We are excited about our prospects during 2006. Among the highlights:

  • Our overall capital spending program is budgeted at $140 million, including $118 million for drilling and $22 million for lease and seismic acquisition.
  • We will continue to ramp up development in the Barnett Shale with about 71% of our drilling budget targeted for this core area. &
  • We plan to drill several high potential targets in our Gulf Coast program. At this writing, we are drilling the Mega Mata, a 21,000' test in Matagorda County.Texas which is a I Tcf target. We generated the prospect and operate the well in which our paying interest is limited to 5% of the cost through casing point at which time we back-in to a 25% working interest.
  • In the UK sector of the North Sea, we retain control of six development blocks. We have successfully sold to industry partners two prospects which will be drilled during 2006. We have no initial capital at risk but retain an attractive back-in.
  • We are initiating a more active drilling program in our Camp Hill acreage where we believe we can successfully exploit our proved oil reserves in this environment.
 
 

The long term fundamentals in the oil and gas business remain attractive. Carrizo is well positioned to benefit from this external environment. Despite volatility in natural gas prices due in part to less than normal weather related demand, which has resulted in high levels of gas storage, the US continues to face long term natural gas supply problems. We believe'the industry will continue to need to develop attractive drilling prospects. That is what Carrizo does well.

We appreciate the support of our shareholders and the hard work and dedication of our people. We will continue to work hard to reward this trust-

Sincerely,

 


S.P. Johnson IV
President and CEO		 
Steven A. Webster
Chairman