Carrizo Oil & Gas (CRZO) Tops Q3 EPS by 14c, Revenues Beat

Carrizo Oil & Gas (NASDAQ: CRZO) reported Q3 EPS of $0.94, $0.14 better than the analyst estimate of $0.80. Revenue for the quarter came in at $303.38 million versus the consensus estimate of $277.25 million.

S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented on the results, “The third quarter was another strong operational and financial quarter for the Company as we delivered production 3% above the high end of our guidance range with operating expenses below the midpoint of our guidance ranges. We continued to see the benefit of our dual-basin strategy during the quarter, as our Eagle Ford Shale production received 104% of NYMEX pricing. This shielded us from the significant widening of Permian Basin differentials and allowed us to expand our EBITDA margin to $35/Boe.

“During the third quarter, we completed our activity pivot to the Eagle Ford Shale. We currently have four of our six rigs operating in the play, where our production continues to benefit from advantaged pricing. We expect our activity to remain weighted to the Eagle Ford Shale until the second half of 2019, when we plan to begin moving rigs back to the Delaware Basin. We are using the increased activity in the Eagle Ford Shale to drill two additional large-scale multipad projects, which should help drive significant production growth when they come online in 2019.

“While the Eagle Ford Shale should be the primary driver of our production growth next year, we remain active in the Delaware Basin. During the quarter, we delivered strong well results from both our Phantom and Ford West areas and announced an attractive bolt-on acquisition in the Phantom area. Though the acquisition closed just last month, we have already begun to execute on some of the identified synergies. Over the next several quarters, we plan to focus our program in the basin on testing multi-layer development concepts throughout the Wolfcamp formation, which should help us maximize the long-term value of our asset.

“Our near- and long-term corporate goals include continuing to reduce our leverage and generating double-digit production growth within cash flow, and we continue to make progress toward achieving these targets. At the end of the third quarter, our leverage metric in accordance with our bank covenants fell below 2x, and we currently expect it to move even lower by year-end 2019. We also remain on track to achieving a free cash flow positive inflection point during 2019.”

For earnings history and earnings-related data on Carrizo Oil & Gas (CRZO) click here.

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