The Company has continued to increase the acreage holdings in several new resource plays throughout North America. We continue acquiring acreage based on thorough analysis of geologic structure, thickness, thermal maturation, drilling depth, acreage availability, engineering, and infrastructure.

Carrizo has acquired 70,000 net acres in the West Texas Barnett/Woodford Shale project. The thickness of the Barnett ranges from 250’ to 600’ and is 6,500’ to 11,500’ deep. Geochemical studies indicated that these shales are thermally mature.

The Arkansas Fayetteville Shale play continued to grow in scope during 2006. Over 200 wells have now been drilled by industry. Carrizo has increased its acreage position to 15,000 acres in the most proven area of the play in Pope, Conway and Johnson Counties where thicknesses range from 150’ to 350’ and the Fayetteville appears thermally mature. Carrizo also participated in its first 2 wells in 2006 as a non-operator. Industry production results are very encouraging for the play as completion techniques continue to be refined.

Carrizo began acquiring acreage in the Floyd Shale in the Black Warrior Basin located on the Mississippi/Alabama border in 2005. This has become our largest position in any of our shale plays. See page 8 for additional details.

The New Albany Shale of Kentucky and Illinois has become very active with many wells being drilled in this historically productive shale interval. The thermally mature shale is found at a depth of 1,500’ to 4,000’ and ranges in thickness between 120’ and 400’. Carrizo’s ongoing lease acquisition program has resulted in 18,000 net acres.

The total acreage position that Carrizo currently holds in these expanding resource plays is 240,000 acres. This substantial, constantly growing acreage position will provide ample opportunity for the Company to continue its balanced growth into the future. Active evaluation of these projects will continue with seismic analysis in preparation for drilling evaluation wells.