S.P. “Chip” Johnson, IV, Carrizo’s President and CEO, commented on the results, “The second quarter was an eventful one for Carrizo as we announced the largest acquisition in our history, approximately 16,500 net acres in the core of the Delaware Basin. Once the acquisition closes later this month, we will hold positions of scale in the core of two of the highest-return plays in North America, the Eagle Ford Shale and Delaware Basin.

“With the scale we now expect to have in these two plays, our plan is to focus our activity on these regions. As a result, we currently have active divestiture processes for our assets in the Marcellus, Utica, and Niobrara. We believe the resulting streamlined portfolio should lead to improved long-term returns from our development program as well as at the corporate level.

“Given the volatile nature of commodity prices as well as the expected closing of the ExL acquisition, we have materially increased our crude oil hedge position. Since the end of June, we have increased our 2018 crude oil hedge position to 18 MBbls/d from 6 MBbls/d previously, and have also added 6 MBbls/d in 2019. With the downside protection the hedges provide, we believe we can organically de-lever our balance sheet in 2018 even if prices were to weaken from current levels. We also believe we are positioned to run a free cash flow positive program in 2019 and beyond at current strip prices.

“The second quarter was another strong quarter for the Company operationally. Crude oil production increased 17% versus the prior quarter. This was led by the Eagle Ford, which was up 20% sequentially. As a result, crude oil production during the quarter materially outperformed the initial guidance that was provided back in May.”

Operational Update

In the Eagle Ford Shale, Carrizo drilled 23 gross (21.2 net) operated wells during the second quarter and completed 26 gross (21.6 net) wells. Crude oil production from the play was more than 30,600 Bbls/d for the quarter, up 20% versus the prior quarter. At the end of the quarter, Carrizo had 28 gross (26.6 net) operated Eagle Ford wells in progress or waiting on completion, equating to net crude oil production potential of approximately 10,000 Bbls/d. The Company is currently operating three rigs in the Eagle Ford, but plans to move one of its rigs to the Delaware Basin later this quarter. Carrizo expects to drill approximately 93 gross (80 net) operated wells and complete 93 gross (84 net) operated wells in the play during 2017.

Carrizo is continuing to test multiple completion optimization techniques aimed at further enhancing the returns of its development program. The Company remains pleased with the performance of its wells with 200 ft. frac stage spacing, and has expanded its pilot testing of even tighter frac stage spacing. Carrizo currently has approximately 30 wells online that were completed with 180 ft. stage spacing or tighter. The Company has also begun to test slickwater completions with an increased proppant concentration, and has recently completed 13 wells with approximately 2,000 lbs/ft. of proppant. This compares to its standard completion that utilizes approximately 1,600 lbs/ft. of proppant. Additionally, the Company has begun to test the potential for refracs on understimulated wells, such as some of those acquired in the Company's recent purchase from Sanchez Energy Corporation. The Company has pumped its first refrac on these properties, and completion is currently underway. Carrizo plans to provide an update on these pilots once it has sufficient production history.

Carrizo continues to test multiple initiatives aimed at determining the optimal development spacing on its acreage position. Recently, the Company has brought online three additional stagger-stack pilots testing new areas on the western side of its acreage position. The pilots are testing effective lateral spacing of 220-250 ft., and bring the total number of stagger-stack pilots online to 14.

In the Delaware Basin, Carrizo completed two operated wells during the second quarter. Crude oil production from the play was more than 900 Bbls/d for the quarter, down from approximately 1,100 Bbls/d in the prior quarter. While Carrizo is not presently operating a rig in the Delaware Basin, there are currently five operated rigs running on the properties to be acquired from ExL. Based on its updated interpretation of the drilling requirements on the acreage, Carrizo now expects to adjust the activity level to three rigs sooner than previously planned following the closing of the transaction. As a result, Carrizo expects to drill approximately 10 gross (8 net) operated wells and complete 16 gross (13 net) operated wells in the Delaware Basin during 2017. These estimates include 9 gross wells drilled and 13 gross wells completed on the properties to be acquired from ExL following the closing of the transaction.

Carrizo continues to be pleased with the well performance on the ExL properties. Since the beginning of the second quarter, three Wolfcamp A wells and three Wolfcamp B wells have been completed and brought online. Currently, there are 14 gross producing horizontal wells on the acreage with 8 additional wells currently drilling or waiting on completion. See below for the peak 30-day rates from the recent wells:

• Fowler State Unit 1720 #1 (Wolfcamp A) - 1,591 Boe/d (50% oil, 68% liquids) from an approximate 6,900 ft. lateral
• Zeman 40 Unit #1 (Wolfcamp B) - 1,766 Boe/d (61% oil, 75% liquids) from an approximate 7,900 ft. lateral
• Saul 3571 heel (Wolfcamp B) - 1,217 Boe/d (56% oil, 71% liquids) from an approximate 4,000 ft. lateral

Additionally, the Davis 2728 Unit #1 well (Wolfcamp B) was brought online in late June, but has yet to achieve a peak 30-day rate. To date, the well has achieved a peak 15-day rate of 1,315 Boe/d (59% oil, 74% liquids) from an approximate 9,500 ft. lateral. The remaining two wells were brought online in late July and are still cleaning up.

In the Niobrara Formation, Carrizo did not drill or complete any operated wells during the second quarter. Crude oil production from the play was approximately 1,900 Bbls/d for the quarter, down from approximately 2,000 Bbls/d in the prior quarter due to the lack of new wells coming online. Carrizo is not currently budgeting any operated activity in the Niobrara during 2017, but expects to continue participating in non-operated activity within its focus area.

In the Utica and Marcellus, Carrizo did not drill or complete any operated wells during the second quarter. Crude oil production from the Utica was approximately 200 Bbls/d during the quarter, up from approximately 180 Bbls/d in the prior quarter. In the Marcellus, the Company’s production was 44.3 MMcf/d, down from 47.6 MMcf/d in the prior quarter as the Company elected to decrease its production in response to a relatively weaker local market price environment. Carrizo expects to continue to vary its Marcellus production during 2017 based on local market pricing. Carrizo has currently allocated a minimal amount of maintenance capital to the Utica and Marcellus during 2017.

Hedging Activity

Carrizo currently has hedges in place for more than 25% of estimated crude oil production for the remainder of 2017 (based on the midpoint of guidance). For the balance of the year, the Company has swaps covering approximately 10,500 Bbls/d of crude oil at an average fixed price of approximately $53.77/Bbl. For 2018, Carrizo currently has three-way collars covering 18,000 Bbls/d of crude oil with an average floor price of $49.08/Bbl, ceiling price of $60.48/Bbl, and sub-floor price of $39.17/Bbl. The Company has also begun to build its 2019 hedge position. For 2019, Carrizo currently has three-way collars covering 6,000 Bbls/d of crude oil with an average floor price of $47.80/Bbl, ceiling price of $61.45/Bbl, and sub-floor price of $40.00/Bbl.

Carrizo also has hedges in place for more than 20% of estimated natural gas production for the remainder of 2017. For the balance of the year, the Company has swaps covering 20,000 MMBtu/d of natural gas at an average fixed price of $3.30/MMBtu. (Please refer to the attached tables for details of the Company’s derivative contracts.)

Conference Call Details

The Company will hold a conference call to discuss 2017 second quarter financial results on Tuesday, August 8, 2017 at 10:00 AM Central Daylight Time. To participate in the call, please dial (888) 223-4515 (U.S. & Canada) or +1 (303) 223-4383 (Intl.) ten minutes before the call is scheduled to begin. A replay of the call will be available through Tuesday, August 15, 2017 at 12:00 PM Central Daylight Time at (800) 633-8284 (U.S. & Canada) or +1 (402) 977-9140 (Intl.). The reservation number for the replay is 21856090 for U.S., Canadian, and International callers.

A simultaneous webcast of the call may be accessed over the internet by visiting our website at http://www.carrizo.com, clicking on “Upcoming Events”, and then clicking on the “2017 Second Quarter Earnings Call” link. To listen, please go to the website in time to register and install any necessary software. The webcast will be archived for replay on the Carrizo website for 7 days.

Carrizo Oil & Gas, Inc. is a Houston-based energy company actively engaged in the exploration, development, and production of oil and gas from resource plays located in the United States. Our current operations are principally focused in proven, producing oil and gas plays primarily in the Eagle Ford Shale in South Texas, the Delaware Basin in West Texas, the Niobrara Formation in Colorado, the Utica Shale in Ohio, and the Marcellus Shale in Pennsylvania.

Statements in this release that are not historical facts, including but not limited to those related to capital requirements, free cash flow positive program, the ExL acquisition (including timing and effects thereof), monetization process matters and results, capital expenditure, guidance, rig program,  production, average well returns, the estimated production results and financial performance, effects of transactions, targeted ratios and other metrics, timing, levels of and potential production, downspacing, crude oil production potential and growth, oil and gas prices, drilling and completion activities, drilling inventory, including timing thereof, resource potential, well costs, break-even prices, production mix, development plans, growth, hedging activity, the Company’s or management’s intentions, beliefs, expectations, hopes, projections, assessment of risks, estimations, plans or predictions for the future, results of the Company’s strategies and other statements that are not historical facts are forward-looking statements that are based on current expectations. Although the Company believes that its expectations are based on reasonable assumptions, it can give no assurance that these expectations will prove correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements include assumptions regarding well costs, estimated recoveries, pricing and other factors affecting average well returns, results of wells and testing, failure of actual production to meet expectations, performance of rig operators, spacing test results, availability of gathering systems, costs of oilfield services, actions by governmental authorities, joint venture partners, industry partners, lenders and other third parties, actions by purchasers or sellers of properties, satisfaction of closing conditions and failure of the acquisition to close, failure of financing transactions to close, purchase price adjustment, integration and other risks and effects of acquisitions, market and other conditions, risks regarding financing, capital needs, availability of well connects, capital needs and uses, commodity price changes, effects of the global economy on exploration activity, results of and dependence on exploratory drilling activities, operating risks, right-of-way and other land issues, availability of capital and equipment, weather, and other risks described in the Company’s Form 10-K for the year ended December 31, 2016 and its other filings with the U.S. Securities and Exchange Commission. There can be no assurance any transaction described in this press release will occur on the terms or timing described, or at all.

(Financial Highlights to Follow)

CARRIZO OIL & GAS, INC.
NON-GAAP FINANCIAL MEASURES
(Unaudited)

Reconciliation of Net Income (Loss) (GAAP) to Adjusted Net Income (Non-GAAP)

Adjusted net income is a non-GAAP financial measure which excludes certain items that are included in net income (loss), the most directly comparable GAAP financial measure. Items excluded are those which the Company believes affect the comparability of operating results and are typically excluded from published estimates by the investment community, including items whose timing and/or amount cannot be reasonably estimated or are non-recurring.

Adjusted net income is presented because management believes it provides useful additional information to investors for analysis of the Company’s fundamental business on a recurring basis. In addition, management believes that adjusted net income is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry.

Adjusted net income should not be considered in isolation or as a substitute for net income (loss) or any other measure of a company’s financial performance or profitability presented in accordance with GAAP. A reconciliation of the differences between net income (loss) and adjusted net income is presented below. Because adjusted net income excludes some, but not all, items that affect net income (loss) and may vary among companies, our calculation of adjusted net income may not be comparable to similarly titled measures of other companies.

Reconciliation of Diluted Weighted Average Common Shares Outstanding (GAAP) to Adjusted Diluted Weighted Average Common Shares Outstanding (Non-GAAP)

Adjusted diluted weighted average common shares outstanding (“Adjusted Diluted WASO”) is a non-GAAP financial measure which includes the effect of potentially dilutive instruments that, under certain circumstances described below, are excluded from diluted weighted average common shares outstanding (“Diluted WASO”), the most directly comparable GAAP financial measure. When a net loss exists, all potentially dilutive instruments are anti-dilutive to the net loss per common share and therefore excluded from the computation of Diluted WASO. The effect of potentially dilutive instruments is included in the computation of Adjusted Diluted WASO for purposes of computing diluted adjusted net income per common share.

__________

(1) Adjusted income tax expense is calculated by applying the Company’s estimated annual effective income tax rates applicable to the adjusted income before income taxes, which were 36.9% and 35.7% for the three months ended June 30, 2017 and 2016, respectively, as well as for the six months ended June 30, 2017 and 2016, respectively.

CARRIZO OIL & GAS, INC.
NON-GAAP FINANCIAL MEASURES
(Unaudited)

Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (Non-GAAP) to Net Cash Provided by Operating Activities (GAAP)

Adjusted EBITDA is a non-GAAP financial measure which excludes certain items that are included in net income (loss), the most directly comparable GAAP financial measure. Items excluded are interest expense, depreciation, depletion and amortization and items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or are non-recurring.

Adjusted EBITDA is presented because management believes it provides useful additional information to investors and analysts, for analysis of the Company’s financial and operating performance on a recurring basis and the Company’s ability to internally generate funds for exploration and development, and to service debt. In addition, management believes that adjusted EBITDA is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry.

Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss), net cash provided by operating activities, or any other measure of a company’s profitability or liquidity presented in accordance with GAAP. A reconciliation of net income (loss) to adjusted EBITDA to net cash provided by operating activities is presented below. Because adjusted EBITDA excludes some, but not all, items that affect net income (loss), our calculations of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Discretionary Cash Flows (Non-GAAP)

Discretionary cash flows are a non-GAAP financial measure which excludes certain items that are included in net cash provided by operating activities, the most directly comparable GAAP financial measure. Items excluded are changes in the components of working capital and other items that the Company believes affect the comparability of operating cash flows such as items that are non-recurring.

Discretionary cash flows are presented because management believes it provides useful additional information to investors for analysis of the Company’s ability to generate cash to internally fund exploration and development, and to service debt. In addition, management believes that discretionary cash flows is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry.

Discretionary cash flows should not be considered in isolation or as a substitute for net cash provided by operating activities or any other measure of a company’s cash flows or liquidity presented in accordance with GAAP. A reconciliation of net cash provided by operating activities to discretionary cash flows is presented below. Because discretionary cash flows excludes some, but not all, items that affect net cash provided by operating activities and may vary among companies, our calculation of discretionary cash flows may not be comparable to similarly titled measures of other companies.