HOUSTON, April 22 /PRNewswire-FirstCall/ -- Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today announced that it has significantly improved its financial flexibility through an amendment to the financial covenants in its secured credit facility ("Credit Facility") by (1) increasing the maximum total debt leverage ratio through 2010 (to as high as 4.75 to 1), (2) refining the definition of Net Debt in the leverage ratio to exclude a portion of Carrizo's Convertible Notes (starting at $51 million in 2009) and (3) adding a senior debt leverage ratio which is less restrictive than the total debt leverage ratio. The amendment is described in more detail below.

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The maximum total net debt to EBITDAX leverage ratio ("Leverage Ratio") in the Credit Facility has been amended as follows: Second Quarter 2009 - 4.25 to 1; Third Quarter 2009 - 4.50 to 1; Fourth Quarter 2009 - 4.75 to 1; First Three Quarters 2010 - 4.75 to 1; and Fourth Quarter 2010 - 4.25 to 1. The Leverage Ratio reverts back to 4.0 to 1 thereafter.

For purposes of calculating the Leverage Ratio, the definition of Net Debt was also revised to exclude the following debt amounts (which will be deemed to be an equity component of the Company's 4.375% Senior Convertible Notes due 2028 - under a newly adopted accounting pronouncement described below): approximately $51.3 million for all of 2009; approximately $38.9 million for all of 2010; approximately $26.0 million for all of 2011; approximately $12.7 million for the duration in 2012.

This new accounting pronouncement, FASB Staff Position (FSP) Accounting Principles Board (APB) 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion", effective January 1, 2009, specifies that Carrizo should bifurcate and separately account for that portion of the 4.375% Senior Convertible Notes due 2028 ("Convertible Notes") deemed to be an equity component and in a manner that the interest expense relative to the debt component will reflect an implied interest rate equal to Carrizo's nonconvertible debt interest rate as of the original note issuance date.

The Credit Facility was also amended to add a new senior debt to EBITDAX covenant (with a maximum ratio of 2.25 to 1) which excludes debt attributable to the Convertible Notes and is less restrictive than the Leverage Ratio.

Paul Boling, Vice President and CFO, commented, "We are pleased that our bank syndicate has provided this strong vote of confidence in our asset base and business strategy by relaxing these financial covenants through 2010. The amendment significantly improves our financial flexibility and removes much of the uncertainty surrounding our future ability to remain compliant with these financial covenants. We will remain vigilant during these challenging times in our industry and remain focused on the Company's continuing strategy to limit the capital expenditures to the level of our 2009 free cash flow."

Carrizo Oil & Gas, Inc. is a Houston-based energy company actively engaged in the exploration, development, exploitation and production of oil and natural gas primarily in the Barnett Shale in North Texas. Carrizo controls significant prospective acreage blocks and utilizes advanced 3-D seismic techniques to identify potential oil and gas reserves and drilling opportunities. Carrizo also controls large acreage positions in other productive shale resource plays including in the Marcellus and Fayetteville.

Statements in this news release that are not historical facts, including but not limited to those related to confidence of Carrizo's banking syndicate in Carrizo's assets and business strategy, financial flexibility, ability to maintain compliance with terms of the credit agreement and restriction of capital expenditures are forward-looking statements that are based on current expectations. Although Carrizo believes that its expectations are based on reasonable assumptions, it can give no assurance that these expectations will prove correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements include market and other conditions, capital needs and uses, actions of lenders under the credit agreement, commodity price changes, effects of the global financial crisis on exploration activity, results of and dependence on exploratory drilling activities, operating risks, land issues, weather, and other risks described in Carrizo's Form 10-K for the year ended December 31, 2008 and its other filings with the Securities and Exchange Commission

    Contact: Carrizo Oil & Gas, Inc.
             Richard Hunter, Vice President of Investor Relations
             Paul F. Boling, Chief Financial Officer
             (713) 328-1000

SOURCE Carrizo Oil & Gas, Inc.