Pinnacle Gas Resources, Inc.
Carrizo contributed the majority of its interest in the Powder River Basin into Pinnacle Gas Resources, Inc. (PGR) in June 2003 for an approximate 17% fully diluted equity interest in the new entity at year-end 2005. PGR has recently completed a private placement of its common stock. Proceeds were used to complete an acquisition in the Green River Basin, redeem Pinnacle's preferred stock and provide development capital. Carrizo effected a cashless exercise of its options and now owns an equity interest of approximately 10% of PGR.

PGR has drilled or acquired over 600 gross wells (~400 producing) from inception through 12/3 1/05, making it one of the Basin's most active developers. Plans call for continued low-risk growth through ongoing development and operation in 2006.

In March 2005, PGR acquired certain leasehold interests totaling some 200,000 net acres, bringing its total to approximately 272,000 net acres of leasehold. Only 3% of Pinnacle's acreage is developed, placing it among top tier companies in the Basin in terms of growth potential. Carrizo will begin using the cost method of accounting for its Pinnacle interest.

U.K North Sea Region
Carrizo was awarded seven acreage blocks totaling over 209,000 acres in the UKCS 21st License Round in June 2003. Another contiguous block was added in the 23rd License Round in June 2005. Upon technical evaluation, two of the eight blocks were relinquished during 2005, leaving over 124,000 acres under lease.

These retained blocks are located within the mature producing areas of the Central and Southern North Sea and consist of two "Traditional" and one "Promote" licenses. Our blocks are located in proven hydrocarbon trends with established infrastructure, available reprocessed 3-D seismic data sets and significant exploration potential, thus ensuring this play area as a natural extension to our business plan, technical capabilities and ongoing portfolio management.

At year-end 2005, industry partners had been signed for the blocks to allow for early exploitation. The interests were promoted to other parties with regional drilling and operating experience, and two exploration/appraisal wells are planned for 2006. Based on these arrangements, Carrizo will have no cost-bearing share in the risk capital for the drilling of these two wells, and a 25% working interest thereafter.