UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 7, 2005
CARRIZO OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
Texas 000-29187-87 76-0415919
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1000 Louisiana Street
Suite 1500
Houston, Texas 77002
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 328-1000
N/A
(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))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On June 13, 2005, Carrizo Oil & Gas, Inc., a Texas corporation
(the "Company" or "we") sold an aggregate of 1.2 million shares of the Company's
common stock, par value $0.01 per share ("Common Stock"), to institutional
investors (the "Investors") at a price of $15.25 per share in a private
placement (the "Private Placement"). The number of shares sold is approximately
5% of the fully diluted shares outstanding before the offering. The net proceeds
of the Private Placement, after deducting placement agents' fees but before
paying offering expenses, are expected to be approximately $17,385,000. We
intend to use the proceeds from the Private Placement to fund in part our
capital expenditure program for 2005, including our drilling programs in the
Barnett Shale and onshore Gulf Coast areas, and for other corporate purposes.
In connection with the Private Placement, we entered into a
Placement Agent Agreement (the "Placement Agent Agreement") with a third party
(the "Placement Agent"), pursuant to which the Company engaged the Placement
Agent as its managing placement agent in the Private Placement. In consideration
of the Placement Agent's services under the Placement Agent Agreement, the
Placement Agent is entitled to a fee equal to five percent of the gross proceeds
of the Private Placement and reimbursement of up to $50,000 of its expenses in
connection with the Private Placement. In certain situations, we are required to
indemnify the Placement Agent, including without limitation, for certain
liabilities under the Securities Act of 1933, as amended (the "Securities Act").
Also in connection with the Private Placement, the Company
entered into Subscription and Registration Rights Agreements (the "Subscription
and Registration Rights Agreements") with the Investors. The Subscription and
Registration Rights Agreements provide registration rights with respect to the
shares purchased in the Private Placement. We are generally required to file a
resale shelf registration statement to register the resale of such shares under
the Securities Act within 30 days of the closing of the Private Placement. We
are subject to certain covenants under the terms of the Subscription and
Registration Rights Agreement, including the requirement that the registration
statement be kept effective for resale of shares for two years. In certain
situations, we are required to indemnify the Investors, including without
limitation, for certain liabilities under the Securities Act.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
As described under Item 1.01 above, on June 13, 2005, pursuant to
the Subscription and Registration Rights Agreements, we issued to the Investors
an aggregate of 1.2 million shares of Common Stock. In issuing the shares of
Common Stock, the Company relied on the exemption from registration provided by
Section 4(2) of the Securities Act for transactions not involving a public
offering.
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Any securities described in this report that have been offered or
are to be offered have not been registered under the Securities Act and may not
be offered or sold in the United States absent registration or an applicable
exemption from registration requirements.
ITEM 7.01 REGULATION FD DISCLOSURE.
In April 2005, we acquired assets in the Barnett Shale for
approximately $4.1 million. This acquisition consisted of approximately 600 net
acres and working interests in 14 existing gross wells (7.3 net) with an
estimated 5.4 Bcfe of proved reserves, based upon our internal estimates. All of
the interests in the wells acquired related to wells in which we already had an
interest. The consideration paid for this acquisition was approximately $2.3
million in cash and 112,697 shares of Common Stock.
On or about April 30, 2005, two of our top producing wells, the
Delta Farms #1 and the Beach House #1, were shut in for workovers. The Beach
House #1, which averages approximately 2.0 MMcfe/d net to us, is currently shut
in while we complete a workover and gravel pack. The Delta Farms #1, which
averages approximately 2.0 MMcfe/d net to us, is also shut in while we perform a
squeeze cement job to eliminate water channeling behind the casing. Both of
these workovers could be completed and back on production by mid-June, although
there can be no assurance as to the timing and results of the workovers. While
there can be no assurance at this time, we believe wellbore problems to be the
cause for the production disruptions on both wells, and, accordingly, expect
that we will successfully re-establish production at the pre-shut in levels.
Based upon the projected time period these wells are to be shut in, we estimate
that the impact from these workovers on our second quarter average daily
production will be a reduction of approximately 2.0 MMcfe/d. There is always a
risk that these workovers may be unsuccessful. In that event, we could lose up
to an estimated 1.4 Bcfe and 0.1 Bcfe of reserves currently booked on the Delta
Farms #1 (current pay zone) and the Beach House #1, respectively. The Delta
Farms #1 has another proven zone up the hole; accordingly, we would recomplete
the well in the second zone should the aforementioned workover be unsuccessful.
As a result of natural declines and delays in tying new wells on
line (including an estimated 7 MMcfe/d of production from wells awaiting
completion and/or pipeline hookup), as well as the shut-in wells described
above, we expect that second quarter production will be in the range of 23 to 24
MMcfe/d as compared to our first quarter 2005 production and our second quarter
2004 production of 26.2 and 21.6 MMcfe/d, respectively.
In connection with our revolving credit facility, we are
presently completing a scheduled May 2005 borrowing base redetermination with
our lenders. We do not expect the borrowing base redetermination will be
completed by the lenders until late June. We do not yet know whether our
borrowing base will be materially reduced by the aforementioned disruptions in
production on the Delta Farms #1 and Beach House #1 wells.
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We expect to seek to refinance our existing debt, currently $77.5
million outstanding as of May 31, 2005. This refinancing could replace our
current debt structure with a smaller ($10 million to $20 million) revolving
credit facility and a second lien term loan facility of up to $125 million in
lieu of our senior subordinated secured notes and senior subordinated notes.
There can be no assurance as to the terms or amount of any refinanced debt or
that any debt refinancing will take place. In the event that we do not complete
the debt refinancing described above or the refinancing is delayed, we would
expect to seek to effect other debt and/or equity financings.
Through our wholly owned subsidiary, CCBM, Inc. ("CCBM"), we have
a minority ownership interest in Pinnacle Gas Resources, Inc. ("Pinnacle"),
which explores for coalbed methane reserves in Montana and Wyoming. In March
2005, Pinnacle entered into a purchase and sale agreement to acquire additional
undeveloped acreage, which would also significantly increase its development
program budget in 2005. CCBM and the other Pinnacle shareholders were given the
option to participate in the equity contribution into Pinnacle needed to finance
this acquisition and its development program in 2005. Should we maintain our
proportionate ownership interest in Pinnacle on a fully diluted basis, we
estimate that we would be required to contribute approximately $3.2 million in
the near term and, if requested by Pinnacle's Board of Directors, up to an
additional $3.2 million by December 31, 2006. If CCBM does not contribute any or
all of its share of the equity contribution, its fully diluted ownership in
Pinnacle would be reduced. In May 2005, CCBM initially subscribed, subject to
certain conditions, to purchase additional Pinnacle capital stock valued at $3.0
million, its approximate share of the first installment of the equity capital
needed to fund the acquisition and part of the additional development program.
However, subject to approval from our board of directors and from Pinnacle, we
expect that CCBM will now elect not to participate in the equity contribution in
Pinnacle. There can be no assurance regarding CCBM's level of participation in
future equity contributions to Pinnacle, if any.
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Certain statements in this Current Report, including without
limitation those relating to the use of the proceeds of the Private Placement,
the timing and success of workovers, the borrowing base redetermination,
refinancing our debt, future financings, the equity contribution in Pinnacle,
our second quarter production 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 our results of operations,
market conditions, the success of debt refinancing, actions by Pinnacle, the
effect and success of workovers and other risks described in the Company's Form
10-K for the year ended December 31, 2004 and its other filings with the
Securities and Exchange Commission.
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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/ Paul F. Boling
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Name: Paul F. Boling
Title: Vice President and
Chief Financial Officer
Date: June 13, 2005