1040593--3/16/2010--CARRIZO_OIL_&_GAS

related topics

{gas, price, oil}

{loss, insurance, financial}

{debt, indebtedness, cash}

{cost, operation, labor}

{tax, income, asset}

{operation, natural, condition}

{cost, regulation, environmental}

{control, financial, internal}

{personnel, key, retain}

{product, market, service}

Natural gas and oil prices are highly volatile and have declined significantly since mid-2008, and lower prices will negatively affect our financial condition, planned capital expenditures and results of operations. Natural gas and oil drilling is a speculative activity and involves numerous risks and substantial and uncertain costs that could adversely affect us. We may not adhere to our proposed drilling schedule. Our reserve data and estimated discounted future net cash flows are estimates based on assumptions that may be inaccurate and are based on existing economic and operating conditions that may change in the future. We depend on successful exploration, development and acquisitions to maintain reserves and revenue in the future. We participate in oil and natural gas leases with third parties and these third parties may not be able to fulfill their commitments to our projects. We have substantial capital requirements that, if not met, may hinder operations. Our senior credit facility contains operating restrictions and financial covenants, and we may have difficulty obtaining additional credit. We have in the past identified material weaknesses in our internal controls over financial reporting, and the identification of any material weaknesses in the future could affect our ability to ensure timely and accurate financial statements. We have limited experience drilling wells in the Marcellus Shale and less information regarding reserves and decline rates in the Marcellus Shale than in other areas of our operations. We may face difficulties in securing and operating under authorizations and permits to drill and/or operate our Marcellus Shale wells. If we are unable to acquire adequate supplies of water for our Marcellus Shale drilling operations or are unable to dispose of the water we use at a reasonable cost and within applicable environmental rules, our ability to produce gas commercially and in commercial quantities could be impaired. A substantial portion of our reserves is located in an urban area, which could increase our costs of development and delay production. We face strong competition from other natural gas and oil companies. We may not be able to keep pace with technological developments in our industry. We are subject to various environmental risks and governmental regulations, including those relating to benzene emissions and hydraulic fracturing, and future regulations may be more stringent. Climate change and climate change legislation and regulatory initiatives could result in increased operating costs and decreased demand for the oil and gas that we produce. We are subject to various operating and other casualty risks that could result in liability exposure or the loss of production and revenues. A substantial portion of our operations is exposed to the additional risk of tropical weather disturbances. We may not have enough insurance to cover all of the risks we face. We cannot control the activities on properties we do not operate. If our access to markets is restricted, it could negatively impact our production, our income and ultimately our ability to retain our leases. Our ability to sell natural gas and/or receive market prices for our natural gas may be adversely affected by pipeline and gathering system capacity constraints. Our future acquisitions may yield revenues or production that varies significantly from our projections. Our business may suffer if we lose key personnel. We may experience difficulty in achieving and managing future growth. We may continue to enter into derivative transactions to manage the price risks associated with our production. Our derivative transactions may result in our making cash payments or prevent us from benefiting from increases in prices for natural gas and oil. Periods of high demand for field services and equipment and the ability of suppliers to meet that demand may limit our ability to drill and produce our oil and natural gas properties. We may record ceiling limitation write-downs that would reduce our shareholders equity. We could lose our ability to use NOLs that we have accumulated over the years. Enactment of a Pennsylvania severance tax on natural gas could adversely impact our results of operations and the economic viability of exploiting natural gas drilling and production opportunities in Pennsylvania. We may incur losses as a result of title deficiencies.

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1040593--3/16/2010--CARRIZO_OIL_&_GAS_INC