Carrizo Oil and Gas (Nasdaq:CRZO) announced a new strategy focusing on oil and liquids rich development, thus joining the growing ranks of exploration and production companies shifting away from natural gas development.
The company also raised its capital spending for 2010 from $170 million to $225 million, and launched an offering of 2.5 million shares of common stock to help pay for this new strategy.

IN PICTURES: 6 Ways To Make Better Options Trades

Carrizo Oil and Gas was the second exploration and production company recently to increase capital spending along with a common stock offering. Brigham Exploration Company (Nasdaq:BEXP) said that it would increase its 2010 capital budget from $199 million to $294 million to accelerate the development of its Williston Basin properties including the Bakken and Three Forks formations. The company also sold 13 million shares of common stock to finance the extra drilling.

Carrizo Oil and Gas will use the capital raised to focus on two areas. The company has acquired 6,800 acres in the Eagle Ford Shale in Texas, and will allocate $30 million in 2010 to acquire and develop more acreage here. The company plans on drilling two horizontal wells in 2010.

Petrohawk Energy (NYSE:HK) is one of the leaders in developing the Eagle Ford Shale. The company has 350,000 net acres under lease here, and proved reserves of 288 Bcfe as of December 31, 2009.

Carrizo Oil and Gas has allocated $25 million for the purchase of 50,000 net acres in the Niobrara formation in the Rocky Mountain area. The company plans on drilling as many as three horizontal wells during the year.

Carrizo Oil and Gas didn't say where the acreage is in the Eagle Ford Shale or the Niobrara, but indicated that the land was near recent discoveries by EOG Resources (NYSE:EOG) in the area.

EOG Resources recently announced the results of the Jake 2-01H well in Colorado in the Niobrara, which the company said produced 50,000 barrels of oil in the first 90 days.

The new strategy represents a major shift for Carrizo Oil and Gas, which was previously almost exclusively focused on the Barnett Shale. The company's original plan was to spend $132 million of its $170 million budget to develop the 52,000 acres that it has under net lease in the Barnett Shale.

Carrizo Oil and Gas also just initiated a development program in the Marcellus Shale, where it has acreage in Pennsylvania, West Virginia and New York. The company is in a joint venture here with Avista Capital Partners. Carrizo Oil and Gas didn't say whether the new strategy would delay any development here.

The Bottom Line
Carrizo Oil and Gas joins the crowded field of exploration and production companies shifting away from natural gas to oil and liquids development. (To learn more, check out Unearth Profits In Oil Exploration And Production.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    The Biggest Risks of Investing in Netflix Stock

    Examine the current state of Netflix Inc., and learn about three of the major fundamental risks that the company is currently facing.
  2. Mutual Funds & ETFs

    Top 3 Commodities Mutual Funds

    Get information about some of the most popular and best-performing mutual funds that are focused on commodity-related investments.
  3. Stock Analysis

    What Seagate Gains by Acquiring Dot Hill Systems

    Examine the Seagate acquisition of Dot Hill Systems, and learn what Seagate is looking to gain by acquiring Dot Hill's software technology.
  4. Personal Finance

    Top Universities for Getting an MBA Abroad

    Going abroad for an MBA can add cachet when it comes time to get a job.
  5. Chart Advisor

    Agriculture Commodities Are In The Bear's Sights

    Agriculture stocks have experienced strong moves higher over recent weeks, but chart patterns on sugar, corn and wheat are suggesting the moves could be short lived.
  6. Credit & Loans

    10 Ways Student Debt Can Destroy Your Life

    If you're getting a student loan, think critically about how you will manage your loan. Student debt could have a profound negative impact on your life.
  7. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  8. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  9. Investing News

    Glencore Shares Surge in Hong Kong

    Shares of Glencore International, a leading multinational commodities and mining company, jumped by around 15% on London Stock Exchange, after the shares had gained about 71% earlier on the Hong ...
  10. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  1. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  2. Student loans, federal and private: what's the difference?

    The cost of a college education now rivals many home prices, making student loans a huge debt that many young people face ... Read Full Answer >>
  3. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  6. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!