0001040593-14-000201.txt : 20141216 0001040593-14-000201.hdr.sgml : 20141216 20141215201847 ACCESSION NUMBER: 0001040593-14-000201 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20141024 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20141216 DATE AS OF CHANGE: 20141215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARRIZO OIL & GAS INC CENTRAL INDEX KEY: 0001040593 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760415919 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-29187-87 FILM NUMBER: 141288136 BUSINESS ADDRESS: STREET 1: 500 DALLAS STREET STREET 2: SUITE 2300 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7133281000 MAIL ADDRESS: STREET 1: 500 DALLAS STREET STREET 2: SUITE 2300 CITY: HOUSTON STATE: TX ZIP: 77002 8-K/A 1 form8-kaxefmacquisitionfin.htm 8-K/A Form 8-K/A - EFM Acquisition Financial Statements


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K/A
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (date of earliest event reported):  October 24, 2014
 
CARRIZO OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
 
 Texas
 000-29187-87  
 76-0415919
(State or other jurisdiction
(Commission
(I.R.S. Employer
of incorporation) 
File Number)   
Identification No.)
 
500 Dallas Street
Suite 2300
Houston, Texas
77002
(Address of principal executive offices)
(Zip code)

Registrant’s telephone number, including area code: (713) 328-1000
 
Not applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





EXPLANATORY NOTE
This Amendment No. 1 amends the Current Report on Form 8-K that Carrizo Oil & Gas, Inc. (the “Company”) filed with the Securities and Exchange Commission on October 27, 2014, concerning the October 24, 2014 completion of the acquisition of interests in oil and gas properties from Eagle Ford Minerals, LLC primarily in LaSalle, Atascosa and McMullen Counties, Texas in the Eagle Ford Shale (the “Eagle Ford Shale Transaction”), to include the audited financial statements and pro forma financial information required by Item 9.01(a) and 9.01(b) of Form 8-K.
Item 9.01        Financial Statement and Exhibits
(a) Financial Statements of Businesses Acquired
The audited Combined Statements of Revenues and Direct Operating Expenses of oil and gas properties acquired by Carrizo Oil & Gas, Inc. for the years ended December 31, 2013 and 2012 and the nine months ended September 30, 2014 and the related notes thereto, together with the report of KPMG LLP, independent auditors, concerning those statements and related notes, are filed as Exhibit 99.1 hereto and are incorporated herein by reference.
(b) Pro Forma Financial Information
Unaudited pro forma condensed combined financial information of the Company giving effect to the Eagle Ford Shale Transaction is filed as Exhibit 99.2 and is incorporated herein by reference.
(d) Exhibits
Exhibit Number
Description
23.1
Consent of KPMG LLP.
23.2
Consent of Ryder Scott Company, L.P.
99.1
Audited Combined Statements of Revenues and Direct Operating Expenses of Oil and Gas Properties Acquired by Carrizo Oil & Gas, Inc. for the years ended December 31, 2013 and 2012 and the nine months ended September 30, 2014.
99.2
Unaudited Pro Forma Condensed Combined Balance Sheet of Carrizo Oil & Gas, Inc. as of September 30, 2014 and Unaudited Pro Forma Condensed Combined Statements of Income for the year ended December 31, 2013 and the nine months ended September 30, 2014.
99.3
Summary of Reserve Report and Report of Ryder Scott Company, L.P. as of December 31, 2012.
99.4
Summary of Reserve Report and Report of Ryder Scott Company, L.P. as of December 31, 2013.
99.5
Summary of Reserve Report and Report of Ryder Scott Company, L.P. as of September 30, 2014.

1



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
CARRIZO OIL & GAS, INC.
 
 
By:
/s/ David L. Pitts
Name:
David L. Pitts
Title:
Vice President and Chief Financial Officer

Date:  December 15, 2014





2



EXHIBIT INDEX
 
Exhibit Number
Description
23.1
Consent of KPMG LLP.
23.2
Consent of Ryder Scott Company, L.P.
99.1
Audited Combined Statements of Revenues and Direct Operating Expenses of Oil and Gas Properties Acquired by Carrizo Oil & Gas, Inc. for the years ended December 31, 2013 and 2012 and the nine months ended September 30, 2014.
99.2
Unaudited Pro Forma Condensed Combined Balance Sheet of Carrizo Oil & Gas, Inc. as of September 30, 2014 and Unaudited Pro Forma Condensed Combined Statements of Income for the year ended December 31, 2013 and the nine months ended September 30, 2014.
99.3
Summary of Reserve Report and Report of Ryder Scott Company, L.P. as of December 31, 2012.
99.4
Summary of Reserve Report and Report of Ryder Scott Company, L.P. as of December 31, 2013.
99.5
Summary of Reserve Report and Report of Ryder Scott Company, L.P. as of September 30, 2014.


3
EX-23.1 2 ex231consentofkpmgllp.htm CONSENT OF KPMG LLP Ex 23.1 Consent of KPMG LLP

Exhibit 23.1

Consent of Independent Auditors


We consent to the incorporation by reference in the registration statement (No. 333-198459) on Form S-3ASR and the registration statements (Nos. 333-196252, 333-181585, 333-162888, 333-137273, 333-116528, 333-55838, and 333-35245) on Form S-8 of Carrizo Oil & Gas, Inc. of our report dated December 15, 2014, with respect to the combined statements of revenues and direct operating expenses of oil and gas properties acquired by Carrizo Oil & Gas, Inc. for the years ended December 31, 2013 and 2012, and the nine months ended September 30, 2014, which report appears in the Form 8-K/A of Carrizo Oil & Gas, Inc. to be filed on December 15, 2014.
/s/ KPMG LLP
Houston, Texas
December 15, 2014




EX-23.2 3 ex232consentofryderscott.htm CONSENT OF RYDER SCOTT Ex 23.2 Consent of Ryder Scott


Exhibit 23.2


CONSENT OF INDEPENDENT PETROLEUM ENGINEER


We hereby consent to the incorporation by reference in the registration statements on Form S-8 (Registration Nos. 333-196252, 333-181585, 333-162888, 333-137273, 333-116528, 333-55838 and 333-35245) and the registration statement on Form S-3ASR (Registration No. 333-198459) of Carrizo Oil & Gas, Inc. of our letters dated November 21, 2014, relating to estimates of proved reserves attributable to certain interests of Eagle Ford Minerals, LLC as of December 31, 2013, December 31, 2012 and September 30, 2014.

/s/ RYDER SCOTT COMPANY, L.P.


RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580



Houston, Texas
December 15, 2014














EX-99.1 4 ex991statementsofrevenuesa.htm STATEMENTS OF COMBINED REVENUES AND DIRECT OPERATING EXPENSES Ex 99.1 Statements of Revenues and Direct Operating Expenses



Exhibit 99.1

Independent Auditors’ Report


The Sole Member
Eagle Ford Minerals, LLC:

We have audited the accompanying combined statements of revenues and direct operating expenses of oil and gas properties acquired by Carrizo Oil & Gas, Inc. (the Statements) for each of the years ended December 31, 2013 and 2012, and the nine months ended September 30, 2014, and the related notes to the Statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these Statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these Statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Statements referred to above present fairly in all material respects, the revenues and direct operating expenses of oil and gas properties acquired by Carrizo Oil & Gas, Inc. for each of the years ended December 31, 2013 and 2012, and the nine months ended September 30, 2014, in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
As described in Note 1, the accompanying combined statements of revenues and direct operating expenses were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and are not intended to be a complete presentation of the operations of the properties. Our opinion is not modified with respect to this matter.

/s/ KPMG LLP

Houston, Texas
December 15, 2014







COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
OF OIL AND GAS PROPERTIES ACQUIRED BY CARRIZO OIL & GAS, INC.
(In thousands)

 
Nine Months Ended
September 30,
 
Year Ended
December 31,
 
2014
 
2013
 
2012
Revenues
$
45,431

 
$
55,539

 
$
51,802

Direct operating expenses
(7,870
)
 
(7,194
)
 
(3,974
)
Revenues in excess of direct operating expenses
$
37,561

 
$
48,345

 
$
47,828


The accompanying notes are an integral part of these combined statements.






NOTES TO COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
OF OIL AND GAS PROPERTIES ACQUIRED BY CARRIZO OIL & GAS, INC.


1.
BASIS OF PRESENTATION

On October 24, 2014, Carrizo Oil & Gas, Inc. (“Carrizo”) completed the acquisition of interests in oil and gas properties (the "Properties”) from Eagle Ford Minerals, LLC (“EFM”) primarily in LaSalle, Atascosa and McMullen Counties, Texas in the Eagle Ford Shale (the “Eagle Ford Shale Transaction”). The Eagle Ford Shale Transaction had an effective date of October 1, 2014, with an agreed upon purchase price of $250.0 million, subject to post-closing and working capital adjustments. Carrizo paid approximately $93.0 million at closing, which represented $100.0 million of the agreed upon purchase price less working capital adjustments of $7.0 million and is required to pay the remaining portion of the agreed upon purchase price of $150.0 million no later than February 16, 2015. Prior to the Eagle Ford Shale Transaction, Carrizo and EFM were joint working interest owners in the Properties, for which Carrizo acted as the operator and owned an approximate 75% working interest in all of such Properties. After giving effect to the Eagle Ford Shale Transaction, Carrizo holds an approximate 100% working interest in the Properties.

The accompanying combined statements include revenues from the sale of crude oil, natural gas liquids and natural gas production and direct operating expenses associated with the Properties for the periods prior to September 30, 2014. Revenues and direct operating expenses are presented on the accrual basis of accounting. For the periods presented, the Properties were not accounted for or operated as a separate division or entity by EFM, therefore, certain expenses such as depreciation, depletion and amortization, general and administrative, interest and income taxes were not allocated to the Properties. Accordingly, complete separate financial statements reflecting the financial position, results of operations and cash flows of the Properties prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) are not presented because the information necessary to prepare such statements is neither readily available nor practicable to obtain in these circumstances. Accordingly, the accompanying combined statements of revenues and direct operating expenses are presented in lieu of the GAAP financial statements required under Item 3-05 of Securities and Exchange Commission (“SEC”) Regulation S-X. As such, the accompanying combined statements are not intended to be a complete presentation of the revenues and expenses of the Properties and are not indicative of the results of the operation of the Properties going forward.

Revenue Recognition
Oil and gas revenues are recognized when production is sold to a purchaser at a fixed or determinable price, delivery has occurred, title has transferred and collectability is reasonably assured. Oil and gas revenues are recognized based on the sales method of accounting whereby revenues from the production of natural gas from properties are recognized for production sold to purchasers, regardless of whether the sales are proportionate to the ownership interest in the property. Sales volumes are not significantly different from the ownership interest share of production. Oil and gas revenues are reported net of royalties and the revenue interests of third parties.

Direct Operating Expenses
Direct operating expenses are recognized when incurred and include (a) lease operating expenses which consist of chemical treating, repairs and maintenance, equipment rental, saltwater disposal and other direct operating expenses (b) production taxes and (c) ad valorem taxes.

Use of Estimates
The preparation of these combined statements requires management to make estimates and assumptions that affect the reported amounts of revenues and direct operating expenses during the reporting period. Estimated amounts will differ from actual results.

Subsequent Events
Management evaluated subsequent events through December 15, 2014, which was the date the financial statements were issued.

2.
COMMITMENTS AND CONTINGENCIES

Pursuant to the terms of the purchase and sale agreement between Carrizo and EFM, certain liabilities arising in connection with ownership of the Properties prior to the effective date are retained by EFM. Management is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the combined statements of revenues and direct operating expenses.








3.
SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
 
The following tables summarize the net ownership interest in the proved oil and gas reserves, the standardized measure and changes in the standardized measure of discounted future net cash flows of the Properties and are based on estimates of proved reserves derived from the reserve reports prepared by independent third-party reserve engineers as of December 31, 2013, December 31, 2012 and September 30, 2014. The standardized measure and changes in the standardized measure presented here exclude income taxes as the tax basis of the Properties is not applicable on a going forward basis. The proved oil and gas reserve estimates and other components of the standardized measure were determined in accordance with the authoritative guidance of the Financial Accounting Standards Board and the SEC.

Proved Oil and Gas Reserve Quantities

Proved reserves are generally those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible in future years from known reservoirs under existing economic conditions, operating methods, and government regulations. Proved developed reserves include proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well. Proved undeveloped reserves are generally proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. The net proved oil and gas reserves and changes in net proved oil and gas reserves attributable to the Properties, all of which are located in the state of Texas, are summarized below:
 
Crude Oil
 
Natural Gas
Liquids
 
Natural Gas
 
Total
 
(MBbls)
 
(MBbls)
 
(MMcf)
 
(MBoe)
Proved reserves:
 
 
 
 
 
 
 
January 1, 2012
3,381

 
295

 
2,361

 
4,070

Extensions and discoveries
3,206

 
301

 
2,526

 
3,927

Revisions of previous estimates
716

 
78

 
812

 
929

Production
(489
)
 
(18
)
 
(194
)
 
(539
)
December 31, 2012
6,814

 
656

 
5,505

 
8,387

Extensions and discoveries
4,242

 
442

 
2,869

 
5,163

Revisions of previous estimates
165

 
52

 
(946
)
 
59

Production
(528
)
 
(45
)
 
(249
)
 
(613
)
December 31, 2013
10,693

 
1,105

 
7,179

 
12,996

Extensions and discoveries
2,498

 
291

 
1,890

 
3,104

Revisions of previous estimates
84

 
(18
)
 
(160
)
 
39

Production
(448
)
 
(37
)
 
(201
)
 
(520
)
September 30, 2014
12,827

 
1,341

 
8,708

 
15,619

 
 
 
 
 
 
 
 
Proved developed reserves:
 
 
 
 
 
 
 
December 31, 2012
2,275

 
179

 
1,501

 
2,704

December 31, 2013
2,115

 
216

 
1,405

 
2,566

September 30, 2014
3,495

 
363

 
2,355

 
4,250

 
 
 
 
 
 
 
 
Proved undeveloped reserves:
 
 
 
 
 
 
 
December 31, 2012
4,539

 
477

 
4,004

 
5,683

December 31, 2013
8,578

 
889

 
5,774

 
10,430

September 30, 2014
9,332

 
978

 
6,353

 
11,369



    





Standardized Measure

The standardized measure of discounted future net cash flows excluding income taxes related to the proved oil and gas reserves of the Properties is as follows:
 
Nine Months Ended September 30,
 
Year Ended
December 31,
 
2014
 
2013
 
2012
 
(In thousands)
Future cash inflows
$
1,319,592

 
$
1,119,625

 
$
725,521

Future production costs
(334,176
)
 
(263,524
)
 
(124,567
)
Future development costs
(243,410
)
 
(222,587
)
 
(94,684
)
Future net cash flows
742,006

 
633,514

 
506,270

Less 10% annual discount to reflect timing of cash flows
(386,750
)
 
(340,326
)
 
(246,245
)
Standard measure of discounted future net cash flows
$
355,256

 
$
293,188

 
$
260,025


Reserve estimates and future cash flows are based on the average realized prices for sales of oil and gas on the first calendar day of each month during the year. The average realized prices used for 2014, 2013 and 2012 were $97.15, $100.26, and $102.08 per barrel, respectively, for crude oil, $26.87, $25.51, and $32.20 per barrel, respectively, for natural gas liquids, and $4.30, $2.69, and $1.60 per Mcf, respectively, for natural gas.

Future operating expenses and development costs are computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the period, based on period end costs and assuming continuation of existing economic conditions. As mentioned above, the standardized measure presented here excludes the effects of income taxes as the tax basis for the Properties is not applicable on a going forward basis. A discount factor of 10% was used to reflect the timing of future net cash flows. The standardized measure of discounted future net cash flows is not intended to represent the replacement cost or fair value of the Properties. An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs, and a discount factor more representative of the time value of money and the risks inherent in oil and gas reserve estimates.

Changes in Standardized Measure

Changes in the standardized measure of discounted future net cash flows excluding income taxes related to the proved oil and gas reserves of the Properties are as follows:
 
Nine Months Ended September 30,
 
Year Ended
December 31,
 
2014
 
2013
 
2012
 
(In thousands)
 
 
 
 
 
 
Standardized measure — beginning of period
$
293,188

 
$
260,025

 
$
168,370

Revisions to reserves proved in prior periods:
 
 
 
 
 
Net change in sales prices and production costs
   related to future production
(18,940
)
 
(37,290
)
 
19,644

Net change in estimated future development costs
8,705

 
(14,660
)
 
(25,129
)
Net change due to revisions in quantity estimates
889

 
1,328

 
28,804

Accretion of discount
21,989

 
26,002

 
16,837

Changes in production rates (timing) and other
(8,292
)
 
(5,769
)
 
(21,687
)
Total revisions
4,351

 
(30,389
)
 
18,469

Net change due to extensions and discoveries, net of
    estimated future development and production costs
59,869

 
107,847

 
114,776

Sales of oil and gas produced, net of production costs
(37,561
)
 
(48,345
)
 
(47,828
)
Previously estimated development costs incurred
35,409

 
4,050

 
6,238

Net change in standardized measure of discounted
    future net cash flows
62,068

 
33,163

 
91,655

Standardized measure — end of period
$
355,256

 
$
293,188

 
$
260,025




EX-99.2 5 ex992proformafinancialstat.htm PRO FORMA FINANCIAL STATEMENTS Ex 99.2 Pro Forma Financial Statements


Exhibit 99.2

CARRIZO OIL & GAS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands, except per share data)

 
September 30, 2014
 
Historical
 
Pro Forma Adjustments
 
 
Pro Forma
Assets
 
 
 
 
 
 
Total current assets

$145,159

 

($17,149
)
(1)(2)
 

$128,010

Property and equipment
 
 
 
 
 
 
Oil and gas properties, net, full cost method
2,247,567

 
247,383

(1)
 
2,494,950

Other property and equipment, net
7,580

 

 
 
7,580

Total property and equipment, net
2,255,147

 
247,383

 
 
2,502,530

Other assets
40,528

 

 
 
40,528

Total Assets

$2,440,834

 

$230,234

 
 

$2,671,068

 
 
 
 
 
 
 
Liabilities and Shareholders Equity
 
 
 
 
 
 
Total current liabilities

$373,526

 

$136,850

(2)(4)
 

$510,376

Long-term debt
1,019,791

 
92,961

(3)
 
1,112,752

Other liabilities
85,638

 
423

(1)
 
86,061

Total liabilities
1,478,955

 
230,234

 
 
1,709,189

Commitments and contingencies
 
 
 
 
 
 
Shareholders’ equity
 
 
 
 
 


Common stock, $0.01 par value
461

 

 
 
461

Additional paid-in capital
908,133

 

 
 
908,133

Retained earnings
53,285

 

 
 
53,285

Total shareholders’ equity
961,879

 

 
 
961,879

Total Liabilities and Shareholders Equity

$2,440,834

 

$230,234

 
 

$2,671,068


See the accompanying notes to the unaudited pro forma condensed combined financial statements.





CARRIZO OIL & GAS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(in thousands, except per share data)

 
Nine Months Ended September 30, 2014
 
Historical
 
Acquired Properties
 
 
Pro Forma Adjustments
 
 
Pro Forma
Revenues
 
 
 
 
 
 
 
 
 
Crude oil

$469,601

 

$36,046

(1)
 

$—

 
 

$505,647

Natural gas liquids
19,669

 
4,910

(1)
 

 
 
24,579

Natural gas
57,642

 
4,475

(1)
 

 
 
62,117

Total revenues
546,912

 
45,431

 
 

 
 
592,343

 
 
 
 
 
 
 
 
 
 
Costs and Expenses
 
 
 
 
 
 
 
 


Lease operating
51,002

 
5,216

(1)
 

 
 
56,218

Production taxes
22,666

 
2,126

(1)
 

 
 
24,792

Ad valorem taxes
5,569

 
528

(1)
 

 
 
6,097

Depreciation, depletion and amortization
228,912

 

 
 
10,439

(2)
 
239,351

General and administrative
65,481

 

 
 

 
 
65,481

Gain on derivatives, net
(11,153
)
 

 
 

 
 
(11,153
)
Interest expense, net
36,557

 

 
 
4,594

(3)
 
41,151

Other expense, net
1,536

 

 
 

 
 
1,536

Total costs and expenses
400,570

 
7,870

 
 
15,033

 
 
423,473

 
 
 
 
 
 
 
 
 


Income From Continuing Operations Before Income Taxes
146,342

 
37,561

 
 
(15,033
)
 
 
168,870

Income tax expense
(53,510
)
 

 
 
(7,885
)
(4)
 
(61,395
)
Income From Continuing Operations

$92,832

 

$37,561

 
 

($22,918
)
 
 

$107,475

 
 
 
 
 
 

 
 


Income From Continuing Operations Per Common Share


 
 
 
 


 
 


Basic

$2.05

 
 
 
 
 
 
 

$2.37

Diluted

$2.01

 
 
 
 
 
 
 

$2.33

 


 
 
 
 
 
 
 


Weighted Average Common Shares Outstanding


 
 
 
 
 
 
 


Basic
45,277

 
 
 
 
 
 
 
45,277

Diluted
46,109

 
 
 
 
 
 
 
46,109


See the accompanying notes to the unaudited pro forma condensed combined financial statements.





CARRIZO OIL & GAS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(in thousands, except per share data)

 
Year Ended December 31, 2013
 
Historical
 
Acquired Properties
 
 
Pro Forma Adjustments
 
 
Pro Forma
Revenues
 
 
 
 
 
 
 

 
Crude oil

$421,311

 

$43,376

(1)
 

$—

 
 

$464,687

Natural gas liquids
15,530

 
5,995

(1)
 

 

21,525

Natural gas
83,341

 
6,168

(1)
 

 

89,509

Total revenues
520,182

 
55,539

 
 

 

575,721

 
 
 
 
 
 


 

 
Costs and Expenses
 
 
 
 
 
 
 



Lease operating
46,828

 
3,904

(1)
 

 

50,732

Production taxes
19,811

 
2,601

(1)
 

 

22,412

Ad valorem taxes
8,701

 
689

(1)
 

 

9,390

Depreciation, depletion and amortization
214,291

 

 
 
19,743

(2)

234,034

General and administrative
77,492

 

 
 

 

77,492

Loss on derivatives, net
18,417

 

 
 

 

18,417

Interest expense, net
54,689

 

 
 
6,297

(3)

60,986

Loss on sale of oil and gas properties
45,377

 

 
 

 
 
45,377

Other income, net
(185
)
 

 
 

 

(185
)
Total costs and expenses
485,421

 
7,194

 
 
26,040

 

518,655

 
 
 
 
 
 


 

 
Income From Continuing Operations Before Income Taxes
34,761

 
48,345

 
 
(26,040
)
 

57,066

Income tax expense
(12,903
)
 

 
 
(7,807
)
(4)
 
(20,710
)
Income From Continuing Operations

$21,858

 

$48,345

 
 

($33,847
)
 
 

$36,356

 


 
 
 
 
 
 

 
Income From Continuing Operations Per Common Share


 
 
 
 
 
 

 
Basic

$0.54

 
 
 
 
 
 
 

$0.89

Diluted

$0.53

 
 
 
 
 
 
 

$0.88

 
 
 
 
 
 
 
 
 
 
Weighted Average Common Shares Outstanding
 
 
 
 
 
 
 
 
 
Basic
40,781

 
 
 
 
 
 
 
40,781

Diluted
41,355

 
 
 
 
 
 
 
41,355


See the accompanying notes to the unaudited pro forma condensed combined financial statements.





CARRIZO OIL & GAS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION
On October 24, 2014, Carrizo Oil & Gas, Inc. (the “Company”) completed the acquisition of interests in oil and gas properties (“the Properties”) from Eagle Ford Minerals, LLC (“EFM”) primarily in LaSalle, Atascosa and McMullen Counties, Texas in the Eagle Ford Shale (the “Eagle Ford Shale Transaction”). The Eagle Ford Shale Transaction had an effective date of October 1, 2014, with an agreed upon purchase price of $250.0 million, subject to post-closing and working capital adjustments. The Company paid approximately $93.0 million at closing, which represented $100.0 million of the agreed upon purchase price, less $7.0 million of working capital adjustments, which was funded with borrowings under its revolving credit facility. The Company is required to pay the remaining portion of the agreed upon purchase price of $150.0 million no later than February 16, 2015, which is expected to be funded with borrowings under the revolving credit facility. Prior to the Eagle Ford Shale Transaction, the Company and EFM were joint working interest owners in the Properties, for which the Company acted as the operator and owned an approximate 75% working interest in all of such Properties. After giving effect to the Eagle Ford Shale Transaction, the Company holds an approximate 100% working interest in the Properties.
The Company issued $300.0 million aggregate principal amount of 7.50% Senior Notes due 2020 in a private placement which closed on October 30, 2014. A portion of the net proceeds from the offering of such 7.50% Senior Notes was used to repay the borrowings under the revolving credit facility for the payment of the initial portion of the agreed upon purchase price of the Eagle Ford Shale Transaction. The Company has presented the effects of financing of the Eagle Ford Shale Transaction with borrowings under the revolving credit facility rather than with the net proceeds from the senior notes offering as the Company had availability to fund the Eagle Ford Shale Transaction with borrowings under the revolving credit facility and the senior notes offering was not directly related to the Eagle Ford Shale Transaction.
The following unaudited pro forma combined financial information is presented to illustrate the effect of the Eagle Ford Shale Transaction on the Company's historical financial position and results of operations. The unaudited pro forma condensed combined balance sheet as of September 30, 2014 is based on the historical consolidated balance sheet as of September 30, 2014 assuming the Eagle Ford Shale Transaction occurred on September 30, 2014. The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2014 and the year ended December 31, 2013 are based on the historical consolidated statements of income for such periods after giving effect to the Eagle Ford Shale Transaction as if it had occurred on January 1, 2013. The unaudited pro forma combined financial information should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto contained in the Company’s 2013 Annual Report on Form 10-K, filed on March 3, 2014, and its quarterly reports on Form 10-Q filed on May 7, 2014, August 5, 2014 and November 6, 2014 and the audited combined statements of revenues and direct operating expenses filed herewith.
The unaudited pro forma condensed combined balance sheet is based on the preliminary allocation of the purchase price and working capital adjustments before certain post-closing adjustments which will relate to any differences between estimated and actual revenues, operating expenses and capital expenditures prior to the October 1, 2014 effective date and therefore will not affect the purchase price. Purchase price adjustments will relate to the revenues, operating expenses and capital expenditures from the October 1, 2014 effective date and the October 24, 2014 closing date and are not reflected in the unaudited pro forma condensed combined balance sheet. As a result, the final purchase price may be different than the preliminary purchase price.
The unaudited pro forma combined financial information does not purport to represent what the statements of income would have been had the Eagle Ford Shale Transaction occurred on January 1, 2013, nor is it indicative of the Company’s future operating results. The Company's management believes the assumptions used provide a reasonable basis for presenting the significant effects directly attributable to the Eagle Ford Shale Transaction.





2. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
The unaudited pro forma condensed combined balance sheet as of September 30, 2014 reflects the following pro forma adjustments:
(1)
The Eagle Ford Shale Transaction is accounted for under the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standard Codification Topic 805, Business Combinations. Under the acquisition method, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated acquisition date fair values. Purchase price adjustments will relate to the revenues, operating expenses and capital expenditures from the October 1, 2014 effective date and the October 24, 2014 closing date. The preliminary allocation of the purchase price is presented below:
Assets
 
(In thousands)
Current assets
 

$485

Oil and gas properties
 
247,383

Total assets acquired
 

$247,868

 
 
 
Liabilities
 
 
Other liabilities
 

$423

Total liabilities assumed
 
423

Net Assets Acquired
 

$247,445


(2)
Reflect the $7.0 million of net working capital adjustments received at closing.
(3)
Reflect the borrowings under the revolving credit facility to fund the initial portion of the agreed upon purchase price paid at closing of $100.0 million less the $7.0 million of net working capital adjustments received at closing.
(4)
Reflect the present value of expected cash to be paid for the remaining balance due to EFM for the Eagle Ford Shale Transaction, subject to post-closing adjustments, on or prior to February 16, 2015, which the Company expects to fund with borrowings under the revolving credit facility.
3. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
The unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2014 and the year ended December 31, 2013 reflect the following pro forma adjustments:
(1)
Record the revenues and direct operating expenses of the Properties.
(2)
Adjust depreciation, depletion and amortization to give effect to the acquisition of the Properties.
(3)
Increase interest expense, net primarily resulting from the amounts outstanding under the revolving credit facility used to fund the acquisition of the Properties. A 1/8% change in the interest rate associated with revolving credit facility would result in a change in interest expense, net of approximately $0.1 million and $0.2 million for the nine months ended September 30, 2014 and the year ended December 31, 2013, respectively.
(4)
Record income tax effect of the revenues and direct operating expenses of the Properties as well as pro forma adjustments using the U.S. federal statutory rate of 35%.



EX-99.3 6 ex993ryderscottreportdecem.htm RYDER SCOTT REPORT DECEMBER 31, 2012 Ex 99.3 Ryder Scott Report December 31, 2012










Carrizo Oil & Gas, Inc.


Eagle Ford Minerals Acquisition





Estimated

Future Reserves and Income

Attributable to Certain

Leasehold Interests




SEC Parameters





As of

December 31, 2012





/s/ Michael F. Stell
 
/s/ Stuart L. Filler
Michael F. Stell, P.E.
 
Stuart L. Filler, P.E.
TBPE License No. 56416
 
TBPE License No. 60823
Advising Senior Vice President
 
Senior Petroleum Engineer

[SEAL]                             [SEAL]

RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS


[Ryder Scott Company L.P. logo]



TBPE REGISTERED ENGINEERING FIRM F-1580        FAX (713) 651-0849
1100 LOUISIANA STREET SUITE 4600    HOUSTON, TEXAS 77002-5294    TELEPHONE (713) 651-9191




November 21, 2014



Carrizo Oil & Gas, Inc.
500 Dallas Street, Suite 2300
Houston, TX 77002


Gentlemen:

At your request, Ryder Scott Company, L.P. (Ryder Scott) has prepared an estimate of the proved reserves, future production, and income attributable to certain leasehold interests of Eagle Ford Minerals, LLC (Eagle Ford Minerals) as of December 31, 2012. The subject properties are located in Atascosa, LaSalle, and McMullen counties, Texas and were acquired by Carrizo Oil & Gas, Inc. (Carrizo) through its wholly-owned subsidiary, Carrizo (Eagle Ford) LLC, on October 24, 2014. As a result of this acquisition date, the reserves and income presented in this report as of December 31, 2012, are actually those attributable to the interests owned by Eagle Ford Minerals, not Carrizo. For clarification, the table below refers to these reserves and income as “Pro Forma” interests of Carrizo in the Eagle Ford Minerals Acquisition. The reserves and income data were estimated based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009, in the Federal Register (SEC regulations). Our third party study, completed on November 21, 2014, and presented herein, was prepared for public disclosure by Carrizo in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.

The properties evaluated by Ryder Scott account for 100 percent of Eagle Ford Mineral’s total net proved reserves in the subject properties as of December 31, 2012, and are estimated as a result of the significance test for Carrizo required by the SEC in Regulation S-X §3-05(b)(2). The proved reserves, future production, and income attributable to these properties are hereafter referred to as the Eagle Ford Minerals acquisition.

The estimated reserves and future net income amounts presented in this report, as of December 31, 2012, are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements, as required by the SEC regulations. Actual future prices may vary significantly from the prices required by SEC regulations; therefore, volumes of reserves actually recovered and the amounts of income actually received may differ significantly from the estimated quantities presented in this report. The results of this study are summarized below.

SUITE 600, 1015 4TH STREET, S.W.    CALGARY, ALBERTA T2R 1J4    TEL (403) 262-2799    FAX (403) 262-2790
621 17TH STREET, SUITE 1550    DENVER, COLORADO 80293-1501    TEL (303) 623-9147    FAX (303) 623-4258

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 2




SEC PARAMETERS
Estimated Pro Forma Net Reserves and Income Data
Certain Leasehold Interests of
Carrizo Oil & Gas, Inc. in the
Eagle Ford Minerals Acquisition
As of December 31, 2012
 
 
Proved
 
 
Developed
 
Total
 
 
Producing
 
Undeveloped
 
Proved
Net Reserves
 
 
 
 
 
 
Oil/Condensate – MBarrels
 
2,275

 
4,539

 
6,814
 
Plant Products – MBarrels
 
179

 
477

 
656
 
Gas – MMCF
 
1,501

 
4,004

 
5,505
 
 
 
 
 
 
 
 
Income Data (M$)
 
 
 
 
 
 
Future Gross Revenue
 

$229,119

 

$462,160

 
$
691,279
 
Deductions
 
40,758

 
144,251

 
185,009
 
Future Net Income (FNI)
 

$188,361

 

$317,909

 
$
506,270
 
 
 
 
 
 
 
 
Discounted FNI @ 10%
 

$109,877

 

$150,148

 
$
260,025
 


Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (MBarrels). All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMCF) at the official temperature and pressure bases of the areas in which the gas reserves are located. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars (M$).

The estimates of the reserves, future production, and income attributable to properties in this report were prepared using the economic software package ARIESTM System Petroleum Economic Evaluation Software, a copyrighted program of Halliburton. The program was used at the request of Carrizo. Ryder Scott has found this program to be generally acceptable, but notes that certain summaries and calculations may vary due to rounding and may not exactly match the sum of the properties being summarized. Furthermore, one line economic summaries may vary slightly from the more detailed cash flow projections of the same properties, also due to rounding. The rounding differences are not material.

The future gross revenue is after the deduction of production taxes. The deductions incorporate the normal direct costs of operating the wells, ad valorem taxes, recompletion costs, development costs, and certain abandonment costs net of salvage. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist, nor does it include any adjustment for cash on hand or undistributed income. Liquid hydrocarbon reserves account for approximately 99 percent and gas reserves account for the remaining 1 percent of total future gross revenue from proved reserves.

The discounted future net income shown above was calculated using a discount rate of 10 percent per annum compounded monthly. Future net income was discounted at four other discount rates which were also compounded monthly. These results are shown in summary form as follows.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 3



 
 
Discounted Future Net Income (M$)
 
 
As of December 31, 2012
Discount Rate
 
Total
 
Percent
 
Proved
 
 
 
 
 
5
 
$343,576
 
15
 
$209,958
 
20
 
$176,674
 
25
 
$152,934
 

The results shown above are presented for your information and should not be construed as our estimate of fair market value.

Reserves Included in This Report

The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “Petroleum Reserves Definitions” is included as an attachment to this report.

The various proved reserve status categories are defined under the attachment entitled “Petroleum Reserves Status Definitions and Guidelines” in this report.

No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.

Reserves are “estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.” All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves, and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. At Carrizo’s request, this report addresses only the proved reserves attributable to the properties evaluated herein.

Proved oil and gas reserves are “those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.” The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a “high degree of confidence that the quantities will be recovered.”

Proved reserve estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that “as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.” Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies, or

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 4



geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.

Carrizo’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons, drilling and production practices, environmental protection, marketing and pricing policies, royalties, and various taxes and levies, including income tax, and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.

The estimates of proved reserves presented herein were based upon a detailed study of the properties in which Carrizo acquired all interests owned by Eagle Ford Minerals; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist, nor were any costs included for potential liabilities to restore and clean up damages, if any, caused by past operating practices.

Estimates of Reserves

The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas, and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods; (2) volumetric-based methods; and (3) analogy. These methods may be used singly or in combination by the reserve evaluator in the process of estimating the quantities of reserves. Reserve evaluators must select the method or combination of methods which, in their professional judgment, is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated, and the stage of development or producing maturity of the property.

In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserve quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserve category assigned by the evaluator. Therefore, it is the categorization of reserve quantities as proved, probable, and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually recovered are much more likely than not to be achieved.” The SEC states that “probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserve category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reserve categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 5



quantities and their associated reserve categories may also be revised due to other factors, such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies, or geopolitical or economic risks as previously noted herein.

The proved reserves for the properties included herein were estimated by performance methods, analogy, or a combination of methods. All of the proved producing reserves attributable to producing wells and/or reservoirs that have produced for sufficient time to establish a clear performance trend were estimated by performance methods. The performance methods, such as decline curve analysis, utilized extrapolations of historical production and pressure data available through December 2012 in those cases where such data were considered to be definitive. Certain proved producing reserves, where a clear performance trend in the particular well or reservoir had not been established, were estimated by analogy. The data utilized in this analysis were furnished to Ryder Scott by Carrizo or obtained from public data sources and were considered sufficient for the purpose thereof.

All of the proved undeveloped reserves utilized data from analogs as the basis for the proved reserves estimates included herein. The data utilized from the analogs were considered sufficient for the purpose thereof.

To estimate economically recoverable proved oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical, and engineering data that cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions, including the prices and costs at which economic producibility from a reservoir is to be determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Carrizo has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future proved production and income, we have relied upon data furnished by Carrizo with respect to property interests, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, recompletion and development costs, abandonment costs after salvage, product prices based on the SEC regulations, adjustments or differentials to product prices, geological structural and isochore maps, well logs, core analyses, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by Carrizo. We consider the factual data used in this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future net revenues herein.

In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein. The proved reserves included herein were determined in conformance with the United States Securities and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC Regulations.” In our opinion, the proved reserves presented in this report comply with the definitions, guidelines, and disclosure requirements as required by the SEC regulations.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 6



Future Production Rates

For wells currently on production, our forecasts of future production rates are based on historical performance data. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates.

Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Carrizo. Wells or locations that are not currently producing may start producing earlier or later than anticipated in our estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells, and/or constraints set by regulatory bodies.

The future production rates from wells currently on production or wells or locations that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand, and/or allowables or other constraints set by regulatory bodies.

Hydrocarbon Prices

The hydrocarbon prices used herein are based on SEC price parameters using the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements. For hydrocarbon products sold under contract, the contract prices, including fixed and determinable escalations, exclusive of inflation adjustments, were used until expiration of the contract. Upon contract expiration, the prices were adjusted to the 12-month unweighted arithmetic average as previously described.

Carrizo furnished us with the above mentioned average prices in effect on December 31, 2012. These initial SEC hydrocarbon prices were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the “benchmark prices” and “price reference” used for the geographic area included in the report.

The product prices that were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or distance from market, referred to herein as “differentials.” The differentials used in the preparation of this report were furnished to us by Carrizo. The differentials furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the data used by Carrizo to determine these differentials.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 7



In addition, the table below summarizes the net volume weighted benchmark prices adjusted for differentials and referred to herein as the “average realized prices.” The average realized prices shown in the table below were determined from the total future gross revenue before production taxes and the total net reserves for the geographic area and presented in accordance with SEC disclosure requirements for each of the geographic areas included in the report.

Geographic Area
Product
Price
Reference
Average
Benchmark
Prices
Average
Realized
Prices
  North America
    United States
Oil/Condensate
WTI Cushing
$94.71/Bbl
$102.08/Bbl
NGLs
WTI Cushing
$94.71/Bbl
$32.20/Bbl
Gas
Henry Hub
$2.76/MMBTU
$1.60/MCF

The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.

Costs

Operating costs for the leases and wells in this report were furnished by Carrizo, which is the operator of the properties included in this report, and are based on the operating expense reports of Carrizo and include only those costs directly applicable to the leases or wells. The operating costs include a portion of general and administrative costs allocated directly to the leases and wells. For operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly to the leases and wells under terms of operating agreements. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.

Development costs were furnished to us by Carrizo and are based on their estimates of authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs. The estimated net cost of abandonment after salvage was included for properties where abandonment costs net of salvage were significant. The estimates of the net abandonment costs furnished by Carrizo were accepted without independent verification.

The proved undeveloped reserves in this report have been incorporated herein in accordance with Carrizo’s anticipated plans to develop these reserves as of December 31, 2012. The implementation of Carrizo’s development plans as presented to us and incorporated herein is subject to the approval process adopted by Carrizo’s management. As the result of our inquiries during the course of preparing this report, Carrizo has informed us that the development activities included herein have been subjected to and received the internal approvals required by Carrizo’s management at the appropriate local, regional, and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements, or other administrative approvals external to Carrizo. Additionally, Carrizo has informed us that they are not aware of any legal, regulatory, political, or economic obstacles that would significantly alter their plans.

Current costs used by Carrizo were held constant throughout the life of the properties.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 8



Standards of Independence and Professional Qualification

Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have over eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.

Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists have received professional accreditation in the form of a registered or certified professional engineer’s license or a registered or certified professional geoscientist’s license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization.

We are independent petroleum engineers with respect to Carrizo. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of this study, presented herein, are based on technical analysis conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical person primarily responsible for overseeing, reviewing, and approving the evaluation of the reserves information discussed in this report, are included as an attachment to this letter.

Terms of Usage

The results of our third party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Carrizo.

Carrizo is required to file periodically on Form 10-K and Form 8-K with the SEC under the 1934 Exchange Act.  Furthermore, Carrizo has certain registration statements filed with the SEC under the 1933 Securities Act into which any subsequently filed Form 8-K and Form 10-K is incorporated by reference. We have consented to the incorporation by reference in the registration statements on Form S-3 and Form S-8 of Carrizo of the references to our name as well as to the references to our third party report for Carrizo. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by Carrizo.

We have provided Carrizo with a digital version of the original signed copy of this report letter. In the event there are any differences between the digital version included in filings made by Carrizo and the original signed report letter, the original signed report letter shall control and supersede the digital version.

The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 9




Very truly yours,

RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580


/s/ Michael F. Stell


Michael F. Stell, P.E.
TBPE License No. 56416
Advising Senior Vice President    [SEAL]


/s/ Stuart L. Filler


Stuart L. Filler, P.E.
TBPE License No. 60823
Senior Petroleum Engineer        [SEAL]

MFS-SLF (FWZ)/pl



RYDER SCOTT COMPANY PETROLEUM CONSULTANTS










Professional Qualifications of Primary Technical Person

The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Mr. Michael F. Stell was the primary technical person responsible for overseeing the estimate of the reserves, future production and income.

Mr. Stell, an employee of Ryder Scott Company L.P. (Ryder Scott) since 1992, is an Advising Senior Vice President and is responsible for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies worldwide. Before joining Ryder Scott, Mr. Stell served in a number of engineering positions with Shell Oil Company and Landmark Concurrent Solutions. For more information regarding Mr. Stell’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Experience/Employees.

Mr. Stell earned a Bachelor of Science degree in Chemical Engineering from Purdue University in 1979 and a Master of Science Degree in Chemical Engineering from the University of California, Berkeley, in 1981. He is a licensed Professional Engineer in the State of Texas. He is also a member of the Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers.

In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of fifteen hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Stell fulfills. As part of his 2009 continuing education hours, Mr. Stell attended an internally presented 13 hours of formalized training as well as a day-long public forum relating to the definitions and disclosure guidelines contained in the United States Securities and Exchange Commission Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register. Mr. Stell attended an additional 15 hours of formalized in-house training as well as an additional five hours of formalized external training during 2009 covering such topics as the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience and petroleum economics evaluation methods, procedures and software and ethics for consultants. As part of his 2010 continuing education hours, Mr. Stell attended an internally presented six hours of formalized training and ten hours of formalized external training covering such topics as updates concerning the implementation of the latest SEC oil and gas reporting requirements, reserve reconciliation processes, overviews of the various productive basins of North America, evaluations of resource play reserves, evaluation of enhanced oil recovery reserves, and ethics training. For each year starting 2011 through 2013, as of the date of this report, Mr. Stell has 20 hours of continuing education hours relating to reserves, reserve evaluations, and ethics.

Based on his educational background, professional training and over 30 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Stell has attained the professional qualifications for a Reserves Estimator and Reserves Auditor set forth in Article III of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the Society of Petroleum Engineers as of February 19, 2007.




RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES DEFINITIONS

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)


PREAMBLE

On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting; Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC regulations”. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.

Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.

Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.

Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES DEFINITIONS
Page 2



of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.

Reserves do not include quantities of petroleum being held in inventory.

Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.


RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:

Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).


PROVED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:

Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES DEFINITIONS
Page 3



PROVED RESERVES (SEC DEFINITIONS) CONTINUED

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.




RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)

and

PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)


Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).


DEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Developed Producing (SPE-PRMS Definitions)

While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.

Developed Producing Reserves
Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate.

Improved recovery reserves are considered producing only after the improved recovery project is in operation.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES
Page 2



Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe reserves.

Shut-In
Shut-in Reserves are expected to be recovered from:
(1)
completion intervals which are open at the time of the estimate, but which have not started producing;
(2)
wells which were shut-in for market conditions or pipeline connections; or
(3)
wells not capable of production for mechanical reasons.

Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future re-completion prior to start of production.

In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.


UNDEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)
Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.






RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
EX-99.4 7 ex994ryderscottreportdecem.htm RYDER SCOTT REPORT DECEMBER 31, 2013 Ex 99.4 Ryder Scott Report December 31, 2013










Carrizo Oil & Gas, Inc.


Eagle Ford Minerals Acquisition





Estimated

Future Reserves and Income

Attributable to Certain

Leasehold Interests




SEC Parameters





As of

December 31, 2013





/s/ Michael F. Stell
 
/s/ Stuart L. Filler
Michael F. Stell, P.E.
 
Stuart L. Filler, P.E.
TBPE License No. 56416
 
TBPE License No. 60823
Advising Senior Vice President
 
Senior Petroleum Engineer

[SEAL]                             [SEAL]

RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS


[Ryder Scott Company L.P. logo]



TBPE REGISTERED ENGINEERING FIRM F-1580        FAX (713) 651-0849
1100 LOUISIANA STREET SUITE 4600    HOUSTON, TEXAS 77002-5294    TELEPHONE (713) 651-9191




November 21, 2014



Carrizo Oil & Gas, Inc.
500 Dallas Street, Suite 2300
Houston, TX 77002


Gentlemen:

At your request, Ryder Scott Company, L.P. (Ryder Scott) has prepared an estimate of the proved reserves, future production, and income attributable to certain leasehold interests of Eagle Ford Minerals, LLC (Eagle Ford Minerals) as of December 31, 2013. The subject properties are located in Atascosa, LaSalle, and McMullen counties, Texas and were acquired by Carrizo Oil & Gas, Inc. (Carrizo) through its wholly-owned subsidiary, Carrizo (Eagle Ford) LLC, on October 24, 2014. As a result of this acquisition date, the reserves and income presented in this report as of December 31, 2013, are actually those attributable to the interests owned by Eagle Ford Minerals, not Carrizo. For clarification, the table below refers to these reserves and income as “Pro Forma” interests of Carrizo in the Eagle Ford Minerals Acquisition. The reserves and income data were estimated based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009, in the Federal Register (SEC regulations). Our third party study, completed on November 19, 2014, and presented herein, was prepared for public disclosure by Carrizo in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.

The properties evaluated by Ryder Scott account for 100 percent of Eagle Ford Mineral’s total net proved reserves in the subject properties as of December 31, 2013, and are estimated as a result of the significance test for Carrizo required by the SEC in Regulation S-X §3-05(b)(2). The proved reserves, future production, and income attributable to these properties are hereafter referred to as the Eagle Ford Minerals acquisition.

The estimated reserves and future net income amounts presented in this report, as of December 31, 2013, are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements, as required by the SEC regulations. Actual future prices may vary significantly from the prices required by SEC regulations; therefore, volumes of reserves actually recovered and the amounts of income actually received may differ significantly from the estimated quantities presented in this report. The results of this study are summarized below.

SUITE 600, 1015 4TH STREET, S.W.    CALGARY, ALBERTA T2R 1J4    TEL (403) 262-2799    FAX (403) 262-2790
621 17TH STREET, SUITE 1550    DENVER, COLORADO 80293-1501    TEL (303) 623-9147    FAX (303) 623-4258

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 2




SEC PARAMETERS
Estimated Pro Forma Net Reserves and Income Data
Certain Leasehold Interests of
Carrizo Oil & Gas, Inc. in the
Eagle Ford Minerals Acquisition
As of December 31, 2013
 
 
Proved
 
 
Developed
 
Total
 
 
Producing
 
Undeveloped
 
Proved
Net Reserves
 
 
 
 
 
 
Oil/Condensate – MBarrels
 
2,115

 
8,578

 
10,693
 
Plant Products – MBarrels
 
216

 
889

 
1,105
 
Gas – MMCF
 
1,406

 
5,773

 
7,179
 
 
 
 
 
 
 
 
Income Data (M$)
 
 
 
 
 
 
Future Gross Revenue
 

$210,893

 

$855,852

 
$
1,066,745
 
Deductions
 
56,116

 
377,116

 
433,232
 
Future Net Income (FNI)
 

$154,777

 

$478,736

 
$
633,513
 
 
 
 
 
 
 
 
Discounted FNI @ 10%
 
$
93,465

 

$199,723

 
$
293,188
 


Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (MBarrels). All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMCF) at the official temperature and pressure bases of the areas in which the gas reserves are located. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars (M$).

The estimates of the reserves, future production, and income attributable to properties in this report were prepared using the economic software package ARIESTM System Petroleum Economic Evaluation Software, a copyrighted program of Halliburton. The program was used at the request of Carrizo. Ryder Scott has found this program to be generally acceptable, but notes that certain summaries and calculations may vary due to rounding and may not exactly match the sum of the properties being summarized. Furthermore, one line economic summaries may vary slightly from the more detailed cash flow projections of the same properties, also due to rounding. The rounding differences are not material.

The future gross revenue is after the deduction of production taxes. The deductions incorporate the normal direct costs of operating the wells, ad valorem taxes, recompletion costs, development costs, and certain abandonment costs net of salvage. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist, nor does it include any adjustment for cash on hand or undistributed income. Liquid hydrocarbon reserves account for approximately 98 percent and gas reserves account for the remaining 2 percent of total future gross revenue from proved reserves.

The discounted future net income shown above was calculated using a discount rate of 10 percent per annum compounded monthly. Future net income was discounted at four other discount rates which were also compounded monthly. These results are shown in summary form as follows.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 3



 
 
Discounted Future Net Income (M$)
 
 
As of December 31, 2013
Discount Rate
 
Total
 
Percent
 
Proved
 
 
 
 
 
5
 
$409,272
 
15
 
$223,374
 
20
 
$177,406
 
25
 
$145,254
 

The results shown above are presented for your information and should not be construed as our estimate of fair market value.

Reserves Included in This Report

The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “Petroleum Reserves Definitions” is included as an attachment to this report.

The various proved reserve status categories are defined under the attachment entitled “Petroleum Reserves Status Definitions and Guidelines” in this report.

No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.

Reserves are “estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.” All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves, and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. At Carrizo’s request, this report addresses only the proved reserves attributable to the properties evaluated herein.

Proved oil and gas reserves are “those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.” The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a “high degree of confidence that the quantities will be recovered.”

Proved reserve estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that “as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.” Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies, or

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 4



geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.

Carrizo’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons, drilling and production practices, environmental protection, marketing and pricing policies, royalties, and various taxes and levies, including income tax, and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.

The estimates of proved reserves presented herein were based upon a detailed study of the properties in which Carrizo acquired all interests owned by Eagle Ford Minerals; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist, nor were any costs included for potential liabilities to restore and clean up damages, if any, caused by past operating practices.

Estimates of Reserves

The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas, and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods; (2) volumetric-based methods; and (3) analogy. These methods may be used singly or in combination by the reserve evaluator in the process of estimating the quantities of reserves. Reserve evaluators must select the method or combination of methods which, in their professional judgment, is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated, and the stage of development or producing maturity of the property.

In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserve quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserve category assigned by the evaluator. Therefore, it is the categorization of reserve quantities as proved, probable, and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually recovered are much more likely than not to be achieved.” The SEC states that “probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserve category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reserve categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 5



quantities and their associated reserve categories may also be revised due to other factors, such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies, or geopolitical or economic risks as previously noted herein.

The proved reserves for the properties included herein were estimated by performance methods, analogy, or a combination of methods. All of the proved producing reserves attributable to producing wells and/or reservoirs that have produced for sufficient time to establish a clear performance trend were estimated by performance methods. The performance methods, such as decline curve analysis, utilized extrapolations of historical production and pressure data available through December 2013 in those cases where such data were considered to be definitive. Certain proved producing reserves, where a clear performance trend in the particular well or reservoir had not been established, were estimated by analogy. The data utilized in this analysis were furnished to Ryder Scott by Carrizo or obtained from public data sources and were considered sufficient for the purpose thereof.

All of the proved undeveloped reserves utilized data from analogs as the basis for the proved reserves estimates included herein. The data utilized from the analogs were considered sufficient for the purpose thereof.

To estimate economically recoverable proved oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical, and engineering data that cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions, including the prices and costs at which economic producibility from a reservoir is to be determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Carrizo has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future proved production and income, we have relied upon data furnished by Carrizo with respect to property interests, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, recompletion and development costs, abandonment costs after salvage, product prices based on the SEC regulations, adjustments or differentials to product prices, geological structural and isochore maps, well logs, core analyses, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by Carrizo. We consider the factual data used in this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future net revenues herein.

In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein. The proved reserves included herein were determined in conformance with the United States Securities and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC Regulations.” In our opinion, the proved reserves presented in this report comply with the definitions, guidelines, and disclosure requirements as required by the SEC regulations.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 6



Future Production Rates

For wells currently on production, our forecasts of future production rates are based on historical performance data. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates.

Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Carrizo. Wells or locations that are not currently producing may start producing earlier or later than anticipated in our estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells, and/or constraints set by regulatory bodies.

The future production rates from wells currently on production or wells or locations that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand, and/or allowables or other constraints set by regulatory bodies.

Hydrocarbon Prices

The hydrocarbon prices used herein are based on SEC price parameters using the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements. For hydrocarbon products sold under contract, the contract prices, including fixed and determinable escalations, exclusive of inflation adjustments, were used until expiration of the contract. Upon contract expiration, the prices were adjusted to the 12-month unweighted arithmetic average as previously described.

Carrizo furnished us with the above mentioned average prices in effect on December 31, 2013. These initial SEC hydrocarbon prices were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the “benchmark prices” and “price reference” used for the geographic area included in the report.

The product prices that were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or distance from market, referred to herein as “differentials.” The differentials used in the preparation of this report were furnished to us by Carrizo. The differentials furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the data used by Carrizo to determine these differentials.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 7



In addition, the table below summarizes the net volume weighted benchmark prices adjusted for differentials and referred to herein as the “average realized prices.” The average realized prices shown in the table below were determined from the total future gross revenue before production taxes and the total net reserves for the geographic area and presented in accordance with SEC disclosure requirements for each of the geographic areas included in the report.

Geographic Area
Product
Price
Reference
Average
Benchmark
Prices
Average
Realized
Prices
  North America
    United States
Oil/Condensate
WTI Cushing
$96.78/Bbl
$100.26/Bbl
NGLs
WTI Cushing
$96.78/Bbl
$25.51/Bbl
Gas
Henry Hub
$3.67/MMBTU
$2.69/MCF

The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.

Costs

Operating costs for the leases and wells in this report were furnished by Carrizo, which is the operator of the properties included in this report, and are based on the operating expense reports of Carrizo and include only those costs directly applicable to the leases or wells. The operating costs include a portion of general and administrative costs allocated directly to the leases and wells. For operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly to the leases and wells under terms of operating agreements. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.

Development costs were furnished to us by Carrizo and are based on their estimates of authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs. The estimated net cost of abandonment after salvage was included for properties where abandonment costs net of salvage were significant. The estimates of the net abandonment costs furnished by Carrizo were accepted without independent verification.

The proved undeveloped reserves in this report have been incorporated herein in accordance with Carrizo’s anticipated plans to develop these reserves as of December 31, 2013. The implementation of Carrizo’s development plans as presented to us and incorporated herein is subject to the approval process adopted by Carrizo’s management. As the result of our inquiries during the course of preparing this report, Carrizo has informed us that the development activities included herein have been subjected to and received the internal approvals required by Carrizo’s management at the appropriate local, regional, and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements, or other administrative approvals external to Carrizo. Additionally, Carrizo has informed us that they are not aware of any legal, regulatory, political, or economic obstacles that would significantly alter their plans.

Current costs used by Carrizo were held constant throughout the life of the properties.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 8



Standards of Independence and Professional Qualification

Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have over eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.

Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists have received professional accreditation in the form of a registered or certified professional engineer’s license or a registered or certified professional geoscientist’s license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization.

We are independent petroleum engineers with respect to Carrizo. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of this study, presented herein, are based on technical analysis conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical person primarily responsible for overseeing, reviewing, and approving the evaluation of the reserves information discussed in this report, are included as an attachment to this letter.

Terms of Usage

The results of our third party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Carrizo.

Carrizo is required to file periodically on Form 10-K and Form 8-K with the SEC under the 1934 Exchange Act.  Furthermore, Carrizo has certain registration statements filed with the SEC under the 1933 Securities Act into which any subsequently filed Form 8-K and Form 10-K is incorporated by reference. We have consented to the incorporation by reference in the registration statements on Form S-3 and Form S-8 of Carrizo of the references to our name as well as to the references to our third party report for Carrizo. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by Carrizo.

We have provided Carrizo with a digital version of the original signed copy of this report letter. In the event there are any differences between the digital version included in filings made by Carrizo and the original signed report letter, the original signed report letter shall control and supersede the digital version.

The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 9




Very truly yours,

RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580


/s/ Michael F. Stell


Michael F. Stell, P.E.
TBPE License No. 56416
Advising Senior Vice President    [SEAL]


/s/ Stuart L. Filler


Stuart L. Filler, P.E.
TBPE License No. 60823
Senior Petroleum Engineer        [SEAL]

MFS-SLF (FWZ)/pl



RYDER SCOTT COMPANY PETROLEUM CONSULTANTS










Professional Qualifications of Primary Technical Person

The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Mr. Michael F. Stell was the primary technical person responsible for overseeing the estimate of the reserves, future production and income.

Mr. Stell, an employee of Ryder Scott Company L.P. (Ryder Scott) since 1992, is an Advising Senior Vice President and is responsible for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies worldwide. Before joining Ryder Scott, Mr. Stell served in a number of engineering positions with Shell Oil Company and Landmark Concurrent Solutions. For more information regarding Mr. Stell’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Experience/Employees.

Mr. Stell earned a Bachelor of Science degree in Chemical Engineering from Purdue University in 1979 and a Master of Science Degree in Chemical Engineering from the University of California, Berkeley, in 1981. He is a licensed Professional Engineer in the State of Texas. He is also a member of the Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers.

In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of fifteen hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Stell fulfills. As part of his 2009 continuing education hours, Mr. Stell attended an internally presented 13 hours of formalized training as well as a day-long public forum relating to the definitions and disclosure guidelines contained in the United States Securities and Exchange Commission Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register. Mr. Stell attended an additional 15 hours of formalized in-house training as well as an additional five hours of formalized external training during 2009 covering such topics as the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience and petroleum economics evaluation methods, procedures and software and ethics for consultants. As part of his 2010 continuing education hours, Mr. Stell attended an internally presented six hours of formalized training and ten hours of formalized external training covering such topics as updates concerning the implementation of the latest SEC oil and gas reporting requirements, reserve reconciliation processes, overviews of the various productive basins of North America, evaluations of resource play reserves, evaluation of enhanced oil recovery reserves, and ethics training. For each year starting 2011 through 2013, as of the date of this report, Mr. Stell has 20 hours of continuing education hours relating to reserves, reserve evaluations, and ethics.

Based on his educational background, professional training and over 30 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Stell has attained the professional qualifications for a Reserves Estimator and Reserves Auditor set forth in Article III of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the Society of Petroleum Engineers as of February 19, 2007.




RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES DEFINITIONS

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)


PREAMBLE

On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting; Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC regulations”. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.

Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.

Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.

Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES DEFINITIONS
Page 2



of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.

Reserves do not include quantities of petroleum being held in inventory.

Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.


RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:

Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).


PROVED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:

Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES DEFINITIONS
Page 3



PROVED RESERVES (SEC DEFINITIONS) CONTINUED

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.




RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)

and

PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)


Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).


DEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Developed Producing (SPE-PRMS Definitions)

While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.

Developed Producing Reserves
Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate.

Improved recovery reserves are considered producing only after the improved recovery project is in operation.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES
Page 2



Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe reserves.

Shut-In
Shut-in Reserves are expected to be recovered from:
(1)
completion intervals which are open at the time of the estimate, but which have not started producing;
(2)
wells which were shut-in for market conditions or pipeline connections; or
(3)
wells not capable of production for mechanical reasons.

Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future re-completion prior to start of production.

In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.


UNDEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)
Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.






RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
EX-99.5 8 ex995ryderscottreportsepte.htm RYDER SCOTT REPORT SEPTEMBER 30, 2014 Ex 99.5 Ryder Scott Report September 30, 2014










Carrizo Oil & Gas, Inc.


Eagle Ford Minerals Acquisition





Estimated

Future Reserves and Income

Attributable to Certain

Leasehold Interests




SEC Parameters





As of

September 30, 2014





/s/ Michael F. Stell
 
/s/ Stuart L. Filler
Michael F. Stell, P.E.
 
Stuart L. Filler, P.E.
TBPE License No. 56416
 
TBPE License No. 60823
Advising Senior Vice President
 
Senior Petroleum Engineer

[SEAL]                             [SEAL]

RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS


[Ryder Scott Company L.P. logo]



TBPE REGISTERED ENGINEERING FIRM F-1580        FAX (713) 651-0849
1100 LOUISIANA STREET SUITE 4600    HOUSTON, TEXAS 77002-5294    TELEPHONE (713) 651-9191




November 21, 2014



Carrizo Oil & Gas, Inc.
500 Dallas Street, Suite 2300
Houston, TX 77002


Gentlemen:

At your request, Ryder Scott Company, L.P. (Ryder Scott) has prepared an estimate of the proved reserves, future production, and income attributable to certain leasehold interests of Eagle Ford Minerals, LLC (Eagle Ford Minerals) as of September 30, 2014. The subject properties are located in Atascosa, LaSalle, and McMullen counties, Texas and were acquired by Carrizo Oil & Gas, Inc. (Carrizo) through its wholly-owned subsidiary, Carrizo (Eagle Ford) LLC, on October 24, 2014. As a result of this acquisition date, the reserves and income presented in this report as of September 30, 2014, are actually those attributable to the interests owned by Eagle Ford Minerals, not Carrizo. For clarification, the table below refers to these reserves and income as “Pro Forma” interests of Carrizo in the Eagle Ford Minerals Acquisition. The reserves and income data were estimated based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009, in the Federal Register (SEC regulations). Our third party study, completed on November 21, 2014, and presented herein, was prepared for public disclosure by Carrizo in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.

The properties evaluated by Ryder Scott account for 100 percent of Eagle Ford Mineral’s total net proved reserves in the subject properties as of September 30, 2014, and are estimated as a result of the significance test for Carrizo required by the SEC in Regulation S-X §3-05(b)(2). The proved reserves, future production, and income attributable to these properties are hereafter referred to as the Eagle Ford Minerals acquisition.

The estimated reserves and future net income amounts presented in this report, as of September 30, 2014, are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements, as required by the SEC regulations. Actual future prices may vary significantly from the prices required by SEC regulations; therefore, volumes of reserves actually recovered and the amounts of income actually received may differ significantly from the estimated quantities presented in this report. The results of this study are summarized below.

SUITE 600, 1015 4TH STREET, S.W.    CALGARY, ALBERTA T2R 1J4    TEL (403) 262-2799    FAX (403) 262-2790
621 17TH STREET, SUITE 1550    DENVER, COLORADO 80293-1501    TEL (303) 623-9147    FAX (303) 623-4258

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 2




SEC PARAMETERS
Estimated Pro Forma Net Reserves and Income Data
Certain Leasehold Interests of
Carrizo Oil & Gas, Inc. in the
Eagle Ford Minerals Acquisition
As of September 30, 2014
 
 
Proved
 
 
Developed
 
Total
 
 
Producing
 
Undeveloped
 
Proved
Net Reserves
 
 
 
 
 
 
Oil/Condensate – MBarrels
 
3,495

 
9,332

 
12,827
 
Plant Products – MBarrels
 
363

 
978

 
1,341
 
Gas – MMCF
 
2,355

 
6,353

 
8,708
 
 
 
 
 
 
 
 
Income Data (M$)
 
 
 
 
 
 
Future Gross Revenue
 

$342,298

 

$914,462

 
$
1,256,760
 
Deductions
 
96,913

 
417,840

 
514,753
 
Future Net Income (FNI)
 

$245,385

 

$496,622

 
$
742,007
 
 
 
 
 
 
 
 
Discounted FNI @ 10%
 

$137,524

 

$217,732

 
$
355,256
 


Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (MBarrels). All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMCF) at the official temperature and pressure bases of the areas in which the gas reserves are located. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars (M$).

The estimates of the reserves, future production, and income attributable to properties in this report were prepared using the economic software package ARIESTM System Petroleum Economic Evaluation Software, a copyrighted program of Halliburton. The program was used at the request of Carrizo. Ryder Scott has found this program to be generally acceptable, but notes that certain summaries and calculations may vary due to rounding and may not exactly match the sum of the properties being summarized. Furthermore, one line economic summaries may vary slightly from the more detailed cash flow projections of the same properties, also due to rounding. The rounding differences are not material.

The future gross revenue is after the deduction of production taxes. The deductions incorporate the normal direct costs of operating the wells, ad valorem taxes, recompletion costs, development costs, and certain abandonment costs net of salvage. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist, nor does it include any adjustment for cash on hand or undistributed income. Liquid hydrocarbon reserves account for approximately 97 percent and gas reserves account for the remaining 3 percent of total future gross revenue from proved reserves.

The discounted future net income shown above was calculated using a discount rate of 10 percent per annum compounded monthly. Future net income was discounted at four other discount rates which were also compounded monthly. These results are shown in summary form as follows.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 3



 
 
Discounted Future Net Income (M$)
 
 
As of September 30, 2014
Discount Rate
 
Total
 
Percent
 
Proved
 
 
 
 
 
5
 
$487,446
 
15
 
$275,064
 
20
 
$221,682
 
25
 
$183,906
 

The results shown above are presented for your information and should not be construed as our estimate of fair market value.

Reserves Included in This Report

The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “Petroleum Reserves Definitions” is included as an attachment to this report.

The various proved reserve status categories are defined under the attachment entitled “Petroleum Reserves Status Definitions and Guidelines” in this report.

No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.

Reserves are “estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.” All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves, and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. At Carrizo’s request, this report addresses only the proved reserves attributable to the properties evaluated herein.

Proved oil and gas reserves are “those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.” The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a “high degree of confidence that the quantities will be recovered.”

Proved reserve estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that “as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.” Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies, or

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 4



geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.

Carrizo’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons, drilling and production practices, environmental protection, marketing and pricing policies, royalties, and various taxes and levies, including income tax, and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.

The estimates of proved reserves presented herein were based upon a detailed study of the properties in which Carrizo acquired all interests owned by Eagle Ford Minerals; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist, nor were any costs included for potential liabilities to restore and clean up damages, if any, caused by past operating practices.

Estimates of Reserves

The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas, and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods; (2) volumetric-based methods; and (3) analogy. These methods may be used singly or in combination by the reserve evaluator in the process of estimating the quantities of reserves. Reserve evaluators must select the method or combination of methods which, in their professional judgment, is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated, and the stage of development or producing maturity of the property.

In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserve quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserve category assigned by the evaluator. Therefore, it is the categorization of reserve quantities as proved, probable, and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually recovered are much more likely than not to be achieved.” The SEC states that “probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserve category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reserve categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 5



quantities and their associated reserve categories may also be revised due to other factors, such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies, or geopolitical or economic risks as previously noted herein.

The proved reserves for the properties included herein were estimated by performance methods, analogy, or a combination of methods. All of the proved producing reserves attributable to producing wells and/or reservoirs that have produced for sufficient time to establish a clear performance trend were estimated by performance methods. The performance methods, such as decline curve analysis, utilized extrapolations of historical production and pressure data available through September 2014 in those cases where such data were considered to be definitive. Certain proved producing reserves, where a clear performance trend in the particular well or reservoir had not been established, were estimated by analogy. The data utilized in this analysis were furnished to Ryder Scott by Carrizo or obtained from public data sources and were considered sufficient for the purpose thereof.

All of the proved undeveloped reserves utilized data from analogs as the basis for the proved reserves estimates included herein. The data utilized from the analogs were considered sufficient for the purpose thereof.

To estimate economically recoverable proved oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical, and engineering data that cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions, including the prices and costs at which economic producibility from a reservoir is to be determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Carrizo has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future proved production and income, we have relied upon data furnished by Carrizo with respect to property interests, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, recompletion and development costs, abandonment costs after salvage, product prices based on the SEC regulations, adjustments or differentials to product prices, geological structural and isochore maps, well logs, core analyses, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by Carrizo. We consider the factual data used in this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future net revenues herein.

In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein. The proved reserves included herein were determined in conformance with the United States Securities and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC Regulations.” In our opinion, the proved reserves presented in this report comply with the definitions, guidelines, and disclosure requirements as required by the SEC regulations.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 6



Future Production Rates

For wells currently on production, our forecasts of future production rates are based on historical performance data. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates.

Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Carrizo. Wells or locations that are not currently producing may start producing earlier or later than anticipated in our estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells, and/or constraints set by regulatory bodies.

The future production rates from wells currently on production or wells or locations that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand, and/or allowables or other constraints set by regulatory bodies.

Hydrocarbon Prices

The hydrocarbon prices used herein are based on SEC price parameters using the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements. For hydrocarbon products sold under contract, the contract prices, including fixed and determinable escalations, exclusive of inflation adjustments, were used until expiration of the contract. Upon contract expiration, the prices were adjusted to the 12-month unweighted arithmetic average as previously described.

Carrizo furnished us with the above mentioned average prices in effect on September 30, 2014. These initial SEC hydrocarbon prices were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the “benchmark prices” and “price reference” used for the geographic area included in the report.

The product prices that were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or distance from market, referred to herein as “differentials.” The differentials used in the preparation of this report were furnished to us by Carrizo. The differentials furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the data used by Carrizo to determine these differentials.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 7



In addition, the table below summarizes the net volume weighted benchmark prices adjusted for differentials and referred to herein as the “average realized prices.” The average realized prices shown in the table below were determined from the total future gross revenue before production taxes and the total net reserves for the geographic area and presented in accordance with SEC disclosure requirements for each of the geographic areas included in the report.

Geographic Area
Product
Price
Reference
Average
Benchmark
Prices
Average
Realized
Prices
  North America
    United States
Oil/Condensate
WTI Cushing
$99.08/Bbl
$97.15/Bbl
NGLs
WTI Cushing
$99.08/Bbl
$26.87/Bbl
Gas
Henry Hub
$4.24/MMBTU
$4.30/MCF

The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.

Costs

Operating costs for the leases and wells in this report were furnished by Carrizo, which is the operator of the properties included in this report, and are based on the operating expense reports of Carrizo and include only those costs directly applicable to the leases or wells. The operating costs include a portion of general and administrative costs allocated directly to the leases and wells. For operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly to the leases and wells under terms of operating agreements. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.

Development costs were furnished to us by Carrizo and are based on their estimates of authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs. The estimated net cost of abandonment after salvage was included for properties where abandonment costs net of salvage were significant. The estimates of the net abandonment costs furnished by Carrizo were accepted without independent verification.

The proved undeveloped reserves in this report have been incorporated herein in accordance with Carrizo’s anticipated plans to develop these reserves as of September 30, 2014. The implementation of Carrizo’s development plans as presented to us and incorporated herein is subject to the approval process adopted by Carrizo’s management. As the result of our inquiries during the course of preparing this report, Carrizo has informed us that the development activities included herein have been subjected to and received the internal approvals required by Carrizo’s management at the appropriate local, regional, and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements, or other administrative approvals external to Carrizo. Additionally, Carrizo has informed us that they are not aware of any legal, regulatory, political, or economic obstacles that would significantly alter their plans.

Current costs used by Carrizo were held constant throughout the life of the properties.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 8



Standards of Independence and Professional Qualification

Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have over eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.

Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists have received professional accreditation in the form of a registered or certified professional engineer’s license or a registered or certified professional geoscientist’s license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization.

We are independent petroleum engineers with respect to Carrizo. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of this study, presented herein, are based on technical analysis conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical person primarily responsible for overseeing, reviewing, and approving the evaluation of the reserves information discussed in this report, are included as an attachment to this letter.

Terms of Usage

The results of our third party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Carrizo.

Carrizo is required to file periodically on Form 10-K and Form 8-K with the SEC under the 1934 Exchange Act.  Furthermore, Carrizo has certain registration statements filed with the SEC under the 1933 Securities Act into which any subsequently filed Form 8-K and Form 10-K is incorporated by reference. We have consented to the incorporation by reference in the registration statements on Form S-3 and Form S-8 of Carrizo of the references to our name as well as to the references to our third party report for Carrizo. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by Carrizo.

We have provided Carrizo with a digital version of the original signed copy of this report letter. In the event there are any differences between the digital version included in filings made by Carrizo and the original signed report letter, the original signed report letter shall control and supersede the digital version.

The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

Carrizo Oil & Gas, Inc.
November 21, 2014
Page 9




Very truly yours,

RYDER SCOTT COMPANY, L.P.
TBPE Firm Registration No. F-1580


/s/ Michael F. Stell


Michael F. Stell, P.E.
TBPE License No. 56416
Advising Senior Vice President    [SEAL]


/s/ Stuart L. Filler


Stuart L. Filler, P.E.
TBPE License No. 60823
Senior Petroleum Engineer        [SEAL]

MFS-SLF (FWZ)/pl



RYDER SCOTT COMPANY PETROLEUM CONSULTANTS










Professional Qualifications of Primary Technical Person

The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Mr. Michael F. Stell was the primary technical person responsible for overseeing the estimate of the reserves, future production and income.

Mr. Stell, an employee of Ryder Scott Company L.P. (Ryder Scott) since 1992, is an Advising Senior Vice President and is responsible for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies worldwide. Before joining Ryder Scott, Mr. Stell served in a number of engineering positions with Shell Oil Company and Landmark Concurrent Solutions. For more information regarding Mr. Stell’s geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Experience/Employees.

Mr. Stell earned a Bachelor of Science degree in Chemical Engineering from Purdue University in 1979 and a Master of Science Degree in Chemical Engineering from the University of California, Berkeley, in 1981. He is a licensed Professional Engineer in the State of Texas. He is also a member of the Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers.

In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of fifteen hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Stell fulfills. As part of his 2009 continuing education hours, Mr. Stell attended an internally presented 13 hours of formalized training as well as a day-long public forum relating to the definitions and disclosure guidelines contained in the United States Securities and Exchange Commission Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register. Mr. Stell attended an additional 15 hours of formalized in-house training as well as an additional five hours of formalized external training during 2009 covering such topics as the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience and petroleum economics evaluation methods, procedures and software and ethics for consultants. As part of his 2010 continuing education hours, Mr. Stell attended an internally presented six hours of formalized training and ten hours of formalized external training covering such topics as updates concerning the implementation of the latest SEC oil and gas reporting requirements, reserve reconciliation processes, overviews of the various productive basins of North America, evaluations of resource play reserves, evaluation of enhanced oil recovery reserves, and ethics training. For each year starting 2011 through 2013, as of the date of this report, Mr. Stell has 20 hours of continuing education hours relating to reserves, reserve evaluations, and ethics.

Based on his educational background, professional training and over 30 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Stell has attained the professional qualifications for a Reserves Estimator and Reserves Auditor set forth in Article III of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the Society of Petroleum Engineers as of February 19, 2007.




RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES DEFINITIONS

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)


PREAMBLE

On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting; Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC regulations”. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.

Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.

Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.

Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

PETROLEUM RESERVES DEFINITIONS
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of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.

Reserves do not include quantities of petroleum being held in inventory.

Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.


RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:

Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).


PROVED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:

Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

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PROVED RESERVES (SEC DEFINITIONS) CONTINUED

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.




RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)

and

PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)


Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).


DEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Developed Producing (SPE-PRMS Definitions)

While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.

Developed Producing Reserves
Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate.

Improved recovery reserves are considered producing only after the improved recovery project is in operation.

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Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe reserves.

Shut-In
Shut-in Reserves are expected to be recovered from:
(1)
completion intervals which are open at the time of the estimate, but which have not started producing;
(2)
wells which were shut-in for market conditions or pipeline connections; or
(3)
wells not capable of production for mechanical reasons.

Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future re-completion prior to start of production.

In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.


UNDEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)
Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.






RYDER SCOTT COMPANY PETROLEUM CONSULTANTS