management systems through the use of geophysical workstations which are compatible with industry standard reservoir simulation programs.

SIGNIFICANT PROJECT AREAS

This section is an explanation and detail of some of the relevant project groupings from our overall inventory of productive wells, seismic data and prospects. Our operations are focused primarily in the Barnett Shale trend in North Texas and in the onshore Gulf Coast area extending from South Louisiana to South Texas. Our other areas of interest are in the Camp Hill Field in Texas, Other Texas areas, the U.K. North Sea and Other Shale trends in West Texas, New Mexico, Mississippi, Alabama, Kentucky, Arkansas, Pennsylvania, New York and North Dakota. The table below highlights our main areas of activity:

Barnett Shale Area

We began active participation in the Barnett Shale area in the Fort Worth Basin on acreage located west of the city of Fort Worth, Texas in mid-2003. In 2003, we acquired leases on approximately 4,100 net acres and invested $0.9 million to drill six wells (2.6 net), two of which were completed and producing and four of which were awaiting pipeline hookup at year end. Net production from the two online wells (0.6 net) was a combined 380 Mcfe per day at year end 2003.

In February 2004 we purchased specified wells and leases in the Barnett Shale trend in Denton County, Texas from a private company for $8.2 million. These non-operated properties have an average 39 percent working interest. The acquisition included 21 existing gross wells (6.7 net) and interests in approximately 1,500 net acres. Production at year end 2004 was approximately 2,800 Mcfe/d.

In April 2005 we acquired 600 net acres and working interests in 14 existing wells (7.3 net) with an estimated 5.4 MMcfe of proved reserves in the Barnett Shale trend for $2.3 million in cash and 112,697 shares of our common stock. In 2005, we drilled 37 additional wells (22.1 net) and acquired an additional 49,632 net acres.

In 2006, we drilled 46.0 additional wells (33.9 net) and acquired an additional 6,400 net acres, increasing our acreage at the end of 2006 to 86,752 net acres (primarily in Tarrant, Parker, Denton, Johnson, Hill and Erath counties). Carrizo was operatoron 32 of the gross wells drilled. At year-end 2006, 31 of the gross wells drilled were producing and the remaining 15 wells were awaiting completion and/or pipeline connection.

During 2007, we drilled 60 additional wells (46.5 net) and our net acreage position was 85,429 net acres at December 31, 2007. Net proved reserves have grown by 88% from 146.6 Bcfe on December 31, 2006 to 276.0 Bcfe on December 31, 2007. We expect to invest approximately $184.9 million (representing nearly 75% of our total 2008 drilling expenditures) to drill 68 gross (62.6 net) wells in this area in 2008.

On January 3, 2008 we announced that the four New Dawn horizontal wells located in southeast Tarrant County, Texas completed fracture stimulation and began sales at a combined initial flow rate of 17.0 MMcf/d gross (12.8 MMcf/d net). These wells, in addition to three horizontal wells in the Tier 1 Parker County area, helped bring our year-end 2007 aggregate net production rate in the Barnett Shale to approximately 48 Mmcfe/d, 153% higher than the year-end 2006 rate of 19 MMcfe/d. In addition, the five wells on our Taylor lease in southeast Tarrant County that began production and sales in early February 2008 had gross production rates totaling 23.0 MMcfe/d. Including these new wells, our estimated net production in the Barnett Shale as of February 7, 2008 was an estimated 57 MMcfe/d.