reserve potential as well as higher well costs. While Carrizo operates almost all of its Wilcox area projects, portions of these wells are typically sold down to industry partners to reduce costs and offset exploration and operational risk.

The Wilcox Central subgroup area contains Company project areas in Goliad, Lavaca, Dewitt, and Bee Counties, Texas and includes the Cabeza Creek Project Area. The Wilcox South subgroup contains projects in Duval, Live Oak, Webb, Zapata and McMullen Counties, Texas. The Wilcox East subgroup contains projects in Colorado, Jackson, Victoria, Fort Bend and Wharton Counties, Texas.

Wilcox Central -- Goliad, Lavaca, Dewitt, and Bee Counties

The Company was successful on six out of seven wells drilled within the central Wilcox area during 2002 with drilling focused in the Cabeza Creek Project Area. Two successful field extension wells to the "Riverdale #2" discovery well were drilled during 2002, the "Riverdale #1" which commenced production in May 2002 and the "Riverdale #3" well which commenced production in August 2002. Carrizo is the operator of the wells and owns a 68.75% working interest. The Company has eleven additional prospects that are drill-ready within the 8,416 net acre area that the Company plans to further evaluate over the next 12 to 18 months, including six wells expected to be drilled during 2003. The primary targets range from the Lower Wilcox to the expanded Upper Wilcox between 12,000 and 16,000 feet. During 2003, the Company plans to participate in a Lower Wilcox test well. The Company continues to develop prospects within its 957 square mile central Wilcox 3-D database, and is working to secure leases over the areas it believes have the highest potential.

Wilcox South -- Live Oak, Duval, Webb, Zapata, and McMullen Counties

The Company continues to develop prospects within its 562 square mile southern Wilcox 3-D seismic database and is working to secure leases over areas it believes have the highest potential. The primary targets include upper Wilcox through Lobo formations. The Company was successful on both of the wells drilled in the area during 2002, the "S. Marshall Jr. A-2123 #1" and "S. Marshall Jr. A-2123 #2" wells in Duval County, both of which commenced sales in February 2003. The Company operates the wells and owns a 29.25% working interest. The Company plans to drill at least one additional well in this area during 2003 near a recent discovery well drilled by a competitor.

Wilcox East -- Colorado, Jackson, Victoria, Fort Bend, and Wharton Counties

The Company continues to develop prospects within its 274 square mile 3-D database and is working to secure leases over the areas it believes have the highest potential. Targets range from the Lower Wilcox to expanded Upper Wilcox between 12,000 and 16,000 feet. Depending upon the success of leasing efforts, initial drilling could occur in late 2003 or 2004.

TEXAS FRIO/VICKSBURG/YEGUA AREAS

This combined area trend sometimes overlaps but is generally closer to the Texas Gulf Coast than the Wilcox areas discussed above. In any particular target or prospect, the Frio is usually a shallower formation, while the Yegua and Vicksburg are generally relatively deeper formations. Across the Carrizo project areas, prospect targets vary greatly in depth and area distribution. The Company has a total of 2,102 miles of 3-D seismic data over these Frio, Vicksburg and Yegua sands. Several key areas are discussed below which highlight areas of expected focus during 2003 and future years.

Matagorda -- Matagorda County

The Matagorda Project Area currently includes license to 542 square miles of 3-D seismic and 3,951 net acres of current leasehold in Matagorda County, Texas. The Company continued its drilling success during 2002 in the Matagorda Project Area with three successful wells. All three wells were drilled as offsets to the field discovery well, the "Staubach #1" that commenced production in January 2002 at over 17,000 Mcfe per day. The "Burkhart #1R" was completed and commenced production in July 2002 at a gross rate of 1,500 barrels of oil and 8,700 Mcf of natural gas (17,700 Mcfe) per day. Carrizo owns a 35% working interest in the well. In July 2002, the Company spud the "Pauline Huebner A-382 #1" well which Carrizo operates and owns a 45% working interest. This well commenced production in mid-November 2002 at a gross rate of approximately 1,800 barrels of oil and 5,000 Mcf of natural gas (approximately 15,800 Mcfe) per day. The latest successful well, the "Matthes-Huebner #1" well, reached total depth of 12,500 feet on December 17, 2002, logged approximately 60 feet of net pay in the Lower Frio section, and was the first well to have multiple pay zones. Carrizo owns an approximate 32.21% working interest in the well which commenced production in early January 2003 at a gross rate of approximately 2,518 barrels of oil and 7,700 Mcf of natural gas (22,800 Mcfe) per day. These four wells are currently continuing to produce at a combined gross rate of approximately 4,990 barrels of oil

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