YOUR VOTE IS IMPORTANT: Whether you plan to attend the Annual Meeting or not, please vote your shares by the Internet, telephone or mail in order to ensure the presence of a quorum. If you attend in person, you may choose to vote your shares at that time even if you have previously voted your shares. Any proxy may be revoked by the submission of a later dated proxy or a written notice of revocation before close of the Annual Meeting.

Even if you plan to attend the Annual Meeting, please read this proxy statement with care and vote right away using any of the following methods. In all cases, have your proxy card or voting instructions accessible and follow the instructions. If your shares are held in the name of a broker or other nominee, follow the voting instructions you receive from such broker or other nominee to vote your shares.

We are providing these proxy materials to you because you were either a registered holder or the beneficial owner of issued and outstanding shares of capital stock of the Company at the close of business on the record date and therefore you or your broker or other nominee are entitled to receive notice of, and to vote on

all matters at, the Annual Meeting and any adjournments thereof. This proxy statement describes matters on which we would like you, as a shareholder, to vote. It also gives you information on these matters so that you can make an informed decision.

At the Annual Meeting, shareholders will vote on the matters outlined in the Notice of Annual Meeting of Shareholders, including the election of eight director nominees, a non-binding shareholder advisory vote to approve the compensation of the Company’s named executive officers, the issuance of shares of common stock, par value $0.01 per share (“Common Stock”) of the Company (i) either as dividends on, or upon redemption of, the

Company’s 8.875% redeemable preferred stock, par value $0.01 per share (the “Preferred Stock”), and (ii) upon the exercise of common stock purchase warrants issued in connection with the Preferred Stock (the “Warrants”) and ratification of the appointment of EY as the Company’s independent registered public accounting firm. Management will be available to respond to questions from shareholders.

At the Annual Meeting, you will be voting on four proposals:

Proposal 1. To elect eight members to the Board of Directors to serve until the 2019 Annual Meeting of Shareholders, until their successors are elected and qualified or until the earlier of their death, resignation or removal.

Proposal 2. To approve, in an advisory vote, the compensation of the Company’s named executive officers.

Proposal 3. To approve, in accordance with NASDAQ Marketplace Rule 5635(d), the issuance of shares of Common Stock (i) either as dividends on, or upon redemption of, the Preferred Stock and (ii) upon the exercise of the Warrants (the “NASDAQ Marketplace Rule Proposal”).

Proposal 4. To ratify the appointment of EY as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

Proposal 1. The Board of Directors recommends that shareholders vote “FOR” the election of the eight nominees for director.

Proposal 2. The Board of Directors recommends that shareholders vote “FOR” the approval, on an advisory basis, of the compensation of the Company’s named executive officers.

Proposal 3. The Board of Directors recommends that shareholders vote “FOR” the approval of the NASDAQ Marketplace Rule Proposal.

Proposal 4. The Board of Directors recommends that shareholders vote “FOR” the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

Proposal 1. The affirmative vote of a majority of the votes cast by holders entitled to vote in the election of directors at the Annual Meeting is required for the election of each nominee for director. With respect to the election of directors in an uncontested election, such as that being held at the Annual Meeting, “majority of votes” cast means the number of votes cast “FOR” the election as a director of such nominee exceeds the number of votes cast “AGAINST” such nominee. See also “Corporate Governance and Board Matters—Majority Vote in Director Elections” for additional information regarding election of directors.

Proposal 2. The affirmative vote of the holders of a majority of the shares entitled to vote on and that vote for or against or expressly abstain with respect to the matter is required to approve, on an advisory basis, the proposal relating to the advisory vote on the executive

compensation of the Company’s named executive officers. As an advisory vote, the shareholders’ vote on this proposal is not binding on our Board of Directors or the Company. However, we expect that the Compensation Committee will review the voting results on such proposal and give consideration to the outcome when making future decisions regarding compensation of the named executive officers.

Proposal 3. Under NASDAQ rules, the affirmative vote of the holders of a majority of total votes cast on the proposal is required to approve the NASDAQ Marketplace Rule Proposal.

Proposal 4. The affirmative vote of the holders of a majority of the shares entitled to vote on the matter is required to approve the proposal relating to ratification of the Company’s independent registered public accounting firm.

A proxy is another person or entity that you legally designate to vote your shares. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. All duly executed proxies received prior to the Annual Meeting will be voted in accordance with the choices specified thereon and, in connection with any other business that may properly come before the

meeting, in the discretion of the persons named in the proxy.

A proxy statement is a document that the United States Securities and Exchange Commission (“SEC”) requires that we make available to you when we ask you to vote your shares at the Annual Meeting.

The holders of record of the issued and outstanding shares of Common Stock of the Company at the close of business on the record date may vote on all matters at the Annual Meeting and any adjournments thereof.

The holders of the Preferred Stock have voting rights only in specified circumstances. Such rights are not currently exercisable. See “Other

Matters-Certain Information regarding Preferred Stock and Warrants”.

On the record date, 82,056,255 shares of Common Stock and 200,000 shares of Preferred Stock of the Company were issued and outstanding. No other class of stock is outstanding.

The record date for the Annual Meeting is March 23, 2018. The record date is the date on which a shareholder must own shares as of record in order to be eligible for notice of, and

to vote at, the Annual Meeting, or at any adjournments or postponements of the Annual Meeting. The record date is fixed by the Board of Directors in accordance with Texas law.

Each share of Common Stock is entitled to one vote on each matter submitted to a vote of shareholders. Votes cast by proxy or in person

at the Annual Meeting will be counted by the persons appointed as election inspectors for the Annual Meeting.

Common shareholders that are entitled to vote at the Annual Meeting may do so in person at the Annual Meeting or by proxy submitted by Internet, by telephone or by mail using the instructions set forth on the enclosed proxy card.

Shareholder of Record. If you are a common shareholder of record, you may vote in person at the Annual Meeting or you can give a proxy to be voted at the meeting, over the telephone, by Internet, or by mailing in a proxy card. Please refer to the specific voting instructions set forth on the enclosed proxy card. Even if you currently plan to attend the Annual Meeting, we recommend that you also submit your proxy as described above so that your

vote will be counted if you later decide not to attend the Annual Meeting.

Street Name Holder. If, like most of our shareholders, you hold your shares in “street name,” you must vote your shares in the manner prescribed by your broker or other nominee. Your broker or other nominee will enclose, or explain how you can access, a voting instruction card for you to use in directing the broker or other nominee how to vote your shares. Since a “street name” holder is not the shareholder of record, if you are a “street name” holder, you may vote your shares in person at the Annual Meeting only if you obtain a signed proxy from your broker or other nominee giving you a right to vote the shares.

Shareholder of Record. If your shares are registered directly in your name with Wells Fargo Shareowner Services, the Company’s

stock transfer agent, you are considered the “shareholder of record,” or a registered holder, with respect to those shares.

Street Name Holder. If, like most of our shareholders, your shares are held in a stock brokerage account, by a bank, fiduciary or other custodian, or by another nominee, you are considered the beneficial owner of these shares, and your shares are held in ‘‘street name.’’ In this case, such broker or other nominee is considered the shareholder of

record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct your broker or other nominee on how to vote the shares held in your account. If you hold your shares through a broker or other nominee we recommend that you follow the directions provided by your broker or other nominee to provide voting instructions.

The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote at the Annual Meeting constitutes a quorum, which is required to transact business at the Annual Meeting. Proxies indicating “abstentions” and shares represented by

“broker non-votes” will be counted for purposes of determining whether there is a quorum at the Annual Meeting. The persons appointed as election inspectors will determine whether a quorum exists.

A “broker non-vote” occurs when a broker or other nominee returns a valid proxy card without voting on such proposal because they did not receive voting instructions from the street name owner and do not have discretionary authority to vote the shares on a particular proposal. Shares represented by broker non-votes will not be voted on any proposal for which the broker or other nominee does not have discretionary authority to vote. Such shares will be disregarded in the calculation of “votes cast” with respect to such proposal and therefore will have no effect on the outcome of that proposal (even though those shares may be considered entitled to vote or be voted on other proposals). Under applicable rules, brokers or other nominees have discretionary voting power with respect to matters that are considered routine, but not with respect to non-routine matters. A broker or other nominee cannot vote without instructions on non-routine matters, therefore there may be broker non-votes on any such proposals.

The proposals relating to the election of directors, the advisory vote on executive compensation and the NASDAQ Marketplace Rule Proposal are non-routine proposals for which the broker or other nominee does not have discretionary authority to vote their customers’ shares under applicable stock exchange rules and may result in broker non-votes. The broker non-votes will have no effect on the outcome of these matters.

If you do not instruct your broker or other nominee how to vote your shares, then they may vote your shares in their discretion on any matter for which they have discretionary authority under applicable NASDAQ Stock Market Rules. The proposal relating to the ratification of EY as the Company’s independent registered public accounting firm is a routine proposal for which the broker or other nominee has discretionary authority to vote their customers’ shares under applicable stock exchange rules.

An “abstention” occurs when the beneficial owner of shares is present, in person or by

proxy, and entitled to vote at the meeting (or when a broker or other nominee holding shares

for a beneficial owner is present and entitled to vote at the meeting), but such person refrains from voting as to a particular proposal by indicating that he or she “abstains” as to that proposal. Abstentions will not be counted as votes cast either for the election of directors or for the NASDAQ Marketplace Rule Proposal at the Annual Meeting and therefore will have no

effect on the election of any nominee or on such proposal. With respect to the proposals relating to the advisory vote on executive compensation and the ratification of EY as the Company’s independent registered public accounting firm, holders that expressly “ABSTAIN” from voting with respect to such proposals will have the same effect as a vote “AGAINST” the proposal.

As to any matter for which no choice has been specified in the proxy, the shares represented thereby will be voted by the persons named in the proxy, to the extent applicable, (1) “FOR” the election as a director of each nominee listed in this proxy statement; (2) “FOR” the approval, on an advisory basis, of the compensation of the Company’s named executive officers; (3) “FOR” the approval of

the NASDAQ Marketplace Rule Proposal; (4) “FOR” the appointment of EY as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018; and (5) in the discretion of the persons named in the proxy in connection with any other business that may properly come before the Annual Meeting.

As of the date of this proxy statement, the Board of Directors is not aware of any matters that may be brought before the Annual Meeting other than those described above. By submitting a proxy by internet, by telephone or by mail using the instructions on the enclosed proxy card, you give to the persons named in

the form of proxy or their substitutes discretionary voting authority with respect to any other business that may properly come before the Annual Meeting, and they intend to vote with respect to any such matters in accordance with their best judgment.

Shareholder of Record. A shareholder of record giving a proxy may revoke it at any time before it is voted at the Annual Meeting by delivering written notice to the Corporate Secretary of the Company or by delivering a properly executed proxy bearing a later date. A shareholder of record who attends the Annual Meeting may, if he or she wishes, vote by ballot

at the Annual Meeting and that vote will cancel any proxy previously given. Attendance at the Annual Meeting will not in itself, however, constitute the revocation of a proxy.

Street Name Holder. If you hold your shares in “street name,” you should follow the directions provided by your broker or other nominee regarding how to revoke your proxy.

The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the persons appointed as election inspectors and published

within four business days, via a Form 8-K filed with the SEC and available to the public at the SEC’s internet site at www.sec.gov, following the conclusion of the Annual Meeting.

The Board of Directors believes our Company’s current leadership structure, with Mr. S.P. Johnson IV serving as Chief Executive Officer, Mr. Steven A. Webster serving as Chairman of the Board and Mr. F. Gardner Parker serving as Lead Independent Director, is the optimal structure for the Company at this time. From the time that we became a publicly traded company in 1997, the roles of Chairman of the Board and Chief Executive Officer have been held by separate individuals. We believe it is the Chief Executive Officer’s responsibility to lead the Company and the Chairman’s responsibility to lead the Board of Directors. As directors continue to have more oversight

responsibilities than ever before, we believe it is beneficial to have a separate Chairman who has the responsibility of leading the Board. In addition, by having another director serve as Chairman of the Board, our Chief Executive Officer is able to focus his energy on leading the Company.

Our bylaws provide that the Lead Independent Director will coordinate and moderate executive sessions of the Board of Director’s independent members and serve as the principal liaison between the Chief Executive Officer and the independent directors on topics or issues as requested by a majority of the

independent directors, any committee of the Board of Directors or the entire Board of the Directors. Our Lead Independent Director can also call meetings of independent directors.

We believe our Chief Executive Officer and our Chairman have an excellent working relationship. We believe this relationship and separation provides strong leadership for the Board of Directors, while also positioning our

Chief Executive Officer as the leader of the Company in the eyes of our employees and other stakeholders. Although the Board has determined that Mr. Webster is not independent under applicable NASDAQ Stock Market Rules, the Board believes that this conclusion does not prevent Mr. Webster from exercising effective leadership in his role as Chairman of the Board and is, in any event, in the best interests of the Company.

The Board has determined that Mr. Parker, Ms. Aldrich Sevilla-Sacasa, Mr. Thomas L. Carter, Jr., Mr. Robert F. Fulton, Mr. Roger A. Ramsey and Mr. Frank A. Wojtek are “independent directors” within the meaning of NASDAQ Listing Rule 5605(a)(2). In making this determination, the Board took into account the transactions between the Company and affiliates of Black Stone Minerals, L.P.

described in “Related Party Transactions—Certain Matters Regarding Mr. Carter.” The Board determined that these transactions did not result in a relationship that interferes with the exercise of Mr. Carter’s independent judgment in carrying out the responsibilities of a director of the Company and therefore did not preclude a determination that Mr. Carter is independent.

The primary responsibilities of the Audit Committee are to oversee the accounting and financial reporting processes and audit of the financial statements of the Company and to assist the Board of Directors in monitoring (i) the integrity of the financial statements, (ii) the performance, independence and qualifications of the independent registered

public accounting firm, (iii) the performance of the Company’s internal audit function, and (iv) the Company’s compliance with legal and regulatory requirements.

The Audit Committee has sole authority to approve all engagement fees and terms of the independent registered public accounting firm and to establish policies and procedures for

pre-approval of audit and non-audit services. The Audit Committee also reviews and discusses the annual audited financial statements, the quarterly unaudited financial statements and internal control over financial reporting with management and the independent registered public accounting firm. A copy of the Audit Committee Charter may be found on our website at www.carrizo.com under “About Us - Governance.”

The Board has determined that all of the members of the Audit Committee satisfy the

independence standards under the NASDAQ Listing Rules and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board has determined that each member of the Audit Committee is an “audit committee financial expert,” as such term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated by the SEC. A description of the background and qualifications of each member of the Audit Committee is described above under “Proposal 1. Election of Directors.”

The primary responsibilities of the Compensation Committee are (i) to review and approve the compensation of our executive officers and directors, (ii) to oversee and advise the Board on the policies that govern our compensation programs, and (iii) to administer the Company’s incentive compensation plans.

The Compensation Committee is composed entirely of independent directors. The Nominating and Corporate Governance Committee recommended the appointment of these directors to serve on the Compensation Committee after determining that they had the independence, knowledge and skills to accomplish the scope of responsibilities set out in the Compensation Committee’s Charter.

The Compensation Committee has the authority to select, retain, terminate, and approve the fees and other retention terms of special counsel, compensation consultants or other experts or consultants, as it deems appropriate, without seeking approval of the Board of Directors or management. The Compensation Committee has historically retained an independent compensation consulting firm to provide the Compensation Committee with an analysis of competitive market data and recommendations regarding

our executive and director compensation programs.

The Compensation Committee has been appointed by the Board of Directors to administer the 2017 Incentive Plan of Carrizo Oil & Gas, Inc. (the “2017 Incentive Plan”), that was approved at the 2017 Annual Meeting of Shareholders, the Incentive Plan of Carrizo Oil & Gas, Inc., as amended and restated effective May 15, 2014 (the “Prior Incentive Plan”), and the Carrizo Oil & Gas, Inc. Cash-Settled Stock Appreciation Rights Plan (the “Cash SAR Plan”). The Board of Directors has designated a special stock award committee of the Board consisting solely of Mr. Johnson to determine whether and how much to award certain eligible participants, excluding “officers” (as defined in Rule 16a-1 promulgated under Section 16 of the Exchange Act) and non-employee directors, shares of restricted stock, restricted stock units (“RSUs”), options and stock appreciation rights (“SARs”) under the 2017 Incentive Plan, Prior Incentive Plan and the Cash SAR Plan, up to an aggregate grant date or modification date fair value not to exceed $250,000 per individual. A copy of the Compensation Committee Charter may be found on our website at www.carrizo.com under “About Us - Governance.”

The primary responsibilities of the Nominating and Corporate Governance Committee include

(i) identifying, evaluating and recommending, for the approval of the entire Board of

Directors, potential candidates to become members of the Board of Directors, (ii) recommending membership on standing committees of the Board of Directors, (iii) developing and recommending to the entire Board of Directors corporate governance principles and practices for the Company and assisting in the implementation of such policies, and (iv) assisting in the identification, evaluation and recommendation of potential candidates to become officers of the Company.

The Nominating and Corporate Governance Committee reviews the Company’s Code of Ethics and Business Conduct and its enforcement and reviews and recommends to the Board whether waivers should be made with respect to such Code. A copy of the Nominating and Corporate Governance Committee Charter may be found on our website at www.carrizo.com under “About Us -Governance.”

The Board of Directors held five meetings during 2017 and transacted business on nine occasions during the year by unanimous written consent. During 2017, each director, except Ms. Aldrich Sevilla-Sacasa, attended at least 75% of the aggregate of the total number of Board of Directors’ meetings and of meetings of committees of the Board of Directors on which they served that were held during their service on the Board of Directors. Ms. Aldrich Sevilla-Sacasa was appointed to the Board in March 2018 and is standing for election by shareholders for the first time at the 2018 Annual Meeting.

Non-employee directors ordinarily meet in executive session without management

present at most regularly scheduled Board meetings. Additionally, the independent directors periodically meet without management or non- independent directors present at regularly scheduled Board meetings and may meet at other times at the discretion of the Lead Independent Director, a majority of the independent directors, any committee of the Board of Directors or the entire Board of the Directors.

The Company does not have a policy regarding director attendance at annual meetings of shareholders. All of the Company’s directors attended the 2017 Annual Meeting of Shareholders in person.

The Board of Directors generally oversees risk management, and the Chief Executive Officer and other members of executive management generally manage the material risks that we face. The Board of Directors focuses on the most significant risks facing the Company and the Company’s general risk management strategy, and also ensures that risks undertaken by the Company are consistent with the Board’s risk tolerance.

Responsibility for risk oversight generally rests with the entire Board of Directors. Risks falling within this area would include but are not limited to business ethics, general business

and industry risks, operating risks and financial

risks. We have not concentrated responsibility for all risk management in a single risk management officer, but rather rely on various executive and other management personnel to understand, assess, mitigate and generally manage material risks that we face in various areas including capital expenditure plans, liquidity, operations and health, safety and environmental. These personnel report to the Board of Directors, as appropriate, regarding material risks and our management of those risks. The Board of Directors monitors the risk management information provided to it and provides feedback to management from time to time.

The standing committees of the Board assist the Board of Directors in managing specific risk areas. The Audit Committee assists the Board of Directors in oversight of the integrity of the Company’s financial statements and various matters relating to our publicly available financial information and our internal auditors and independent registered public accounting firm. The Audit Committee also evaluates related party transactions and potential conflicts of interest. The Audit Committee receives information from our employees and others regarding public disclosure, our internal controls over financial reporting and material violations of law. Certain risks associated with

our governance fall within the authority of the Nominating and Corporate Governance Committee, which is responsible for evaluating independence of directors and Board candidates. Risks associated with retaining and incentivizing management fall within the scope of the authority of the Compensation Committee, which assists the Board of Directors in reviewing and administering compensation, benefits, incentive and equity-based compensation plans. These committees receive reports from management periodically regarding management’s assessment of risks and report regularly to the full Board of Directors.

The Company’s bylaws provide that in an election of directors at a meeting of shareholders at which a quorum is present, (a) if the number of nominees exceeds the number of directors to be elected (a “contested election”), the members of the Board of Directors that are elected by shareholders will be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at such meeting and (b) in an election of directors that is not a contested election (an “uncontested election”), the members of the Board of Directors that are elected by shareholders shall be elected by a majority of the votes cast by the holders of shares entitled to vote in the election of directors at such meeting. For purposes of the bylaws, in an uncontested election of directors a “majority of votes cast” shall mean that the number of shares voted “for” a director exceeds the number of votes cast “against” that director. The Company’s Code of Ethics and Business Conduct provides that, as a condition to being nominated to continue to

serve as a director, whether by the Board of Directors or by shareholder, an incumbent director nominee will agree that if such incumbent director nominee fails to receive the required vote for election to the Board of Directors at the next meeting of the shareholders of the Company at which such nominee faces re-election, he or she will submit to the Board of Directors an irrevocable letter of resignation that would be effective upon, and only in the event that the Board of Directors accepts, such resignation.

The Board of Directors will decide whether to accept or reject such resignation, or whether other action should be taken, taking into account the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors and will publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results.

The Nominating and Corporate Governance Committee developed and recommended to the Board a Code of Ethics and Business Conduct, which the Board has adopted. The

Code of Ethics and Business Conduct is applicable to all employees, officers and directors and satisfies the requirements of NASDAQ Listing Rule 5610. Any waiver of, or

amendment to, the Code of Ethics and Business Conduct of the Company may be approved only by the Board and will be promptly disclosed as required by law, the regulations of the SEC, and the NASDAQ Stock Market Rules. Such waivers will be disclosed promptly by posting to our website. The Nominating and Corporate Governance

Committee also reviews and may recommend to the Board waivers of, or amendments to, the Code of Ethics and Business Conduct. The Code of Ethics and Business Conduct is available on the Company’s website at www.carrizo.com under “About Us -Governance.”

Shareholders may communicate with the Board by submitting their communications in writing, addressed to the Board as a whole or, at the election of the shareholder, to one or more specific directors, c/o Corporate Secretary, Carrizo Oil & Gas, Inc., 500 Dallas Street, Suite 2300, Houston, Texas 77002.

The Audit Committee of the Board of Directors has established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or

auditing matters. Shareholders who wish to submit a complaint under these procedures should submit the complaint in writing to: F. Gardner Parker, Chairman of the Audit Committee, Carrizo Oil & Gas, Inc., 500 Dallas Street, Suite 2300, Houston, Texas 77002. The Company also has a hotline by which employees can confidentially communicate illegal and unethical activities including concerns or complaints regarding the matters noted above. The phone number is 877-888-0002.

In assessing the qualifications of candidates for director, the Nominating and Corporate Governance Committee considers, in addition to qualifications set forth in the Company’s bylaws, each potential nominee’s personal and professional integrity, experience, reputation, skills, ability and willingness to devote the time and effort necessary to be an effective board member, and commitment to acting in the best interests of the Company and its shareholders. The Nominating and Corporate Governance Committee also considers requirements under the listing standards of the NASDAQ Stock Market for a majority of independent directors, as well as qualifications applicable to membership on Board committees under the listing standards and various regulations. The Nominating and Corporate Governance Committee makes recommendations to the Board, which in turn makes the nominations for consideration by the shareholders.

Ms. Aldrich Sevilla-Sacasa was appointed to the Board in March 2018 and is standing for election by shareholders for the first time at the 2018 Annual Meeting. Ms. Aldrich Sevilla-Sacasa was recommended to the Nominating and Corporate Governance Committee by a non-employee director. After considering other candidates and finding that Ms. Aldrich Sevilla-Sacasa was independent under NASDAQ rules, the Nominating and Corporate Governance Committee recommended Ms. Aldrich Sevilla-Sacasa to the full Board, which in turn elected her as a director.

Suggestions for potential nominees for director can come to the Nominating and Corporate Governance Committee from a number of sources, including incumbent directors, officers, executive search firms and others. The extent to which the Nominating and Corporate Governance Committee dedicates time and resources to the consideration and evaluation of any potential nominee brought to its attention depends on the information available to the Nominating and Corporate Governance Committee about the qualifications and suitability of the individual, viewed in light of the needs of the Board of Directors, and is at the Nominating and Corporate Governance Committee’s discretion. Recognizing the contribution of incumbent directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and, therefore, provide an increasing contribution to the Board as a whole, the Nominating and Corporate Governance Committee reviews each incumbent director’s qualifications to continue on the Board in connection with the selection of nominees to take office when that director’s term expires, and conducts a more detailed review of each director’s suitability to continue on the Board following expiration of the director’s term.

In addition, the Nominating and Corporate Governance Committee’s policy is that it will consider candidates for the Board recommended by shareholders. Any such recommendation

should include the candidate’s name and qualifications for Board membership and should be submitted in writing to the Corporate Secretary, Carrizo Oil & Gas, Inc.,500 Dallas Street, Suite 2300, Houston, Texas 77002, along with:

Although the Nominating and Corporate Governance Committee will consider candidates recommended by shareholders, it

may determine not to recommend that the Board, or the Board may determine not to, nominate those candidates for election to the Board of Directors.

Our Code of Ethics and Business Conduct provides that as a condition to being nominated to continue to serve as a director, whether by the Board or by a shareholder, an incumbent director nominee will agree that if such incumbent director nominee fails to receive the required vote for election to the Board at the next meeting of the shareholders of the Company at which such nominee faces re-election, he or she will submit to the Board an irrevocable letter of resignation that would be effective upon, and only in the event that the Board accepts, such resignation.

The Nominating and Corporate Governance Committee considers diversity in identifying nominees for director and endeavors to have a Board representing diverse experience in areas that will contribute to the Board’s ability to perform its roles relating to oversight of the Company’s business, strategy and risk exposure worldwide. For example, the Nominating and Corporate Governance Committee takes into account, among other things, the diversity of business, leadership and personal experience of Board candidates and determines how that experience will serve the best interests of the Company.

The Board of Directors has nominated for election as directors at the Annual Meeting the eight nominees named below. If elected, each nominee will serve until the 2019 Annual Meeting of Shareholders or until their successors have been elected and qualified or until their death, resignation or removal.

The Board of Directors has no reason to believe that any nominee for election as a director will not be a candidate or will be unable to serve, but if for any reason one or more of

these nominees is unavailable as a candidate or unable to serve when election occurs, the persons designated as proxies on the enclosed proxy card, in the absence of contrary instructions by shareholders, will in their discretion vote the proxies for the election of any of the other nominees or for a substitute nominee or nominees, if any, selected by the Board of Directors.

Each nominee brings a strong and unique background and set of skills to the Board of

Directors, giving the Board of Directors as a whole, competence and experience in a wide variety of areas, including corporate governance and board service, executive management, corporate finance and financial markets, investment, the oil and gas industry, and civic leadership. Information regarding the

business experience and qualifications of each nominee is provided below. All nominees are currently serving as directors and are standing for re-election by the shareholders, except in the case of Ms. Aldrich Sevilla-Sacasa, who joined our Board of Directors in March 2018 and is a first-time candidate for election.

		Thomas L. Carter, Jr. Independent Age: 66 Director Since: 2005 Committees: Audit and Nominating and Corporate Governance (Chair)

Principal Occupation

President, Chairman and Chief Executive Officer,

Black Stone Minerals, L.P.

Recent Business Experience

Mr. Carter has served as President, Chief Executive Officer and Chairman of the general partner of Black Stone Minerals, L.P., a publicly traded mineral acquisition and management company (“BSM”), since its formation in 2014. Mr. Carter is the founder of Black Stone Minerals Company, L.P. (“BSMC”), BSM’s predecessor, and has served as President, Chief Executive Officer and Chairman of its general partner since 1998. Mr. Carter served as Managing General Partner of W.T. Carter & Bro. from 1987 to 1992 and Black Stone Energy Company from 1980 to present, both of which preceded BSMC’s general partner. Mr. Carter founded Black Stone Energy Company, BSMC’s operating and exploration subsidiary, in 1980. From 1978 to 1980, Mr. Carter served as a lending officer in the Energy Department of Texas Commerce Bank in Houston, Texas, after serving in various other roles from 1975. He has served as a Trustee of St. Edward’s University since 2009. Mr. Carter served as a trustee of a nonprofit from 1998 to 2017, including a four-year term as president of the board of trustees from 2013 to 2017, and presently serves as trustee emeritus of such nonprofit. Mr. Carter also serves on the University of Texas at Austin Internal Audit Committee and the University Lands Advisory Board. Mr. Carter received M.B.A. and B.B.A. degrees from the University of Texas at Austin.

Other Current Public Company Directorships

Black Stone Minerals, L.P.

Public Company Directorships Within the Past Five Years

None

Reasons for Nomination

Mr. Carter brings to the Board of Directors extensive knowledge of the oil and gas exploration and production business and knowledge of accounting and finance.

Principal Occupation

Retired

Recent Business Experience

Mr. Fulton served as President and Chief Executive Officer of Frontier Drilling ASA, an offshore oil and gas drilling and production contractor, from September 2002 through July 2010. From December 2001 to August 2002, Mr. Fulton managed personal investments. Prior to December 2001, Mr. Fulton spent most of his business career in the energy service and contract drilling industry. He served as Executive Vice President and Chief Financial Officer of Merlin Offshore Holdings, Inc. from August 1999 until November 2001. From 1998 to June 1999, Mr. Fulton served as Executive Vice President of Finance for R&B Falcon Corporation, during which time he was instrumental in effecting the merger of Falcon Drilling Company with Reading & Bates Corporation to create R&B Falcon Corporation and the merger of R&B Falcon Corporation with Cliffs Drilling Company. He graduated with a B.S. degree in Accountancy from the University of Illinois and an M.B.A. in finance from Northwestern University.

Other Current Public Company Directorships

None

Public Company Directorships Within the Past Five Years

Basic Energy Services, Inc.

Reasons for Nomination

Mr. Fulton brings to the Board of Directors extensive knowledge of the oil and gas exploration and production business and accounting and finance gained through his roles in executive positions at numerous public and private companies.

		Roger A. Ramsay Independent Age: 79 Director Since: 2004 Committees: Audit and Compensation (Chair)

Principal Occupation

Retired

Recent Business Experience

Mr. Ramsey served as Managing Partner of Ramjet Capital Ltd., a private investment firm, from 1999 through January 2013. He served as the Chairman and Chief Executive Officer of MedServe, Inc., a privately held medical waste disposal and treatment company, from 2004 through December 2009. He served as Chairman of the Board of Allied Waste Industries, Inc., a waste recycling, transportation and disposal company, from October 1989 through his retirement in December 1998, and Chief Executive Officer of that company from October 1989 through July 1997. Beginning in 1960, Mr. Ramsey, a certified public accountant, was employed by the international accounting firm of Arthur Andersen LLP. In 1968, Mr. Ramsey co-founded Browning-Ferris Industries, Inc., a waste management company, and served as its Vice President and Chief Financial Officer until 1978. Mr. Ramsey also served as a director of WCA Waste Corporation, a waste management company, from June 2004 through March 2012 when the company was taken private. Mr. Ramsey is currently a member of the Board of Trustees at Texas Christian University.

Other Current Public Company Directorships

None

Public Company Directorships Within the Past Five Years

None

Reasons for Nomination

Mr. Ramsey brings to the Board of Directors experience and perspective as chief executive officer of several publicly traded and private companies and knowledge of accounting and finance as a director of several public and private companies.

Principal Occupation

President and Director, A-Texian Compressor, Inc.

Recent Business Experience

Mr. Wojtek is a founder and currently the President and a Director of A-Texian Compressor, Inc., a natural gas compression services company, and has served in various capacities with that company since July 2004. In addition, Mr. Wojtek is a landowner and actively manages several ranch properties with oil and gas mineral rights, which total over 34,000 acres in South and West Texas. Mr. Wojtek served as our Chief Financial Officer, Vice President, Secretary and Treasurer from 1993 until August 2003. From 1992 to 1997, Mr. Wojtek was the Assistant to the Chairman of the Board of Reading & Bates Corporation, an offshore drilling company. Mr. Wojtek has also held the positions of Vice President, Secretary and Treasurer of Loyd & Associates, Inc., a private financial consulting firm, from 1989 to 2013. Mr. Wojtek held the positions of Vice President and Chief Financial Officer of Griffin-Alexander Drilling Company from 1984 to 1987, Treasurer of Chiles-Alexander International Inc. from 1987 to 1989, and Vice President and Chief Financial Officer of India Offshore Inc. from 1989 to 1992, all of which were companies in the offshore drilling industry. Mr. Wojtek holds a B.B.A. in Accounting with Honors from The University of Texas at Austin.

Other Current Public Company Directorships

None

Public Company Directorships Within the Past Five Years

None

Reasons for Nomination

Mr. Wojtek brings to the Board of Directors knowledge of the Company and the energy industry by virtue of his service as a prior executive officer and director of the Company since its founding, experience in accounting and experience in financial executive positions at public and private companies, management experience and knowledge in the oil and gas services industry, as well as knowledge and experience in the industry from a land and mineral owner perspective.

The Company’s non-employee director compensation, which is reviewed and approved annually by the Compensation Committee, consists of a combination of cash and equity-based compensation designed to attract and retain qualified individuals to serve on the Board and align the interests of directors with those of our shareholders. In determining the level of non-employee director compensation, the Compensation Committee considers the significant amount of time directors spend fulfilling their duties as well as the competitive market for skilled directors. The annual service period for our directors is the period from one shareholders meeting to the next with cash compensation generally paid on a quarterly basis and equity awards granted upon joining the Board and after each annual shareholder meeting. The Company also reimburses travel, meal and lodging expenses incurred by our non-employee directors to attend Board and

committee meetings and director education programs. Mr. Johnson, our President and Chief Executive Officer and only employee director, does not receive additional compensation for serving on the Board.

The Compensation Committee engages Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent compensation consultant to annually review non-employee director compensation based on an analysis of the compensation paid to the non-employee directors of companies included in the same compensation peer group used to determine executive compensation.

After considering Pearl Meyer’s 2017 review of non-employee director compensation, in March 2017, the Compensation Committee approved the following non-employee director compensation for the 2017-2018 director term.

After considering Pearl Meyer’s 2018 review of non-employee director compensation, in March 2018, the Compensation Committee approved a number of changes to the Company’s non-employee director compensation program for the 2018-2019 director term which will reduce complexity and variability, enhance current and long-term competitiveness of program and align with peer and industry practices. These changes include converting

from a fixed share approach to fixed value approach to granting non-employee director equity awards, eliminating board and committee meeting fees and increasing the equity component to 50% of total compensation. The non-employee director compensation for the 2018-2019 director term that was approved by the Compensation Committee in March 2018 is summarized below.

Non-employee directors must own shares equal to three times their annual cash retainer. Upon appointment as a non-employee director, the individual has a five year period in which to

comply with the ownership guidelines. As of March 23, 2018, all non-employee directors were in compliance with the stock ownership guidelines.

Brad Fisher has served as Vice President and Chief Operating Officer since March 2005. Prior to that time, he served as Vice President of Operations since July 2000 and General Manager of Operations from April 1998 to June 2000. Prior to joining us, Mr. Fisher spent 14 years with Cody Energy and its predecessor Ultramar Oil & Gas Limited where he held various managerial and technical positions, last serving as Senior Vice President of Engineering and Operations. Mr. Fisher holds a B.S. degree in Petroleum Engineering from Texas A&M University.

David L. Pitts has served as Vice President and Chief Financial Officer since August 2014. Mr. Pitts also served as Treasurer from August 2014 to March 2015 and Vice President and Chief Accounting Officer from January 2010 to September 2014. Prior to joining us, he served as an audit partner with Ernst & Young LLP. Prior to his employment at Ernst &Young LLP from 2002 to 2009, Mr. Pitts was a senior manager with Arthur Andersen. Mr. Pitts is a CPA and holds a B.S. in Accounting and Business from Southwest Baptist University.

Gerald A. Morton has served as General Counsel and Vice President of Business Development of the Company since 2008. Prior to joining the Company, Mr. Morton spent 15 years with Pogo Producing Company, where he held various positions including Vice President – Law, Corporate Secretary, and

Senior Vice President for Asia and Pacific operations. Mr. Morton began his oil industry career in 1982 working for Texaco as a geophysicist. Mr. Morton graduated from Brigham Young University with an Engineering Geology degree. He received his MBA in Finance in 1985 and a law degree in 1988, both from the University of Houston.

Richard H. Smith has served as Vice President of Land since August 2006. Prior to joining us, Mr. Smith held the position of Vice President of Land for Petrohawk Energy Corporation from March 2004 through August 2006. Mr. Smith served with Unocal Corporation from April 2001 until March 2004 where he held the position of Land Manager — Gulf Region USA with areas of concentration in the Outer Continental Shelf, Onshore Texas and Louisiana and Louisiana State Waters. From September 1997 until March 2001 Mr. Smith held the position of Land Manager — Gulf Coast Region with Basin Exploration, Inc. Mr. Smith held various land management positions with Sonat Exploration Company, Michel T. Halbouty Energy Co., Pend Oreille Oil & Gas Company and Norcen Explorer, Inc. from the time he began his career in 1980 until the time he joined Basin Exploration. Mr. Smith is a Certified Professional Landman with a B.B.A. in Petroleum Land Management from the University of Texas at Austin.

Gregory F. Conaway has served as Vice President and Chief Accounting Officer since September 2014. Mr. Conaway joined the Company in July 2011 serving as Assistant Controller — Financial Reporting and served as Controller — Financial Reporting from May 2012 to September 2014. Prior to joining us,

Mr. Conaway worked for Ernst & Young LLP, holding positions of increasing responsibility including senior manager. Mr. Conaway began his career with Arthur Andersen in 1998. Mr. Conaway is a CPA and holds a M.B.A. and B.B.A. in Accounting from Angelo State University.

The Compensation Committee oversees our compensation programs. Our compensation programs are designed to specifically address our desire to motivate and retain all of our employees.

Our executive compensation program is designed to pay our Named Executive Officers a significant amount of their compensation in equity of the Company in order to incentivize them to consistently build long-term shareholder value and to align the interests of our executives with those of our shareholders. The following Compensation Discussion and Analysis explains how the Compensation Committee has structured our executive compensation program to achieve these objectives.

Although this section of the proxy statement specifically addresses the compensation program of our Named Executive Officers, we are focused on the compensation of all of our employees and structuring all of our compensation programs to reward behavior that we believe will ultimately increase shareholder value, and the Compensation Committee considers compensation programs of all of our employees with the focus of tying a substantial portion of compensation to the Company’s performance and creation of shareholder value.

2017 was a transformational year for the Company as we acquired a large position in the core of the Delaware Basin and divested

substantially all of our assets in the Marcellus and Utica and signed purchase and sale agreements to sell substantially all of our

assets in the Niobrara and a portion of our assets in the Eagle Ford, both of which closed in January 2018. Even considering the divestitures, our management team was able to deliver another year of significant production and reserve growth in 2017.

Summarized below are further details as well as additional key financial and operational highlights that we accomplished during 2017.

The following graph presents a comparison of total shareholder returns of the Company’s Common Stock, the average returns of our 2016 and 2017 compensation peer groups, and the S&P 500 and Dow Jones U.S. Exploration

and Production indexes, assuming an investment of $100 (with reinvestment of all dividends) was invested on December 31, 2012.

Although our total shareholder return declined during 2017, we continued to outperform our 2016 and 2017 compensation peer groups over the cumulative five-year period. We view this as a testament to management’s ability to

position the Company for success. See “Executive Compensation Program Objectives—Compensation Should Be Benchmarked” for information about our 2016 and 2017 Compensation Peer Groups.

The Compensation Committee reviews and adjusts the compensation of our executives each year to ensure continued alignment with the goals and objectives of the Company, as well as motivate executives to maximize long-

term value creation for our shareholders. This has been accomplished by continuing to weight a significant portion our executive compensation towards at-risk, variable compensation.

Our CEO’s variable, at-risk compensation consists of a performance based annual incentive bonus, RSUs, Cash SARs, and performance shares. As such, our CEO’s realizable compensation varies significantly based on the Company’s share price as well as the Company’s performance relative to the

annual incentive bonus performance metric targets. Realizable compensation is not a substitute for targeted compensation in evaluating our executive compensation, but we believe it is important to understand the impact the Company’s performance and share price has on our realizable compensation.

We believe that the differences in our CEO’s target compensation and realizable compensation effectively illustrate the high correlation between the Company’s performance and share price and our CEO’s realizable compensation.

At our 2017 Annual Meeting of Shareholders, holders of 96.4% of the shares entitled to vote on the matter voted in favor of the compensation of the Named Executive Officers as described in our 2017 proxy statement. The Compensation Committee interpreted this strong level of shareholder support as affirmation of the elements and objectives of the Company’s executive compensation program. Although the results of this advisory vote indicated that no change to our executive compensation program was necessary, the Compensation Committee also considered

information provided by its independent compensation consultant, including compensation decisions made by the compensation committees of companies included in our 2017 compensation peer group, when determining whether changes to our executive compensation program were necessary in 2018. The Compensation Committee will continue to consider the results of the annual shareholder advisory vote on executive compensation when making future executive compensation decisions.

Provide competitive total compensation opportunities that allow us to attract, retain, reward and motivate talented management. We evaluate the range of current industry compensation practices to provide external benchmarks that help to guide our executive compensation structure. Unless circumstances warrant otherwise, we generally target executive total direct compensation near the market median of executives in equivalent positions at comparable companies, considering individual performance, responsibilities, experience, leadership and contributions as well as the Company’s financial, operational and share price performance.

Support a performance-based culture. Our executive compensation program is intended to provide the appropriate balance between fixed and variable compensation, cash and equity compensation, and short-term and long-term incentives with the majority of each executive’s total compensation “at risk” or variable based on a combination of attainment of short-term goals in support of our Company’s long-term strategy and long-term stock performance

providing absolute and relative total shareholder returns. Our program is structured to require a commitment to performance because total compensation at the market is not guaranteed. Therefore, our program is designed to reward above-target compensation when performance is warranted and below-target compensation when performance does not meet expectations.

Align our executives’ interests with those of our shareholders. We believe that we achieve alignment of executives’ and shareholders’ interests by providing a substantial portion of total compensation in the form of long-term equity-based incentives that tie executive pay to stock price performance and through stock ownership guidelines that ensure our executives have a meaningful ownership stake during their tenure.

Encourage appropriate risk management. We believe that effective leadership requires taking prudent business risks while discouraging excessive risk-taking. To encourage this balance, we have structured our compensation programs to include three- year vesting schedules on long-term equity-

based incentive awards and an annual incentive bonus using a combination of short-term financial and operational objectives. We also mitigate risk by exercising discretion in determining the payout of annual incentive

bonuses rather than relying solely on a formula. We regularly review our compensation programs to ensure that our executives are not encouraged to take inappropriate or excessive risks.

The Compensation Committee oversees the Company’s compensation programs, administers the Company’s 2017 Incentive Plan, the Prior Incentive Plan, and the Cash SAR Plan, and reviews and approves all compensation decisions relating to our executives. The Compensation Committee is authorized by the Board of Directors and the

Compensation Committee’s Charter to make all the decisions regarding compensation for executives without ratification or other action by the Board of Directors. The Compensation Committee also advises the Board of Directors on the adoption of policies that govern the Company’s compensation programs.

Pearl Meyer serves as independent compensation consultant for and reports directly to the Compensation Committee. Representatives of Pearl Meyer attend Compensation Committee meetings, as requested, and communicates with the Compensation Committee between meetings. Pearl Meyer assists and advises the Compensation Committee on all aspects of our executive compensation program. Services provided by the independent compensation consultant include:

To facilitate the delivery of these services to the Compensation Committee, Pearl Meyer interfaces with our management, particularly our CFO and our Vice President of Human Resources. In 2017, Pearl Meyer did not provide any services to the Company other than those requested by the Compensation Committee and related to Pearl Meyer’s engagement as the independent compensation consultant to the Compensation Committee.

Other than those services requested by the Compensation Committee, Pearl Meyer did not have any business or personal relationships with members of the Compensation Committee or executives of the Company, did not own any of the Company’s Common Stock and maintained policies and procedures designed to avoid such conflicts of interest. As such, the Compensation Committee determined the engagement of Pearl Meyer in 2017 did not create any conflicts of interest.

The Compensation Committee engages Pearl Meyer to annually review the compensation peer group used for executive compensation decisions. Pearl Meyer’s process considers the

prior year compensation peer group as the starting point, and expands the pool of potential peers by reviewing peers of peers,

peers identified by proxy advisory firms and other peers identified from analyst reports and independent research. Pearl Meyer refines their list of potential peers using criteria such as industry focus, corporate structure, operational similarity and financial size with a focus on identifying a peer group of 15-20 domestic independent exploration and production companies with operations in the same basins and where the Company is within a reasonable range of the peer group median for revenues and/or market capitalization with final peer group selections made after considering input from management. The resulting compensation peer group, along with any changes in the composition of the peer group, are reviewed and approved by the Compensation Committee.

The compensation peer groups used for executive compensation decisions in 2016,

2017 and 2018 are presented in the table below. From 2016 to 2017, one company was removed and one company was added in order to maintain a peer group of companies that met the financial size criteria discussed above. From 2017 to 2018, five companies were removed due to a lack of operational similarity as a result of the Company’s sale of its Utica, Marcellus and Niobrara assets. In order to maintain an appropriately sized peer group, six companies were added that met the operational similarity, financial size and other criteria discussed above. A separate peer group is used in connection with our performance share awards as described below under “Executive Compensation Components—Long-Term Equity-Based Incentive Awards—Performance Shares.”

The Compensation Committee considers the results of Pearl Meyer’s executive compensation review to ensure that compensation decisions are appropriate, reasonable and consistent with the Company’s compensation program objectives and competitive with executive compensation of companies against which we compete for business opportunities, investment dollars and executive talent. To maintain independence and objectivity, the input and interpretation of data sources, methodology of consolidating data, and marketplace statistics included in Pearl Meyer’s executive compensation review were compiled without any

input from management except for explanations of position functions.

The market-based compensation data included in Pearl Meyer’s executive compensation review is based on compensation peer group proxy compensation data and published industry compensation survey data. Proxy data is generally favored over survey data with the weighting based on the number of position matches available in the compensation peer group. Pearl Meyer’s 2017 executive compensation review was based on the following weighting:

The charts below show the 2017 targeted total direct compensation mix of our Chief Executive Officer and other Named Executive Officers. As the charts illustrate, 88% and 83% of targeted total compensation for our Chief Executive

Officer and other Named Executive Officers, respectively, is attributable to the performance-based annual incentive bonus and long-term equity-based incentive awards, and thus is variable and tied to performance (i.e. “at risk”).

Base salary is intended to provide a foundation of executive compensation that recognizes the level of responsibility and authority of each individual executive and compensates the individual executive for day to day contributions to our success. Unless circumstances warrant otherwise, we generally target base salaries near the 50th percentile of executives in equivalent positions at comparable companies.

After considering the recommendations of our CEO for adjustments to base salaries for executives other than himself and competitive market data provided by its independent compensation consultant, in March 2017, the Compensation Committee approved the 2017 base salaries of the Named Executive Officers as set forth below. Changes in base salaries are generally effective April 1 of each year, unless otherwise noted.

Executives are eligible for an annual incentive bonus which is designed to focus executives on achieving our annual corporate plan linked to our strategy. Execution against our annual corporate plan is important to drive long term shareholder value by improving financial strength, managing costs, and investing in projects that will deliver future value. We employ balanced financial and operational performance metrics to further specific objectives of our strategy, such crude oil production growth, cost management and capital efficiency.

Annual incentive bonus targets, expressed as a percentage of base salary, are established for each executive. Each executive’s annual incentive bonus payout opportunity ranges

from zero to 200% of target based on the Company’s actual results relative to performance metric targets. Actual annual incentive bonuses paid could be more or less than the calculated payout as determined by the Compensation Committee in its discretion.

After considering the recommendations of our CEO for adjustments to annual incentive bonus targets for executives other than himself and competitive market data provided by its independent compensation consultant, in March 2017, the Compensation Committee approved the 2017 annual incentive bonus targets of the Named Executive Officers as set forth below, which remained unchanged from 2016:

Each year, the Compensation Committee approves the annual incentive bonus performance metrics, weighting factors and targets after considering input from its independent compensation consultant, including a review of the annual incentive bonus performance metrics used by companies included in our compensation peer group.

The table below sets forth the performance metrics, weighting factors and targets for executives’ 2017 annual incentive bonus, which were approved by the Compensation Committee in March 2017, along with the Company’s 2017 actual results and payout levels achieved. The performance metric targets were based on the Company’s 2017 corporate plan and consistent with the

Company’s 2017 annual guidance included in its February 23, 2017 press release, except that the target for cash G&A excluded annual bonuses due to the uncertainty, at the time the guidance was issued, regarding the portion of annual bonuses to be paid with stock in lieu of cash. The 2017 performance metrics and targets set forth below are also consistent with those established for non-executive employees’ 2017 annual incentive bonus (other than cash G&A which is not a performance metric for non-executive employees). The Company separated cash G&A expense and lease operating expense performance metrics in 2017 to be consistent with the Company’s 2017 annual guidance, as described above.

Our 2017 target for drill-bit finding and development cost was $13.00/Boe, which reflects a 14% increase from our 2016 actual drill-bit finding and development cost of

$11.40/Boe. This increase is primarily due to the impact of increased services costs in response to higher crude oil prices in 2017 as compared to 2016.

Despite 2017 actual results achieving 133% of targeted performance, considering the Company’s recent share price performance, management recommended, and the Compensation Committee approved, the exercise of negative discretion to reduce the

payout to 125% of target. The actual 2017 annual incentive bonuses, which were paid to Named Executive Officers in March 2018, along with the 2017 annual incentive bonus targets, are set forth below:

The table below sets forth the performance metrics, weighting factors and targets for executives’ 2018 annual incentive bonus, which were approved by the Compensation Committee in March 2018.

The performance metric targets were based on the Company’s 2018 corporate plan and consistent with the Company’s annual guidance included in its February 26, 2018 press release. The 2018 performance metrics and targets set forth below are also consistent with those established for non-executive employees’ 2018 annual incentive bonus (other than cash G&A which is not a performance metric for non-executive employees).

Our 2018 target for cash G&A is $53.5 million, 35% higher than the 2017 actual cash G&A of $39.7 million shown above. This is primarily due to excluding annual bonuses from our 2017 target for cash G&A (and therefore also excluding annual bonuses from the 2017 actual results shown above) as well as the impact of the Company’s August 2017 acquisition of properties in the Delaware Basin. This acquisition and associated increase in drilling and completion activity resulted in an increase in employee headcount in late 2017 with an additional increase in employee headcount expected in 2018.

In determining the payout achieved for our annual incentive bonus, actual results and performance metric targets are adjusted to exclude the impacts of acquisitions and divestitures. This eliminates any benefit or detriment to the payout as a result of transactions that were not anticipated at the time the performance metric targets were established. In addition, because of such adjustments, actual results shown above may not agree with the related amounts included in the Company’s consolidated financial statements.

While we do not include total shareholder return, return on capital employed or other return based performance metric in our annual incentive bonus program, we believe that the Company’s performance relative to target for oil production, operating costs and capital efficiency related performance metrics are key drivers of our share price performance. Although very few of the companies in our compensation peer group currently include return based performance metrics in their annual incentive bonus program, we will continue to monitor our compensation peer group to identify changes in practice.

The objectives of our long-term incentive plan are to attract and retain the services of executives, encourage a sense of proprietorship, stimulate the active interest in our development and financial success, and align their interests with those of our shareholders. We intend to achieve these objectives by granting awards designed to provide our executives with a meaningful proprietary interest in our growth and performance.

One of the fundamental philosophies of our compensation program is that all of our full-time employees are eligible for grants of long-term equity incentive awards, which consist entirely of RSUs. The Compensation Committee believes that long-term equity-based incentive awards give employees a direct interest in the financial results and performance of the Company, furthering our goal of aligning the interests of each employee with those of our shareholders.

Determining the Amount of Long-Term Equity-Based Incentive Compensation

Unless circumstances warrant otherwise, the amount of long-term incentives granted to each executive is generally based on the amount that results in targeted total direct compensation near the market median of

executives in equivalent positions at comparable companies, considering individual performance, responsibilities, experience, leadership and contributions as well as the Company’s financial, operational and share price performance.

Allocating Amount of Long-Term Equity-Based Incentive Compensation Among Award Types

In 2017, the amount of long-term equity-based incentive awards granted to executives was allocated 65% to RSUs, 25% to SARs to be settled in cash (“Cash SARs”) and 10% to performance shares. In the Compensation Committee’s opinion, awards of RSUs provide an effective retention incentive and therefore, long-term incentive compensation has historically been weighted more towards RSUs than other types of awards.

We believe this combination of long-term equity-based incentive awards provides incentives that capture absolute total shareholder return as well as total shareholder return relative to companies included in our stock performance peer group and are generally consistent with the types of long-term equity-based incentive awards used by companies included in our compensation peer group.

After considering the recommendations of our CEO for long-term equity based incentive awards for executives other than himself and competitive market data provided by its independent compensation consultant, on

March 23, 2017, the Compensation Committee approved the 2017 grants of long-term equity based incentive awards to the Named Executive Officers as set forth below.

All 2017 long-term equity-based incentives awarded to executives included a performance condition designed to allow the Company to avail itself of the benefits of an exemption to the deduction limits of Section 162(m) of the Internal Revenue Code, which is described below under “Tax Deductibility of Executive Compensation.” The performance condition established by the Compensation Committee for the 2017 long-term equity based incentive awards was average daily production of the Company for the quarter ended June 30, 2017 of at least (a) 27,455 barrels of oil per day (“Bbls/d”), if the Company’s average realized crude oil price was greater than or equal to $40 per Bbl for such quarter, or (b) 21,964 Bbls/d, if the Company’s average realized crude oil price was less than $40 per Bbl for such quarter, in each case excluding the impacts of derivative settlements on the average realized prices and impacts of acquisitions and divestitures on daily production (the “2017 Production Target”). On July 27, 2017, the Compensation Committee certified that the 2017 Production Target was met as average daily production for the quarter ended June 30, 2017 was 33,629 Bbls/d. Because the 2017 Production Target was met, the RSUs, Cash SARs and performance shares will vest as described below, subject to continued employment and,

for performance shares, subject to the market condition described below.

RSUs

The RSUs were granted under the Company’s Prior Incentive Plan with a grant date fair value per RSU of $26.94, the average of the high and low price of the Company’s Common Stock on the March 23, 2017 grant date. The RSUs vest ratably over a three-year period, one-third of which vested on March 17, 2018, and an additional one-third will vest on March 17, 2019 and March 17, 2020.

In addition, on May 17, 2017, the Compensation Committee granted to Mr. Pitts a special long-term equity-based incentive award of 104,559 RSUs with a grant date fair value of $2.5 million. The RSUs were granted under the 2017 Incentive Plan with a grant date fair value per RSU of $23.91, the closing price of the Company’s Common Stock on the grant date. The RSUs will cliff vest on March 17, 2020, subject to Mr. Pitts’ continued employment with the Company. This special award was granted to reflect a market adjustment to Mr. Pitts’ compensation, recognize his significant individual achievements and encourage the retention of his services to the Company. Grants of special

long-term equity based incentive awards to Named Executive Officers are rare, with only three other such awards granted in the past 10 years.

Cash SARs

The Cash SARs were granted under the Company’s Cash SAR Plan at an exercise price of $26.94, the average of the high and low price of the Company’s Common Stock on the March 23, 2017 grant date with a grant date fair value per Cash SAR of $12.00, based on a Black-Scholes-Merton option pricing model. The Cash SARs vest ratably over a two year period, one-half of which vested and became exercisable on March 17, 2018 and the remaining one- half will vest on March 17, 2019. All of the Cash SARs expire March 23, 2022.

Performance Shares

The performance shares were granted under the Company’s Prior Incentive Plan with a grant date fair value per performance share of $35.14, based on a Monte Carlo simulation model calculated as of the March 23, 2017 grant date. The performance shares cliff vest

on March 17, 2020, with the actual number of performance shares to vest ranging from zero to 200% of target based on the Company’s total shareholder return (“TSR”) relative to our 2017 stock performance peer group over an approximate three-year performance period. Linear interpolation will be used to determine the payout multiplier for relative TSR that falls between the percentiles listed above.

The Compensation Committee engages Pearl Meyer to annually review the stock performance peer group used to determine relative TSR for the performance shares. Pearl Meyer follows a process similar to that used to review the compensation peer group except that the selection of companies is not limited to those with a similar financial size and operational similarity is defined as companies with operations in multiple basins similar to the Company with final peer group selections made after considering input from management. The resulting stock performance peer group, along with any changes in the composition of the peer group, are reviewed and approved by the Compensation Committee.

The companies that comprise the stock performance peer groups for 2016, 2017, and 2018 are presented in the table below. From 2016 to 2017, one company was removed as a result of filing bankruptcy. From 2017 to 2018, seven companies were removed due to a lack of operational similarity either as a result of the

Company’s sale of its Utica, Marcellus and Niobrara assets or because the companies did not have operations in multiple basins similar to the Company. In order to maintain an appropriately sized peer group, five companies were added with operations in multiple basins similar to the Company.