x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Texas | 76-0415919 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
500 Dallas Street, Suite 2300, Houston, Texas | 77002 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
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CARRIZO OIL & GAS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||
June 30, 2013 | December 31, 2012 | |||||||
(In thousands, except per share amounts) | ||||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 3,847 | $ | 52,095 | ||||
Accounts receivable, net | 119,851 | 112,821 | ||||||
Accounts receivable - related party | 7,717 | 9,815 | ||||||
Current assets held for sale | — | 1,882 | ||||||
Assets of discontinued operations | 6,875 | — | ||||||
Fair value of derivative instruments | 14,091 | 23,981 | ||||||
Prepaids and other current assets | 7,562 | 8,111 | ||||||
Total current assets | 159,943 | 208,705 | ||||||
PROPERTY AND EQUIPMENT, NET | ||||||||
Oil and gas properties using the full cost method of accounting | ||||||||
Proved oil and gas properties, net | 1,429,801 | 1,152,548 | ||||||
Unproved properties, not being amortized | 360,534 | 323,688 | ||||||
Other property and equipment, net | 12,527 | 11,438 | ||||||
TOTAL PROPERTY AND EQUIPMENT, NET | 1,802,862 | 1,487,674 | ||||||
LONG-TERM ASSETS HELD FOR SALE | — | 132,626 | ||||||
DEFERRED FINANCING COSTS, NET | 22,739 | 23,914 | ||||||
FAIR VALUE OF DERIVATIVE INSTRUMENTS | 18,235 | 5,180 | ||||||
DEFERRED INCOME TAXES | — | 21,272 | ||||||
OTHER ASSETS | 6,518 | 4,625 | ||||||
TOTAL ASSETS | $ | 2,010,297 | $ | 1,883,996 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable, trade | $ | 96,428 | $ | 44,775 | ||||
Revenue and royalties payable | 124,111 | 82,300 | ||||||
Accrued drilling costs | 66,193 | 60,729 | ||||||
Accrued interest | 17,502 | 18,012 | ||||||
Other accrued liabilities | 36,435 | 28,445 | ||||||
Advances for joint operations | 18,414 | 8,069 | ||||||
Deferred income taxes | 1,284 | 7,925 | ||||||
Current liabilities associated with assets held for sale | — | 48,663 | ||||||
Liabilities of discontinued operations | 9,936 | — | ||||||
Total current liabilities | 370,303 | 298,918 | ||||||
LONG-TERM DEBT, NET OF DEBT DISCOUNT | 927,904 | 967,808 | ||||||
LONG-TERM LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE | — | 23,547 | ||||||
LIABILITIES OF DISCONTINUED OPERATIONS | 17,999 | — | ||||||
ASSET RETIREMENT OBLIGATIONS | 6,499 | 4,489 | ||||||
DEFERRED INCOME TAXES | 24,763 | — | ||||||
OTHER LIABILITIES | 4,577 | 4,218 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.01 par value (90,000 shares authorized, 40,864 and 40,165 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively) | 409 | 402 | ||||||
Additional paid-in capital | 677,173 | 667,096 | ||||||
Accumulated deficit | (19,330 | ) | (82,482 | ) | ||||
Total shareholders’ equity | 658,252 | 585,016 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,010,297 | $ | 1,883,996 |
For The Three Months Ended June 30, | For The Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
OIL AND GAS REVENUES | $ | 134,224 | $ | 83,818 | $ | 246,125 | $ | 164,533 | |||||||
COSTS AND EXPENSES | |||||||||||||||
Lease operating | 11,797 | 7,031 | 21,992 | 15,454 | |||||||||||
Production tax | 4,584 | 3,128 | 9,097 | 6,227 | |||||||||||
Ad valorem tax | 2,863 | 2,296 | 4,723 | 5,911 | |||||||||||
Depreciation, depletion and amortization | 50,408 | 43,380 | 95,998 | 74,941 | |||||||||||
General and administrative (inclusive of stock-based compensation expense of $2,983 and $1,516 for the three months ended June 30, 2013 and 2012, respectively, and $9,466 and $5,532 for the six months ended June 30, 2013 and 2012, respectively) | 17,834 | 13,085 | 34,007 | 24,620 | |||||||||||
Accretion related to asset retirement obligations | 120 | 92 | 227 | 194 | |||||||||||
TOTAL COSTS AND EXPENSES | 87,606 | 69,012 | 166,044 | 127,347 | |||||||||||
OPERATING INCOME | 46,618 | 14,806 | 80,081 | 37,186 | |||||||||||
OTHER INCOME AND EXPENSES | |||||||||||||||
Gain (loss) on derivative instruments, net | 25,726 | 37,890 | 11,172 | 41,693 | |||||||||||
Interest expense | (21,519 | ) | (16,767 | ) | (43,271 | ) | (33,224 | ) | |||||||
Capitalized interest | 7,530 | 6,011 | 14,306 | 12,034 | |||||||||||
Other income, net | 27 | 22 | 67 | 234 | |||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 58,382 | 41,962 | 62,355 | 57,923 | |||||||||||
INCOME TAX EXPENSE | (22,545 | ) | (16,279 | ) | (23,994 | ) | (21,564 | ) | |||||||
NET INCOME FROM CONTINUING OPERATIONS | $ | 35,837 | $ | 25,683 | $ | 38,361 | $ | 36,359 | |||||||
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | 1,132 | 2,821 | 24,790 | 1,568 | |||||||||||
NET INCOME | $ | 36,969 | $ | 28,504 | $ | 63,151 | $ | 37,927 | |||||||
NET INCOME PER COMMON SHARE - BASIC | |||||||||||||||
Net income from continuing operations | $ | 0.89 | $ | 0.65 | $ | 0.96 | $ | 0.92 | |||||||
Net income from discontinued operations | 0.03 | 0.07 | 0.62 | 0.04 | |||||||||||
Net income | $ | 0.92 | $ | 0.72 | $ | 1.58 | $ | 0.96 | |||||||
NET INCOME PER COMMON SHARE - DILUTED | |||||||||||||||
Net income from continuing operations | $ | 0.88 | $ | 0.64 | $ | 0.95 | $ | 0.91 | |||||||
Net income from discontinued operations | 0.03 | 0.07 | 0.61 | 0.04 | |||||||||||
Net income | $ | 0.91 | $ | 0.71 | $ | 1.56 | $ | 0.95 | |||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||
Basic | 40,078 | 39,596 | 39,928 | 39,520 | |||||||||||
Diluted | 40,610 | 40,042 | 40,469 | 39,987 |
For The Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(In thousands) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 63,151 | $ | 37,927 | |||
Net income from discontinued operations, net of income taxes | (24,790 | ) | (1,568 | ) | |||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities- | |||||||
Depreciation, depletion and amortization | 95,998 | 74,941 | |||||
Unrealized (gain) loss on derivative instruments, net | (3,166 | ) | (20,598 | ) | |||
Accretion related to asset retirement obligations | 227 | 194 | |||||
Stock-based compensation, net of amounts capitalized | 9,466 | 5,532 | |||||
Allowance for doubtful accounts | 7 | 41 | |||||
Deferred income taxes | 23,994 | 21,564 | |||||
Amortization of debt discount and deferred financing costs, net of amounts capitalized | 2,386 | 2,091 | |||||
Other, net | 244 | 1,793 | |||||
Changes in operating assets and liabilities- | |||||||
Accounts receivable | (4,938 | ) | (31,279 | ) | |||
Accounts payable | 73,771 | 50,896 | |||||
Accrued liabilities | (19,035 | ) | 6,366 | ||||
Other, net | (3,593 | ) | (2,592 | ) | |||
Net cash provided by operating activities - continuing operations | 213,722 | 145,308 | |||||
Net cash used in operating activities - discontinued operations | (80 | ) | (209 | ) | |||
Net cash provided by operating activities | 213,642 | 145,099 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures - oil and gas properties | (409,928 | ) | (385,611 | ) | |||
Capital expenditures - other property and equipment | (1,196 | ) | (3,388 | ) | |||
Increase in capital expenditure payables and accruals | 37,346 | 619 | |||||
Proceeds from sales of U.S. oil and gas properties, net | 10,681 | 190,892 | |||||
Advances to operators | 282 | (431 | ) | ||||
Advances for joint operations | 10,345 | (33,342 | ) | ||||
Other, net | 403 | (2,655 | ) | ||||
Net cash used in investing activities - continuing operations | (352,067 | ) | (233,916 | ) | |||
Net cash provided by (used in) investing activities - discontinued operations | 128,179 | (19,824 | ) | ||||
Net cash used in investing activities | (223,888 | ) | (253,740 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from borrowings and issuances | 165,000 | 520,412 | |||||
Debt repayments | (206,325 | ) | (438,000 | ) | |||
Payments of costs associated with revolving credit facility and debt issuance | (962 | ) | (239 | ) | |||
Proceeds from stock options exercised | 766 | 6 | |||||
Net cash provided by (used in) financing activities - continuing operations | (41,521 | ) | 82,179 | ||||
Net cash provided by financing activities - discontinued operations | 3,000 | 19,119 | |||||
Net cash provided by (used in) financing activities | (38,521 | ) | 101,298 | ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (48,767 | ) | (7,343 | ) | |||
CASH AND CASH EQUIVALENTS, beginning of period | 52,614 | 28,112 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 3,847 | $ | 20,769 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Stock Appreciation Rights | $ | 7 | $ | (2,975 | ) | $ | 3,939 | $ | (1,309 | ) | ||||||
Restricted Stock Awards and Units | 4,462 | 5,476 | 8,319 | 8,581 | ||||||||||||
4,469 | 2,501 | 12,258 | 7,272 | |||||||||||||
Less: amounts capitalized | (1,486 | ) | (985 | ) | (2,792 | ) | (1,740 | ) | ||||||||
Total Stock-Based Compensation Expense | $ | 2,983 | $ | 1,516 | $ | 9,466 | $ | 5,532 | ||||||||
Income Tax Benefit | $ | (1,107 | ) | $ | (562 | ) | $ | (3,470 | ) | $ | (2,052 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net income from continuing operations | $ | 35,837 | $ | 25,683 | $ | 38,361 | $ | 36,359 | ||||||||
Basic weighted average common shares outstanding | 40,078 | 39,596 | 39,928 | 39,520 | ||||||||||||
Effect of dilutive instruments | 532 | 446 | 541 | 467 | ||||||||||||
Diluted weighted average common shares outstanding | 40,610 | 40,042 | 40,469 | 39,987 | ||||||||||||
Net income from continuing operations per common share | ||||||||||||||||
Basic | $ | 0.89 | $ | 0.65 | $ | 0.96 | $ | 0.92 | ||||||||
Diluted | $ | 0.88 | $ | 0.64 | $ | 0.95 | $ | 0.91 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
OIL AND GAS REVENUES | $ | — | $ | — | $ | — | $ | — | ||||||||
COSTS AND EXPENSES | ||||||||||||||||
General and administrative | 296 | 9 | 301 | 12 | ||||||||||||
Accretion related to asset retirement obligations | — | 78 | 36 | 154 | ||||||||||||
TOTAL COST AND EXPENSES | 296 | 87 | 337 | 166 | ||||||||||||
OPERATING LOSS | (296 | ) | (87 | ) | (337 | ) | (166 | ) | ||||||||
OTHER INCOME AND EXPENSES | ||||||||||||||||
Gain on sale of discontinued operations | — | — | 37,294 | — | ||||||||||||
Decrease in estimated future obligations | 2,565 | — | 2,565 | — | ||||||||||||
Gain (loss) on derivative instruments, net | (31 | ) | 357 | (75 | ) | (408 | ) | |||||||||
Interest expense | — | (919 | ) | (253 | ) | (1,798 | ) | |||||||||
Capitalized interest | — | 1,798 | 253 | 1,798 | ||||||||||||
Other income (expense), net | 308 | 203 | 332 | (594 | ) | |||||||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES | 2,546 | 1,352 | 39,779 | (1,168 | ) | |||||||||||
INCOME TAX (EXPENSE) BENEFIT | (1,414 | ) | 1,469 | (14,989 | ) | 2,736 | ||||||||||
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | $ | 1,132 | $ | 2,821 | $ | 24,790 | $ | 1,568 |
June 30, 2013 | December 31, 2012 | |||||||
(In thousands) | ||||||||
Proved oil and gas properties | $ | 2,086,461 | $ | 1,713,827 | ||||
Accumulated depreciation, depletion and amortization | (656,660 | ) | (561,279 | ) | ||||
Proved oil and gas properties, net | 1,429,801 | 1,152,548 | ||||||
Unproved properties, not being amortized | ||||||||
Unevaluated leasehold costs | 284,362 | 238,833 | ||||||
Exploratory wells in progress | 30,936 | 43,803 | ||||||
Capitalized interest | 45,236 | 41,052 | ||||||
Total unproved properties, not being amortized | 360,534 | 323,688 | ||||||
Other property and equipment | 18,975 | 17,079 | ||||||
Accumulated depreciation | (6,448 | ) | (5,641 | ) | ||||
Other property and equipment, net | 12,527 | 11,438 | ||||||
Total property and equipment, net | $ | 1,802,862 | $ | 1,487,674 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Income tax expense at the statutory rate | $ | 20,427 | $ | 14,687 | $ | 21,824 | $ | 20,273 | ||||||||
State income taxes, net of U.S. federal income tax benefit | 2,049 | 843 | 2,063 | 1,087 | ||||||||||||
Other, net | 69 | 749 | 107 | 204 | ||||||||||||
Income tax expense | $ | 22,545 | $ | 16,279 | $ | 23,994 | $ | 21,564 |
June 30, 2013 | December 31, 2012 | |||||||
(In thousands) | ||||||||
8.625% Senior Notes | $ | 600,000 | $ | 600,000 | ||||
Unamortized discount for 8.625% Senior Notes | (4,521 | ) | (4,849 | ) | ||||
7.50% Senior Notes | 300,000 | 300,000 | ||||||
4.375% Convertible Senior Notes | 4,425 | 73,750 | ||||||
Unamortized discount for 4.375% Convertible Senior Notes | — | (1,093 | ) | |||||
Senior Secured Revolving Credit Facility | 28,000 | — | ||||||
$ | 927,904 | $ | 967,808 |
Counterparty | June 30, 2013 | December 31, 2012 | ||||
Credit Suisse | 38 | % | 40 | % | ||
Societe Generale | 35 | % | 22 | % | ||
Wells Fargo | 13 | % | 2 | % | ||
BNP Paribas | 13 | % | 33 | % | ||
BBVA Compass | 1 | % | 3 | % | ||
Total | 100 | % | 100 | % |
Period | Volumes (in MMBtu) | Weighted Average Floor Price ($/MMBtu) | Weighted Average Ceiling Price ($/MMBtu) | ||||||||
2013 | 10,120,000 | $ | 4.58 | $ | 4.58 | ||||||
2014 | 18,250,000 | $ | 4.07 | $ | 4.36 | ||||||
2015 | 3,650,000 | $ | 4.33 | $ | 4.33 |
Period | Volumes (in Bbls) | Weighted Average Floor Price ($/Bbl) | Weighted Average Ceiling Price ($/Bbl) | ||||||||
2013 | 1,766,400 | $ | 90.17 | $ | 100.87 | ||||||
2014 | 3,375,500 | $ | 90.59 | $ | 96.99 | ||||||
2015 | 1,806,750 | $ | 89.41 | $ | 94.96 | ||||||
2016 | 244,000 | $ | 85.00 | $ | 104.00 |
Period | Volumes (in Bbls) | Weighted Average Short Put Price ($/Bbl) | Weighted Average Put Spread ($/Bbl) | ||||||||
2014 | 182,500 | $ | 65.00 | $ | 20.00 | ||||||
2015 | 365,000 | $ | 65.00 | $ | 20.00 | ||||||
2016 | 244,000 | $ | 65.00 | $ | 20.00 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Realized gain (loss) on derivative instruments, net | $ | 2,291 | $ | 9,962 | $ | 8,006 | $ | 21,095 | ||||||||
Unrealized gain (loss) on derivative instruments, net | 23,435 | 27,928 | 3,166 | 20,598 | ||||||||||||
Gain (loss) on derivative instruments, net | $ | 25,726 | $ | 37,890 | $ | 11,172 | $ | 41,693 |
June 30, 2013 | ||||||||||||
Description | Gross Amounts Recognized | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts Presented in the Consolidated Balance Sheets | |||||||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Derivative instruments | $ | 37,768 | $ | (5,442 | ) | $ | 32,326 | |||||
Liabilities: | ||||||||||||
Derivative instruments | (5,442 | ) | 5,442 | — | ||||||||
Total | $ | 32,326 | $ | — | $ | 32,326 |
December 31, 2012 | ||||||||||||
Description | Gross Amounts Recognized | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts Presented in the Consolidated Balance Sheets | |||||||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Derivative instruments | $ | 36,452 | $ | (7,291 | ) | $ | 29,161 | |||||
Liabilities: | ||||||||||||
Derivative instruments | (7,291 | ) | 7,291 | — | ||||||||
Total | $ | 29,161 | $ | — | $ | 29,161 |
June 30, 2013 | December 31, 2012 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
8.625% Senior Notes | $ | 595,479 | $ | 640,140 | $ | 595,151 | $ | 645,000 | ||||||||
7.50% Senior Notes | 300,000 | 312,000 | 300,000 | 308,250 | ||||||||||||
4.375% Convertible Senior Notes | 4,425 | 4,436 | 72,657 | 73,842 |
June 30, 2013 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | $ | 1,779,723 | $ | 153,382 | $ | — | $ | (1,780,037 | ) | $ | 153,068 | |||||||||
Assets of discontinued operations | 6,875 | — | — | — | 6,875 | |||||||||||||||
Property and equipment, net | 469 | 1,780,872 | — | 21,521 | 1,802,862 | |||||||||||||||
Investments in subsidiaries | 20,539 | — | — | (20,539 | ) | — | ||||||||||||||
Other assets | 52,108 | — | — | (4,616 | ) | 47,492 | ||||||||||||||
Total assets | $ | 1,859,714 | $ | 1,934,254 | $ | — | $ | (1,783,671 | ) | $ | 2,010,297 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities | $ | 250,191 | $ | 1,890,213 | $ | — | $ | (1,780,037 | ) | $ | 360,367 | |||||||||
Current liabilities of discontinued operations | 9,936 | — | — | — | 9,936 | |||||||||||||||
Long-term liabilities | 933,960 | 23,502 | — | 6,281 | 963,743 | |||||||||||||||
Long-term liabilities of discontinued operations | 17,999 | — | — | — | 17,999 | |||||||||||||||
Shareholders’ equity (deficit) | 647,628 | 20,539 | — | (9,915 | ) | 658,252 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,859,714 | $ | 1,934,254 | $ | — | $ | (1,783,671 | ) | $ | 2,010,297 |
December 31, 2012 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | $ | 1,689,430 | $ | 130,487 | $ | — | $ | (1,613,094 | ) | $ | 206,823 | |||||||||
Current assets held for sale | — | — | 1,882 | — | 1,882 | |||||||||||||||
Property and equipment, net | 23,041 | 1,443,064 | — | 21,569 | 1,487,674 | |||||||||||||||
Investments in subsidiaries | 14,588 | — | — | (14,588 | ) | — | ||||||||||||||
Long-term assets held for sale | 12,670 | — | 119,956 | — | 132,626 | |||||||||||||||
Other assets | 46,913 | 16,928 | — | (8,850 | ) | 54,991 | ||||||||||||||
Total assets | $ | 1,786,642 | $ | 1,590,479 | $ | 121,838 | $ | (1,614,963 | ) | $ | 1,883,996 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities | $ | 179,221 | $ | 1,631,887 | $ | — | $ | (1,560,853 | ) | $ | 250,255 | |||||||||
Current liabilities associated with assets held for sale | 9,880 | — | 38,783 | — | 48,663 | |||||||||||||||
Long-term liabilities | 973,003 | 3,512 | — | — | 976,515 | |||||||||||||||
Long-term liabilities associated with assets held for sale | — | — | 23,547 | — | 23,547 | |||||||||||||||
Shareholders’ equity (deficit) | 624,538 | (44,920 | ) | 59,508 | (54,110 | ) | 585,016 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 1,786,642 | $ | 1,590,479 | $ | 121,838 | $ | (1,614,963 | ) | $ | 1,883,996 |
For the Three Months Ended June 30, 2013 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Oil and gas revenues | $ | 2,086 | $ | 132,138 | $ | — | $ | — | $ | 134,224 | ||||||||||
Cost and expenses | 19,315 | 68,474 | — | (183 | ) | 87,606 | ||||||||||||||
Operating income (loss) | (17,229 | ) | 63,664 | — | 183 | 46,618 | ||||||||||||||
Other income (expense), net | 17,544 | (5,780 | ) | — | — | 11,764 | ||||||||||||||
Income (loss) from continuing operations before income taxes | 315 | 57,884 | — | 183 | 58,382 | |||||||||||||||
Income tax (expense) benefit | (110 | ) | (20,365 | ) | — | (2,070 | ) | (22,545 | ) | |||||||||||
Equity in income (loss) of subsidiaries | 37,519 | — | — | (37,519 | ) | — | ||||||||||||||
Net income (loss) from continuing operations | 37,724 | 37,519 | — | (39,406 | ) | 35,837 | ||||||||||||||
Net income from discontinued operations, net of income taxes | 1,132 | — | — | — | 1,132 | |||||||||||||||
Net income (loss) | $ | 38,856 | $ | 37,519 | $ | — | $ | (39,406 | ) | $ | 36,969 |
For the Three Months Ended June 30, 2012 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Oil and gas revenues | $ | 4,608 | $ | 79,210 | $ | — | $ | — | $ | 83,818 | ||||||||||
Cost and expenses | 32,806 | 51,429 | — | (15,223 | ) | 69,012 | ||||||||||||||
Operating income (loss) | (28,198 | ) | 27,781 | — | 15,223 | 14,806 | ||||||||||||||
Other income (expense), net | 34,170 | (7,014 | ) | — | — | 27,156 | ||||||||||||||
Income (loss) from continuing operations before income taxes | 5,972 | 20,767 | — | 15,223 | 41,962 | |||||||||||||||
Income tax (expense) benefit | (2,041 | ) | (7,268 | ) | — | (6,970 | ) | (16,279 | ) | |||||||||||
Equity in income (loss) of subsidiaries | 16,320 | — | — | (16,320 | ) | — | ||||||||||||||
Net income (loss) from continuing operations | 20,251 | 13,499 | — | (8,067 | ) | 25,683 | ||||||||||||||
Net income from discontinued operations, net of income taxes | — | — | 2,821 | — | 2,821 | |||||||||||||||
Net income (loss) | $ | 20,251 | $ | 13,499 | $ | 2,821 | $ | (8,067 | ) | $ | 28,504 |
For the Six Months Ended June 30, 2013 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Oil and gas revenues | $ | 3,647 | $ | 242,478 | $ | — | $ | — | $ | 246,125 | ||||||||||
Cost and expenses | 36,433 | 129,564 | — | 47 | 166,044 | |||||||||||||||
Operating income (loss) | (32,786 | ) | 112,914 | — | (47 | ) | 80,081 | |||||||||||||
Other income (expense), net | (5,681 | ) | (12,045 | ) | — | — | (17,726 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | (38,467 | ) | 100,869 | — | (47 | ) | 62,355 | |||||||||||||
Income tax (expense) benefit | 13,463 | (35,410 | ) | — | (2,047 | ) | (23,994 | ) | ||||||||||||
Equity in income (loss) of subsidiaries | 65,459 | — | — | (65,459 | ) | — | ||||||||||||||
Net income (loss) from continuing operations | 40,455 | 65,459 | — | (67,553 | ) | 38,361 | ||||||||||||||
Net income from discontinued operations, net of income taxes | 24,790 | — | — | — | 24,790 | |||||||||||||||
Net income (loss) | $ | 65,245 | $ | 65,459 | $ | — | $ | (67,553 | ) | $ | 63,151 |
For the Six Months Ended June 30, 2012 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Oil and gas revenues | $ | 11,397 | $ | 153,136 | $ | — | $ | — | $ | 164,533 | ||||||||||
Cost and expenses | 47,352 | 94,107 | — | (14,112 | ) | 127,347 | ||||||||||||||
Operating income (loss) | (35,955 | ) | 59,029 | — | 14,112 | 37,186 | ||||||||||||||
Other income (expense), net | 35,297 | (14,560 | ) | — | — | 20,737 | ||||||||||||||
Income (loss) from continuing operations before income taxes | (658 | ) | 44,469 | — | 14,112 | 57,923 | ||||||||||||||
Income tax (expense) benefit | 229 | (15,564 | ) | — | (6,229 | ) | (21,564 | ) | ||||||||||||
Equity in income (loss) of subsidiaries | 30,473 | — | — | (30,473 | ) | — | ||||||||||||||
Net income (loss) from continuing operations | 30,044 | 28,905 | — | (22,590 | ) | 36,359 | ||||||||||||||
Net income from discontinued operations, net of income taxes | — | — | 1,568 | — | 1,568 | |||||||||||||||
Net income (loss) | $ | 30,044 | $ | 28,905 | $ | 1,568 | $ | (22,590 | ) | $ | 37,927 |
For the Six Months Ended June 30, 2013 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by (used in) operating activities - continuing operations | $ | 4,319 | $ | 209,403 | $ | — | $ | — | $ | 213,722 | ||||||||||
Net cash provided by (used in) investing activities - continuing operations | (142,476 | ) | (428,774 | ) | — | 219,183 | (352,067 | ) | ||||||||||||
Net cash provided by (used in) financing activities - continuing operations | (41,521 | ) | 219,183 | — | (219,183 | ) | (41,521 | ) | ||||||||||||
Net cash provided by (used in) discontinued operations | 131,618 | — | (519 | ) | — | 131,099 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | (48,060 | ) | (188 | ) | (519 | ) | — | (48,767 | ) | |||||||||||
Cash and cash equivalents, beginning of period | 51,894 | 201 | 519 | — | 52,614 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 3,834 | $ | 13 | $ | — | $ | — | $ | 3,847 |
For the Six Months Ended June 30, 2012 | ||||||||||||||||||||
Parent Company | Combined Guarantor Subsidiaries | Combined Non- Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by operating activities - continuing operations | $ | 43,723 | $ | 101,585 | $ | — | $ | — | $ | 145,308 | ||||||||||
Net cash provided by (used in) investing activities - continuing operations | (165,100 | ) | (188,743 | ) | — | 119,927 | (233,916 | ) | ||||||||||||
Net cash provided by (used in) financing activities - continuing operations | 108,986 | 93,120 | — | (119,927 | ) | 82,179 | ||||||||||||||
Net cash used in discontinued operations | (18 | ) | — | (896 | ) | — | (914 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (12,409 | ) | 5,962 | (896 | ) | — | (7,343 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 19,134 | 7,263 | 1,715 | — | 28,112 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 6,725 | $ | 13,225 | $ | 819 | $ | — | $ | 20,769 |
For The Three Months Ended June 30, 2013 | As of June 30, 2013 | ||||||||||||||||||||||||||
Drilled | Completed | Waiting on Completion | Producing | Rig count | |||||||||||||||||||||||
Region | Gross | Net | Gross | Net | Gross | Net | Gross | Net | |||||||||||||||||||
Eagle Ford Shale | 15 | 10.9 | 12 | 9.8 | 24 | 17.5 | 95 | 74.5 | 3 | ||||||||||||||||||
Niobrara Formation | 13 | 4.3 | 10 | 3.3 | 6 | 2.0 | 50 | 20.6 | 2 | ||||||||||||||||||
Marcellus Shale | 9 | 2.8 | 12 | 3.3 | 28 | 9.3 | 50 | 16.6 | 1 | ||||||||||||||||||
Barnett Shale | — | — | — | — | — | — | 86 | 55.9 | — | ||||||||||||||||||
Total | 37 | 18.0 | 34 | 16.4 | 58 | 28.8 | 281 | 167.6 | 6 |
Three Months Ended June 30, | 2013 Period Compared to 2012 Period | ||||||||||||||
2013 | 2012 | Increase (Decrease) | % Increase (Decrease) | ||||||||||||
Production volumes - | |||||||||||||||
Crude oil (MBbls) | 1,069 | 693 | 376 | 54 | % | ||||||||||
NGLs (MBbls) | 105 | 65 | 40 | 62 | % | ||||||||||
Natural gas (MMcf) | 8,348 | 9,808 | (1,460 | ) | (15 | )% | |||||||||
Total Natural gas and NGLs (MMcfe) | 8,978 | 10,198 | (1,220 | ) | (12 | )% | |||||||||
Total barrels of oil equivalent (MBoe) | 2,565 | 2,393 | 172 | 7 | % | ||||||||||
Daily production volumes by product - | |||||||||||||||
Crude oil (Bbls/d) | 11,747 | 7,615 | 4,132 | 54 | % | ||||||||||
NGLs (Bbls/d) | 1,154 | 714 | 440 | 62 | % | ||||||||||
Natural gas (Mcf/d) | 91,736 | 107,780 | (16,044 | ) | (15 | )% | |||||||||
Total Natural gas and NGLs (Mcfe/d) | 98,659 | 112,066 | (13,407 | ) | (12 | )% | |||||||||
Total barrels of oil equivalent (Boe/d) | 28,187 | 26,297 | 1,890 | 7 | % | ||||||||||
Daily production volumes by region (Boe/d) - | |||||||||||||||
Eagle Ford Shale | 12,239 | 7,603 | 4,636 | 61 | % | ||||||||||
Niobrara Formation | 1,839 | 1,041 | 798 | 77 | % | ||||||||||
Barnett Shale | 8,136 | 12,380 | (4,244 | ) | (34 | )% | |||||||||
Marcellus Shale | 5,647 | 3,772 | 1,875 | 50 | % | ||||||||||
Other | 326 | 1,501 | (1,175 | ) | (78 | )% | |||||||||
Total barrels of oil equivalent (Boe/d) | 28,187 | 26,297 | 1,890 | 7 | % | ||||||||||
Average realized prices - | |||||||||||||||
Crude oil ($ per Bbl) | $ | 98.98 | $ | 98.96 | $ | 0.02 | — | % | |||||||
NGLs ($ per Bbl) | 26.34 | 35.05 | (8.71 | ) | (25 | )% | |||||||||
Natural gas ($ per Mcf) | 3.07 | 1.32 | 1.75 | 133 | % | ||||||||||
Total Natural gas and NGLs average realized price ($ per Mcfe) | $ | 3.17 | $ | 1.49 | $ | 1.68 | 113 | % | |||||||
Total average realized price ($ per Boe) | $ | 52.33 | $ | 35.03 | $ | 17.30 | 49 | % | |||||||
Oil and gas revenues (In thousands) - | |||||||||||||||
Crude oil | $ | 105,805 | $ | 68,576 | $ | 37,229 | 54 | % | |||||||
NGLs | 2,766 | 2,278 | 488 | 21 | % | ||||||||||
Natural gas | 25,653 | 12,964 | 12,689 | 98 | % | ||||||||||
Total oil and gas revenues | $ | 134,224 | $ | 83,818 | $ | 50,406 | 60 | % |
Six Months Ended June 30, | 2013 Period Compared to 2012 Period | |||||||||||||
2013 | 2012 | Increase (Decrease) | % Increase (Decrease) | |||||||||||
Production volumes - | ||||||||||||||
Crude oil (MBbls) | 1,907 | 1,234 | 673 | 55 | % | |||||||||
NGLs (MBbls) | 206 | 114 | 92 | 81 | % | |||||||||
Natural gas (MMcf) | 17,077 | 20,135 | (3,058 | ) | (15 | )% | ||||||||
Total Natural gas and NGLs (MMcfe) | 18,313 | 20,819 | (2,506 | ) | (12 | )% | ||||||||
Total barrels of oil equivalent (MBoe) | 4,959 | 4,704 | 255 | 5 | % | |||||||||
Daily production volumes by product - | ||||||||||||||
Crude oil (Bbls/d) | 10,536 | 6,780 | 3,756 | 55 | % | |||||||||
NGLs (Bbls/d) | 1,138 | 626 | 512 | 82 | % | |||||||||
Natural gas (Mcf/d) | 94,348 | 110,632 | (16,284 | ) | (15 | )% | ||||||||
Total Natural gas and NGLs (Mcfe/d) | 101,177 | 114,390 | (13,213 | ) | (12 | )% | ||||||||
Total barrels of oil equivalent (Boe/d) | 27,398 | 25,846 | 1,552 | 6 | % | |||||||||
Daily production volumes by region (Boe/d) - | ||||||||||||||
Eagle Ford Shale | 11,280 | 6,617 | 4,663 | 70 | % | |||||||||
Niobrara Formation | 1,397 | 983 | 414 | 42 | % | |||||||||
Barnett Shale | 8,399 | 14,038 | (5,639 | ) | (40 | )% | ||||||||
Marcellus Shale | 5,989 | 2,604 | 3,385 | 130 | % | |||||||||
Other | 333 | 1,604 | (1,271 | ) | (79 | )% | ||||||||
Total barrels of oil equivalent (Boe/d) | 27,398 | 25,846 | 1,552 | 6 | % | |||||||||
Average realized prices - | ||||||||||||||
Crude oil ($ per Bbl) | $ | 101.36 | $ | 103.68 | $ | (2.32 | ) | (2 | )% | |||||
NGLs ($ per Bbl) | 26.73 | 38.92 | (12.19 | ) | (31 | )% | ||||||||
Natural gas ($ per Mcf) | 2.77 | 1.60 | 1.17 | 73 | % | |||||||||
Total Natural gas and NGLs average realized price ($ per Mcfe) | $ | 2.89 | $ | 1.76 | $ | 1.13 | 64 | % | ||||||
Total average realized price ($ per Boe) | $ | 49.63 | $ | 34.98 | $ | 14.65 | 42 | % | ||||||
Oil and gas revenues (In thousands) - | ||||||||||||||
Crude oil | $ | 193,287 | $ | 127,945 | $ | 65,342 | 51 | % | ||||||
NGLs | 5,507 | 4,437 | 1,070 | 24 | % | |||||||||
Natural gas | 47,331 | 32,151 | 15,180 | 47 | % | |||||||||
Total oil and gas revenues | $ | 246,125 | $ | 164,533 | $ | 81,592 | 50 | % |
Capital Expenditures for the Three Months Ended | |||||||
March 31, 2013 | June 30, 2013 | ||||||
(In thousands) | |||||||
Eagle Ford Shale | $ | 101,735 | $ | 88,210 | |||
Marcellus Shale | 18,888 | 19,459 | |||||
Niobrara Formation | 11,817 | 22,106 | |||||
Barnett Shale and Other | 4,257 | 3,460 | |||||
Total drilling and completion | 136,697 | 133,235 | |||||
Total leasehold and seismic | 89,274 | 30,182 | |||||
Total | $ | 225,971 | $ | 163,417 |
• | Cash provided by operations. Cash flows from operations are highly dependent on commodity prices and market conditions for oilfield services. We hedge a portion of our our forecasted production to mitigate the risk of a decline in oil and gas prices. |
• | Revolving credit facility. At July 31, 2013, we had $43.0 million borrowings outstanding and $0.9 million in letters of credit outstanding under the revolving credit facility, which reduce the amounts available under the revolving credit facility. The amount we are able to borrow with respect to the borrowing base of the revolving credit facility is subject to compliance with, and limited by, the financial covenants and other provisions of the credit agreement governing our revolving credit facility. |
• | Asset sales. In order to fund our capital expenditure plan, we may consider the sale of certain properties or assets that are not part of our core business or are no longer deemed essential to our future growth, provided we are able to sell such assets on terms that are acceptable to us. We are currently marketing the sale of substantially all of our Barnett Shale assets. |
• | Securities offerings. As situations or conditions arise, we may choose to issue debt, equity or other instruments to supplement our cash flows. However, we may not be able to obtain such financing on terms that are acceptable to us, or at all. |
• | Joint ventures. Joint ventures with third parties including those through which such third parties fund a portion of our exploration activities to earn an interest in our exploration acreage or purchase a portion of interests, or both. |
2013 | 2014 | 2015 | 2016 | 2017 | 2018 and Beyond | Total | |||||||||||||||||||||
Long-term debt (1) | $ | — | $ | — | $ | — | $ | 28,000 | $ | — | $ | 904,425 | $ | 932,425 | |||||||||||||
Interest on long-term debt (2) | 37,545 | 75,057 | 75,057 | 74,489 | 74,443 | 119,330 | 455,921 | ||||||||||||||||||||
Operating leases | 919 | 1,819 | 1,792 | 1,770 | 1,770 | 7,963 | 16,033 | ||||||||||||||||||||
Drilling and completion services (3) | 37,079 | 38,692 | 11,322 | 1,165 | — | — | 88,258 | ||||||||||||||||||||
Pipeline volume commitments | 9,759 | 16,935 | 16,272 | 9,824 | 4,409 | 13,595 | 70,794 | ||||||||||||||||||||
Asset retirement obligations and other (4) | 5,021 | 11,225 | 7,764 | 3,310 | 1,459 | 6,566 | 35,345 | ||||||||||||||||||||
Total Contractual Obligations | $ | 90,323 | $ | 143,728 | $ | 112,207 | $ | 118,558 | $ | 82,081 | $ | 1,051,879 | $ | 1,598,776 |
(1) | At June 30, 2013, we had $28.0 million of borrowings outstanding under the revolving credit facility which matures in 2016. |
(2) | Interest on long-term debt is based on the 8.625% Senior Notes, the 7.50% Senior Notes, 4.375% Convertible Senior Notes, and our revolving credit facility average interest rate of 2.19%. |
(4) | Asset retirement obligations and other are based on estimates and assumptions that affect the reported amounts as of June 30, 2013. Certain of such estimates and assumptions are inherently unpredictable and will differ from actuals results. See “Note 2. Summary of Significant Accounting Policies - Use of Estimates” for further discussion of estimates and assumptions that may affect the reported amounts. |
12 Month Average | Cushion/(Impairment) | |||||
U.S. Full Cost Pool Scenarios | Oil Price ($/Bbl) | Gas Price ($/Mcf) | (in millions) | |||
June 30, 2013 Actual | $100.41 | $2.62 | $137 | |||
Oil and Gas Price Sensitivity | ||||||
Oil and Gas +10% | $109.55 | $2.96 | $306 | |||
Oil and Gas -10% | $91.27 | $2.28 | $(33) | |||
Oil Price Sensitivity | ||||||
Oil +10% | $109.55 | $2.62 | $263 | |||
Oil -10% | $91.27 | $2.62 | $10 | |||
Gas Price Sensitivity | ||||||
Gas +10% | $100.41 | $2.96 | $179 | |||
Gas -10% | $100.41 | $2.28 | $94 |
Counterparty | June 30, 2013 | December 31, 2012 | ||||
Credit Suisse | 38 | % | 40 | % | ||
Societe Generale | 35 | % | 22 | % | ||
Wells Fargo | 13 | % | 2 | % | ||
BNP Paribas | 13 | % | 33 | % | ||
BBVA Compass | 1 | % | 3 | % | ||
Total | 100 | % | 100 | % |
Period | Volumes (in MMBtu) | Weighted Average Floor Price ($/MMBtu) | Weighted Average Ceiling Price ($/MMBtu) | ||||||||
2013 | 10,120,000 | $ | 4.58 | $ | 4.58 | ||||||
2014 | 18,250,000 | $ | 4.07 | $ | 4.36 | ||||||
2015 | 3,650,000 | $ | 4.33 | $ | 4.33 |
Period | Volumes (in Bbls) | Weighted Average Floor Price ($/Bbl) | Weighted Average Ceiling Price ($/Bbl) | ||||||||
2013 | 1,766,400 | $ | 90.17 | $ | 100.87 | ||||||
2014 | 3,375,500 | $ | 90.59 | $ | 96.99 | ||||||
2015 | 1,806,750 | $ | 89.41 | $ | 94.96 | ||||||
2016 | 244,000 | $ | 85.00 | $ | 104.00 |
Period | Volumes (in Bbls) | Weighted Average Short Put Price ($/Bbl) | Weighted Average Put Spread ($/Bbl) | ||||||||
2014 | 182,500 | $ | 65.00 | $ | 20.00 | ||||||
2015 | 365,000 | $ | 65.00 | $ | 20.00 | ||||||
2016 | 244,000 | $ | 65.00 | $ | 20.00 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands) | ||||||||||||||||
Realized gain (loss) on derivative instruments, net | $ | 2,291 | $ | 9,962 | $ | 8,006 | $ | 21,095 | ||||||||
Unrealized gain (loss) on derivative instruments, net | 23,435 | 27,928 | 3,166 | 20,598 | ||||||||||||
Gain (loss) on derivative instruments, net | $ | 25,726 | $ | 37,890 | $ | 11,172 | $ | 41,693 |
Exhibit Number | Exhibit Description | |
10.1 | – | Form of Director Restricted Stock Unit Award Agreement under the Incentive Plan of Carrizo Oil & Gas, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed June 17, 2013). |
10.2 | – | Form of Employee Restricted Stock Award Agreement (Officer) under the Incentive Plan of Carrizo Oil & Gas, Inc. (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed June 17, 2013). |
10.3 | – | Form of Employee Restricted Stock Unit Award Agreement (Officer) under the Incentive Plan of Carrizo Oil & Gas, Inc. (incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed June 17, 2013). |
10.4 | – | Form of Employee Stock Appreciation Rights Agreement (Officer) under the Incentive Plan of Carrizo Oil & Gas, Inc. (incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed June 17, 2013). |
10.5 | – | Form of Employee Stock Appreciation Rights Agreement (Officer) under the Carrizo Oil & Gas, Inc. Cash-Settled Appreciation Rights Plan (incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed June 17, 2013). |
*31.1 | – | CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
*31.2 | – | CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
*32.1 | – | CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
*32.2 | – | CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
*101 | – | Interactive Data Files |
Carrizo Oil & Gas, Inc. (Registrant) | ||||
Date: | August 7, 2013 | By: | /s/ Paul F. Boling | |
Chief Financial Officer, Vice President, Secretary and Treasurer (Principal Financial Officer) | ||||
Date: | August 7, 2013 | By: | /s/ David L. Pitts | |
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Carrizo Oil & Gas, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 7, 2013 | /s/ S.P. Johnson, IV | |
S.P. Johnson, IV President, Chief Executive Officer and Director |
1. | I have reviewed this quarterly report on Form 10-Q of Carrizo Oil & Gas, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 7, 2013 | /s/ Paul F. Boling | |
Paul F. Boling Chief Financial Officer, Vice President, Secretary and Treasurer |
1. | the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 7, 2013 | /s/ S.P. Johnson, IV | |
S.P. Johnson, IV President, Chief Executive Officer and Director |
1. | the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 7, 2013 | /s/ Paul F. Boling | |
Paul F. Boling Chief Financial Officer, Vice President, Secretary and Treasurer |
Summary Of Significant Accounting Policies (Policy)
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis Of Presentation And Principles Of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company after elimination of all significant intercompany transactions and balances and are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company proportionately consolidates its undivided interests in oil and gas properties as well as investments in unincorporated entities, such as partnerships and limited liability companies where the Company, as a partner or member, has undivided interests in the oil and gas properties. The consolidated financial statements reflect all necessary adjustments, all of which were of a normal recurring nature and are in the opinion of management necessary for a fair presentation of the Company’s interim financial position, results of operations and cash flows. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. |
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Reclassifications | Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period presentation. These reclassifications had no effect on total assets, total liabilities, total shareholders’ equity, net income, or net cash provided by or used in operating, investing or financing activities. |
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Discontinued Operations | Discontinued Operations On December 27, 2012, the Company agreed to sell Carrizo UK Huntington Ltd, a wholly owned subsidiary of the Company (“Carrizo UK”), and all of its interest in the Huntington Field discovery, where Carrizo UK owned a 15% non-operated working interest and certain overriding royalty interests. The sale closed on February 22, 2013. Accordingly, the Company classified the U.K. North Sea assets and associated liabilities as current and long-term assets held for sale and current and long-term liabilities associated with assets held for sale in the consolidated balance sheets as of December 31, 2012. Beginning March 31, 2013, the Company classified the remaining assets and liabilities associated with the U.K. North Sea as assets of discontinued operations and liabilities of discontinued operations in the consolidated balance sheets. The related results of operations and cash flows have been classified as discontinued operations, net of income taxes, in the consolidated statements of income, statements of cash flows and condensed consolidating financial information. Unless otherwise indicated, the information in these notes relate to the Company’s continuing operations. Information related to assets held for sale and discontinued operations is included in “Note 3. Discontinued Operations” and “Note 10. Condensed Consolidating Financial Information.” |
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Use Of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods reported. Certain of such estimates and assumptions are inherently unpredictable and will differ from actual results. The Company evaluates subsequent events through the date the financial statements are issued. Significant estimates include volumes of proved oil and gas reserves, which are used in calculating the amortization of proved oil and gas property costs, the present value of future net revenues included in the full cost ceiling test, estimates of future taxable income used in assessing the realizability of deferred tax assets, and the timing of asset retirement obligations. Oil and gas reserve estimates, and therefore calculations based on such reserve estimates, are subject to numerous inherent uncertainties, the accuracy of which, is a function of the quality and quantity of available data, the application of engineering and geological interpretation and judgment to available data and the interpretation of mineral leaseholds and other contractual arrangements, including adequacy of title, drilling requirements and royalty obligations. These estimates also depend on assumptions regarding quantities and production rates of recoverable oil and gas reserves, oil and gas prices, timing and amounts of development costs and operating expenses, all of which will vary from those assumed in our estimates. Other significant estimates include impairments of unproved properties, fair values of derivative instruments, stock-based compensation, collectability of receivables, disputed claims, interpretation of contractual arrangements (including royalty obligations and notional interest calculations) and contingencies. Estimates are based on current assumptions that may be materially affected by the results of subsequent drilling, testing and production as well as subsequent changes in oil and gas prices, counterparty creditworthiness, interest rates and the market value and volatility of the Company's common stock. |
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Cash And Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less |
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Accounts Receivable And Allowance For Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The Company establishes an allowance for doubtful accounts when it determines that it will not collect all or a part of an accounts receivable balance. The Company assesses the collectability of its accounts receivable on a quarterly basis and adjusts the allowance as necessary using the specific identification method. At June 30, 2013 and December 31, 2012, the Company’s allowance for doubtful accounts was $0.7 million and $1.4 million, respectively |
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Concentration Of Credit Risk | Concentration of Credit Risk Substantially all of the Company’s accounts receivable result from oil and gas sales, joint interest billings to third-party working interest owners in the oil and gas industry or development advances to third-party operators for drilling and completion costs of wells in progress. This concentration of customers and joint interest owners may impact the Company’s overall credit risk in that these entities may be similarly affected by changes in economic and other industry conditions. The Company does not require collateral from its customers. The Company generally has the right to offset revenue against related billings to joint interest owners. Derivative instruments subject the Company to a concentration of credit risk. See “Note 8. Derivative Instruments” for further discussion of concentration of credit risk related to the Company’s derivative instruments |
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Oil And Gas Properties | Oil and Gas Properties Oil and gas properties are accounted for using the full cost method of accounting under which all productive and nonproductive costs directly associated with property acquisition, exploration and development activities are capitalized to costs centers established on a country-by-country basis. Internal costs, including payroll and stock-based compensation, directly associated with acquisition, exploration and development activities are capitalized and totaled $4.2 million and $4.1 million for the three months ended June 30, 2013 and 2012, respectively, and $6.3 million and $7.5 million for the six months ended June 30, 2013 and 2012, respectively. Internal costs related to production, general corporate overhead and similar activities are expensed as incurred. Capitalized oil and gas property costs within a cost center are amortized on an equivalent unit-of-production method, converting oil and natural gas liquids to gas equivalents at the ratio of one barrel of oil or natural gas liquids to six thousand cubic feet of gas, which represents their approximate relative energy content. The equivalent unit-of-production rate is computed on a quarterly basis by dividing production by proved oil and gas reserves at the beginning of the quarter then applying such amount to capitalized oil and gas property costs, which includes estimated asset retirement costs, less accumulated amortization, plus the estimated future expenditures (based on current costs) to be incurred in developing proved reserves, net of estimated salvage values. Average depreciation, depletion and amortization (“DD&A”) per Boe was $19.65 and $18.13 for the three months ended June 30, 2013 and 2012, respectively, and $19.36 and $15.93 for the six months ended June 30, 2013 and 2012, respectively. Unproved properties, which are not being amortized, include unevaluated leasehold and seismic costs associated with specific unevaluated properties, the cost of exploratory wells in progress, and related capitalized interest. Significant costs of unevaluated properties and exploratory wells in progress are assessed individually on a quarterly basis to determine whether or not and to what extent proved reserves have been assigned to the properties or if an impairment has occurred, in which case the related costs are added to the oil and gas property costs subject to amortization. Factors the Company considers in its impairment assessment include drilling results by the Company and other operators, the terms of oil and gas leases not held by production and drilling capital expenditure plans. The Company expects to complete its evaluation of the majority of its unproved leasehold within the next five years and exploratory wells in progress within the next year. Individually insignificant costs of unevaluated properties are grouped by major area and added to the oil and gas property costs subject to amortization based on the average primary lease term of the properties. The Company capitalized interest costs associated with its unevaluated leasehold and seismic costs and exploratory wells in progress of $7.5 million and $6.0 million for the three months ended June 30, 2013 and 2012, respectively, and $14.3 million and $12.0 million for the six months ended June 30, 2013 and 2012, respectively. Interest is capitalized on the average balance of unevaluated leasehold and seismic costs and the average balance of exploratory wells in progress using a weighted-average interest rate based on outstanding borrowings. Proceeds from the sale of oil and gas properties are recognized as a reduction of capitalized oil and gas property costs with no gain or loss recognized, unless the sale significantly alters the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center. On February 22, 2013, the Company closed on the sale of Carrizo UK, which included all of the Company's proved reserves in its U.K. cost center. As a result, in the first quarter of 2013, the Company recognized a $37.3 million gain in “net income from discontinued operations, net of income taxes” in the consolidated statements of income. Other than the sale of Carrizo UK noted above, the Company has not had any sales of oil and gas properties that significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center through June 30, 2013. Capitalized costs, less accumulated amortization and related deferred income taxes, are limited to the “cost center ceiling” equal to (i) the sum of (A) the present value of estimated future net revenues from proved oil and gas reserves, less estimated future expenditures to be incurred in developing and producing the proved reserves computed using a discount factor of 10%, (B) the costs of properties not subject to amortization, and (C) the lower of cost or estimated fair value of unproved properties included in the costs being amortized; less (ii) related income tax effects. If the net capitalized costs exceed the cost center ceiling, the excess is recognized as an impairment of oil and gas properties. An impairment recognized in one period may not be reversed in a subsequent period even if higher oil and gas prices increase the cost center ceiling applicable to the subsequent period. The estimated future net revenues used in the ceiling test are calculated using average quoted market prices for sales of oil and gas on the first calendar day of each month during the preceding 12-month period prior to the end of the current reporting period. Prices are held constant indefinitely and are not changed except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts. Prices used in the ceiling test computation do not include the impact of derivative instruments because the Company elected not to meet the criteria to qualify its derivative instruments for hedge accounting treatment. Depreciation of other property and equipment is recognized using the straight-line method based on estimated useful lives ranging from five to ten years |
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Deferred Financing Costs | Deferred Financing Costs Deferred financing costs include legal fees, accounting fees, underwriting fees, printing costs, and other direct costs associated with the issuance of the debt securities and costs associated with revolving credit facilities. The capitalized costs are amortized to interest expense, net of amounts capitalized using the effective interest method over the terms of the debt securities or credit facilities. |
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Financial Instruments | Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, receivables, payables, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, receivables and payables approximate fair value due to the highly liquid or short-term nature of these instruments. The fair values of the Company's derivative instruments are based on a third-party pricing model that uses market data obtained from third-party sources, including (a) quoted forward prices for oil and gas, (b) discount rates, (c) volatility factors and (d) current market and contractual prices, as well as other relevant economic measures. The carrying amounts of long-term debt under the Company’s revolving credit facility approximate fair value as the borrowings bear interest at variable rates of interest. The carrying amounts of the Company’s senior notes and convertible senior notes may not approximate fair value because the notes bear interest at fixed rates of interest. See “Note 6. Long-Term Debt” and “Note 9. Fair Value Measurements. |
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Asset Retirement Obligations | Asset Retirement Obligations The Company’s oil and gas properties require expenditures to plug and abandon wells after the reserves have been depleted. The asset retirement obligation is recognized as a liability at its fair value when the well is drilled with an associated increase in oil and gas property costs. Asset retirement obligations require estimates of the costs to plug and abandon wells, the costs to restore the surface, the remaining lives of wells based on oil and gas reserve estimates and future inflation rates. The obligations are discounted using a credit-adjusted risk-free interest rate which is accreted over the estimated productive lives of the oil and gas properties to their expected settlement values. Estimated costs consider historical experience, third party estimates and state regulatory requirements and do not consider salvage values. At least annually, the Company reassesses its asset retirement obligations to determine whether a change in the estimated obligation is necessary. Revisions in estimated liabilities can result from changes in estimated inflation rates, changes in estimated costs to plug and abandon wells and changes in estimated timing of oil and gas property retirement. Upon settlement of the liability, the Company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement, which is included in oil and gas property costs. On an interim basis, the Company reassesses the estimated cash flows underlying the obligation when indicators suggest the estimated cash flows underlying the obligation have materially changed and updates its estimated obligation if necessary |
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Commitments And Contingencies | Commitments and Contingencies Liabilities are recognized for contingencies when (i) it is both probable that an asset has been impaired or that a liability has been incurred and (ii) the amount of such loss is reasonably estimable |
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Revenue Recognition | Revenue Recognition Oil and gas revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred, title has transferred and collectability is reasonably assured. The Company follows the sales method of accounting for oil and gas revenues whereby revenue is recognized for all oil and gas sold to purchasers, regardless of whether the sales are proportionate to the Company’s ownership interest in the property. Production imbalances are recognized as an asset or liability to the extent that the Company has an imbalance on a specific property that is in excess of its remaining proved oil and gas reserves. Oil and gas sales volumes are not significantly different from the Company’s share of production and as of June 30, 2013 and December 31, 2012, the Company did not have any material production imbalances |
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Derivative Instruments | Derivative Instruments The Company uses derivative instruments, typically fixed-rate swaps, costless collars, puts, calls and basis differential swaps, to manage commodity price risk associated with a portion of its forecasted oil and gas production. Derivative instruments are recognized at their balance sheet date fair value as assets or liabilities in the consolidated balance sheets. Although the derivative instruments provide an economic hedge of the Company’s exposure to commodity price risk associated with a portion of its forecasted oil and gas production, because the Company elected not to meet the criteria to qualify its derivative instruments for hedge accounting treatment, unrealized gains and losses as a result of changes in the fair value of derivative instruments are recognized as gain (loss) on derivative instruments, net in the consolidated statements of income. Realized gains and losses as a result of cash settlements with counterparties to the Company’s derivative instruments are also recorded as gain (loss) on derivative instruments, net in the consolidated statements of income. The Company offsets fair value amounts recognized for derivative instruments executed with the same counterparty and subject to master netting agreements. The Company’s Board of Directors establishes risk management policies and reviews derivative instruments, including volumes, types of instruments and counterparties, on a quarterly basis. These policies require that derivative instruments be executed only by the President or Chief Financial Officer after consultation with and concurrence by the President, Chief Financial Officer and Chairman of the Board. The master contracts with approved counterparties identify the President and Chief Financial Officer as the only Company representatives authorized to execute trades. See “Note 8. Derivative Instruments” for further discussion of the Company’s derivative instruments |
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Stock-Based Compensation | Stock-Based Compensation The Company grants stock options, stock appreciation rights (“SARs”) that may be settled in cash or common stock at the option of the Company, SARs that may only be settled in cash, restricted stock awards and units to directors, employees and independent contractors. The Company recognized the following stock-based compensation expense for the periods indicated which is reflected as general and administrative expense in the consolidated statements of income:
Stock Options and SARs. For stock options and SARs that the Company expects to settle in common stock, stock-based compensation expense is based on the grant-date fair value and recognized over the vesting period (generally three years). For SARs that the Company expects to settle in cash, stock-based compensation expense is based on the fair value remeasured at each reporting period, recognized over the vesting period (generally three years) and classified as other accrued liabilities for the portion of the awards that are vested or are expected to vest within the next 12 months, with the remainder classified as other long-term liabilities. Subsequent to vesting, the liability for SARs that the Company expects to settle in cash is remeasured in earnings at each reporting period based on fair value until the awards are settled. The Company recognizes stock-based compensation expense over the vesting period for stock options and SARs using the straight-line method, except for awards with performance conditions, in which case the Company uses the graded vesting method. Stock options typically expire ten years after the date of grant. SARs typically expire between four and seven years after the date of grant. The Company uses the Black-Scholes-Merton option pricing model to compute the fair value of stock options and SARs. Restricted Stock Awards and Units. For restricted stock awards and units, stock-based compensation expense is based on the grant-date fair value and recognized over the vesting period (generally one to three years) using the straight-line method, except for award or units with performance conditions, in which case the Company uses the graded vesting method. The fair value of restricted stock awards and units is based on the price of the Company’s common stock on the grant date. For restricted stock awards and units granted to independent contractors, stock-based compensation expense is based on fair value remeasured at each reporting period and recognized over the vesting period (generally three years) using the straight-line method. |
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Income Taxes | Income Taxes Deferred income taxes are recognized at each reporting period for the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts based on tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The Company routinely assesses the realizability of its deferred tax assets and considers its estimate of future taxable income based on production of proved reserves at estimated future pricing in making such assessments by taxing jurisdiction. If the Company concludes that it is more likely than not that some portion or all of the deferred tax assets will not be realized, the deferred tax assets are reduced by a valuation allowance. The Company classifies interest and penalties associated with income taxes as interest expense. |
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Net Income (Loss) Per Common Share | Net Income From Continuing Operations Per Common Share Supplemental net income from continuing operations per common share information is provided below:
Basic net income from continuing operations per common share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income from continuing operations per common share is based on the weighted average number of common shares and all potentially dilutive common shares outstanding during the period which include restricted stock awards and units, stock options, SARs expected to be settled in common stock, warrants and convertible debt. The Company excludes shares related to restricted stock awards, units and stock options from the calculation of diluted weighted average shares outstanding when the grant date prices are greater than the average market prices of the common shares for the period as the effect would be antidilutive to the computation. The shares excluded for the periods ending June 30, 2013 and 2012 were not significant. Shares of common stock subject to issuance upon the conversion of the Company's convertible senior notes did not have an effect on the calculation of dilutive shares for the three and six months ended June 30, 2013 or 2012, because the conversion price was in excess of the market price of the common stock for those periods |
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Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective January 1, 2013, the Company adopted the provisions of ASU No. 2011-11, Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities, and began providing enhanced disclosures regarding the effect or potential effect of netting arrangements on an entity's financial position by improving information about financial instruments and derivative instruments that either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset. Reporting entities are required to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. We adopted this new disclosure requirement effective January 1, 2013. The adoption did not have a material effect on our consolidated financial statements. |
Property And Equipment, Net
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Jun. 30, 2013
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property And Equipment, Net | 4. Property and Equipment, Net At June 30, 2013 and December 31, 2012, property and equipment, net consisted of the following:
Utica Shale Joint Venture. On January 15, 2013, we exercised our option for an additional 40% in the remaining properties held through our joint venture with ACP II Marcellus LLC (“ACP II”), which is also one of our joint venture partners in the Marcellus Shale, and ACP III Utica LLC (“ACP III”), both affiliates of Avista Capital Holdings, LP, a private equity firm (collectively with ACP II and ACP III, “Avista”) by paying $63.1 million. Following the option exercise, the Company has elected to acquire additional properties on a 50/50 basis with Avista. The Company's right to receive distributions associated with the properties owned by ACP III through its B Units in ACP III terminated upon the consummation of the Company’s January 15, 2013 option to increase its interest in the Avista Utica joint venture properties. |
Fair Value Measurements (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets |
The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012. All items included in the tables below are Level 2 inputs within the fair value hierarchy:
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Schedule of Fair Value of Debt Instruments | The following table presents the carrying amounts and fair values of the Company’s senior notes and convertible senior notes, based on quoted market prices, as of June 30, 2013 and December 31, 2012.
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Summary Of Significant Accounting Policies (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Stock-Based Compensation Expense | The Company recognized the following stock-based compensation expense for the periods indicated which is reflected as general and administrative expense in the consolidated statements of income:
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Schedule Of Supplemental Net Income Per Common Share | Supplemental net income from continuing operations per common share information is provided below:
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Derivative Instruments (Schedule of Fair Value Holding Percentage) (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
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Dec. 31, 2012
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Derivative Instruments, Fair Value [Line Items] | ||
Derivative Asset, Fair Value, Net | $ 32.3 | $ 29.2 |
Derivative Instrument Holding Percentage | 100.00% | 100.00% |
Credit Suisse [Member]
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Derivative Instruments, Fair Value [Line Items] | ||
Derivative Instrument Holding Percentage | 38.00% | 40.00% |
Wells Fargo [Member]
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Derivative Instruments, Fair Value [Line Items] | ||
Derivative Instrument Holding Percentage | 13.00% | 2.00% |
Bnp Paribas [Member]
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Derivative Instruments, Fair Value [Line Items] | ||
Derivative Instrument Holding Percentage | 13.00% | 33.00% |
Societe Generale [Member]
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Derivative Instruments, Fair Value [Line Items] | ||
Derivative Instrument Holding Percentage | 35.00% | 22.00% |
Bbva Compass [Member]
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Derivative Instruments, Fair Value [Line Items] | ||
Derivative Instrument Holding Percentage | 1.00% | 3.00% |
Summary Of Significant Accounting Policies (Schedule Of Stock-Based Compensation Expense) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 4,469 | $ 2,501 | $ 12,258 | $ 7,272 |
Less: amounts capitalized | (1,486) | (985) | (2,792) | (1,740) |
Total Stock-Based Compensation Expense | 2,983 | 1,516 | 9,466 | 5,532 |
Income Tax Benefit | (1,107) | (562) | (3,470) | (2,052) |
Stock Options And SARs [Member]
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Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | 7 | (2,975) | 3,939 | (1,309) |
Restricted Stock Awards And Units [Member]
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Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 4,462 | $ 5,476 | $ 8,319 | $ 8,581 |
Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)
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3 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Jun. 30, 2013
Minimum [Member]
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Jun. 30, 2013
Maximum [Member]
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Jun. 30, 2013
Stock Options And SARs [Member]
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Jun. 30, 2013
Stock Options [Member]
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Jun. 30, 2013
Stock Appreciation Rights (SARs) [Member]
Minimum [Member]
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Jun. 30, 2013
Stock Appreciation Rights (SARs) [Member]
Maximum [Member]
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Jun. 30, 2013
Restricted Stock Awards And Units [Member]
Minimum [Member]
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Jun. 30, 2013
Restricted Stock Awards And Units [Member]
Maximum [Member]
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Jun. 30, 2013
Restricted Stock Granted To Contractors [Member]
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Dec. 27, 2012
Carrizo United Kingdom [Member]
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Summary Of Significant Accounting Policies [Line Items] | |||||||||||||||
Internal costs capitalized, Oil and Gas Producing Activities | $ 4,200,000 | $ 4,100,000 | $ 6,300,000 | $ 7,500,000 | |||||||||||
Percentage of non-operating working interest and overriding royalty interests | 15.00% | ||||||||||||||
Allowance for doubtful accounts | 700,000 | 700,000 | 1,400,000 | ||||||||||||
Average DD&A Per Boe (in USD per BOE) | 19.65 | 18.13 | 19.36 | 15.93 | |||||||||||
Oil and Gas, Exploratory Period | 5 years | ||||||||||||||
Capitalized interest | 7,530,000 | 6,011,000 | 14,306,000 | 12,034,000 | |||||||||||
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax | $ 0 | $ 0 | $ 37,294,000 | $ 0 | |||||||||||
Reserves discount factor | 10.00% | ||||||||||||||
Estimated useful life, years | 5 years | 10 years | |||||||||||||
Vesting period, in years | 3 years | 1 year | 3 years | 3 years | |||||||||||
Expiration period after date of grant, in years | 10 years | 4 years | 7 years |
Income Taxes (Schedule Of Effective Income Tax Rate Reconciliation) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Income Tax Disclosure [Abstract] | ||||
Income tax expense at the statutory rate | $ 20,427 | $ 14,687 | $ 21,824 | $ 20,273 |
State income taxes, net of U.S. federal income tax benefit | 2,049 | 843 | 2,063 | 1,087 |
Other, net | 69 | 749 | 107 | 204 |
Income tax expense | $ 22,545 | $ 16,279 | $ 23,994 | $ 21,564 |
Derivative Instruments (Schedule Of U.S. Crude Oil Derivative Positions) (Details) (U.S. Crude Oil Derivative Positions [Member])
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Jun. 30, 2013
bbls
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2013 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 1,766,400 |
Weighted Average Floor Price ($/Bbls) | 90.17 |
Weighted Average Ceiling Price ($/Bbls) | 100.87 |
2014 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 3,375,500 |
Weighted Average Floor Price ($/Bbls) | 90.59 |
Weighted Average Ceiling Price ($/Bbls) | 96.99 |
2015 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 1,806,750 |
Weighted Average Floor Price ($/Bbls) | 89.41 |
Weighted Average Ceiling Price ($/Bbls) | 94.96 |
2016 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 244,000 |
Weighted Average Floor Price ($/Bbls) | 85.00 |
Weighted Average Ceiling Price ($/Bbls) | 104.00 |
Property And Equipment, Net (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
0 Months Ended | |
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Jun. 30, 2013
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Jan. 15, 2013
Corporate Joint Venture [Member]
Utica [Member]
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Property, Plant and Equipment [Line Items] | ||
Joint venture, percentage of ownership increase (decrease) | 40.00% | |
Payments to acquire interest in joint venture | $ 63.1 | |
Joint venture investment, net proceeds ownership percentage | 50.00% | |
Joint Venture Investment, Counterparty Ownership Percentage | 50.00% |
Condensed Consolidating Financial Information (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Condensed Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Condensed Consolidating Balance Sheets | CARRIZO OIL & GAS, INC. CONDENSED CONSOLIDATING BALANCE SHEETS
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Schedule Of Condensed Consolidating Statements Of Operations | CARRIZO OIL & GAS, INC. CONDENSED CONSOLIDATING STATEMENTS OF INCOME
CARRIZO OIL & GAS, INC. CONDENSED CONSOLIDATING STATEMENTS OF INCOME
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Schedule Of Condensed Consolidating Statements Of Cash Flows | CARRIZO OIL & GAS, INC. CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
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Summary Of Significant Accounting Policies
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Jun. 30, 2013
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company after elimination of all significant intercompany transactions and balances and are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company proportionately consolidates its undivided interests in oil and gas properties as well as investments in unincorporated entities, such as partnerships and limited liability companies where the Company, as a partner or member, has undivided interests in the oil and gas properties. The consolidated financial statements reflect all necessary adjustments, all of which were of a normal recurring nature and are in the opinion of management necessary for a fair presentation of the Company’s interim financial position, results of operations and cash flows. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period presentation. These reclassifications had no effect on total assets, total liabilities, total shareholders’ equity, net income, or net cash provided by or used in operating, investing or financing activities. Discontinued Operations On December 27, 2012, the Company agreed to sell Carrizo UK Huntington Ltd, a wholly owned subsidiary of the Company (“Carrizo UK”), and all of its interest in the Huntington Field discovery, where Carrizo UK owned a 15% non-operated working interest and certain overriding royalty interests. The sale closed on February 22, 2013. Accordingly, the Company classified the U.K. North Sea assets and associated liabilities as current and long-term assets held for sale and current and long-term liabilities associated with assets held for sale in the consolidated balance sheets as of December 31, 2012. Beginning March 31, 2013, the Company classified the remaining assets and liabilities associated with the U.K. North Sea as assets of discontinued operations and liabilities of discontinued operations in the consolidated balance sheets. The related results of operations and cash flows have been classified as discontinued operations, net of income taxes, in the consolidated statements of income, statements of cash flows and condensed consolidating financial information. Unless otherwise indicated, the information in these notes relate to the Company’s continuing operations. Information related to assets held for sale and discontinued operations is included in “Note 3. Discontinued Operations” and “Note 10. Condensed Consolidating Financial Information.” Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods reported. Certain of such estimates and assumptions are inherently unpredictable and will differ from actual results. The Company evaluates subsequent events through the date the financial statements are issued. Significant estimates include volumes of proved oil and gas reserves, which are used in calculating the amortization of proved oil and gas property costs, the present value of future net revenues included in the full cost ceiling test, estimates of future taxable income used in assessing the realizability of deferred tax assets, and the timing of asset retirement obligations. Oil and gas reserve estimates, and therefore calculations based on such reserve estimates, are subject to numerous inherent uncertainties, the accuracy of which, is a function of the quality and quantity of available data, the application of engineering and geological interpretation and judgment to available data and the interpretation of mineral leaseholds and other contractual arrangements, including adequacy of title, drilling requirements and royalty obligations. These estimates also depend on assumptions regarding quantities and production rates of recoverable oil and gas reserves, oil and gas prices, timing and amounts of development costs and operating expenses, all of which will vary from those assumed in our estimates. Other significant estimates include impairments of unproved properties, fair values of derivative instruments, stock-based compensation, collectability of receivables, disputed claims, interpretation of contractual arrangements (including royalty obligations and notional interest calculations) and contingencies. Estimates are based on current assumptions that may be materially affected by the results of subsequent drilling, testing and production as well as subsequent changes in oil and gas prices, counterparty creditworthiness, interest rates and the market value and volatility of the Company's common stock. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. Accounts Receivable and Allowance for Doubtful Accounts The Company establishes an allowance for doubtful accounts when it determines that it will not collect all or a part of an accounts receivable balance. The Company assesses the collectability of its accounts receivable on a quarterly basis and adjusts the allowance as necessary using the specific identification method. At June 30, 2013 and December 31, 2012, the Company’s allowance for doubtful accounts was $0.7 million and $1.4 million, respectively. Concentration of Credit Risk Substantially all of the Company’s accounts receivable result from oil and gas sales, joint interest billings to third-party working interest owners in the oil and gas industry or development advances to third-party operators for drilling and completion costs of wells in progress. This concentration of customers and joint interest owners may impact the Company’s overall credit risk in that these entities may be similarly affected by changes in economic and other industry conditions. The Company does not require collateral from its customers. The Company generally has the right to offset revenue against related billings to joint interest owners. Derivative instruments subject the Company to a concentration of credit risk. See “Note 8. Derivative Instruments” for further discussion of concentration of credit risk related to the Company’s derivative instruments. Oil and Gas Properties Oil and gas properties are accounted for using the full cost method of accounting under which all productive and nonproductive costs directly associated with property acquisition, exploration and development activities are capitalized to costs centers established on a country-by-country basis. Internal costs, including payroll and stock-based compensation, directly associated with acquisition, exploration and development activities are capitalized and totaled $4.2 million and $4.1 million for the three months ended June 30, 2013 and 2012, respectively, and $6.3 million and $7.5 million for the six months ended June 30, 2013 and 2012, respectively. Internal costs related to production, general corporate overhead and similar activities are expensed as incurred. Capitalized oil and gas property costs within a cost center are amortized on an equivalent unit-of-production method, converting oil and natural gas liquids to gas equivalents at the ratio of one barrel of oil or natural gas liquids to six thousand cubic feet of gas, which represents their approximate relative energy content. The equivalent unit-of-production rate is computed on a quarterly basis by dividing production by proved oil and gas reserves at the beginning of the quarter then applying such amount to capitalized oil and gas property costs, which includes estimated asset retirement costs, less accumulated amortization, plus the estimated future expenditures (based on current costs) to be incurred in developing proved reserves, net of estimated salvage values. Average depreciation, depletion and amortization (“DD&A”) per Boe was $19.65 and $18.13 for the three months ended June 30, 2013 and 2012, respectively, and $19.36 and $15.93 for the six months ended June 30, 2013 and 2012, respectively. Unproved properties, which are not being amortized, include unevaluated leasehold and seismic costs associated with specific unevaluated properties, the cost of exploratory wells in progress, and related capitalized interest. Significant costs of unevaluated properties and exploratory wells in progress are assessed individually on a quarterly basis to determine whether or not and to what extent proved reserves have been assigned to the properties or if an impairment has occurred, in which case the related costs are added to the oil and gas property costs subject to amortization. Factors the Company considers in its impairment assessment include drilling results by the Company and other operators, the terms of oil and gas leases not held by production and drilling capital expenditure plans. The Company expects to complete its evaluation of the majority of its unproved leasehold within the next five years and exploratory wells in progress within the next year. Individually insignificant costs of unevaluated properties are grouped by major area and added to the oil and gas property costs subject to amortization based on the average primary lease term of the properties. The Company capitalized interest costs associated with its unevaluated leasehold and seismic costs and exploratory wells in progress of $7.5 million and $6.0 million for the three months ended June 30, 2013 and 2012, respectively, and $14.3 million and $12.0 million for the six months ended June 30, 2013 and 2012, respectively. Interest is capitalized on the average balance of unevaluated leasehold and seismic costs and the average balance of exploratory wells in progress using a weighted-average interest rate based on outstanding borrowings. Proceeds from the sale of oil and gas properties are recognized as a reduction of capitalized oil and gas property costs with no gain or loss recognized, unless the sale significantly alters the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center. On February 22, 2013, the Company closed on the sale of Carrizo UK, which included all of the Company's proved reserves in its U.K. cost center. As a result, in the first quarter of 2013, the Company recognized a $37.3 million gain in “net income from discontinued operations, net of income taxes” in the consolidated statements of income. Other than the sale of Carrizo UK noted above, the Company has not had any sales of oil and gas properties that significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center through June 30, 2013. Capitalized costs, less accumulated amortization and related deferred income taxes, are limited to the “cost center ceiling” equal to (i) the sum of (A) the present value of estimated future net revenues from proved oil and gas reserves, less estimated future expenditures to be incurred in developing and producing the proved reserves computed using a discount factor of 10%, (B) the costs of properties not subject to amortization, and (C) the lower of cost or estimated fair value of unproved properties included in the costs being amortized; less (ii) related income tax effects. If the net capitalized costs exceed the cost center ceiling, the excess is recognized as an impairment of oil and gas properties. An impairment recognized in one period may not be reversed in a subsequent period even if higher oil and gas prices increase the cost center ceiling applicable to the subsequent period. The estimated future net revenues used in the ceiling test are calculated using average quoted market prices for sales of oil and gas on the first calendar day of each month during the preceding 12-month period prior to the end of the current reporting period. Prices are held constant indefinitely and are not changed except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts. Prices used in the ceiling test computation do not include the impact of derivative instruments because the Company elected not to meet the criteria to qualify its derivative instruments for hedge accounting treatment. Depreciation of other property and equipment is recognized using the straight-line method based on estimated useful lives ranging from five to ten years. Deferred Financing Costs Deferred financing costs include legal fees, accounting fees, underwriting fees, printing costs, and other direct costs associated with the issuance of the debt securities and costs associated with revolving credit facilities. The capitalized costs are amortized to interest expense, net of amounts capitalized using the effective interest method over the terms of the debt securities or credit facilities. Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, receivables, payables, derivative instruments and long-term debt. The carrying amounts of cash and cash equivalents, receivables and payables approximate fair value due to the highly liquid or short-term nature of these instruments. The fair values of the Company's derivative instruments are based on a third-party pricing model that uses market data obtained from third-party sources, including (a) quoted forward prices for oil and gas, (b) discount rates, (c) volatility factors and (d) current market and contractual prices, as well as other relevant economic measures. The carrying amounts of long-term debt under the Company’s revolving credit facility approximate fair value as the borrowings bear interest at variable rates of interest. The carrying amounts of the Company’s senior notes and convertible senior notes may not approximate fair value because the notes bear interest at fixed rates of interest. See “Note 6. Long-Term Debt” and “Note 9. Fair Value Measurements.” Asset Retirement Obligations The Company’s oil and gas properties require expenditures to plug and abandon wells after the reserves have been depleted. The asset retirement obligation is recognized as a liability at its fair value when the well is drilled with an associated increase in oil and gas property costs. Asset retirement obligations require estimates of the costs to plug and abandon wells, the costs to restore the surface, the remaining lives of wells based on oil and gas reserve estimates and future inflation rates. The obligations are discounted using a credit-adjusted risk-free interest rate which is accreted over the estimated productive lives of the oil and gas properties to their expected settlement values. Estimated costs consider historical experience, third party estimates and state regulatory requirements and do not consider salvage values. At least annually, the Company reassesses its asset retirement obligations to determine whether a change in the estimated obligation is necessary. Revisions in estimated liabilities can result from changes in estimated inflation rates, changes in estimated costs to plug and abandon wells and changes in estimated timing of oil and gas property retirement. Upon settlement of the liability, the Company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement, which is included in oil and gas property costs. On an interim basis, the Company reassesses the estimated cash flows underlying the obligation when indicators suggest the estimated cash flows underlying the obligation have materially changed and updates its estimated obligation if necessary. Commitments and Contingencies Liabilities are recognized for contingencies when (i) it is both probable that an asset has been impaired or that a liability has been incurred and (ii) the amount of such loss is reasonably estimable. Revenue Recognition Oil and gas revenues are recognized when the products are sold to a purchaser at a fixed or determinable price, delivery has occurred, title has transferred and collectability is reasonably assured. The Company follows the sales method of accounting for oil and gas revenues whereby revenue is recognized for all oil and gas sold to purchasers, regardless of whether the sales are proportionate to the Company’s ownership interest in the property. Production imbalances are recognized as an asset or liability to the extent that the Company has an imbalance on a specific property that is in excess of its remaining proved oil and gas reserves. Oil and gas sales volumes are not significantly different from the Company’s share of production and as of June 30, 2013 and December 31, 2012, the Company did not have any material production imbalances. Derivative Instruments The Company uses derivative instruments, typically fixed-rate swaps, costless collars, puts, calls and basis differential swaps, to manage commodity price risk associated with a portion of its forecasted oil and gas production. Derivative instruments are recognized at their balance sheet date fair value as assets or liabilities in the consolidated balance sheets. Although the derivative instruments provide an economic hedge of the Company’s exposure to commodity price risk associated with a portion of its forecasted oil and gas production, because the Company elected not to meet the criteria to qualify its derivative instruments for hedge accounting treatment, unrealized gains and losses as a result of changes in the fair value of derivative instruments are recognized as gain (loss) on derivative instruments, net in the consolidated statements of income. Realized gains and losses as a result of cash settlements with counterparties to the Company’s derivative instruments are also recorded as gain (loss) on derivative instruments, net in the consolidated statements of income. The Company offsets fair value amounts recognized for derivative instruments executed with the same counterparty and subject to master netting agreements. The Company’s Board of Directors establishes risk management policies and reviews derivative instruments, including volumes, types of instruments and counterparties, on a quarterly basis. These policies require that derivative instruments be executed only by the President or Chief Financial Officer after consultation with and concurrence by the President, Chief Financial Officer and Chairman of the Board. The master contracts with approved counterparties identify the President and Chief Financial Officer as the only Company representatives authorized to execute trades. See “Note 8. Derivative Instruments” for further discussion of the Company’s derivative instruments. Stock-Based Compensation The Company grants stock options, stock appreciation rights (“SARs”) that may be settled in cash or common stock at the option of the Company, SARs that may only be settled in cash, restricted stock awards and units to directors, employees and independent contractors. The Company recognized the following stock-based compensation expense for the periods indicated which is reflected as general and administrative expense in the consolidated statements of income:
Stock Options and SARs. For stock options and SARs that the Company expects to settle in common stock, stock-based compensation expense is based on the grant-date fair value and recognized over the vesting period (generally three years). For SARs that the Company expects to settle in cash, stock-based compensation expense is based on the fair value remeasured at each reporting period, recognized over the vesting period (generally three years) and classified as other accrued liabilities for the portion of the awards that are vested or are expected to vest within the next 12 months, with the remainder classified as other long-term liabilities. Subsequent to vesting, the liability for SARs that the Company expects to settle in cash is remeasured in earnings at each reporting period based on fair value until the awards are settled. The Company recognizes stock-based compensation expense over the vesting period for stock options and SARs using the straight-line method, except for awards with performance conditions, in which case the Company uses the graded vesting method. Stock options typically expire ten years after the date of grant. SARs typically expire between four and seven years after the date of grant. The Company uses the Black-Scholes-Merton option pricing model to compute the fair value of stock options and SARs. Restricted Stock Awards and Units. For restricted stock awards and units, stock-based compensation expense is based on the grant-date fair value and recognized over the vesting period (generally one to three years) using the straight-line method, except for award or units with performance conditions, in which case the Company uses the graded vesting method. The fair value of restricted stock awards and units is based on the price of the Company’s common stock on the grant date. For restricted stock awards and units granted to independent contractors, stock-based compensation expense is based on fair value remeasured at each reporting period and recognized over the vesting period (generally three years) using the straight-line method. Income Taxes Deferred income taxes are recognized at each reporting period for the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts based on tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. The Company routinely assesses the realizability of its deferred tax assets and considers its estimate of future taxable income based on production of proved reserves at estimated future pricing in making such assessments by taxing jurisdiction. If the Company concludes that it is more likely than not that some portion or all of the deferred tax assets will not be realized, the deferred tax assets are reduced by a valuation allowance. The Company classifies interest and penalties associated with income taxes as interest expense. Net Income From Continuing Operations Per Common Share Supplemental net income from continuing operations per common share information is provided below:
Basic net income from continuing operations per common share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income from continuing operations per common share is based on the weighted average number of common shares and all potentially dilutive common shares outstanding during the period which include restricted stock awards and units, stock options, SARs expected to be settled in common stock, warrants and convertible debt. The Company excludes shares related to restricted stock awards, units and stock options from the calculation of diluted weighted average shares outstanding when the grant date prices are greater than the average market prices of the common shares for the period as the effect would be antidilutive to the computation. The shares excluded for the periods ending June 30, 2013 and 2012 were not significant. Shares of common stock subject to issuance upon the conversion of the Company's convertible senior notes did not have an effect on the calculation of dilutive shares for the three and six months ended June 30, 2013 or 2012, because the conversion price was in excess of the market price of the common stock for those periods. Recently Adopted Accounting Pronouncements Effective January 1, 2013, the Company adopted the provisions of ASU No. 2011-11, Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities, and began providing enhanced disclosures regarding the effect or potential effect of netting arrangements on an entity's financial position by improving information about financial instruments and derivative instruments that either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset. Reporting entities are required to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. We adopted this new disclosure requirement effective January 1, 2013. The adoption did not have a material effect on our consolidated financial statements. |
Income Taxes
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Jun. 30, 2013
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | 5. Income Taxes The Company’s estimated annual effective income tax rates are used to allocate expected annual income tax expense to interim periods. The rates are the ratio of estimated annual income tax expense to estimated annual income before income taxes by taxing jurisdiction, except for discrete items, which are significant, unusual or infrequent items for which income taxes are computed and recorded in the interim period in which the specific transaction occurs. The estimated annual effective income tax rates are applied to the year-to-date income before income taxes by taxing jurisdiction to determine the income tax expense allocated to the interim period. The Company updates its estimated annual effective income tax rate at the end of each quarterly period considering the geographic mix of income based on the tax jurisdictions in which the Company operates. Actual results that are different from the assumptions used in estimating the annual effective income tax rate will impact future income tax expense. Income tax expense differs from income tax expense computed by applying the U.S. federal statutory corporate income tax rate of 35% to income from continuing operations before income taxes as follows:
As of June 30, 2013, the Company had U.S. income tax loss carryforwards of approximately $179.6 million. The U.S. loss carryforwards expire between 2019 and 2032 if not utilized in earlier periods. The realization of the deferred tax assets related to the U.S. loss carryforwards is dependent on the Company’s ability to generate sufficient future taxable income, which the Company expects to be able to generate within the applicable carryforward periods. Accordingly, the Company believes that it is more likely than not that its deferred tax assets related to the U.S. loss carryforwards will be fully realized. At June 30, 2013, the Company had no material uncertain tax positions and the tax years since 1999 remain open to review by federal and various state tax jurisdictions. |
Discontinued Operations
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Jun. 30, 2013
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | 3. Discontinued Operations On February 22, 2013, the Company closed on the sale of Carrizo UK, and all of its interest in the Huntington Field discovery, including a 15% non-operated working interest and certain overriding royalty interests, to a subsidiary of Iona Energy Inc. (“Iona Energy”) for an agreed-upon price of $184.0 million, including the assumption and repayment by Iona Energy of the $55.0 million of borrowings outstanding under Carrizo UK's senior secured multicurrency credit facility as of the closing date. The assets of discontinued operations of $6.9 million primarily relate to the remaining deferred consideration which the Company expects to receive during 2013. The liabilities of discontinued operations of $27.9 million relate to an accrual for estimated future obligations related to the sale. See “Note 2. Summary of Significant Accounting Policies—Use of Estimates” for further discussion of estimates and assumptions that may affect the reported amounts of assets and liabilities related to the sale of Carrizo UK. The following table summarizes the amounts included in net income from discontinued operations, net of income taxes presented in the consolidated statements of income for the three and six months ended June 30, 2013 and 2012:
Income Taxes Carrizo UK is a disregarded entity for U.S. income tax purposes. Accordingly, the income tax (expense) benefit reflected above includes the Company’s U.S. deferred income tax (expense) benefit associated with the income (loss) from discontinued operations before income taxes. The related U.S. deferred tax assets and liabilities have been classified as deferred income taxes of continuing operations in the consolidated balance sheet. Foreign Currency The U.S. dollar was the functional currency for the Company’s operations in the U.K. North Sea. Transaction gains or losses that occurred due to the realization of assets and the settlement of liabilities denominated in a currency other than the functional currency were recorded as Other income (expense), net. |
Derivative Instruments (Schedule Of U.S. Crude Oil Protective Put Spreads) (Details) (Protective Put Spreads [Member])
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Jun. 30, 2013
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2014 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 182,500 |
Weighted Average Short Put Price ($/Bbl) | 65.00 |
Weighted Average Put Spread ($/Bbl) | 20.00 |
2015 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 365,000 |
Weighted Average Short Put Price ($/Bbl) | 65.00 |
Weighted Average Put Spread ($/Bbl) | 20.00 |
2016 [Member]
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Derivative [Line Items] | |
Volumes (in Bbls) | 244,000 |
Weighted Average Short Put Price ($/Bbl) | 65.00 |
Weighted Average Put Spread ($/Bbl) | 20.00 |
Summary Of Significant Accounting Policies (Schedule Of Supplemental Net Income Per Common Share) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Accounting Policies [Abstract] | ||||
Net income from continuing operations | $ 35,837 | $ 25,683 | $ 38,361 | $ 36,359 |
Basic weighted average common shares outstanding | 40,078 | 39,596 | 39,928 | 39,520 |
Effect of dilutive instruments | 532 | 446 | 541 | 467 |
Diluted weighted average common shares outstanding | 40,610 | 40,042 | 40,469 | 39,987 |
Net income from continuing operations per common share | ||||
Net income from continuing operations - basic (in dollars per share) | $ 0.89 | $ 0.65 | $ 0.96 | $ 0.92 |
Net income from continuing operations - diluted (in dollars per share) | $ 0.88 | $ 0.64 | $ 0.95 | $ 0.91 |
Property And Equipment, Net (Schedule Of Property And Equipment) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Proved oil and gas properties | $ 2,086,461 | $ 1,713,827 |
Accumulated depreciation, depletion and amortization | (656,660) | (561,279) |
Proved oil and gas properties, net | 1,429,801 | 1,152,548 |
Unproved properties, not being amortized | ||
Unevaluated leasehold costs | 284,362 | 238,833 |
Exploratory wells in progress | 30,936 | 43,803 |
Capitalized interest | 45,236 | 41,052 |
Total unproved properties, not being amortized | 360,534 | 323,688 |
Other property and equipment | 18,975 | 17,079 |
Accumulated depreciation | (6,448) | (5,641) |
Other property and equipment, net | 12,527 | 11,438 |
TOTAL PROPERTY AND EQUIPMENT, NET | $ 1,802,862 | $ 1,487,674 |
Derivative Instruments (Narrative) (Details)
|
6 Months Ended |
---|---|
Jun. 30, 2013
bbls
|
|
Derivatives, Fair Value [Line Items] | |
Current Long-Term Derivative Instrument Strategy | 60 months |
Derivative positions not covered by put spread | 3,193,000 |