We believe this strategy is working well. We continue to advance our technical understanding within our major project areas. We have been very successful with the drillbit, achieving over an 80% success rate in drilling over the last two years. We have added significantly to our prospect inventory, particularly in larger, high impact targets. We believe Carrizo has developed one of the industry's largest inventories of 3-D seismic data and drilling prospects for a company of our size.

 


Specific achievements during 2002 include:

  • Record annual production levels of 7.2 Bcfe, an increase of 34% over 2001.
  • Replacement of over 150% of our 2002 production, resulting in an increase in reserves to 63 Bcfe.
  • Acquisition of 3,174 square miles of 3-D seismic data, an increase of 78% in our in-house data, which should lead to an even greater level of prospect generation.
  • In the fourth quarter, record levels of quarterly production (2.1 Bcfe) and EBITDA ($7.0 million).
  

The record levels of production and cash flow achieved as we exited 2002 point to an exciting year ahead as we are starting with record production volumes at a time when prices are accelerating. Taking a longer term view, our acquisition of   such a large amount  of  additional
3-D seismic data at the end of last year should result in substantial increases in our prospect inventory, the life blood of our company.

We are quite enthusiastic about our 2003 drilling program. We plan to drill a mix of low risk prospects, including three additional wells in

 

 

 

  

Matagorda County early in the year, as well as higher risk, high reserve potential targets located within our major project areas. Our plan exposes us to significant reserve growth while keeping our capital outlay below our internally generated cash flow.

In summary, we believe Carrizo is a particularly well-positioned company whose time is now. Our production volume is reaching record levels at a time when U.S. production is declining and prices are high. We are prospect rich in a prospect poor environment. We have a team that has proved itself and which we believe will continue to produce superior results.

Let us close by thanking the people that make this company work, our management and our shareholders. We appreciate your support.

Sincerely,



     
 

 

 

  

Steven A. Webster
Chairman
  
     

S. P. Johnson, IV
President and CEO