Chicago Jun 23, 2015 (Thomson StreetEvents) -- Edited Transcript of Carrizo Oil & Gas, Inc. presentation Tuesday, June 23, 2015 at 4:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Chip Johnson Carrizo Oil & Gas, Inc. - President and COO ================================================================================ Presentation -------------------------------------------------------------------------------- Chip Johnson, Carrizo Oil & Gas, Inc. - President and COO [1] -------------------------------------------------------------------------------- Thank you. I'm Chip Johnson, President and CEO Carrizo. Also with me as Jeff Hayden, our VP of IR. You can read that later. This is where Carrizo stands today. We are focused on four high-quality oil plays, primarily Eagle Ford and then smaller but also very profitable Delaware Basin, Utica, and Niobrara. Our financial position is excellent. We have a debt to EBITDA of around 2.3. We have about $100 million drawn on a revolver that's $675 million, which we think will go up in the fall instead of go down, based on the current indications from the bank. No near-term debt maturities. Our bonds are yielding about 6% right now, and we are well hedged in 2015 and the first quarter of 2016. Operational flexibility means that we don't have any near-term lease obligations so that we are not forced to spend capital. Most of our leases in the Eagle Ford can be held with about one and a half drilling rigs per year. We are currently running three. In the Niobrara and the Utica we don't really have much to do for about a year to hold all those leases. We can ramp up quickly. This was going to be the year where we really ramped up and went from three rigs in the Eagle Ford to five, one in the Utica, two in the Niobrara. And after last Thanksgiving, obviously, with the oil price crash we didn't do that. We stayed flat in the Eagle Ford. I'll show you what that has led to. But we can ramp up very quickly because we've got -- in the Eagle Ford we have all the infrastructure in place. We have proven what works on every pad that we own, so it would be very easy to go to one, two, or three rigs if we saw the right price signals, which we think don't start till $65 oil. Large resource potential -- a key factor there is that over half of our undrilled locations in the Company are profitable below $50 a barrel, and that's a 10% IRR. And in the Eagle Ford that number is 80%. We have a great technical team that has been through a few of these cycles. We've drilled and fracked over 700 horizontal wells. Our EURs generally outperform our peers, and you can look on our Analyst Day presentation we gave in January. That's on our website, and it shows how we rank against our peers in all of our basins. We've gotten better and better at drilling and fracking, which is kind of surprising that there's still room to improve. But of our cost reductions in the last six months, about 25% of that has been because we are drilling and fracking faster. We drilled an Eagle Ford well in [7.8] days the other day, and we are making 3,500 feet a day drilling in the lateral with a new generation 3 rig. These are the basins we are in. We started the Company in 1993. We went public in 1997. We didn't on any of these assets in 2010. We were and onshore Gulf Coast, Barnett Shale, CBM, Fayetteville player. All that is gone now. These are the plays we focused on when we decided to get oily. We still have some legacy gas is Northeast Pennsylvania. We don't have any activity up there except production now. But the rest of these are all oil plays. This is why we like these plays. This is really faint there, but this is ITG's slide that shows the breakeven price for the different plays in the US and some in Canada. And the Eagle Ford always comes out either number one or two in these charts. Their average breakeven price was about $62 per BOE. Because of where we are located in the Eagle Ford, ours is $42 per BOE. So this is what the 2015 plan turned into after the oil price dropped last year. We talked to about 60 shareholders in December and came up with this plan, and basically it was preserve the balance sheet, and that's what we've done, keeping debt to EBITDA below three. Actually, now it's about 2.3. Preserve the assets -- we have some great assets. And we feel like there will be a U-shaped return to oil prices in the future. And so we really aren't that interested in losing any of our assets now, either selling or producing. So we are hanging onto this now because we think these are going to pick back up. But we did want to slightly grow. The shareholders did not want to see a drop. So we decided to hold 2015 production even with fourth-quarter 2014. In 2014 we grew 60% over 2013. And this year we were going to do the same, but with the slowdown now we are going to grow about 18% is now our current year-over-year rate. And if we stay at three rigs in the Eagle Ford and do nothing else, we still grow in the teens from this year to next year. Cost reductions -- we will talk a little bit more about that. But we are down about 20% overall on our well cost. Most of that is on the completion side. Most of our day rates in the Eagle Ford are term contracts. So we really can't change those. But we've still come down on drilling costs about 10% and frack costs closer to 25% to 30%. We want to test our Delaware Basin acreage. We are about to spud our first well there. In the next couple of weeks we will drill three wells back to back on the Reeves-Culberson County line. We will get our own data, finally, on what it costs to drill these wells and what it costs to frack them and how to deal with the gas and the oil. And we want to take advantage of opportunities. I think financially we are in a better spot than most companies. So we think there should be some assets for sale, both land and production, possibly companies that could fit into our goals. |