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

    Analyzing Porter's Five Forces on JPMorgan Chase (JPM)

    Examine the major money-center bank holding firm, JPMorgan Chase & Company, from the perspective of Porter's five forces model for industry analysis.
  2. Chart Advisor

    Watch This ETF For Signs Of A Reversal (BCX)

    Trying to determine if the commodity markets are ready for a bounce? Take a look at the analysis of this ETF to find out if now is the time to buy.
  3. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  4. Stock Analysis

    Analyzing Dish Network's Return on Equity (ROE) (DISH, TWC)

    Analyze Dish Network's return on equity (ROE), understand why it has vacillated so greatly in recent years and learn what factors are influencing it.
  5. Investing Basics

    The Importance of Commodity Pricing in Understanding Inflation

    Commodity prices are believed to be a leading indicator of inflation, but does it always hold?
  6. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  7. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  8. Fundamental Analysis

    Performance Review: Commodities in 2015

    Learn how commodities took a big hit in 2015 with a huge variance in performances. Discover how the major commodities performed over the year.
  9. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  10. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
RELATED FAQS
  1. When does a growth stock turn into a value opportunity?

    A growth stock turns into a value opportunity when it trades at a reasonable multiple of the company's earnings per share ... Read Full Answer >>
  2. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  3. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  4. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  5. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  6. What's the difference between microeconomics and macroeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center