Carrizo Oil & Gas, Inc. is a Houston based independent energy company engaged in the exploration, development and production of natural gas and oil. Our current operations are focused in proven, producing natural gas and oil geologic trends along the onshore Gulf Coast in Texas and Louisiana, primarily in the Miocene, Wilcox, Frio, and Vicksburg trends, and, since mid-2003, in the Barnett Shale area in North Texas.

We have grown our production through our 3-D seismic-driven exploratory drilling program. From our inception through December 31, 2004, we participated in the drilling of 373 wells (119.7 net) with a success rate of approximately 70 percent in our onshore Gulf Coast area and 100 percent in the Barnett Shale area. Exploratory wells accounted for 86 percent of the total wells we drilled.

As a main component of our business strategy, we have acquired licenses for over 9,200 square miles of 3-D seismic data for processing and evaluation. Since 2001, we have been able to increase the size of our 3-D seismic holdings in our onshore Gulf Coast core area by approximately 84 percent to over 7,500 square miles, in large part by taking advantage of very favorable pricing available for nonproprietary data. One of our primary strengths is the experience of our management and technical staff in the development, processing and analysis of this 3-D seismic data to generate and drill natural gas and oil prospects. Our technical and operating employees have an average of over 20 years industry experience, in many cases with major and large independent oil and gas companies. Using our 3-D seismic database, our highly quali.ed technical staff is continually adding to and re.ning our substantial inventory of drilling locations.

We believe that our utilization of large-scale 3-D seismic surveys and related technology allows us to create and maintain a multiyear inventory of high-quality exploration prospects. As of December 31, 2004, we had 159,496 gross acres in Texas and Louisiana under lease or lease option, including 109,129 gross acres in our onshore Gulf Coast area, almost all of which is covered by 3-D seismic data, and 44,835 gross acres in our Barnett Shale area. On this leased acreage, we have identi.ed over 155 potential exploratory drilling locations in our onshore Gulf Coast area, including over 78 additional extension opportunities, depending on the success of our initial drilling activities on those locations. In the Barnett Shale area we have identi.ed over 200 potential exploratory and development horizontal drilling locations.

In 2004, our capital expenditures were $82.6 million, used primarily to drill 71 wells (27.3 net). In 2005, we expect capital expenditures to be approximately $85 to $90 million. We expect to drill 34 wells (14.4 net) in the onshore Gulf Coast area and 37 gross wells (24.0 net) in our Barnett Shale area and 9 gross wells (7.7 net) in our East Texas areas in 2005.

Our other interests include additional properties in East Texas and a coalbed methane investment in the Rocky Mountains. Additionally, in 2003 we obtained licenses to explore in the U.K. North Sea.