CAMP HILL PROJECT

The Company owns interests in eight leases totaling approximately 619 gross acres in the Camp Hill field in Anderson County, Texas. The Company currently operates seven of these leases. During the year ended December 31, 2002, the project produced an average of 58 Bbls/d of 19 API gravity oil. The wells produce from a depth of 500 feet and utilize a tertiary steam drive as an enhanced oil recovery process. Although efficient at maximizing oil recovery, the steam drive process is relatively expensive to operate because natural gas or produced crude is burned to create the steam injectant. Lifting costs during the year ended December 31, 2002 averaged $14.99 per barrel ($2.50 per Mcfe). In response to high fuel gas prices, steam injection was reduced in mid 2000. Because profitability increases when natural gas prices drop relative to oil prices, the project is a natural hedge against decreases in natural gas prices relative to oil prices. The oil produced, although viscous, commands a higher price (an average premium of $1.00 per Bbl during the year ended December 31, 2002) than West Texas intermediate crude due to its suitability as a lube oil feedstock. As of December 31, 2002, the Company had 7.7 MBbls of proved oil reserves in this project, with 750 MBbls of oil reserves currently developed. The Company anticipates drilling additional wells and increasing steam injection to develop the proved undeveloped reserves in this project, with the timing and amount of expenditures depending on the relative prices of oil and natural gas. The Company has an average working interest of 90% in this field and an average net revenue interest of 74%.

WYOMING/MONTANA COALBED METHANE PROJECT AREA

The Company, through CCBM, acquired interests from RMG in certain oil and gas leases covering 233,875 gross acres and 43,711 gross acres in options during 2001 in areas prospective for coalbed methane in the Powder River Basin ("PRB") in southwestern Wyoming and Montana. The Company's working interest ranges from 6.25% to 50.00% in the leases. As consideration for the interests, CCBM paid RMG $7.5 million in the form of a non-recourse promissory note (the "CCBM Note"), secured solely by CCBM's interest in the undeveloped acreage. In addition, the Company committed to spend up to $5.0 million to drill and test coalbed methane wells on this acreage during 2001 through 2003, 50% of which would be spent pursuant to an obligation by Carrizo to fund $2.5 million of drilling costs on behalf of RMG. As of December 31, 2002, the Company has participated in the acquisition and/or drilling of 75 gross wells (28 net) satisfying approximately $3.0 million of the $5.0 million drilling commitment. All of the wells encountered coal accumulations and are in various stages of development and/or stages of production. Coalbed methane wells typically first produce water and then, as the water production declines, begin producing methane gas at an increasing rate. As the wells mature the production peaks and begins declining.

At the "Clearmont Project" in Wyoming, in which CCBM owns an average 50% working interest, 32 wells have been drilled and completed to date, including 19 wells currently on pump in the dewatering stage of development. As there are only a few other coalbed methane projects/wells in the immediate vicinity, the dewatering process has taken longer than originally estimated. All of the wells on pump are producing small amounts of gas consistent with expectations given the current development stage of the project. The gas gathering, compression facilities and sales pipeline are in place, and depending upon the progress of the dewatering process, commercial production could commence in late 2003.

At the 1,940 gross acre "Bobcat Project" in Wyoming, in which CCBM owns an average working interest of approximately 28%, gross production has reached a level of over 2,600 Mcf/d, with wellhead prices in excess of $4.00 per Mcf. Many of the 24 production wells in the project area are still in the dewatering stage and as such, production is expected to increase in the months ahead. In addition to the existing wells, the Company believes that there are numerous additional potential drilling locations which could target the coal seams currently being produced as well as three additional deeper prospective coal seams.

Of the 55,167 net mineral acres held by CCBM as of December 31, 2002, approximately 25,600 net mineral acres are located in the state of Montana. The issuance of new coalbed methane drilling permits in Montana has been temporarily halted pending a final Record of Decision for Montana's Environmental Impact Statement (EIS) which is expected to be issued by the Federal Bureau of Land Management (BLM) in mid-year 2003. The Company anticipates a favorable outcome and as a result new drilling permits could be issued soon and new wells could again be drilled by coalbed methane industry participants in Montana. Opponents of coalbed methane drilling in Montana could continue their legal challenge, but the Company believes that the decision will ultimately be upheld which would allow new coalbed methane development to commence in Montana as early as late 2003. RMG, CCBM's partner and project operator, holds approximately 114 grandfathered drilling permits in Montana for acreage in which CCBM also has an interest. There can be no assurances when, if ever, any new permits will be obtained.

OTHER PROJECT AREAS

In addition to the specific project areas described above, the Company has 15 additional active project areas in various stages of development as of December 31, 2002. These project areas are located in the onshore Texas and Louisiana Gulf Coast regions.

8