##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended December 31, 2009
 Commission No. 0-22915
 Carrizo Oil & Gas, Inc.
  Texas
(State or other jurisdiction of incorporation or organization)
    
    76-0415919
(I.R.S. Employer Identification No.)1000 Louisiana Street, Suite 1500, Houston, Texas
(Principal executive offices)
    
    77002
(Zip Code)
 (713) 328-1000
  Common Stock, $0.01 par value
  o þ
  o þ
  þ o
  o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



TABLE OF CONTENTS
 Forward Looking Statements
    
    
    2PART I
    
    
    3Item 1. and Item 2. Business and Properties
    
    
    3Item 1A. Risk Factors
    
    
    23Item 1B. Unresolved Staff Comments
    
    
    35Item 3. Legal Proceedings
    
    
    39Item 4. Reserved
    
    
    39PART II
    
    
    41Item 5. Market for Registrants Common Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities
    
    
    41Item 6. Selected Financial Data
    
    
    43Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    44Item 7A. Qualitative and Quantitative Disclosures About Market Risk
    
    
    59Item 8. Financial Statements and Supplementary Data
    
    
    59Item 9.
Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    59Item 9A. Controls and Procedures
    
    
    59Item 9B. Other Information
    
    
    60PART III
    
    
    60Item 10. Directors, Executive Officers and Corporate Governance
    
    
    60Item 11. Executive Compensation Committee
    
    
    60Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
    
    
    61Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    61Item 14. Principal Accountant Fees and Services
    
    
    61PART IV
    
    
    61Item 15. Exhibits and Financial Statement Schedules
    
    
    61EX-21.1EX-23.1EX-23.2EX-23.3EX-23.4EX-23.5EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1EX-99.2EX-99.3




---



##### Table of Contents



2




---



##### Table of Contents



PART I
 
 Item 1. and Item 2. Business and Properties
 OVERVIEW
 General
     Barnett Shale Area
   3




---



##### Table of Contents



Marcellus Shale Area
   Other Project Areas
  U.K. North Sea Area
    4




---



##### Table of Contents



th
 Business Strategy
 Measured Growth Through the Drillbit
  
    
    Control Capital Costs and Maintain Financial Flexibility.In response to continued
reduced demand for natural gas and lower natural gas prices as a result of the recent
economic downturn, we have announced our capital and exploration expenditure plan for 2010
to be $170 million. Although this reflects an increase from the capital plan in 2009, we
continue to strive to maintain our financial flexibility, while achieving a positive
production growth profile. Any further deterioration in commodity prices may cause us to
reduce our capital and exploration expenditure plan for 2010.
 
    
    Grow Primarily Through Drilling.We pursue a technology-driven exploration drilling
program. We generate exploration prospects through geological and geophysical analysis of
3-D seismic and other data. Our ability to successfully define and drill exploratory
prospects is demonstrated by our exploratory drilling success rate in the onshore Gulf Coast
area of 85% over the last seven years and our 100% drilling success rate in the Barnett
Shale area since inception in 2003. During 2010, we plan to drill approximately 57 gross
(38.1 net) wells in the Barnett Shale area, eleven gross (3.8 net) wells in the Marcellus
Shale area and three gross (1.5 net) well in other company project areas. We have planned
approximately $170 million for capital expenditures in 2010, approximately $145 million of
which we expect to use for drilling activities, including $130 million in the Barnett Shale
area, $20 million for leasehold and seismic in the Marcellus and Barnett Shale areas and $5
million in other project areas, including development planning in the North Sea.
 
    
    Focus on Areas Where We Have Experience and a Technical Advantage.We focus our
activities in the industry-proven Barnett Shale in which our wells have generally
longer-lived reserves and where our management, technical staff and field operations teams
have significant experience and, we believe, a technical advantage derived from operating
over 200 horizontal wells. We are attempting to leverage this advantage in other shale
trends, principally in the Marcellus and the Eagle Ford Shales. We plan to focus a majority
of our near-term capital expenditures in the Barnett Shale area, where we have acquired a
significant acreage position and accumulated a large drillsite inventory, and in the
Marcellus Shale, where our joint venture currently controls over 213,636 net acres.
 
    
    Maintain a Conservative Exploration and Development Portfolio.In recent years, we have
sought to more heavily weight our drilling program toward projects with relatively lower
risk and moderate potential, such as our development drilling in the Barnett Shale, than to
projects that have relatively higher risk, but substantial upside potential such as our
onshore Gulf Coast projects.
 
    
    Manage Risk Exposure by Market Testing Prospects and Optimizing Working Interests.We
seek to limit our financial and operating risks by varying our level of participation in
drilling prospects with differing risk profiles and by seeking well funded partners to
ensure that we are able to move forward on projects in a timely manner when others are
capital constrained. Our joint ventures with Avista in the Marcellus Shale, that commenced
in August 2008, and with Sumitomo Corporation in the Barnett Shale that we announced in
November 2009, are recent and prominent examples of this strategy. Additionally, we rely on
advanced technologies, including 3-D seismic analysis, to better define geologic risks,
thereby enhancing the results of our drilling efforts. The use of 3-D seismic analysis does
not guarantee that hydrocarbons are present or, if present, that they can be recovered
economically.
 5




---



##### Table of Contents




    
    Retain and Incentivize a Highly Qualified Technical Staff.We employ 38 natural gas and
oil professionals, including geophysicists, petrophysicists, geologists, petroleum engineers
and production and reservoir engineers and technical support staff, who have an average of
over 20 years of experience. This level of expertise and experience gives us an in-house
ability to apply advanced technologies to our drilling and production activities, including
our extensive experience in fracing and horizontal drilling technologies. Our technical
staff is granted stock-based awards and participates in an incentive bonus pool based on
production resulting from our exploratory successes.
 EXPLORATION APPROACH
    OPERATING APPROACH
   6




---



##### Table of Contents



SIGNIFICANT PROJECT AREAS
  3-D Seismic
    
    
    Net
    
    
    Drilling CapitalProductive Wells
    
    
    Data
    
    
    Leased
    
    
    ExpendituresGross
    
    
    Net
    
    
    (Sq. Miles)
    
    
    Acres
    
    
    2009
    
    
    2010 Plan(In millions)Barnett Shale
    
    
    242
    
    
    
    175.2
    
    
    
    663
    
    
    
    52,166
    
    
    $
    124.0
    
    
    $
    130.0Marcellus Shale
    
    
    1
    
    
    
    0.2
    
    
    
    7
    
    
    
    106,818
    
    
    
    3.2
    
    
    
    15.0Other Project Areas in the U.S.
    
    
    202
    
    
    
    113.5
    
    
    
    11,057
    
    
    
    338,108
    
    
    
    4.0
    
    
    
    U.K. North Sea
    
    
    
    
    
    
    
    
    
    
    2,057
    
    
    
    140,346
    
    
    
    
    
    
    
    Total
    
    
    445
    
    
    
    288.9
    
    
    
    13,784
    
    
    
    637,438
    
    
    $
    131.2
    
    
    $
    145.0
 Barnett Shale Area
   Marcellus Shale Area
    7




---



##### Table of Contents



Other Project Areas
    8




---



##### Table of Contents



Camp Hill Field
       9




---



##### Table of Contents



U.K. North Sea Area
   ADDITIONAL OIL AND GAS DISCLOSURES
 Working Interest and Drilling in Project Areas
   10




---



##### Table of Contents



Oil and Natural Gas Reserves
  Summary of Oil and Gas Reserves as of December 31, 2009
Based on Average 2009 Prices
(Dollars in thousands)
 Oil, Condensate,and Natural Gas
    
    
    Natural Gas
    
    
    TotalLiquids (MBbls)
    
    
    (MMcf)
    
    
    (MMcfe)(1)
    
    
    PV-10 Value (2) (3)PROVED(4)Developed
    
    
    6,898
    
    
    
    292,695
    
    
    
    334,085
    
    
    $
    343,771Undeveloped
    
    
    7,905
    
    
    
    220,351
    
    
    
    267,780
    
    
    
    54,559Total Proved
    
    
    14,803
    
    
    
    513,046
    
    
    
    601,865
    
    
    
    398,330
 
 (1)
    
    Natural gas equivalents are determined using the ratio of 6 Mcf of natural gas to 1
Bbl of crude oil.(2)
    
    The PV-10 value as of December 31, 2009 is pre-tax and was determined by using the
unweighted average of oil and natural gas prices at the beginning of each month in the
twelve-month period prior to December 31, 2009 sales prices, which averaged $56.10 per Bbl of
oil, $23.18 per Bbl of natural gas liquids and $3.30 per Mcf of natural gas. Management
believes that the presentation of PV-10 value may be considered a non-GAAP financial measure
as defined in Item 10(e) of Regulation S-K. Therefore, we have included a reconciliation of
the measure to the most directly comparable GAAP financial measure (standardized measure of
discounted future net cash flows in footnote (3) below). Management believes that the
presentation of PV-10 value provides useful information to investors because it is widely used
by professional analysts and sophisticated investors in evaluating oil and gas companies.
Because many factors that are unique to each individual company may impact the amount of
future income taxes to be paid, the use of the pre-tax measure provides greater comparability
when evaluating companies. It is relevant and useful to investors for evaluating the relative
monetary significance of our oil and natural gas properties. Further, investors may utilize
the measure as a basis for comparison of the relative size and value of our reserves to other
companies. Management also uses this pre-tax measure when assessing the potential return on
investment related to its oil and natural gas properties and in evaluating acquisition
candidates. The PV-10 value is not a measure of financial or operating performance under GAAP,
nor is it intended to represent the current market value of the estimated oil and natural gas
reserves owned by us. PV-10 value should not be considered in isolation or as a substitute for
the standardized measure of discounted future net cash flows as defined under GAAP.(3)
    
    Future income taxes and present value discounted (10%) future income taxes were
$73.7 and $16.2 million, respectively. Accordingly, the after-tax PV-10 value of Total Proved
Reserves (or Standardized Measure of Discounted Future Net Cash
Flows) is $382.1 million.(4)
    
    All our proved reserves are located within the United States. Proved Undeveloped Reserves
  11




---



##### Table of Contents



Qualifications of Third Party Engineers
  Internal Controls
   12




---



##### Table of Contents



Oil and Natural Gas Reserve Replacement
  2009
    
    2008
    
    2007Reserve Replacement Ratio
    
    
    400
    %
    
    
    705
    %
    
    
    887
    %
 Volumes, Prices and Oil & Natural Gas Production Expense
  Year Ended December 31,2009
    
    2008
    
    2007Production volumesOil (MBbls)
    
    
    174
    
    
    
    186
    
    
    
    241Natural gas (MMcf)(1)
    
    
    32,002
    
    
    
    24,513
    
    
    
    16,042Natural gas equivalent (MMcfe)
    
    
    33,044
    
    
    
    25,632
    
    
    
    17,487Average sales pricesOil (per Bbl)
    
    $
    58.85
    
    
    $
    99.74
    
    
    $
    71.42Natural gas (per Mcf)
    
    
    3.20
    
    
    
    7.80
    
    
    
    6.77Natural gas equivalent (per Mcfe)
    
    
    3.41
    
    
    
    8.19
    
    
    
    7.19Average production costs (per Mcfe)(2)
    
    $
    0.91
    
    
    $
    1.28
    
    
    $
    1.16
 
 (1)
    
    Includes 1,975.2 and 965.7 MMcfe of natural gas liquids in
2009 and 2008
 respectively.(2)
    
    Includes direct lifting costs (labor, repairs and maintenance, materials and
supplies), workover costs, transportation costs and the administrative costs of production
offices, and insurance and property. Acquisition, Exploration and Development Capital Expenditures and Finding and Development Costs
  13




---



##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Acquisition costs:Unproved properties
    
    $
    35,248
    
    
    $
    271,618
    
    
    $
    54,467Proved properties
    
    
    
    
    
    
    
    
    
    
    Exploration costs
    
    
    77,255
    
    
    
    235,382
    
    
    
    144,402Development costs
    
    
    55,270
    
    
    
    49,626
    
    
    
    30,562Asset retirement obligation
    
    
    (1,390
    )
    
    
    630
    
    
    
    1,961Total costs incurred
    
    $
    166,383
    
    
    $
    557,256
    
    
    $
    231,392Total proved reserves added (MMcfe)
    
    
    132,326
    
    
    
    180,594
    
    
    
    155,139Average all-sources finding cost (per Mcfe)
    
    $
    1.26
    
    
    $
    3.09
    
    
    $
    1.49Average finding and development cost (per Mcfe)(1)
    
    $
    1.16
    
    
    $
    1.68
    
    
    $
    1.22Average drilling finding cost (per Mcfe)
    
    $
    0.99
    
    
    $
    1.58
    
    
    $
    1.14
 
 (1)
    
    Comprised of all exploration and development costs incurred in the year plus
the leasehold and seismic costs attributable to all proved drilling locations additions in the
year.     14




---



##### Table of Contents



Drilling Activity
  Year Ended December 31,2009
    
    2008
    
    2007Gross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetExploratory Wells  ProductiveUnited States
    
    
    46
    
    
    
    22.4
    
    
    
    83
    
    
    
    60.0
    
    
    
    64
    
    
    
    42.6U.K. North Sea
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    0.2
    
    
    
    1
    
    
    
    0.2Total
    
    
    46
    
    
    
    22.4
    
    
    
    84
    
    
    
    60.2
    
    
    
    65
    
    
    
    42.8Exploratory Wells  NonproductiveUnited States
    
    
    1
    
    
    
    0.8
    
    
    
    2
    
    
    
    0.3
    
    
    
    1
    
    
    
    0.4U.K. North Sea
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    0.2Total
    
    
    1
    
    
    
    0.8
    
    
    
    2
    
    
    
    0.3
    
    
    
    2
    
    
    
    0.6Development Wells  ProductiveUnited States
    
    
    16
    
    
    
    13.0
    
    
    
    31
    
    
    
    24.2
    
    
    
    29
    
    
    
    24.0U.K. North Sea
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    16
    
    
    
    13.0
    
    
    
    31
    
    
    
    24.2
    
    
    
    29
    
    
    
    24.0Development Wells  NonproductiveUnited States
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3.0
    
    
    
    1
    
    
    
    1.0U.K. North Sea
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3.0
    
    
    
    1
    
    
    
    1.0
   Productive Wells
  CompanyOperated
    
    Non-Operated
    
    TotalGross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetOil
    
    
    92
    
    
    
    86.8
    
    
    
    4
    
    
    
    0.8
    
    
    
    96
    
    
    
    87.6Natural gas
    
    
    194
    
    
    
    165.8
    
    
    
    155
    
    
    
    35.5
    
    
    
    349
    
    
    
    201.3Total
    
    
    286
    
    
    
    252.6
    
    
    
    159
    
    
    
    36.3
    
    
    
    445
    
    
    
    288.9
 Acreage Data
  15




---



##### Table of Contents



Developed Acreage
    
    Undeveloped Acreage
    
    TotalGross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetBarnett Shale  Texas
    
    
    36,717
    
    
    
    24,679
    
    
    
    35,791
    
    
    
    27,487
    
    
    
    72,508
    
    
    
    52,166Marcellus ShaleNew York
    
    
    
    
    
    
    
    
    
    
    37,067
    
    
    
    8,298
    
    
    
    37,067
    
    
    
    8,298Pennsylvania
    
    
    
    
    
    
    
    
    
    
    102,172
    
    
    
    40,578
    
    
    
    102,172
    
    
    
    40,578West Virginia
    
    
    
    
    
    
    
    
    
    
    105,881
    
    
    
    50,821
    
    
    
    105,881
    
    
    
    50,821Virginia and other
    
    
    
    
    
    
    
    
    
    
    14,390
    
    
    
    7,121
    
    
    
    14,390
    
    
    
    7,121Marcellus Shale Total
    
    
    
    
    
    
    
    
    
    
    259,510
    
    
    
    106,818
    
    
    
    259,510
    
    
    
    106,818OtherOther Shales(1)
    
    
    919
    
    
    
    310
    
    
    
    411,164
    
    
    
    257,181
    
    
    
    412,083
    
    
    
    257,491Texas (2)
    
    
    31,102
    
    
    
    10,950
    
    
    
    74,294
    
    
    
    54,701
    
    
    
    105,396
    
    
    
    65,651Other
    
    
    2,455
    
    
    
    1,383
    
    
    
    24,899
    
    
    
    13,583
    
    
    
    27,354
    
    
    
    14,966Other Total
    
    
    34,476
    
    
    
    12,643
    
    
    
    510,357
    
    
    
    325,465
    
    
    
    544,833
    
    
    
    338,108Total United States
    
    
    71,193
    
    
    
    37,322
    
    
    
    805,658
    
    
    
    459,770
    
    
    
    876,851
    
    
    
    497,092Total U.K. North Sea
    
    
    
    
    
    
    
    
    
    
    275,146
    
    
    
    140,346
    
    
    
    275,146
    
    
    
    140,346Total
    
    
    71,193
    
    
    
    37,322
    
    
    
    1,080,804
    
    
    
    600,116
    
    
    
    1,151,997
    
    
    
    637,438
 
 (1)
    
    Other Shales principally includes the Fayetteville Shale in Arkansas; the New
Albany Shale in Kentucky and Illinois; the Floyd/Neal Shale in Mississippi; the
Barnett/Woodford in West Texas and New Mexico; and the Bakken in North Dakota.(2)
    
    Other Texas includes the Camp Hill Field and other non-resource plays in North, East
and Central Texas.   Marketing
    16




---



##### Table of Contents




    
    demand for natural gas and oil;
    
    the extent of production of natural gas and oil and, in particular, domestic production
and imports;
    
    the proximity and capacity of natural gas pipelines and other transportation facilities;
    
    the marketing of competitive fuels; and
    
    the effects of state and federal regulations on natural gas and oil production and sales.
   Competition and Technological Changes
   Regulation
  17




---



##### Table of Contents



Regulation of Natural Gas and Oil Exploration and Production
  
    
    require permits for the drilling of wells;
 
    
    mandate that we maintain bonding requirements in order to drill or operate wells; and
 
    
    regulate the location of wells, the method of drilling and casing wells, the surface use
and restoration of properties upon which wells are drilled, the plugging and abandoning of
wells and the disposal of fluids used in connection with operations.
  Regulation of Sales and Transportation of Natural Gas
    18




---



##### Table of Contents



Oil Price Controls and Transportation Rates
   Environmental Regulations
  19




---



##### Table of Contents



20




---



##### Table of Contents



Global Climate Change
   Massachusetts v.
Environmental Protection Agency
  Operating Hazards and Insurance
  21




---



##### Table of Contents



Title to Properties; Acquisition Risks
   Customers
  Year Ended December 31,2009
    
    2008
    
    2007DTE Energy Trading, Inc.
    
    
    54
    %
    
    
    39
    %
    
    
    *Cokinos Natural Gas Company
    
    
    *
    
    
    
    11
    %
    
    
    11
    %Crosstex Energy
    
    
    *
    
    
    
    10
    %
    
    
    15
    %Houston Pipeline Company
    
    
    *
    
    
    
    *
    
    
    
    11
    %Energy Transfer
    
    
    *
    
    
    
    *
    
    
    
    10
    %
 
 *
    
    Revenues were below 10%.  22




---



##### Table of Contents



Employees
    Available Information
   
    
    Audit Committee Charter;
 
    
    Compensation Committee Charter;
 
    
    Nominating Committee Charter;
 
    
    Code of Ethics and Business Conduct; and
 
    
    Compliance Employee Report Line.
  
 Item 1A.
    
    Risk Factors
 The global financial and credit crisis may have impacts on our liquidity and financial condition
that we currently cannot predict.
  23




---



##### Table of Contents



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.
   
    
    the level of consumer product demand;
    
    overall economic conditions;
    
    weather conditions;
    
    domestic and foreign governmental relations, regulations and taxes;
    
    the price and availability of alternative fuels;
    
    political conditions;
    
    the level and price of foreign imports of oil and liquefied natural gas; and
    
    the ability of the members of the Organization of Petroleum Exporting Countries to
agree upon and maintain production constraints and oil price controls.
 Natural gas and oil drilling is a speculative activity and involves numerous risks and substantial
and uncertain costs that could adversely affect us.
  
    
    unexpected or adverse drilling conditions;
 
    
    elevated pressure or irregularities in geologic formations;
 
    
    equipment failures or accidents;
 
    
    adverse weather conditions;
 
    
    compliance with governmental requirements; and
    
    shortages or delays in the availability of drilling rigs, crews and equipment.
 24




---



##### Table of Contents



We may not adhere to our proposed drilling schedule.
  
    
    the results of our exploration efforts and the acquisition, review and analysis of the
seismic data;
 
    
    the availability of sufficient capital resources to us and the other participants for the
drilling of the prospects;
 
    
    the approval of the prospects by the other participants after additional data has been
compiled;
 
    
    economic and industry conditions at the time of drilling, including prevailing and
anticipated prices for natural gas and oil and the availability and prices of drilling rigs
and crews; and
 
    
    the availability of leases and permits on reasonable terms for the prospects.
  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.
    25




---



##### Table of Contents




    
    the actual prices we receive for natural gas and oil;
 
    
    our actual operating costs in producing natural gas and oil;
 
    
    the amount and timing of actual production;
 
    
    supply and demand for natural gas and oil;
 
    
    increases or decreases in consumption of natural gas and oil; and
 
    
    changes in governmental regulations or taxation.
  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.
  26




---



##### Table of Contents



Our senior credit facility contains operating restrictions and financial covenants, and we may have
difficulty obtaining additional credit.
  
    
    our ability to obtain financing for working capital, capital expenditures, our drilling
program, purchases of new technology or other purposes may be impaired;
    
    the covenants in our senior credit facility that limit our ability to borrow additional
funds and dispose of assets may affect our flexibility in planning for, and reacting to,
changes in business conditions;
 
    
    because our indebtedness is subject to variable interest rates, we are vulnerable to increases in interest rates;
    
    any additional financing we obtain may be on unfavorable terms;
 
    
    we may be required to use a substantial portion of our cash flow to make debt service
payments, which will reduce the funds that would otherwise be available for operations and
future business opportunities;
 
    
    a substantial decrease in our operating cash flow or an increase in our expenses could
make it difficult for us to meet debt service requirements and could require us to modify
our operations, including by curtailing portions of our drilling program, selling assets,
reducing our capital expenditures, refinancing all or a portion of our existing debt or
obtaining additional financing; and
 
    
    we may become more vulnerable to downturns in our business or the economy.
  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.
 27




---



##### Table of Contents



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.
  28




---



##### Table of Contents



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.
    29




---



##### Table of Contents



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.
  
    
    well blowouts;
 
    
    mechanical failures;
 30




---



##### Table of Contents




    
    explosions;
 
    
    uncontrollable flows of oil, natural gas or well fluids;
 
    
    fires;
 
    
    geologic formations with abnormal pressures;
 
    
    pipeline ruptures or spills;
 
    
    releases of toxic gases; and
 
    
    other environmental hazards and risks.
   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.
  
    
    the operator could refuse to initiate exploration or development projects;
 31




---



##### Table of Contents




    
    if we proceed with any of those projects the operator has refused to initiate, we may not
receive any funding from the operator with respect to that project;
 
    
    the operator may initiate exploration or development projects on a different schedule
than we would prefer;
 
    
    the operator may propose greater capital expenditures than we wish, including
expenditures to drill more wells or build more facilities on a project than we have funds
for, which may mean that we cannot participate in those projects or participate in a
substantial amount of the revenues from those projects; and
 
    
    the operator may not have sufficient expertise or resources.
  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.
  32




---



##### Table of Contents



Our business may suffer if we lose key personnel.
  We may experience difficulty in achieving and managing future growth.
  
    
    our ability to obtain leases or options on properties, including those for which we have
3-D seismic data;
 
    
    our ability to acquire additional 3-D seismic data;
 
    
    our ability to identify and acquire new exploratory prospects;
 
    
    our ability to develop existing prospects;
 
    
    our ability to continue to retain and attract skilled personnel;
 
    
    our ability to maintain or enter into new relationships with project partners and
independent contractors;
 
    
    the results of our drilling program;
 
    
    hydrocarbon prices; and
 
    
    our access to capital.
  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.
  33




---



##### Table of Contents



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.
  34




---



##### Table of Contents



We have risks associated with our foreign operations.
  
    
    currency restrictions and exchange rate fluctuations;
 
    
    loss of revenue, property and equipment as a result of expropriation, nationalization,
war or insurrection;
 
    
    increases in taxes and governmental royalties;
 
    
    renegotiation of contracts with governmental entities and quasi-governmental agencies;
 
    
    changes in laws and policies governing operations of foreign-based companies;
 
    
    labor problems; and
 
    
    other uncertainties arising out of foreign government sovereignty over our international
operations.
  The threat and impact of terrorist attacks or similar hostilities may adversely impact our
operations.
  
 Item 1B.
    
    Unresolved Staff Comments
  Glossary of Certain Industry Terms
  35




---



##### Table of Contents



After payout.
 Bbl.
 Bbls/d.
 Bcf.
 Bcfe.
 Before payout.
 BOE or Barrel of Oil Equivalent.
 Btu or British Thermal Unit.
 Completion.
 Condensate.
 Developed acreage.
 Developed oil and gas reserves.
 Development Costs.
 Development well.
 Dry well.
 Economically producible.
 36




---



##### Table of Contents



Exploratory well.
 Farm-in or farm-out.
 Fracing.
 Field.
 Finding costs.
 Gross acres or gross wells.
 MBbls.
 MBbls/d.
 Mcf.
 Mcf/d.
 Mcfe.
 MMBbls.
 MMBtu.
 MMcf.
 MMcf/d.
 MMcfe.
 Net acres or net wells.
 Net Revenue Interest.
 Present value.
 37




---



##### Table of Contents



Production costs.
 Productive well.
 Proved developed reserves.
 Proved reserves.
       Proved undeveloped reserves.
 PV-10 Value.
 Reasonable certainty.
 38




---



##### Table of Contents



Recompletion.
 Reserves.
 Reservoir.
 Royalty interest.
 3-D seismic data.
 Undeveloped acreage.
 Undeveloped oil and gas reserves.
    Working interest.
 Workover.
 
 Item 3. Legal Proceedings
  
 Item 4. Reserved
 Executive Officers of the Registrant
  39




---



##### Table of Contents



Name
    
    Age
    
    PositionS.P. Johnson IV
    
    
    54
    
    
    President, Chief Executive Officer and DirectorPaul F. Boling
    
    
    56
    
    
    Chief Financial Officer, Vice President, Secretary and TreasurerDavid L. Pitts
    
    
    43
    
    
    Vice President and Chief Accounting OfficerJ. Bradley Fisher
    
    
    49
    
    
    Vice President and Chief Operating OfficerGregory E. Evans
    
    
    60
    
    
    Vice President of ExplorationRichard H. Smith
    
    
    52
    
    
    Vice President of Land
  S.P. Johnson IV
 Paul F. Boling
 David L. Pitts
 J. Bradley Fisher
 Gregory E. Evans
 Richard H. Smith
 40




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities
  High
    
    Low2009First Quarter
    
    $
    21.19
    
    
    $
    6.71Second Quarter
    
    
    23.21
    
    
    
    8.42Third Quarter
    
    
    26.85
    
    
    
    14.75Fourth Quarter
    
    
    30.22
    
    
    
    20.202008First Quarter
    
    $
    62.47
    
    
    $
    43.11Second Quarter
    
    
    76.30
    
    
    
    58.26Third Quarter
    
    
    69.51
    
    
    
    30.75Fourth Quarter
    
    
    36.26
    
    
    
    11.72
    41




---



##### Table of Contents



S&P
    
    
    AMEX
    
    
    COGIDecember 31, 2004
    
    
    
    100
    
    
    
    
    100
    
    
    
    
    100December 31, 2005
    
    
    
    103
    
    
    
    
    153
    
    
    
    
    219December 31, 2006
    
    
    
    117
    
    
    
    
    170
    
    
    
    
    257December 31, 2007
    
    
    
    121
    
    
    
    
    217
    
    
    
    
    485December 31, 2008
    
    
    
    75
    
    
    
    
    111
    
    
    
    
    142December 31, 2009
    
    
    
    92
    
    
    
    
    154
    
    
    
    
    235
    42




---



##### Table of Contents



Item 6. Selected Financial Data
  Year Ended December 31,2009
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005(In thousands, except per share data)Statements of Operations Data:Oil and natural gas revenues
    
    $
    114,079
    
    
    $
    216,677
    
    
    $
    125,789
    
    
    $
    82,945
    
    
    $
    78,155Costs and expenses:Oil and natural gas operating expenses
    
    
    30,204
    
    
    
    37,885
    
    
    
    24,662
    
    
    
    16,428
    
    
    
    10,437Impairment of oil and natural gas properties
    
    
    338,914
    
    
    
    178,470
    
    
    
    
    
    
    
    
    
    
    
    Depreciation, depletion and amortization
    
    
    52,005
    
    
    
    58,311
    
    
    
    41,899
    
    
    
    31,129
    
    
    
    21,374Third party gas purchases
    
    
    1,497
    
    
    
    6,570
    
    
    
    
    
    
    
    
    
    
    
    General and administrative
    
    
    30,136
    
    
    
    23,425
    
    
    
    18,912
    
    
    
    14,909
    
    
    
    11,243Accretion expense related to asset retirement obligation
    
    
    308
    
    
    
    154
    
    
    
    374
    
    
    
    496
    
    
    
    70Total costs and expenses
    
    
    453,064
    
    
    
    304,815
    
    
    
    85,847
    
    
    
    62,962
    
    
    
    43,124Operating income (loss)
    
    
    (338,985
    )
    
    
    (88,138
    )
    
    
    39,942
    
    
    
    19,983
    
    
    
    35,031Gain (loss) on derivatives, net
    
    
    41,465
    
    
    
    37,499
    
    
    
    (1,366
    )
    
    
    16,457
    
    
    
    (5,882
    )Loss on extinguishment of debt
    
    
    
    
    
    
    (5,689
    )
    
    
    
    
    
    
    (294
    )
    
    
    (3,721
    )Equity in income (loss/impairment) of Pinnacle Gas
Resources, Inc.
    
    
    (2,091
    )
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    (2,542
    )Interest expense, net of amounts capitalized and
interest income
    
    
    (18,577
    )
    
    
    (9,461
    )
    
    
    (13,994
    )
    
    
    (8,127
    )
    
    
    (4,295
    )Other income, net
    
    
    36
    
    
    
    17
    
    
    
    130
    
    
    
    427
    
    
    
    (457
    )Income (loss) before income tax expense (benefit)
    
    
    (318,152
    )
    
    
    (65,772
    )
    
    
    24,712
    
    
    
    28,481
    
    
    
    18,134Income tax expense (benefit)
    
    
    (113,307
    )
    
    
    (20,725
    )
    
    
    9,243
    
    
    
    10,233
    
    
    
    7,500Net income (loss) available to common shareholders
    
    $
    (204,845
    )
    
    $
    (45,047
    )
    
    $
    15,469
    
    
    $
    18,248
    
    
    $
    10,634Basic earnings (loss) per common share
    
    $
    (6.61
    )
    
    $
    (1.49
    )
    
    $
    0.58
    
    
    $
    0.73
    
    
    $
    0.45Diluted earnings (loss) per common share
    
    $
    (6.61
    )
    
    $
    (1.49
    )
    
    $
    0.57
    
    
    $
    0.71
    
    
    $
    0.44Basic weighted average shares outstanding
    
    
    31,006
    
    
    
    30,326
    
    
    
    26,641
    
    
    
    25,081
    
    
    
    23,539Diluted weighted average shares outstanding
    
    
    31,006
    
    
    
    30,326
    
    
    
    27,120
    
    
    
    25,565
    
    
    
    24,361Statements of Cash Flow Data:Net cash provided by operating activities
    
    $
    133,372
    
    
    $
    148,754
    
    
    $
    95,231
    
    
    $
    65,437
    
    
    $
    38,839Net cash used in investing activities
    
    
    (162,453
    )
    
    
    (555,345
    )
    
    
    (227,724
    )
    
    
    (161,576
    )
    
    
    (111,417
    )Net cash provided by financing activities
    
    
    27,734
    
    
    
    403,749
    
    
    
    135,111
    
    
    
    72,822
    
    
    
    95,635Other Cash Flow Data:Capital expenditures
    
    $
    182,907
    
    
    $
    571,291
    
    
    $
    247,003
    
    
    $
    201,773
    
    
    $
    135,156Debt repayments(1)
    
    
    96,461
    
    
    
    498,923
    
    
    
    108,258
    
    
    
    40,536
    
    
    
    101,021Balance Sheet Data:Working capital (deficit)
    
    $
    (47,328
    )
    
    $
    (57,602
    )
    
    $
    (50,053
    )
    
    $
    (17,014
    )
    
    $
    10,307Property and equipment, net
    
    
    733,700
    
    
    
    986,629
    
    
    
    646,810
    
    
    
    445,447
    
    
    
    314,074Total assets
    
    
    863,107
    
    
    
    1,071,702
    
    
    
    708,663
    
    
    
    494,795
    
    
    
    383,101Total debt, net of debt discount
    
    
    520,336
    
    
    
    475,961
    
    
    
    254,501
    
    
    
    188,758
    
    
    
    149,294Total shareholders equity
    
    
    247,609
    
    
    
    440,085
    
    
    
    310,721
    
    
    
    212,274
    
    
    
    155,385
 
 (1)
    
    Debt repayments include amounts refinanced. 43




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General Overview
  Drilling program.Our success is largely dependent on the results of our drilling program. During
the year ended December 31, 2009, we drilled 63 gross wells (36.2 net wells) with an apparent
success rate of 94% that was comprised of: (a) 47 of 47 gross wells (32.7 net wells) in the
Barnett Shale area, (b) one of two gross wells (0.25 of 1.0 net well) in the onshore Gulf Coast
area, (c) seven gross wells (2.3 net wells) in the Marcellus Shale area, of which three gross
(1.5 net) wells awaited testing, and (d) seven of seven gross wells (0.2 net wells) in other
areas. At December 31, 2009, 35 of these gross wells (23.5 net wells) were awaiting completion
or pipeline connections.
 Reserve growth.As a result of our drilling program discussed above, our reserves increased 20%
to 601.9 Bcfe at December 31, 2009, replacing 400% of 2009 production.
 Production.Our 2009 annual production of 33.0 Bcfe, or 90.5 MMcfe/d, was a record high. The 2009
production increased 28.9% from 2008 production of 25.6 Bcfe. The increase was primarily due to
the addition of new Barnett Shale wells.
 Commodity prices.Our average natural gas price during 2009 was $3.20 per Mcf (excluding the
impact of our hedges), $4.60 per Mcf lower than the 2008 price of $7.80. Our average oil price in
2009 was $58.85 per Bbl, or $40.89 lower than in 2008. Commodity prices are affected by changes
in market demand, overall economic activity, weather, pipeline capacity constraints, inventory
storage levels, basis differentials and other factors. Our financial results are largely
dependent on commodity prices, particularly natural gas prices, which are beyond our control and
have been and are expected to remain volatile.
 Financial flexibility.In April 2009, we improved our financial flexibility through an amendment
to our senior secured revolving credit facility (the Senior Credit Facility) that (a) increased
the maximum total debt leverage ratio under the Senior Credit Facility through 2010 to as high as
4.75 to 1, (b) refined the definition of Net Debt in the leverage ratio to exclude a portion of
our 4.375% Senior Convertible Notes due 2028 (the Senior Convertible Notes) ($51 million in
2009 and $39 million in 2010) and (c) added a senior debt leverage covenant with a maximum ratio
of 2.25 to 1. During December 2009 the borrowing base and total commitments under the Senior
Credit Facility were both increased to $350 million. See Senior Credit Facility for more
information. In October 2009, we sold certain of our pipeline gathering systems in the Barnett
Shale for approximately $34.7 million. The net proceeds from the sale of this pipeline system
were used to reduce the debt outstanding under the Senior Credit Facility. See Recent Events 
Mansfield Pipeline Sale.
 Recent Events
 Mansfield Pipeline Sale
 We sold our Mansfield pipeline and gathering system in the Barnett Shale play to Delphi Midstream
Partners, LLC (Delphi) for net proceeds of $34.7 million. Net proceeds from the sale were used
to reduce the debt outstanding under the Senior Credit Facility. We constructed the Mansfield
pipeline system to gather and transport natural gas from our Southeast Tarrant County operating
area. The pipeline consists of 19 miles of 6, 8 and 10 inch diameter pipe with a current maximum
capacity of 70 MMcf/day. The system also includes an associated compression/dehydration facility
that was included in the transaction. Over the 30 days preceding the date of sale, the pipeline
transported an average of 58 MMcf/day. We have also entered into an agreement to continue to
operate the Mansfield pipeline system on Delphis behalf.
 Northeast Pennsylvania Alliance
 We have entered into an alliance with Delphi through which the parties have agreed to cooperate
in solving gathering and mid-stream pipeline related issues for our Marcellus production in
certain Northeast Pennsylvania counties including, among others, Bradford, Susquehanna, Tioga,
Wayne and Wyoming counties. We have granted Delphi a right of first offer with respect to these
Northeast Pennsylvania counties if we seek a third party to develop and construct a gathering or
intrastate pipeline and a right of first refusal with respect to Wyoming County, Pennsylvania if
a third party other than Delphi makes a development proposal. This alliance will terminate on
the earlier to occur of October 19, 2014 and the first date on which Delphi has invested an
aggregate of $100 million to develop and construct pipelines under the alliance. Delphis
funding obligations are subject to certain conditions, including the approval of its board of
directors. No projects have yet been constructed under this alliance.
 Sumitomo Joint Venture
 44




---



##### Table of Contents



In December 2009, we entered into a strategic alliance with a subsidiary of Sumitomo Corporation
(Sumitomo). We sold Sumitomo a 12.5% working interest in 16 of our drilling units in the
Barnett Shale for $15.7 million for certain costs previously incurred by us with respect to these
drilling units, including Sumitomos proportionate share of certain land seismic and drilling
costs. As part of our agreement, Sumitomo undertook an obligation to fund the drilling and
completion of 30 wells on a promoted basis and received an option to participate in up to an
additional 56 future wells on a similar promoted basis. We currently expect Sumitomo will
exercise its option to participate in the additional 56 wells. Additional wells may be drilled
under the joint venture within these units but would be drilled on an unpromoted basis. The net
proceeds from this sale were used to reduce the debt outstanding under the Senior Credit
Facility.
 Outlook for 2010
 Our outlook for 2010 is challenging, primarily as a result of the decline in natural gas and oil
prices that began in mid 2008, but our outlook for the long-term future remains positive.
Production growth and commodity prices that permit us to drill, develop and produce at a profit
are key to our future success, and we believe the following measures will have a positive impact
on our results in 2010:
 Control capital costs and maintain financial flexibility.In response to reduced demand for
natural gas and lower natural gas prices as a result of the continued economic downturn, we have
set our capital expenditure plan for 2010 at $170 million, and we are striving to maintain our
financial flexibility and a positive production growth profile. A deterioration in commodity
prices may cause us to reduce our capital and exploration plan for 2010.
 2010 drilling and capital program. In 2010 we plan to drill 57 gross (38.1 net) wells in the
Barnett Shale area, 11 gross (3.8 net) wells in the Marcellus Shale area, and three gross (1.5
net) wells in our other areas. As mentioned above, our 2010 capital expenditure plan has been set
at $170 million and includes approximately $130 million drilling in the Barnett Shale and $15
million for drilling in the Marcellus Shale, and $25 million for lease and seismic acquisition
activities and drilling and development in other project areas. The actual number of wells we
drill will vary depending upon various factors, including the availability and cost of drilling
rigs, land and industry partner issues, our available cash flow, success of drilling programs,
weather delays and other factors.
 Results of Operations
 Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
  45




---



##### Table of Contents



2009Compared to 2008December 31,
    
    
    Increase
    
    
    % Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    (Decrease)Production volumes-Oil and condensate (Mbbls)
    
    
    174
    
    
    
    186
    
    
    
    (12
    )
    
    
    (6
    )%Natural gas (MMcf)(1)
    
    
    32,002
    
    
    
    24,513
    
    
    
    7,489
    
    
    
    31
    %Average sales prices-Oil and condensate (per Bbl)
    
    $
    58.85
    
    
    $
    99.74
    
    
    $
    (40.89
    )
    
    
    (41
    )%Natural gas (per Mcf)
    
    
    3.20
    
    
    
    7.80
    
    
    
    (4.60
    )
    
    
    (59
    )%Operating revenues (In thousands) -Oil and condensate
    
    $
    10,217
    
    
    $
    18,598
    
    
    $
    (8,381
    )
    
    
    (45
    )%Natural gas
    
    
    102,482
    
    
    
    191,231
    
    
    
    (88,749
    )
    
    
    (46
    )%Other
    
    
    1,380
    
    
    
    6,848
    
    
    
    (5,468
    )
    
    
    (80
    )%Total
    
    $
    114,079
    
    
    $
    216,677
    
    
    $
    (102,598
    )
    
    
    (47
    )%
 
 (1)
    
    Includes 1,975.2 and 965.7 MMcfe of natural gas liquids in 2009 and 2008,
respectively.        Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007
  46




---



##### Table of Contents



2008Compared to 2007December 31,
    
    
    Increase
    
    
    % Increase2008
    
    
    2007
    
    
    (Decrease)
    
    
    (Decrease)Production volumes-Oil and condensate (Mbbls)
    
    
    186
    
    
    
    241
    
    
    
    (55
    )
    
    
    (23
    )%Natural gas (MMcf)(1)
    
    
    24,513
    
    
    
    16,042
    
    
    
    8,471
    
    
    
    53
    %Average sales prices-Oil and condensate (per Bbl)
    
    $
    99.74
    
    
    $
    71.42
    
    
    $
    28.32
    
    
    
    40
    %Natural gas (per Mcf)
    
    
    7.80
    
    
    
    6.77
    
    
    
    1.03
    
    
    
    15
    %Operating revenues (In thousands) -Oil and condensate
    
    $
    18,598
    
    
    $
    17,197
    
    
    $
    1,401
    
    
    
    8
    %Natural gas
    
    
    191,231
    
    
    
    108,592
    
    
    
    82,639
    
    
    
    76
    %Other
    
    
    6,848
    
    
    
    
    
    
    
    6,848
    
    
    
    100
    %Total
    
    $
    216,677
    
    
    $
    125,789
    
    
    $
    90,888
    
    
    
    72
    %
 
 (1)
    
    Includes 965.7 MMcfe of natural gas liquids in 2008.        47




---



##### Table of Contents



Liquidity and Capital Resources
 2010 Capital and Exploration Expenditures Plan and Funding Strategy.
 Sources and Uses of Cash.
 
    
    Cash on hand and cash generated by operations. Cash flows from operations are highly
dependent on commodity prices and market conditions for oil and gas field services. We hedge
a portion of our production to reduce the downside risk of declining natural gas and oil
prices.
    
    Borrowings under the Senior Credit Facility. During the fourth quarter of 2009, the
borrowing base under the Senior Credit Facility was increased to $350.0 million. At March
1, 2010, $138.2 million was available for borrowing under the Senior Credit Facility. The
next borrowing base redetermination is currently scheduled for April 1, 2010.
    
    Asset sales. In order to fund our capital expenditure plan, we may consider the
sale of certain properties or assets that are not part of our core business, or are no
longer deemed essential to our future growth, if we are able to sell such assets on terms
that are acceptable to us. In October 2009, we completed the sale of our Mansfield
pipelines and gathering system located in the Barnett Shale play for approximately $34.7
million. The net proceeds from the sale were used to reduce the debt outstanding under the
Senior Credit Facility. We may consider the sale of additional non-core assets, including
the possible sale of our interest in the Huntington Field located in the North Sea, provided
that we can obtain terms that are acceptable to us.
    
    Debt and equity offerings. As situations or conditions arise, we may need to
issue debt, equity or other instruments to supplement our cash flows. However, we may not
be able to obtain such financing on terms that are acceptable to us, or at all.
    
    Project financing in certain limited circumstances, particularly to fund all or a portion
of our future development costs for the Huntington Field in the U.K. North Sea.
    
    Lease option agreements and land banking arrangements, such as those we have entered into
in the Marcellus Shale, the Barnett Shale and other plays.
    
    Joint ventures with third parties through which such third parties fund a portion of our
exploration activities to earn an interest in our exploration acreage, such as our joint
venture in the Marcellus Shale play and our joint venture with Sumitomo in the Barnett
Shale.
    
    We may consider sale/leaseback transactions of certain capital assets, such as our
remaining pipelines and compressors, which are not part of our core oil and gas exploration
and production business.
  48




---



##### Table of Contents



Overview of Cash Flow Activities.
   Liquidity/Cash Flow Outlook.
   49




---



##### Table of Contents



Contractual Obligations
  Payments Due by Year(In thousands)2014 andTotal
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    ThereafterLong-term Debt(1)
    
    $
    565,150
    
    
    $
    
    
    
    $
    
    
    
    $
    191,400
    
    
    $
    373,750
    
    
    $
    Interest on
long-term debt(4)
    
    
    73,490
    
    
    
    22,264
    
    
    
    22,264
    
    
    
    20,786
    
    
    
    8,176
    
    
    
    Operating Leases
    
    
    2,642
    
    
    
    1,328
    
    
    
    1,314
    
    
    
    
    
    
    
    
    
    
    
    Drilling Contracts
    
    
    33,797
    
    
    
    25,418
    
    
    
    8,379
    
    
    
    
    
    
    
    
    
    
    
    Pipeline Volume Commitment(2)
    
    
    46,149
    
    
    
    9,239
    
    
    
    7,831
    
    
    
    7,019
    
    
    
    6,556
    
    
    
    15,504Asset retirement obligation
    
    
    5,410
    
    
    
    203
    
    
    
    375
    
    
    
    164
    
    
    
    87
    
    
    
    4,581Other(3)
    
    
    6,013
    
    
    
    1,924
    
    
    
    4,089
    
    
    
    
    
    
    
    
    
    
    
    Total Contractual Cash Obligations
    
    $
    732,651
    
    
    $
    60,376
    
    
    $
    44,252
    
    
    $
    219,369
    
    
    $
    388,569
    
    
    $
    20,085
 
 (1)
    
    Noteholders may require us to repurchase the Convertible Senior Notes in June 2013,
June 2018, or June 2023. The table assumes that the holders of the Convertible Senior Notes
exercise this right on the first available date (in June 2013).(2)
    
    Includes a seven year firm transportation agreement for 80,000 MMBtus/d effective
September 2009.(3)
    
    Includes premiums on long puts and other miscellaneous long-term liabilities.(4)
    
    Interest on long term debt is based on the 4.375% rate on the Convertible Senior
Notes and the December 31, 2009 average 3.2% rate outstanding under the Senior Secured
Revolving Credit Facility. Off Balance Sheet Arrangements
  Financing Arrangements
 Senior Secured Revolving Credit Facility
      50




---



##### Table of Contents



Convertible Senior Notes
    51




---



##### Table of Contents



Second Lien Credit Facility
  Public Offerings in 2008 and 2007
   Lease Option Arrangements
    52




---



##### Table of Contents



Effects of Inflation and Changes in Price
  Recently Adopted Accounting Pronouncements
     53




---



##### Table of Contents



Summary of Critical Accounting Policies
  Use of Estimates
  54




---



##### Table of Contents



Oil and Natural Gas Properties
       55




---



##### Table of Contents



Oil and Natural Gas Reserve Estimates
     Derivative Instruments
    56




---



##### Table of Contents



Income Taxes
  Contingencies
  Volatility of Oil and Natural Gas Prices
     December 31,2009
    
    2008
    
    2007Oil positions settled (Bbls)
    
    
    5,900
    
    
    
    64,100
    
    
    
    52,000Natural gas positions settled (MMBtu)
    
    
    26,066,000
    
    
    
    15,733,000
    
    
    
    7,846,000Realized gain ($ millions) (1)
    
    $
    74.9
    
    
    $
    (1.9
    )
    
    $
    6.4Unrealized gain (loss) ($ millions) (1)
    
    $
    (33.4
    )
    
    $
    41.1
    
    
    $
    (5.2
    )
 
 (1)
    
    Included in gain (loss) on derivatives, net in the Consolidated Statements of
Operations.   57




---



##### Table of Contents



Natural Gas Swaps
    
    Natural Gas CollarsAverage
    
    
    
    
    
    Average
    
    AverageFixed
    
    
    
    
    
    Floor
    
    CeilingQuarter
    
    MMbtus(1)
    
    Price(2)
    
    MMbtus(1)
    
    Price(2)
    
    Price(2)First Quarter 2010
    
    
    4,140,000
    
    
    $
    5.51
    
    
    
    2,070,000
    
    
    $
    7.29
    
    
    $
    8.96Second Quarter 2010
    
    
    4,641,000
    
    
    
    5.52
    
    
    
    1,092,000
    
    
    
    5.50
    
    
    
    6.99Third Quarter 2010
    
    
    3,496,000
    
    
    
    5.75
    
    
    
    1,564,000
    
    
    
    5.76
    
    
    
    7.31Fourth Quarter 2010
    
    
    3,036,000
    
    
    
    5.83
    
    
    
    1,840,000
    
    
    
    6.12
    
    
    
    7.57First Quarter 2011
    
    
    2,430,000
    
    
    
    5.92
    
    
    
    1,080,000
    
    
    
    7.84
    
    
    
    9.84Second Quarter 2011
    
    
    1,820,000
    
    
    
    5.64
    
    
    
    455,000
    
    
    
    7.75
    
    
    
    9.75Third Quarter 2011
    
    
    2,208,000
    
    
    
    5.74
    
    
    
    828,000
    
    
    
    7.55
    
    
    
    9.40Fourth Quarter 2011
    
    
    2,208,000
    
    
    
    5.77
    
    
    
    736,000
    
    
    
    7.88
    
    
    
    9.83First Quarter 2012
    
    
    1,365,000
    
    
    
    6.22
    
    
    
    1,001,000
    
    
    
    8.04
    
    
    
    9.96Second Quarter 2012
    
    
    910,000
    
    
    
    5.88
    
    
    
    455,000
    
    
    
    7.80
    
    
    
    9.80Third Quarter 2012
    
    
    1,472,000
    
    
    
    6.06
    
    
    
    644,000
    
    
    
    6.41
    
    
    
    7.91Fourth Quarter 2012
    
    
    1,472,000
    
    
    
    6.09
    
    
    
    644,000
    
    
    
    6.48
    
    
    
    8.43TOTAL
    
    
    29,198,000
    
    
    
    
    
    
    
    12,409,000
 
 (1)
    
    During 2009, we entered into (1) a $5.00 put, a $5.85 long-call and an $7.65
short-call with respect to a portion of our production hedged with swaps (10,000 MMBtus per
day) in 2011, (2) a $5.05 put, a $5.90 long call and a $7.70 short call with respect to a
portion of our production hedged with swaps (10,000 MMBtu per day) in 2012 and (3) a $3.93
put, a $5.58 long-call and a $6.08 short-call with respect to a portion of our production
hedged with swaps (20,000 MMBtus per day) for April through October
of 2010.The table
below presents additional put positions we have entered into associated with a portion of
hedged volumes presented above: Quarter
    
    MMBtus
    
    Put PriceSecond Quarter 2010
    
    
    455,000
    
    
    $
    3.74Third Quarter 2010
    
    
    920,000
    
    
    
    4.31Fourth Quarter 2010
    
    
    1,196,000
    
    
    
    4.61First Quarter 2011
    
    
    1,530,000
    
    
    
    5.53Second Quarter 2011
    
    
    910,000
    
    
    
    5.65Third Quarter 2011
    
    
    1,288,000
    
    
    
    5.59Fourth Quarter 2011
    
    
    1,196,000
    
    
    
    5.58First Quarter 2012
    
    
    1,911,000
    
    
    
    5.46Second Quarter 2012
    
    
    1,365,000
    
    
    
    5.45Third Quarter 2012
    
    
    1,564,000
    
    
    
    4.97Fourth Quarter 2012
    
    
    1,564,000
    
    
    
    4.98
 
 (2)
    
    Based on Houston Ship Channel (HSC) and WAHA spot prices. 58




---



##### Table of Contents



In addition, we sold the following natural gas long put positions:
 AverageQuarter
    
    MMBtus
    
    Fixed PriceSecond Quarter 2010
    
    
    300,000
    
    
    $
    5.86Third Quarter 2010
    
    
    920,000
    
    
    
    5.86Fourth Quarter 2010
    
    
    920,000
    
    
    
    5.86First Quarter 2011
    
    
    900,000
    
    
    
    5.80Second Quarter 2011
    
    
    910,000
    
    
    
    5.80Third Quarter 2011
    
    
    920,000
    
    
    
    5.80Fourth Quarter 2011
    
    
    920,000
    
    
    
    5.80
 
 Item 7A.
    
    Qualitative and Quantitative Disclosures about Market Risk
 Commodity Risk.
  Financial Instruments and Debt Maturities.
 
 Item 8.
    
    Financial Statements and Supplementary Data
  
 Item 9.
    
    Changes and Disagreements With Accountants on Accounting
and Financial Disclosures
  
 Item 9A.
    
    Controls and Procedures
 (a) Disclosure Controls and Procedures
   59




---



##### Table of Contents



(b) Managements Annual Report on Internal Control over Financial Reporting
 
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect our transactions and dispositions of our assets;
 
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and
 
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on the
financial statements.
  Internal Control  Integrated Framework
  (c) Changes in Internal Control over Financial Reporting
 
 Item 9B.
    
    Other Information
  
 PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
   
 Item 11.
    
    Executive Compensation
  60




---



##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accountant Fees and Services
  
 PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
 (a)(1) Financial Statements
  (a)(2) Financial Statement Schedules
  (a)(3) Exhibits
 
 EXHIBIT INDEX
 ExhibitNumber
    
    
    
    Description2.1
    
    
    
    Combination Agreement by and among the Company, Carrizo Production, Inc., Encinitas Partners Ltd., La
Rosa Partners Ltd., Carrizo Partners Ltd., Paul B. Loyd, Jr., Steven A. Webster, S.P. Johnson IV,
Douglas A.P. Hamilton and Frank A. Wojtek dated as of September 6, 1997 (incorporated herein by
reference to Exhibit 2.1 to the Companys Registration Statement on Form S-1 (Registration No.
333-29187)).3.1
    
    
    
    Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to
Exhibit 3.1 to the Companys Annual Report on Form 10-K for the year ended December 31, 1997).3.2
    
    
    
    Articles of Amendment to Amended and Restated Articles of Incorporation (incorporated herein by
reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed on June 25, 2008).3.3
    
    
    
    Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.1 to the
Companys Current Report on Form 8-K filed on January 3, 2008).4.1
    
    
    
    Indenture among Carrizo Oil & Gas, Inc., the subsidiaries named therein and Wells Fargo Bank, National
Association, as trustee, dated May 28, 2008 (incorporated herein by reference to Exhibit 4.1 to the
Companys Current Report on Form 8-K filed on May 28, 2008).4.2
    
    
    
    First Supplemental Indenture dated May 28, 2008 between Carrizo Oil & Gas, Inc. and Wells Fargo Bank,
National Association, as trustee (incorporated herein by reference to Exhibit 4.2 to the Companys
Current Report on Form 8-K filed on May 28, 2008).4.3
    
    
    
    Second Supplemental Indenture dated May 14, 2009 among Carrizo Oil & Gas, Inc., the subsidiaries named therein and Wells Fargo Bank,
National Association, as trustee (incorporated herein by reference to Exhibit 4.21 to the Companys
Registration Statement  on Form S-3 (Registration No. 333-159237)).10.1
    
    
    
    Amendment No. 1 to the Letter Agreement Regarding Participation in the Companys 2001 Seismic and
Acreage Program, dated June 1, 2001 (incorporated herein by reference to Exhibit 4.2 to the Companys
Quarterly Report on Form 10-Q for the quarter ended June 30, 2001).*10.2
    
    
    
    Amended and Restated Incentive Plan of the Company effective as of April 30, 2009 (incorporated herein
by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on May 6, 2009).
 61




---



##### Table of Contents



ExhibitNumber
    
    
    
    Description*10.3
    
    
    
    Amended and Restated Employment Agreement between the Company and S.P. Johnson IV (incorporated herein
by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on June 9, 2009).*10.4
    
    
    
    Amended and Restated Employment Agreement between the Company and Paul F. Boling (incorporated herein
by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed on June 9, 2009).*10.5
    
    
    
    Amended and Restated Employment Agreement between the Company and J. Bradley Fisher (incorporated
herein by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K filed on June 9, 2009).*10.6
    
    
    
    Amended and Restated Employment Agreement between the Company and Gregory E. Evans (incorporated herein
by reference to Exhibit 10.5 to the Companys Current Report on Form 8-K filed on June 9, 2009).*10.7
    
    
    
    Amended and Restated Employment Agreement between the Company and Richard H. Smith (incorporated herein
by reference to Exhibit 10.6 to the Companys Current Report on Form 8-K filed on June 9, 2009).*10.8
    
    
    
    Employment Agreement between the Company and David L. Pitts (incorporated herein by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed on January 20, 2010).*10.9
    
    
    
    Form of Stock Option Award Agreement (incorporated herein by reference to Exhibit 10.43 to the
Companys Annual Report on Form 10-K for the year ended December 31, 2004).*10.10
    
    
    
    Form of Director Restricted Stock Award Agreement under the Incentive Plan of Carrizo Oil & Gas, Inc.
(incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on
April 22, 2005).*10.11
    
    
    
    Form of Director Restricted Stock Award Agreement under the Incentive Plan of Carrizo Oil & Gas, Inc.
(incorporated herein by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on
April 22, 2005).*10.12
    
    
    
    Form of Employee Restricted Stock Award Agreement under the Incentive Plan of Carrizo Oil & Gas, Inc.
(incorporated herein by reference to Exhibit 10.3 to the Companys Current Report on Form 8-K filed on
April 22, 2005).*10.13
    
    
    
    Form of 2009 Employee Restricted Stock Unit Award Agreement (with performance-based vesting and
time-based vesting) (incorporated herein by reference to Exhibit 10.7 to the Companys Current Report
on Form 8-K filed on June 9, 2009).*10.14
    
    
    
    Form of 2009 Employee Restricted Stock Unit Award Agreement (with performance-based vesting only)
(incorporated herein by reference to Exhibit 10.8 to the Companys Current Report on Form 8-K filed on
June 9, 2009).*10.15
    
    
    
    Form of 2009 Employee Cash or Stock Settled Stock Appreciation Rights Award Agreement under the Carrizo
Oil & Gas, Inc. Incentive Plan (incorporated herein by reference to Exhibit 10.9 to the Companys
Current Report on Form 8-K filed on June 9, 2009).*10.16
    
    
    
    Carrizo Oil & Gas, Inc. Cash-Settled Stock Appreciation Rights Plan (incorporated herein by reference
to Exhibit 10.10 to the Companys Current Report on Form 8-K filed on June 9, 2009).*10.17
    
    
    
    Form of 2009 Employee Cash-Settled Stock Appreciation Rights Award Agreement pursuant to the Carrizo
Oil & Gas, Inc. Stock Appreciation Rights Plan (incorporated herein by reference to Exhibit 10.11 to
the Companys Current Report on Form 8-K filed on June 9, 2009).*10.18
    
    
    
    Form of Independent Contractor Restricted Stock Award Agreement (incorporated herein by reference to
Exhibit 10.4 to the Companys Current Report on Form 8-K filed on May 30, 2006).*10.19
    
    
    
    Form of Employee Restricted Stock Award Agreement (with performance-based vesting) (incorporated herein
by reference to Exhibit 10.6 to the Companys Current Report on Form 8-K filed on December 23, 2008).10.20
    
    
    
    S Corporation Tax Allocation, Payment and Indemnification Agreement among the Company and Messrs. Loyd,
Webster, Johnson, Hamilton and Wojtek (incorporated herein by reference to Exhibit 10.8 to the
Companys Registration Statement on Form S-1 (Registration No. 333-29187)).10.21
    
    
    
    S Corporation Tax Allocation, Payment and Indemnification Agreement among Carrizo Production, Inc. and
Messrs. Loyd, Webster, Johnson, Hamilton and Wojtek (incorporated herein by reference to Exhibit 10.9
to the Companys Registration Statement on Form S-1 (Registration No. 333-29187)).10.22
    
    
    
    Amended and Restated Registration Rights Agreement dated December 15, 1999 among the Company, Paul B.
Loyd Jr., Douglas A. P. Hamilton, Steven A. Webster, S.P. Johnson IV, Frank A. Wojtek and DAPHAM
Partnership, L.P. (incorporated herein by reference to Exhibit 99.5 to the Companys Current Report on
Form 8-K dated December 15, 1999).
 62




---



##### Table of Contents



ExhibitNumber
    
    
    
    Description10.23
    
    
    
    Registration Rights Agreement dated February 20, 2002 among the Company, Mellon Ventures, L.P. and
Steven A. Webster (incorporated herein by reference to Exhibit 99.5 to the Companys Current Report on
Form 8-K dated February 20, 2002).10.24
    
    
    
    Credit Agreement dated as of May 25, 2006 among Carrizo Oil & Gas, Inc., as Borrower, Certain
Subsidiaries of Borrower, as Guarantors, the Lenders party thereto, JPMorgan Chase Bank, National
Association, as Administrative Agent, and J.P. Morgan Securities Inc., as Sole Bookrunner and Lead
Arranger (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on May 30, 2006).10.25
    
    
    
    First Lien Stock Pledge and Security Agreement dated as of May 25, 2006, by Carrizo Oil & Gas, Inc., in
favor of JPMorgan Chase Bank, National Association, as Administrative Agent (incorporated herein by
reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on May 30, 2006).10.26
    
    
    
    Second Amendment effective as of September 11, 2007 to Credit Agreement dated as of May 25, 2006 among
Carrizo Oil & Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors, JPMorgan Chase
Bank, National Association, as Administrative Agent and Lender, and Guaranty Bank as Lender
(incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on
September 11, 2007).10.27
    
    
    
    Third Amendment effective as of December 20, 2007 to Credit Agreement dated as of May 25, 2006 among
Carrizo Oil & Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors, JPMorgan Chase
Bank, National Association, as Administrative Agent and Lender, and Guaranty Bank as Lender
(incorporated by reference to Exhibit 10.48 to the Companys Annual Report on Form 10-K for the year
ended December 31, 2008).10.28
    
    
    
    Fourth Amendment to Credit Agreement, dated as of May 20, 2008, by and among Carrizo Oil & Gas, Inc.
and certain subsidiaries thereof, the Lenders party thereto and JPMorgan Chase Bank, N.A., as
Administrative Agent (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report
on Form 8-K filed on May 22, 2008).10.29
    
    
    
    Fifth Amendment to Credit Agreement dated as of June 11, 2008 to Credit Agreement dated as of May 25,
2006 among Carrizo Oil & Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors,
JPMorgan Chase Bank, N.A., as Administrative Agent, and the Lenders party thereto (incorporated herein
by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on July 11, 2008).10.30
    
    
    
    Sixth Amendment dated as of July 7, 2008 to Credit Agreement dated as of May 25, 2006 among Carrizo Oil
& Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors, JPMorgan Chase Bank, N.A.,
as Administrative Agent, and the Lenders party thereto (incorporated herein by reference to Exhibit
10.2 to the Companys Current Report on Form 8-K filed on July 11, 2008).10.31
    
    
    
    Seventh Amendment dated as of October 29, 2008 to Credit Agreement dated as of May 25, 2006 among
Carrizo Oil & Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors, the Lenders
party thereto, JPMorgan Chase Bank, N.A., as resigning administrative agent and as resigning issuing
bank, and Guaranty Bank, as successor administrative agent and as successor issuing bank (incorporated
herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on November 4,
2008).10.32
    
    
    
    Lender Certificate dated December 16, 2008 of Union Bank of California, N.A. regarding joinder as
Lender to Credit Agreement, as amended, dated as of May 25, 2006 among Carrizo Oil & Gas, Inc., as
Borrower, Certain Subsidiaries of Borrower, as Guarantors, Guaranty Bank, as Administrative Agent and
the Lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on December 22, 2008).10.33
    
    
    
    Eighth Amendment dated as of April 22, 2009 to Credit Agreement dated May 25, 2006 by and among Carrizo
Oil & Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors, the Lenders party
thereto, and Guaranty Bank, as administrative agent (incorporated herein by reference to Exhibit 10.1
to the Companys Current Report on Form 8-K filed on April 28, 2009).10.34
    
    
    
    Ninth Amendment dated as of April 30, 2009 to Credit Agreement dated May 25, 2006 by and among Carrizo
Oil & Gas, Inc., as Borrower, Certain Subsidiaries of Borrower, as Guarantors, the Lenders party
thereto, and Guaranty Bank, as administrative agent (incorporated herein by reference to Exhibit 10.1
to the Companys Current Report on Form 8-K filed on May 6, 2009).10.35
    
    
    
    Tenth Amendment to Credit Agreement dated as of May 20, 2009 among Carrizo Oil & Gas, Inc., as
Borrower, certain Subsidiaries of Borrower, as Guarantors, the Lenders party thereto, Guaranty Bank, as
resigning administrative agent and as resigning issuing bank, and Wells Fargo Bank, N.A., as successor
administrative agent and as successor issuing bank (incorporated herein by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K filed on May 27, 2009).
 63




---



##### Table of Contents



ExhibitNumber
    
    
    
    Description10.36
    
    
    
    Lender Certificate dated June 5, 2009 of Calyon New York Branch regarding joinder as Lender to Credit
Agreement, as amended, dated as of May 25, 2006 among Carrizo Oil & Gas, Inc., as Borrower, Certain
Subsidiaries of Borrower, as Guarantors, Guaranty Bank, as Administrative Agent and the Lenders party
thereto (incorporated herein by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed on June 9, 2009).10.37
    
    
    
    Eleventh Amendment to Credit Agreement dated as of December 16, 2009 among Carrizo Oil & Gas, Inc., as
Borrower, certain Subsidiaries of the Borrower, as Guarantors, the Lenders party thereto, and Wells
Fargo Bank, N.A., as administrative agent and issuing bank (incorporated herein by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed on December 17, 2009).10.38
    
    
    
    Form of Indemnification Agreement
between the Company and each of its directors and executive officers
(incorporated herein by reference to Exhibit 10.6 to the
Companys Annual Report on Form 10-K for the year ended December
31, 1998).10.39
    
    
    
    Form of Amendment to Director
Indemnification Agreement (incorporated herein by reference to
Exhibit 99.8 to the Companys Current Report a Form 8-K dated
February 20, 2002).16.1
    
    
    
    Letter dated June 3, 2009 from Pannell Kerr Forster of Texas, P.C. to the Securities and Exchange
Commission regarding a change in certifying accountant (incorporated herein by reference to Exhibit
16.1 to the Companys Current Report on Form 8-K filed on June 4, 2009).21.1
    
    
    
    Subsidiaries of the Company.23.1
    
    
    
    Consent of KPMG LLP.23.2
    
    
    
    Consent of Pannell Kerr Forster of Texas, P.C.23.3
    
    
    
    Consent of Ryder Scott Company Petroleum Engineers.23.4
    
    
    
    Consent of Fairchild & Stan, Inc.23.5
    
    
    
    Consent of LaRoche Petroleum Consultants, Ltd.31.1
    
    
    
    CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    
    
    
    Summary of Reserve Report and Report of Ryder Scott Company Petroleum Engineers as of December 31, 2009.99.2
    
    
    
    Summary of Reserve Report and Report of Fairchild & Stan, Inc. as of December 31, 2009.99.3
    
    
    
    Summary of Reserve Report and Report of LaRoche Petroleum Consultants, Ltd. as of December 31, 2009.
 
 
    
    Incorporated by reference as indicated.*
    
    Management contract or compensatory plan or arrangement. 64




---



##### Table of Contents



CARRIZO OIL & GAS, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PAGEReports of Independent Registered Public Accounting Firms
    
    F-2Consolidated Balance Sheets, December 31, 2009 and 2008
    
    F-5Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007
    
    F-6Consolidated Statements of Shareholders Equity for the Years Ended December 31, 2009, 2008 and 2007
    
    F-7Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007
    
    F-9Notes to Consolidated Financial Statements
    
    F-10
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Oil and Gas Reserve Estimation and Disclosures
 Internal Control  Integrated Framework
  
 F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework Controls and Procedures
    Internal
Control  Integrated Framework
   
 F-3




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 
 F-4




---



##### Table of Contents



CARRIZO OIL & GAS, INC.


CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    
    2008(In thousands, exceptper share amount)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    3,837
    
    
    $
    5,184Accounts receivable, trade (net of allowance for doubtful accounts of
$2,036 and $1,264 at December 31, 2009 and 2008, respectively)
    
    
    21,341
    
    
    
    21,458Advances to operators
    
    
    540
    
    
    
    336Fair value of derivative financial instruments
    
    
    8,404
    
    
    
    26,008Prepayments and deposits
    
    
    1,278
    
    
    
    3,335Total current assets
    
    
    35,400
    
    
    
    56,321PROPERTY AND EQUIPMENT, net full-cost method of accounting for oil and natural
gas properties (including costs not subject to amortization of $330,607 and
$378,634 at December 31, 2009 and 2008, respectively)
    
    
    733,700
    
    
    
    986,629DEFERRED FINANCING COSTS, NET
    
    
    9,738
    
    
    
    8,430INVESTMENTS
    
    
    3,358
    
    
    
    3,274FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS
    
    
    6,477
    
    
    
    15,876DEFERRED TAX ASSET
    
    
    70,217
    
    
    
    OTHER ASSETS
    
    
    4,217
    
    
    
    1,172TOTAL ASSETS
    
    $
    863,107
    
    
    $
    1,071,702LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable, trade
    
    $
    47,297
    
    
    $
    46,683Accrued liabilities
    
    
    30,293
    
    
    
    54,149Advances for joint operations
    
    
    1,739
    
    
    
    3,815Current maturities of long-term debt
    
    
    148
    
    
    
    173Deferred tax liability
    
    
    1,474
    
    
    
    9,103Other current liabilities
    
    
    1,777
    
    
    
    Total current liabilities
    
    
    82,728
    
    
    
    113,923LONG-TERM DEBT, net of current maturities and debt discount
    
    
    520,188
    
    
    
    475,788ASSET RETIREMENT OBLIGATION
    
    
    5,410
    
    
    
    6,503FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS
    
    
    2,818
    
    
    
    DEFERRED INCOME TAXES
    
    
    
    
    
    
    34,778DEFERRED CREDITS
    
    
    4,354
    
    
    
    625COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:Common stock, par value $0.01 per share (90,000 shares authorized with
31,100 and 30,860 issued and outstanding at December 31, 2009 and 2008,
respectively)
    
    
    311
    
    
    
    309Additional paid in capital
    
    
    431,757
    
    
    
    420,778Retained earnings
    
    
    (184,548
    )
    
    
    20,297Accumulated other comprehensive income (loss), net of tax
    
    
    89
    
    
    
    (1,299
    )Total shareholders equity
    
    
    247,609
    
    
    
    440,085TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    863,107
    
    
    $
    1,071,702
  F-5




---



##### Table of Contents



CARRIZO OIL & GAS, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Years Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands, except per share amounts)OIL AND NATURAL GAS REVENUES
    
    $
    114,079
    
    
    $
    216,677
    
    
    $
    125,789COSTS AND EXPENSES:Oil and natural gas operating expenses
    
    
    30,204
    
    
    
    37,885
    
    
    
    24,662Third party gas purchases
    
    
    1,497
    
    
    
    6,570
    
    
    
    Depreciation, depletion and amortization
    
    
    52,005
    
    
    
    58,311
    
    
    
    41,899Impairment of oil and natural gas properties
    
    
    338,914
    
    
    
    178,470
    
    
    
    General and administrative
    
    
    30,136
    
    
    
    23,425
    
    
    
    18,912Accretion expense related to asset retirement obligation
    
    
    308
    
    
    
    154
    
    
    
    374Total costs and expenses
    
    
    453,064
    
    
    
    304,815
    
    
    
    85,847OPERATING INCOME (LOSS)
    
    
    (338,985
    )
    
    
    (88,138
    )
    
    
    39,942OTHER INCOME AND EXPENSES:Gain (loss) on derivatives, net
    
    
    41,465
    
    
    
    37,499
    
    
    
    (1,366
    )Loss on extinguishment of debt
    
    
    
    
    
    
    (5,689
    )
    
    
    Impairment of investment in Pinnacle Gas Resources, Inc.
    
    
    (2,091
    )
    
    
    
    
    
    
    Interest income
    
    
    13
    
    
    
    269
    
    
    
    691Interest expense
    
    
    (38,286
    )
    
    
    (30,257
    )
    
    
    (26,403
    )Capitalized interest
    
    
    19,696
    
    
    
    20,527
    
    
    
    11,718Other income, net
    
    
    36
    
    
    
    17
    
    
    
    130INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
    
    
    (318,152
    )
    
    
    (65,772
    )
    
    
    24,712INCOME TAX EXPENSE (BENEFIT)
    
    
    (113,307
    )
    
    
    (20,725
    )
    
    
    9,243NET INCOME (LOSS)
    
    $
    (204,845
    )
    
    $
    (45,047
    )
    
    $
    15,469OTHER COMPREHENSIVE INCOME (LOSS):Increase (decrease) in market value of investment in
Pinnacle Gas
Resources, Inc., net of income taxes
    
    
    55
    
    
    
    (6,724
    )
    
    
    5,425Reclassification of cumulative decrease in market value
of investment in Pinnacle Gas Resources, Inc., net
of taxes
    
    
    1,333
    
    
    
    
    
    
    
    COMPREHENSIVE INCOME (LOSS)
    
    $
    (203,457
    )
    
    $
    (51,771
    )
    
    $
    20,894BASIC EARNINGS (LOSS) PER COMMON SHARE
    
    $
    (6.61
    )
    
    $
    (1.49
    )
    
    $
    0.58DILUTED EARNINGS (LOSS) PER COMMON SHARE
    
    $
    (6.61
    )
    
    $
    (1.49
    )
    
    $
    0.57WEIGHTED AVERAGE SHARES OUTSTANDING:BASIC
    
    
    31,006
    
    
    
    30,326
    
    
    
    26,641DILUTED
    
    
    31,006
    
    
    
    30,326
    
    
    
    27,120
  F-6




---



##### Table of Contents



CARRIZO OIL & GAS, INC.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Common StockShares
    
    
    Amount(In thousands, exceptshare amounts)BALANCE, January 1, 2007
    
    
    25,980,605
    
    
    $
    260Common stock issued, net of offering cost
    
    
    1,800,000
    
    
    
    18Stock options exercised for cash
    
    
    124,148
    
    
    
    1Stock-based compensation
    
    
    
    
    
    
    Restricted stock awards, net of forfeitures
    
    
    111,839
    
    
    
    1Common stock repurchased to settle tax withholding obligations
    
    
    (7,440
    )
    
    
    Other comprehensive income:Fair value adjustment to investment in Pinnacle Gas Resources, Inc., net of income
tax expense of $2,921
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    Total comprehensive income
    
    
    
    
    
    
    BALANCE, December 31, 2007
    
    
    28,009,152
    
    
    $
    280Common stock issued, net of offering cost
    
    
    2,587,500
    
    
    
    26Bifurcation of equity premium related to Senior Secured Notes
    
    
    
    
    
    
    Stock options exercised for cash
    
    
    65,400
    
    
    
    1Stock-based compensation
    
    
    
    
    
    
    Restricted stock awards, net of forfeitures
    
    
    203,306
    
    
    
    2Common stock repurchased to settle tax withholding obligations
    
    
    (5,711
    )
    
    
    Other comprehensive loss:
    
    
    
    
    
    
    Fair value adjustment to investment in Pinnacle Gas Resources, Inc., net of income tax
benefit of $3,621
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    Total comprehensive loss
    
    
    
    
    
    
    BALANCE, December 31, 2008
    
    
    30,859,647
    
    
    $
    309Stock options exercised for cash
    
    
    5,000
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    Restricted stock and stock option awards, net of forfeitures
    
    
    226,286
    
    
    
    2Other
    
    
    9,500
    
    
    
    Other comprehensive loss:Fair value adjustment to investment in Pinnacle Gas Resources, Inc., net of income tax
expense of $31
    
    
    
    
    
    
    Reclassification of cumulative decrease in market value of investment in
Pinnacle Gas Resources, Inc., net of income tax expense of $758
    
    
    
    
    
    
    Net lossTotal comprehensive loss
    
    
    
    
    
    
    BALANCE, December 31, 2009
    
    
    31,100,433
    
    
    $
    311
  F-7




---



##### Table of Contents



CARRIZO OIL & GAS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 AccumulatedAdditional
    
    
    
    
    
    
    OtherPaid in
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersCapital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity(In thousands)BALANCE, January 1, 2007
    
    $
    162,139
    
    
    $
    49,875
    
    
    $
    
    
    
    $
    212,274Common stock issued, net of offering cost
    
    
    71,908
    
    
    
    
    
    
    
    
    
    
    
    71,926Stock options exercised for cash
    
    
    1,030
    
    
    
    
    
    
    
    
    
    
    
    1,031Stock-based compensation
    
    
    5,041
    
    
    
    
    
    
    
    
    
    
    
    5,041Restricted stock awards, net of forfeitures
    
    
    (136
    )
    
    
    
    
    
    
    
    
    
    
    (135
    )Common stock repurchased to settle tax withholding obligations
    
    
    (310
    )
    
    
    
    
    
    
    
    
    
    
    (310
    )Other comprehensive income:Fair value adjustment to investment in Pinnacle Gas
Resources, Inc., net of income tax expense of $2,921
    
    
    
    
    
    
    
    
    
    
    5,425
    
    
    
    5,425Net income
    
    
    
    
    
    
    15,469
    
    
    
    
    
    
    
    15,469Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,894BALANCE, December 31, 2007
    
    $
    239,672
    
    
    $
    65,344
    
    
    $
    5,425
    
    
    $
    310,721Common stock issued, net of offering cost
    
    
    135,049
    
    
    
    
    
    
    
    
    
    
    
    135,075Bifurcation of equity premium related to Senior Convertible
Notes
    
    
    40,207
    
    
    
    
    
    
    
    
    
    
    
    40,207Stock options exercised for cash
    
    
    261
    
    
    
    
    
    
    
    
    
    
    
    262Stock-based compensation
    
    
    6,013
    
    
    
    
    
    
    
    
    
    
    
    6,013Restricted stock awards, net of forfeitures
    
    
    (63
    )
    
    
    
    
    
    
    
    
    
    
    (61
    )Common stock repurchased to settle tax withholding obligations
    
    
    (361
    )
    
    
    
    
    
    
    
    
    
    
    (361
    )Other comprehensive loss:Fair value adjustment to investment in Pinnacle Gas
Resources, Inc., net of income tax benefit of $3,621
    
    
    
    
    
    
    
    
    
    
    (6,724
    )
    
    
    (6,724
    )Net loss
    
    
    
    
    
    
    (45,047
    )
    
    
    
    
    
    
    (45,047
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,771
    )BALANCE, December 31, 2008
    
    $
    420,778
    
    
    $
    20,297
    
    
    $
    (1,299
    )
    
    $
    440,085Stock options exercised for cash
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    9Stock-based compensation
    
    
    10,543
    
    
    
    
    
    
    
    
    
    
    
    10,543Restricted stock and stock option awards, net of forfeitures
    
    
    304
    
    
    
    
    
    
    
    
    
    
    
    306Other
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    123Other Comprehensive loss:Fair value adjustment to investment in Pinnacle Gas
Resources, Inc., net of income tax expense of $31
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    55Reclassification of cumulative decrease in market value of
investment in Pinnacle Gas Resources, Inc., net of
income tax
expense of $758
    
    
    
    
    
    
    
    
    
    
    1,333
    
    
    
    1,333Net loss
    
    
    
    
    
    
    (204,845
    )
    
    
    
    
    
    
    (204,845
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (203,457
    )BALANCE, December 31, 2009
    
    $
    431,757
    
    
    $
    (184,548
    )
    
    $
    89
    
    
    $
    247,609
  F-8




---



##### Table of Contents



CARRIZO OIL & GAS, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (204,845
    )
    
    $
    (45,047
    )
    
    $
    15,469Adjustments to reconcile net income (loss) to net cash provided by
operating activities Depreciation, depletion and amortization
    
    
    52,005
    
    
    
    58,311
    
    
    
    41,899Impairment of oil and natural gas properties
    
    
    338,914
    
    
    
    178,470
    
    
    
    Fair value (gain) loss on derivative financial instruments
    
    
    33,401
    
    
    
    (43,859
    )
    
    
    8,023Provision for allowance for doubtful accounts
    
    
    772
    
    
    
    (166
    )
    
    
    (209
    )Accretion of discounts on asset retirement obligations
    
    
    308
    
    
    
    154
    
    
    
    374Loss on extinguishment of debt
    
    
    
    
    
    
    4,601
    
    
    
    Stock-based compensation
    
    
    11,297
    
    
    
    5,952
    
    
    
    4,907Deferred income taxes
    
    
    (113,374
    )
    
    
    (20,920
    )
    
    
    8,329Amortization of equity premium associated with Senior Convertible Notes
    
    
    5,898
    
    
    
    1,825
    
    
    
    Impairment of investment in Pinnacle Gas Resources, Inc.
    
    
    2,091
    
    
    
    
    
    
    
    Other
    
    
    5,865
    
    
    
    5,272
    
    
    
    1,623Changes in operating assets and liabilities Accounts receivable, trade
    
    
    (656
    )
    
    
    5,119
    
    
    
    (330
    )Other assets
    
    
    (876
    )
    
    
    (3,661
    )
    
    
    (210
    )Accounts payable, trade
    
    
    558
    
    
    
    (1,476
    )
    
    
    15,463Accrued liabilities
    
    
    2,014
    
    
    
    4,179
    
    
    
    (107
    )Net cash provided by operating activities
    
    
    133,372
    
    
    
    148,754
    
    
    
    95,231CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (182,907
    )
    
    
    (571,291
    )
    
    
    (247,003
    )Change in capital expenditure accrual
    
    
    (25,685
    )
    
    
    11,808
    
    
    
    17,079Proceeds from the sale of oil and natural gas properties
    
    
    48,524
    
    
    
    3,259
    
    
    
    1,505Advances to operators
    
    
    (204
    )
    
    
    776
    
    
    
    994Advances for joint operations
    
    
    (2,076
    )
    
    
    2,943
    
    
    
    (229
    )Other
    
    
    (105
    )
    
    
    (2,840
    )
    
    
    (70
    )Net cash used in investing activities
    
    
    (162,453
    )
    
    
    (555,345
    )
    
    
    (227,724
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from common stock issuances:Stock offerings, net of offering costs
    
    
    
    
    
    
    135,075
    
    
    
    71,926Stock option exercises
    
    
    9
    
    
    
    262
    
    
    
    1,031Net proceeds from debt issuance and borrowings
    
    
    128,113
    
    
    
    778,182
    
    
    
    174,000Debt repayments
    
    
    (96,461
    )
    
    
    (498,923
    )
    
    
    (108,258
    )Payments of financing costs and other
    
    
    (3,927
    )
    
    
    (10,847
    )
    
    
    (3,588
    )Net cash provided by financing activities
    
    
    27,734
    
    
    
    403,749
    
    
    
    135,111NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (1,347
    )
    
    
    (2,842
    )
    
    
    2,618CASH AND CASH EQUIVALENTS, beginning of year
    
    
    5,184
    
    
    
    8,026
    
    
    
    5,408CASH AND CASH EQUIVALENTS, end of year
    
    $
    3,837
    
    
    $
    5,184
    
    
    $
    8,026SUPPLEMENTAL CASH FLOW DISCLOSURES:Cash paid for interest (net of amounts capitalized)
    
    $
    16,347
    
    
    $
    4,160
    
    
    $
    12,217Cash paid for income taxes
    
    $
    67
    
    
    $
    30
    
    
    $
    
  F-9




---



##### Table of Contents



CARRIZO OIL & GAS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. NATURE OF OPERATIONS
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Unconsolidated Investments
   Reclassifications
  Use of Estimates
    Oil and Natural Gas Properties
  F-10




---



##### Table of Contents



Cash and Cash Equivalents
  Revenue Recognition and Natural Gas Imbalances
   F-11




---



##### Table of Contents



Deferred Financing Costs, net
  Supplemental Cash Flow Information
  Financial Instruments
  Stock-Based Compensation
  Years Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Stock Option and SARs
    
    $
    1.2
    
    
    $
    0.1
    
    
    $
    0.3Restricted Stock
    
    
    10.1
    
    
    
    5.9
    
    
    
    4.6Total Stock-Based Compensation
    
    $
    11.3
    
    
    $
    6.0
    
    
    $
    4.9Tax Benefit
    
    $
    4.1
    
    
    $
    2.1
    
    
    $
    1.7
 Stock Options and SARs.
  
    
    The risk-free interest rate is based on a Treasury bond at date of grant that corresponds
to the expected term of the option/SAR.
    
    The dividend yield on the Companys common stock is assumed to be zero since the Company
does not pay dividends and has no current plans to do so in the future.
    
    The market price volatility of the Companys common stock is based on daily, historical
prices equal to the expected term of the option/SAR.
    
    The term of the grants is based on the simplified method, or on historical experience.
 Restricted Stock
 Taxes.
 F-12




---



##### Table of Contents



Derivative Instruments
    Income Taxes
  Concentration of Credit Risk
   Allowance for Doubtful Accounts
  January 1, 2007
    
    $
    1,639Charged to general and administrative expense
    
    
    (209
    )December 31, 2007
    
    $
    1,430Charged to general and administrative expense
    
    
    (166
    )December 31, 2008
    
    $
    1,264Charged to general and administrative expense
    
    
    772December 31, 2009
    
    $
    2,036
 F-13




---



##### Table of Contents



Major Customers
  Year Ended December 31,2009
    
    2008
    
    2007DTE Energy Trading, Inc.
    
    
    54
    %
    
    
    39
    %
    
    
    *Cokinos Natural Gas Company
    
    
    *
    
    
    
    11
    %
    
    
    11
    %Crosstex Energy
    
    
    *
    
    
    
    10
    %
    
    
    15
    %Houston Pipeline Company
    
    
    *
    
    
    
    *
    
    
    
    11
    %Energy Transfer
    
    
    *
    
    
    
    *
    
    
    
    10
    %
 
 (*)
    
    Revenues were below 10%. Earnings Per Share
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands, except per share amounts)Net income (loss) available to common shareholders
    
    $
    (204,845
    )
    
    $
    (45,047
    )
    
    $
    15,469Basic weighted average common shares outstanding
    
    
    31,006
    
    
    
    30,326
    
    
    
    26,641Stock options
    
    
    
    
    
    
    
    
    
    
    479Diluted weighted average shares outstanding
    
    
    31,006
    
    
    
    30,326
    
    
    
    27,120Earnings (loss) per shareBasic
    
    $
    (6.61
    )
    
    $
    (1.49
    )
    
    $
    0.58Diluted
    
    $
    (6.61
    )
    
    $
    (1.49
    )
    
    $
    0.57
  Contingencies
  Asset Retirement Obligation
   F-14




---



##### Table of Contents



2009
    
    
    2008(In thousands)Asset retirement obligation at beginning of year
    
    $
    6,503
    
    
    $
    5,869Liabilities incurred
    
    
    444
    
    
    
    1,004Liabilities settled
    
    
    (36
    )
    
    
    (177
    )Accretion expense
    
    
    308
    
    
    
    154Revisions to previous estimates
    
    
    (1,809
    )
    
    
    (347
    )Asset retirement obligation at end of year
    
    $
    5,410
    
    
    $
    6,503
 Foreign Currency
  Recently Adopted Accounting Pronouncements
        F-15




---



##### Table of Contents



3. INVESTMENTS
  December 31,2009
    
    
    2008(In thousands)Pinnacle Gas Resources, Inc.
    
    $
    835
    
    
    $
    751Oxane Materials, Inc.
    
    
    2,523
    
    
    
    2,523$
    3,358
    
    
    $
    3,274
 Pinnacle Gas Resources, Inc.
     F-16




---



##### Table of Contents



Oxane Materials, Inc.
  4. PROPERTY AND EQUIPMENT
  December 31,2009
    
    
    2008(In thousands)Proved oil and natural gas properties
    
    $
    667,907
    
    
    $
    821,238Costs not subject to amortization
    
    
    330,607
    
    
    
    378,634Land, building and other equipment
    
    
    6,475
    
    
    
    6,363Total property and equipment
    
    
    1,004,989
    
    
    
    1,206,235Accumulated depreciation, depletion and amortization
    
    
    (271,289
    )
    
    
    (219,606
    )Property and equipment, net
    
    $
    733,700
    
    
    $
    986,629
     5. INCOME TAXES
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Provision at the statutory tax rate
    
    $
    (111,353
    )
    
    $
    (23,020
    )
    
    $
    8,649State taxes,
net of federal benefit
    
    
    (2,270
    )
    
    
    123
    
    
    
    594Nondeductible expenses
    
    
    35
    
    
    
    1,930
    
    
    
    Other
    
    
    281
    
    
    
    242
    
    
    
    Income tax expense (benefit)
    
    $
    (113,307
    )
    
    $
    (20,725
    )
    
    $
    9,243
  F-17




---



##### Table of Contents



December 31,2009
    
    
    2008(In thousands)Deferred income tax assets:Net operating loss carryforward
    
    $
    29,629
    
    
    $
    23,547Financial Statement DD&A and impairment charges in
excess of oil an gas acquisition, exploration and
development costs deducted for tax purposes
    
    
    84,919
    
    
    
    Stock based compensation
    
    
    1,963
    
    
    
    1,549Allowance for doubtful accounts
    
    
    738
    
    
    
    442Equity in loss of Pinnacle
    
    
    399
    
    
    
    385Valuation allowance
    
    
    (399
    )
    
    
    (385
    )Adjustment to fair value of investment in Pinnacle
    
    
    707
    
    
    
    699Other
    
    
    224
    
    
    
    118,180
    
    
    
    26,237Deferred income tax liabilities:Oil and gas acquisition, exploration and development
costs deducted for tax purposes in excess of financial
statement DD&A
    
    
    
    
    
    
    12,740Conversion premium on convertible debt
    
    
    16,352
    
    
    
    20,044Capitalized interest
    
    
    30,455
    
    
    
    22,520Fair value derivative instruments
    
    
    2,630
    
    
    
    14,659Other
    
    
    
    
    
    
    15549,437
    
    
    
    70,118Net deferred income tax asset (liability)
    
    $
    68,743
    
    
    $
    (43,881
    )
  December 31,2009
    
    
    2008(In thousands)Noncurrent deferred tax asset
    
    $
    70,217
    
    
    $
    Current deferred tax liability
    
    
    (1,474
    )
    
    
    (9,103
    )Noncurrent deferred tax liability
    
    
    
    
    
    
    (34,778
    )Deferred income tax asset (liability), net
    
    $
    68,743
    
    
    $
    (43,881
    )
    F-18




---



##### Table of Contents



6. LONG-TERM DEBT
  December 31,2009
    
    
    2008(In thousands)Convertible Senior Notes
    
    $
    373,750
    
    
    $
    373,750Unamortized discount for Convertible Senior Notes
    
    
    (45,122
    )
    
    
    (57,269
    )Senior Secured Revolving Credit Facility
    
    
    191,400
    
    
    
    159,000Other
    
    
    308
    
    
    
    480520,336
    
    
    
    475,961Less: current maturities
    
    
    (148
    )
    
    
    (173
    )$
    520,188
    
    
    $
    475,788
 Convertible Senior Notes
        F-19




---



##### Table of Contents



Senior Secured Revolving Credit Facility
           7. COMMITMENTS AND CONTINGENCIES
  F-20




---



##### Table of Contents



Amount(in thousands)2010
    
    $
    35,9852011
    
    
    17,5242012
    
    
    7,0192013
    
    
    6,5562014 and Thereafter
    
    
    15,504$
    82,588
 8. SHAREHOLDERS EQUITY AND STOCK INCENTIVE PLAN
 Shareholders Equity
   Stock Incentive Plan
  F-21




---



##### Table of Contents



Stock Options and SARs.
 Weighted-Weighted-
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicExercise
    
    Life
    
    ValueShares
    
    Prices
    
    (In years)
    
    (In millions)For the Year Ended December 31, 2007Outstanding, beginning of period
    
    
    891,069
    
    
    $
    5.25Granted
    
    
    
    
    
    
    Exercised
    
    
    (124,148
    )
    
    
    8.30Forfeited
    
    
    (5,000
    )
    
    
    16.35Outstanding, end of period
    
    
    761,921
    
    
    $
    4.67Exercisable, end of period
    
    
    731,808
    
    
    $
    4.23For the Year Ended December 31, 2008Outstanding, beginning of period
    
    
    761,921
    
    
    $
    4.67Granted
    
    
    Exercised
    
    
    (65,400
    )
    
    
    4.01Forfeited
    
    
    (10,667
    )
    
    
    6.72Outstanding, end of period
    
    
    685,854
    
    
    $
    4.71Exercisable, end of period
    
    
    685,854
    
    
    $
    4.71For the Year Ended December 31, 2009Outstanding, beginning of period
    
    
    685,854
    
    
    $
    4.71Granted
    
    
    214,609
    
    
    
    20.18Exercised
    
    
    5,000
    
    
    
    1.81Outstanding, end of period
    
    
    895,463
    
    
    $
    8.43
    
    
    
    3.8
    
    
    $
    16.6Exercisable, end of period
    
    
    680,854
    
    
    $
    4.73
    
    
    
    2.0
    
    
    $
    15.1
   Restricted Stock Shares and Units.
 Shares/
    
    
    Grant-dateUnits
    
    
    Fair ValueUnvested restricted stock at December 31, 2006
    
    
    326,209
    
    
    $
    25.87Granted
    
    
    132,719
    
    
    
    40.26Vested
    
    
    (86,199
    )
    
    
    25.13Forfeited
    
    
    (20,880
    )
    
    
    31.21Unvested restricted stock at December 31, 2007
    
    
    351,849
    
    
    
    31.15Granted
    
    
    215,469
    
    
    
    35.43Vested
    
    
    (217,113
    )
    
    
    28.65Forfeited
    
    
    (8,507
    )
    
    
    42.00Unvested restricted stock at December 31, 2008
    
    
    341,698
    
    
    
    34.93Granted
    
    
    529,062
    
    
    
    18.76Vested
    
    
    (390,655
    )
    
    
    25.49Forfeited
    
    
    (8,862
    )
    
    
    28.81Unvested restricted stock at December 31, 2009
    
    
    471,243
    
    
    $
    25.01
 F-22




---



##### Table of Contents



Cash- Settled Stock Appreciation Rights Plan
  9. RELATED-PARTY TRANSACTIONS
 Marcellus Shale Joint Venture.
      F-23




---



##### Table of Contents



Avista Land Bank Agreement
 Other Transactions.
 Year Ended December 31,2009
    
    2008
    
    2007(In millions)Basic Energy Services
    
    $
    0.1
    
    
    $
    0.4
    
    
    $
    0.2Geokinetics, Inc.
    
    
    0.4
    
    
    
    
    
    
    
    Grey Wolf Inc.(1)
    
    
    
    
    
    
    7.1
    
    
    
    6.8Brigham Exploration(2)
    
    
    
    
    
    
    
    
    
    
    (0.3
    )Hercules Offshore, Inc.
    
    
    
    
    
    
    3.2
    
    
    
    
 
 (1)
    
    During 2009, Grey Wolf Inc. merged with another company and is no longer considered
a related party at January 1, 2009.(2)
    
    At the end of the first quarter of 2007, Mr. Webster resigned from the Board of
Directors of Goodrich Petroleum and Brigham Exploration. As such, these companies are no
longer deemed related parties after the first quarter of 2007.     10. DERIVATIVE FINANCIAL INSTRUMENTS
  F-24




---



##### Table of Contents



Year Ended December 31,2009
    
    
    2008
    
    
    2007(In millions)Realized gain (loss)Natural gas and oil derivatives
    
    $
    74.9
    
    
    $
    (1.9
    )
    
    $
    6.4Interest rate swaps
    
    
    
    
    
    
    (1.2
    )
    
    
    0.2Loss on interest rate swap termination
    
    
    
    
    
    
    (3.3
    )
    
    
    74.9
    
    
    
    (6.4
    )
    
    
    6.6Unrealized gain (loss)Natural gas and oil derivatives
    
    
    (33.4
    )
    
    
    41.1
    
    
    
    (5.2
    )Interest rate swaps
    
    
    
    
    
    
    2.8
    
    
    
    (2.8
    )(33.4
    )
    
    
    43.9
    
    
    
    (8.0
    )Gain (loss) on derivatives, net
    
    $
    41.5
    
    
    $
    37.5
    
    
    $
    (1.4
    )
   Natural Gas Swaps
    
    Natural Gas CollarsAverage
    
    
    
    
    
    Average
    
    AverageFixed
    
    
    
    
    
    Floor
    
    CeilingQuarter
    
    MMbtus(1)
    
    Price(2)
    
    MMbtus(1)
    
    Price(2)
    
    Price(2)First Quarter 2010
    
    
    4,140,000
    
    
    $
    5.51
    
    
    
    2,070,000
    
    
    $
    7.29
    
    
    $
    8.96Second Quarter 2010
    
    
    4,641,000
    
    
    
    5.52
    
    
    
    1,092,000
    
    
    
    5.50
    
    
    
    6.99Third Quarter 2010
    
    
    3,496,000
    
    
    
    5.75
    
    
    
    1,564,000
    
    
    
    5.76
    
    
    
    7.31Fourth Quarter 2010
    
    
    3,036,000
    
    
    
    5.83
    
    
    
    1,840,000
    
    
    
    6.12
    
    
    
    7.57First Quarter 2011
    
    
    2,430,000
    
    
    
    5.92
    
    
    
    1,080,000
    
    
    
    7.84
    
    
    
    9.84Second Quarter 2011
    
    
    1,820,000
    
    
    
    5.64
    
    
    
    455,000
    
    
    
    7.75
    
    
    
    9.75Third Quarter 2011
    
    
    2,208,000
    
    
    
    5.74
    
    
    
    828,000
    
    
    
    7.55
    
    
    
    9.40Fourth Quarter 2011
    
    
    2,208,000
    
    
    
    5.77
    
    
    
    736,000
    
    
    
    7.88
    
    
    
    9.83First Quarter 2012
    
    
    1,365,000
    
    
    
    6.22
    
    
    
    1,001,000
    
    
    
    8.04
    
    
    
    9.96Second Quarter 2012
    
    
    910,000
    
    
    
    5.88
    
    
    
    455,000
    
    
    
    7.80
    
    
    
    9.80Third Quarter 2012
    
    
    1,472,000
    
    
    
    6.06
    
    
    
    644,000
    
    
    
    6.41
    
    
    
    7.91Fourth Quarter 2012
    
    
    1,472,000
    
    
    
    6.09
    
    
    
    644,000
    
    
    
    6.48
    
    
    
    8.43TOTAL
    
    
    29,198,000
    
    
    
    
    
    
    
    12,409,000
 
 (1)
    
    During 2009, the Company entered into (1) a $5.00 put, a $5.85 long-call and an
$7.65 short-call with respect to a portion of the Companys production hedged with swaps
(10,000 MMBtus per day) in 2011, (2) a $5.05 put, a $5.90 long-call and a $7.70 short call
with respect to a portion of the Companys production hedged with swaps (10,000 MMBtus per F-25




---



##### Table of Contents



day) in 2012 and (3) a $3.93 put, a $5.58 long-call and a $6.08 short-call with respect to
a portion of the Companys production hedged with swaps (20,000 MMBtus
per day) for April through October of 2010.The table below presents additional put positions the Company has entered into associated
with a portion of hedged volumes presented above: Quarter
    
    MMBtus
    
    Put PriceSecond Quarter 2010
    
    
    455,000
    
    
    $
    3.74Third Quarter 2010
    
    
    920,000
    
    
    
    4.31Fourth Quarter 2010
    
    
    1,196,000
    
    
    
    4.61First Quarter 2011
    
    
    1,530,000
    
    
    
    5.53Second Quarter 2011
    
    
    910,000
    
    
    
    5.65Third Quarter 2011
    
    
    1,288,000
    
    
    
    5.59Fourth Quarter 2011
    
    
    1,196,000
    
    
    
    5.58First Quarter 2012
    
    
    1,911,000
    
    
    
    5.46Second Quarter 2012
    
    
    1,365,000
    
    
    
    5.45Third Quarter 2012
    
    
    1,564,000
    
    
    
    4.97Fourth Quarter 2012
    
    
    1,564,000
    
    
    
    4.98
 
 (2)
    
    Based on Houston Ship Channel (HSC) and WAHA spot prices.In addition, the Company sold the following natural gas long put positions: AverageQuarter
    
    MMBtus
    
    Fixed PriceSecond Quarter 2010
    
    
    300,000
    
    
    $
    5.86Third Quarter 2010
    
    
    920,000
    
    
    
    5.86Fourth Quarter 2010
    
    
    920,000
    
    
    
    5.86First Quarter 2011
    
    
    900,000
    
    
    
    5.80Second Quarter 2011
    
    
    910,000
    
    
    
    5.80Third Quarter 2011
    
    
    920,000
    
    
    
    5.80Fourth Quarter 2011
    
    
    920,000
    
    
    
    5.80
    11. FAIR VALUE MEASUREMENTS
     F-26




---



##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)Assets:Investment in Pinnacle Gas Resources, Inc.
    
    $
    835
    
    
    $
    
    
    
    $
    
    
    
    $
    835Oil and natural gas derivatives
    
    
    
    
    
    
    14,881
    
    
    
    
    
    
    
    14,881Liabilities:Oil and natural gas derivatives
    
    
    
    
    
    
    (2,818
    )
    
    
    
    
    
    
    (2,818
    )Total
    
    $
    835
    
    
    $
    12,063
    
    
    $
    
    
    
    $
    12,898
  Fair Value of Other Financial Instruments
  12.
    
    SUPPLEMENTARY FINANCIAL INFORMATION ON OIL AND NATURAL GAS EXPLORATION, DEVELOPMENT AND
PRODUCTION ACTIVITIES (UNAUDITED)
  Costs Incurred
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Property acquisition costsUnproved
    
    $
    35,248
    
    
    $
    271,618
    
    
    $
    54,467Proved
    
    
    
    
    
    
    
    
    
    
    Exploration costs
    
    
    77,255
    
    
    
    235,382
    
    
    
    144,402Development costs
    
    
    55,270
    
    
    
    49,626
    
    
    
    30,562Asset retirement obligation
    
    
    (1,390
    )
    
    
    630
    
    
    
    1,961Total costs incurred(1)
    
    $
    166,383
    
    
    $
    557,256
    
    
    $
    231,392
 
 (1)
    
    Excludes capitalized interest on unproved properties of $19.7 million, $20.5
million, and $11.7 million for the years ended December 31, 2009, 2008 and 2007, respectively,
and includes capitalized overhead of $5.6 million, $7.8 million, and $4.5 million for the
years ended December 31, 2009, 2008 and 2007, respectively. Oil And Natural Gas Reserves
  F-27




---



##### Table of Contents



Millions of Cubic Feetof Natural Gasat December 31,2009
    
    2008
    
    2007Proved developed and undeveloped reserves Beginning of year
    
    
    392,736
    
    
    
    248,433
    
    
    
    166,798Purchases of reserves in place
    
    
    
    
    
    
    
    
    
    
    Discoveries and extensions
    
    
    191,452
    
    
    
    146,189
    
    
    
    131,836Revisions of previous estimates
    
    
    (38,483
    )
    
    
    21,661
    
    
    
    (34,017
    )Sales of reserves in place
    
    
    (2,680
    )
    
    
    
    
    
    
    (142
    )Production
    
    
    (29,978
    )
    
    
    (23,547
    )
    
    
    (16,042
    )End of year
    
    
    513,047
    
    
    
    392,736
    
    
    
    248,433Proved developed reserves at beginning of year
    
    
    216,229
    
    
    
    122,598
    
    
    
    73,912Proved developed reserves at end of year
    
    
    292,695
    
    
    
    216,229
    
    
    
    122,598Proved undeveloped reserves at beginning of year
    
    
    176,507
    
    
    
    125,835
    
    
    
    92,886Proved undeveloped reserves at end of year
    
    
    220,352
    
    
    
    176,507
    
    
    
    125,835
 Thousands of Barrels of

Oil, Condensate and 
Natural Gas Liquidsat December 31,2009
    
    2008
    
    2007Proved developed and undeveloped reserves -Beginning of year
    
    
    18,308
    
    
    
    16,531
    
    
    
    7,195Purchases of reserves in place
    
    
    
    
    
    
    
    
    
    
    796Discoveries and extensions
    
    
    2,373
    
    
    
    2,088
    
    
    
    3,536Revisions of previous estimates
    
    
    (5,375
    )
    
    
    36
    
    
    
    5,245Production
    
    
    (503
    )
    
    
    (347
    )
    
    
    (241
    )End of year
    
    
    14,803
    
    
    
    18,308
    
    
    
    16,531Proved developed reserves at beginning of year
    
    
    7,869
    
    
    
    6,536
    
    
    
    1,638Proved developed reserves at end of year
    
    
    6,898
    
    
    
    7,869
    
    
    
    6,536Proved undeveloped reserves at beginning of year
    
    
    10,439
    
    
    
    9,995
    
    
    
    5,557Proved undeveloped reserves at end of year
    
    
    7,905
    
    
    
    10,439
    
    
    
    9,995
  2009
    
    Drilling in the Barnett Shale play and additional proved undeveloped
locations now permitted under new SEC guidelines2008
    
    Drilling in the Barnett Shale play2007
    
    Drilling in the Barnett Shale play
  2009
    
    Negative price revision in Barnett Shale and Gulf Coast2008
    
    Performance revision primarily in Barnett Shale2007
    
    Reclassification of natural gas liquids from natural gas to oil and condensate
  F-28




---



##### Table of Contents



Standardized Measure
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Future gross reserves
    
    $
    2,150,293
    
    
    $
    2,501,460
    
    
    $
    2,663,281Future oil and natural gas operating expenses
    
    
    (943,774
    )
    
    
    (868,027
    )
    
    
    (618,479
    )Future development costs
    
    
    (297,023
    )
    
    
    (315,837
    )
    
    
    (277,070
    )Future income tax expenses
    
    
    (73,656
    )
    
    
    (223,828
    )
    
    
    (394,569
    )Future net cash flows
    
    
    835,840
    
    
    
    1,093,768
    
    
    
    1,373,163Less 10% annual discount for estimating timing of cash flows
    
    
    (453,747
    )
    
    
    (582,819
    )
    
    
    (710,793
    )Standard measure of discounted future net cash flows
    
    $
    382,093
    
    
    $
    510,949
    
    
    $
    662,370
   F-29




---



##### Table of Contents



Change in Standardized Measure
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Changes in Standardized Measure:Standardized measure  beginning of year
    
    $
    510,949
    
    
    $
    662,370
    
    
    $
    298,711Revisions to reserves proved in prior years:Net changes in prices, net of production costs
    
    
    (254,511
    )
    
    
    (371,924
    )
    
    
    142,126Net changes in future development costs
    
    
    108,831
    
    
    
    (80,780
    )
    
    
    43,812Net changes due to revisions in quantity estimates
    
    
    (71,840
    )
    
    
    44,643
    
    
    
    (7,614
    )Accretion of discount
    
    
    59,589
    
    
    
    83,931
    
    
    
    38,718Changes in production rates (timing) and other
    
    
    (70,616
    )
    
    
    (67,218
    )
    
    
    (39,793
    )Total revisions
    
    
    (228,547
    )
    
    
    (391,348
    )
    
    
    177,249Discoveries and extensions, net of future production and
development costs
    
    
    76,419
    
    
    
    228,037
    
    
    
    340,503Purchases of minerals in place
    
    
    
    
    
    
    
    
    
    
    20,625Sales of minerals in place
    
    
    748
    
    
    
    
    
    
    
    (351
    )Sales of oil and gas produced, net of production costs
    
    
    (80,997
    )
    
    
    (171,944
    )
    
    
    (101,127
    )Previously estimated development costs incurred
    
    
    34,816
    
    
    
    91,832
    
    
    
    15,918Net change in income taxes
    
    
    68,705
    
    
    
    92,002
    
    
    
    (89,158
    )Net change in standardized measure of discounted future
net cash flows
    
    
    (128,856
    )
    
    
    (151,421
    )
    
    
    363,659Standardized measure  end of year
    
    $
    382,093
    
    
    $
    510,949
    
    
    $
    662,370
 13. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
  2009
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands, except per share amounts)Revenues
    
    $
    31,203
    
    
    $
    26,171
    
    
    $
    23,847
    
    
    $
    32,858Costs and expenses, net
    
    
    (156,748
    ) (1)
    
    
    (32,187
    )
    
    
    (28,642
    )
    
    
    (101,347
    ) (1)Net loss
    
    $
    (125,545
    )
    
    $
    (6,016
    )
    
    $
    (4,795
    )
    
    $
    (68,489
    )Basic net loss per share
    
    $
    (4.07
    )
    
    $
    (0.19
    )
    
    $
    (0.15
    )
    
    $
    (2.20
    )Diluted net loss per share
    
    $
    (4.07
    )
    
    $
    (0.19
    )
    
    $
    (0.15
    )
    
    $
    (2.20
    )
 2008
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands, except per share amounts)Revenues
    
    $
    53,560
    
    
    $
    67,388
    
    
    $
    58,527
    
    
    $
    37,202Costs and expenses, net
    
    
    (58,856
    )
    
    
    (80,168
    ) (2)
    
    
    7,188
    (2)
    
    
    (129,888
    ) (3)Net income (loss)
    
    $
    (5,296
    )
    
    $
    (12,780
    )
    
    $
    65,715
    
    
    $
    (92,686
    )Basic net income (loss) per share
    
    $
    (0.18
    )
    
    $
    (0.42
    )
    
    $
    2.15
    
    
    $
    (3.01
    )Diluted net income (loss) per share
    
    $
    (0.18
    )
    
    $
    (0.42
    )
    
    $
    2.12
    
    
    $
    (3.01
    )
 
 (1)
    
    Includes a before tax $216.4 million and $122.5 million impairment of oil and
gas properties for the first and fourth quarter, respectively.(2)
    
    Includes a before tax $48.2 million loss and $77.7 million gain associated with
derivatives for the second and third quarter, respectively.(3)
    
    Includes a before tax $178.5 million impairment of oil and gas properties. F-30




---



##### Table of Contents



SIGNATURES
  CARRIZO OIL & GAS, INC.By:
    /s/ Paul F. BolingPaul F. BolingChief Financial Officer, Vice President,
Secretary and Treasurer   Name
    
    Capacity
    
    Date/s/ S. P. Johnson IV

S. P. Johnson IV
    
    President, Chief Executive Officer and Director
(Principal Executive Officer)
    
    March 16, 2010/s/ Paul F. Boling

Paul F. Boling
    
    Chief Financial Officer, Vice President, 
Secretary and Treasurer 
(Principal Financial Officer)
    
    March 16, 2010/s/ David L. Pitts

David L. Pitts
    
    Vice President and Chief Accounting Officer
(Principal Accounting Officer)
    
    March 16, 2010/s/ Steven A. Webster

Steven A. Webster
    
    Chairman of the Board
    
    March 16, 2010/s/ Thomas L. Carter, Jr.

Thomas L. Carter, Jr.
    
    Director
    
    March 16, 2010/s/ Paul B. Loyd, Jr.

Paul B. Loyd, Jr.
    
    Director
    
    March 16, 2010/s/ F. Gardner Parker

F. Gardner Parker
    
    Director
    
    March 16, 2010/s/ Roger A. Ramsey

Roger A. Ramsey
    
    Director
    
    March 16, 2010/s/ Frank A. Wojtek

Frank A. Wojtek
    
    Director
    
    March 16, 2010
 F-31