscal quarterly periods the quarterly
Cash Flow (as defined below) of the Company is less than the amount of
the dividends accrued in respect to the Preferred Stock, (d) the
Company fails to pay certain amounts due on indebtedness for borrowed
money or there has otherwise been an acceleration of such indebtedness
for borrowed money, (e) there is a violation of the Shareholders'
Agreement that is not waived or (f) the Company sells, leases,
exchanges or otherwise disposes of all or substantially all of its
property and assets which transaction does not provide for the
redemption of the Preferred Stock. "Cash Flow" means net income prior
to preferred dividends and accretion (i) plus (to the extent included
in net income prior to preferred dividends and accretion)
depreciation, depletion and amortization and other non-cash charges
and losses on the sale of property (ii) minus non-cash income items
and required principal payments on indebtedness for borrowed money
with a maturity from the original date of incurrence of such
indebtedness of six months or greater (excluding voluntary prepayments
and refinancings,
-13-
<PAGE> 14
but including prepayments (other than in connection with refinancings)
which would otherwise be due under such indebtedness within a 60-day
period following the date of such prepayment).
The Preferred Stock also may be redeemed at the option of the Company
at any time in whole or in part.
All redemptions are at a price per share, together with dividends
accumulated and unpaid to the date of redemption as follows: (i) if
the redemption occurs within 12 months of the date of initial issuance
of Preferred Stock, $104.50 per share; (ii) if the redemption occurs
after 12 months from but within 24 months of the date of initial
issuance of the Preferred Stock, $102.25 per share; (iii) if the
redemption occurs after 24 months from but within 36 months of the
date of initial issuance of the Preferred Stock, $101.125 per share;
and (iv) if the redemption occurs after 36 months from the date of
initial issuance of the Preferred Stock, $100.00 per share.
Voting. Holders of the Preferred Stock generally have no right to
vote for directors or on other matters except in certain circumstances
described herein or as otherwise required by law.
The holders of Preferred Stock have the right to approve, by the
affirmative vote of the holders of a majority of the shares of
Preferred Stock, a merger or share exchange where Carrizo is the
surviving entity and (i) the voting power of the number of voting
shares outstanding immediately after the merger exceeds by more than
30 percent the voting power of the total number of voting shares of
Carrizo outstanding immediately before the merger; or (ii) the number
of participating shares outstanding immediately after the merger
exceeds by more than 30 percent the total number of participating
shares of Carrizo outstanding immediately before the merger.
If, and only if, the Company fails to redeem the required number of
shares of Preferred Stock pursuant to clauses (a) through (d) of the
first paragraph under "--Redemption" above, the number of directors
constituting the Board of Directors will be expanded and the holders
of the Preferred Stock will have the right, voting separately as a
class, to elect a majority of the board. These voting rights continue
only until such time as the shares of Preferred Stock presented for
redemption and required to be redeemed have been redeemed or all
necessary funds have been set aside for payment.
If, and only if, the Company fails to redeem the required number of
shares of Preferred Stock pursuant clause (e) of the first paragraph
under "--Redemption" above, the number of directors constituting the
Board of Directors will be expanded by the number equal to the
difference between (i) the whole number nearest to the quotient of (A)
the number of directors then constituting the Board of Directors
(unless such number is less than two, in which case the number of
directors then constituting the Board of Directors will be deemed to
be two) divided by (B) 0.73 and (ii) the number of directors then
constituting the Board of Directors, and the holders of shares of
Preferred Stock have the right, voting separately as a class, to elect
the directors to fill such newly created directorships. These voting
rights continue only until such time as the shares of Preferred Stock
presented for redemption and required to be redeemed have been
redeemed or all necessary funds have been set aside for payment.
In addition, holders of the Preferred Stock have the right to approve
any authorization or issuance, or increase in the authorized amount of
(i) any stock ranking senior to the Preferred Stock or ranking on a
parity with the Preferred Stock and (ii) any security convertible into
or exchangeable or exercisable for stock of such class.
Holders of Preferred Stock also have the right to vote as a class in a
number of other circumstances as are required by Texas Business
Corporation Act ("TBCA"). The affirmative vote of the holders of a
majority of the holders of Shares of Preferred Stock entitled to vote
thereon (unless a higher percentage is required by law or the Amended
and Restated Articles of Incorporation of the Company) is required for
any of these actions. The Statement of Resolution sets forth such
provisions as they currently exist under the TBCA with respect to
certain amendments to the Company's Articles of Incorporation and
certain mergers.
-14-
<PAGE> 15
The terms of the Preferred Stock, including the voting rights thereof,
could have the effect of delaying, deferring or preventing a takeover
attempt of the Company.
Liquidation. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Company (a
"Liquidation"), before any distribution of assets is made to the
holders of any Junior Stock (as defined below) of the Company, the
holder of each share of Preferred Stock then outstanding will be
entitled to be paid out of the assets of the Company available for
distribution to its shareholders, an amount equal to the amount set
forth below plus all dividends accumulated and unpaid on such share on
the date fixed for the distribution of assets of the Company to the
holders of Preferred Stock: (i) if the Liquidation occurs within 12
months of the date of initial issuance of Preferred Stock, $104.50 per
share; (ii) if the Liquidation occurs after 12 months from but within
24 months of the date of initial issuance of the Preferred Stock,
$102.25 per share; (iii) if the Liquidation occurs after 24 months
from but within 36 months of the date of initial issuance of the
Preferred Stock, $101.125 per share; and (iv) if the Liquidation
occurs after 36 months from the date of initial issuance of the
Preferred Stock, $100.00 per share.
Ranking and Certain Covenants. The Preferred Stock ranks senior to
the Common Stock and all other series of the Company's preferred stock
(none of which are issued and outstanding as of the date hereof) as to
the payment of dividends, as to payments upon redemption and as to the
distribution of assets upon liquidation, dissolution or winding up
unless, after the approval of the holders of a majority of the shares
of Preferred Stock, the terms of such other series provide otherwise.
So long as any shares of Preferred Stock are outstanding, (i) no
dividends in cash, securities or other property may be declared, paid
or set aside for payment or any other distribution made upon any
Junior Stock (defined to include all stock ranking junior to the
Preferred Stock, including the Common Stock) (other than dividends or
distributions in Junior Stock or dividends of rights to purchase
preferred or common stock of the type commonly known as "poison pill
rights"; provided that such poison pill rights are not triggered
solely as a result of the exercise of the rights and remedies under
the Statement of Resolution, Stock Purchase Agreement, Shareholders'
Agreement and/or Warrant Certificates); and (ii) except for
redemptions, purchases or acquisitions of Preferred Stock, no parity
stock may be (A) redeemed pursuant to a sinking fund or otherwise
(unless all the parity stock is redeemed or a pro rata redemption is
made from all holders of parity stock, the amount allocable to each
series of such parity stock being determined on the basis of the
aggregate liquidation preference of the outstanding shares of each
series and the shares of each series are to be redeemed only on a pro
rata basis) or (B) purchased or otherwise acquired for any
consideration by the Company; and (iii) no Junior Stock may be
redeemed or acquired for consideration except by conversion into or
exchange for other Junior Stock; provided however that the Company
shall be entitled to pay in cash such sum as may be required to
eliminate fractional shares.
THE WARRANTS
The Warrants are exercisable during the period beginning January 8,
1999 and ending January 8, 2005 for the purchase of an aggregate of
1,000,000 shares of Common Stock (the "Warrant Shares") at an exercise
price of $11.50 per share, subject to certain adjustments. Each
Warrant may be exercised by (i) paying the exercise price (A) in cash
or (B) by surrender to the Company of shares of Preferred Stock or
(ii) exercising the Warrant for a number of net Warrant Shares equal
to (x) the number of Warrant Shares issuable upon exercise of the
Warrant multiplied by the difference between the average market price
of the Common Stock during the 20 trading day period preceding the
date of exercise and the exercise price divided by (y) the average
market price of the Common Stock during the 20 day trading period
preceding the date of exercise. In addition, with the consent of the
Company, the holder of the Warrant may receive a cash payment equal
to the number of Warrant Shares for which the Warrant is exercised
multiplied by the difference between the average market price of the
Common Stock during the 20 trading day period preceding the date of
exercise and the exercise price.
The number of Warrant Shares and exercise price are subject to
adjustment in certain circumstances, including (i) if the Company
makes a distribution of shares of Common Stock, subdivides or combines
its outstanding shares of Common Stock or issues any shares of its
capital stock or distributes other assets in a reclassification or
reorganization of the Common Stock, (ii) if the Company issues shares
of Common Stock or securities exercisable or exchangeable for or
convertible into shares of Common Stock for no consideration or for
less than the market value of the Common Stock, subject to certain
exceptions, and (iii) if the Company engages in a
-15-
<PAGE> 16
consolidation, merger or business combination with, or sells all or
substantially all of its assets to, another corporation.
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
FORWARD LOOKING STATEMENTS
The statements contained in all parts of this document, including, but
not limited to, those relating to the Company's schedule, targets, estimates or
results of future drilling, budgeted wells, increases in wells, budgeted and
other future capital expenditures, use of offering proceeds, effects of
litigation, expected production or reserves, increases in reserves, acreage
working capital requirements, hedging activities, the ability of expected
sources of liquidity to implement its business strategy, and any other
statements regarding future operations, financial results, business plans and
cash needs and other statements that are not historical facts are forward
looking statements. When used in this document, the words "anticipate,"
"estimate," "expect," "may," "project," "believe" and similar expression are
intended to be among the statements that identify forward looking statements.
Such statements involve risks and uncertainties, including, but not limited to,
those relating to the Company's dependence on its exploratory drilling
activities, the volatility of oil and natural gas prices, the need to replace
reserves depleted by production, operating risks of oil and natural gas
operations, the Company's dependence on its key personnel, factors that affect
the Company's ability to manage its growth and achieve its business strategy,
risks relating to, limited operating history, technological changes,
significant capital requirements of the Company, the potential impact of
government regulations, litigation, competition, the uncertainty of reserve
information and future net revenue estimates, property acquisition risks and
other factors detailed in the Registration Statement and the Company's other
filings with the Securities and Exchange Commission. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual outcomes may vary materially from those indicated.
Item 6 - Exhibits and Reports on Form 8-K
Exhibits
<TABLE>
<CAPTION>
Exhibit Description
Number -----------
------
<S> <C> <C>
+2.1 - Combination Agreement by and among the Company, Carrizo Production, Inc., Encinitas
Partners Ltd., La Rosa Partners Ltd., Carrizo Partners Ltd., Paul B. Loyd, Jr., Steven A.
Webster, S.P. Johnson IV, Douglas A.P. Hamilton and Frank A. Wojtek dated as of June 6,
1997 (Incorporated herein by reference to Exhibit 2.1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-29187)).
+3.1 - Amended and Restated Articles of Incorporation of the Company (Incorporated herein by
reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997).
+3.2 - Statement of Resolution Establishing Series of Shares Designated 9% Series A Preferred
Stock (Incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
+3.3 - Amended and Restated Bylaws of the Company, as amended by Amendment No. 1 (incorporated
herein by reference to Exhibit 3.2 to the Company's Registration Statement on Form 8-A
(Registration No. 000-22915).
+4.1 - First Amended, Restated, and Combined Loan Agreement between the Company and Compass
</TABLE>
-16-
<PAGE> 17
<TABLE>
<S> <C> <C>
Bank dated August 28, 1997.
+4.2 - First Amendment to First Amended, Restated and Combined Loan Agreement between the Company
and Compass Bank dated December 23, 1997 (Incorporated herein by reference to Exhibit 4.2
to the Company's Annual Report on Form 10-K for the year ended December 31, 1997).
+4.3 Second Amendment to First Amended, Restated and Combined Loan Agreement between the
Company and Compass Bank dated December 30, 1997 (incorporated herein by reference to
Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended December 31,
1997).
+10.1 - Stock Purchase Agreement dated January 8, 1998 among the Company, Enron Capital & Trade
Resources Corp. and Joint Energy Development Investments II Limited Partnership
(Incorporated herein by reference to Exhibit 99.1 to the Company's Current Report on Form
8-K dated January 8, 1998).
+10.2 - Warrant Certificates (Incorporated herein by reference to Exhibit 4.2 to the Company's
Current Report on Form 8-K dated January 8, 1998).
+10.3 - Shareholders' Agreement dated January 8, 1998 among the Company, S.P. Johnson IV, Frank A.
Wojtek, Steven A. Webster, Paul B. Loyd, Jr., Douglas A.P. Hamilton, DAPHAM Partnership,
L.P., The Douglas A.P. Hamilton 1997 GRAT, Enron Capital & Trade Resources Corp. and Joint
Energy Development Investments II Limited Partnership (Incorporated herein by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K dated January 8, 1998).
+10.4 - Form of Amendment to Executive Officer Employment Agreement (Incorporated herein by
reference to Exhibit 99.3 to the Company's Current Report on Form 8-K dated January 8,
1998).
27.1 - Financial Data Schedule.
</TABLE>
+ Incorporated herein by reference as indicated.
Reports on Form 8-K
The Company filed a Form 8-K dated January 8, 1998 regarding the
sale of shares of Preferred Stock and the Warrants.
-17-
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Carrizo Oil & Gas, Inc.
(Registrant)
Date: May 13, 1998 By: /s/ S. P. Johnson IV
----------------------------------------------
President And Chief Executive Officer
(Principal Executive Officer)
Date: May 13, 1998 By: /s/ Frank A. Wojtek
----------------------------------------------
Chief Financial Officer
(Principal Financial and Accounting Officer)
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,800,235
<SECURITIES> 0
<RECEIVABLES> 3,100,382
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,932,076
<PP&E> 53,276,520
<DEPRECIATION> 0
<TOTAL-ASSETS> 70,512,387
<CURRENT-LIABILITIES> 6,703,454
<BONDS> 0
0
28,558,424
<COMMON> 103,750
<OTHER-SE> 32,746,589
<TOTAL-LIABILITY-AND-EQUITY> 70,512,387
<SALES> 2,338,882
<TOTAL-REVENUES> 2,338,882
<CGS> 1,388,950
<TOTAL-COSTS> 1,388,950
<OTHER-EXPENSES> 834,352
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,085
<INCOME-PRETAX> 305,998
<INCOME-TAX> 120,463
<INCOME-CONTINUING> 185,535
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185,535
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
