UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (date of earliest event reported): May
23, 2006
CARRIZO
OIL & GAS, INC.
(Exact
name of registrant as specified in its charter)
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Texas
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000-29187-87
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76-0415919
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
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Identification
No.)
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1000
Louisiana Street
Suite
1500
Houston,
Texas
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77002
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(Address
of principal executive offices)
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(Zip
code)
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Registrant’s
telephone number, including area code: (713)
328-1000
N/A
(Former
name or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement
First
Lien Credit Agreement
On
May
25, 2006, Carrizo Oil & Gas, Inc. (the “Company” or “we”) entered into a
Credit Agreement with JPMorgan Chase Bank, National Association, as
Administrative Agent (the “Agent”), the lenders party thereto, and CCBM, Inc.,
as Guarantor (the “Credit Facility”). The Credit Facility provides for a
revolving credit facility up to the lesser of the Borrowing Base and $200
million. The Credit Facility matures on May 25, 2010. It is secured by
substantially all of our assets and is guaranteed by our subsidiary. The liens
securing the Credit Facility are first in priority to the liens securing our
existing second lien credit facility, as more fully described in the
Intercreditor Agreement among us and our lenders dated July 21, 2005, as amended
on May 25, 2006.
The
Borrowing Base will be determined by the lenders at least semi-annually on
each
April 1 and October 1, beginning October 1, 2006. The initial Borrowing Base
is
$40 million. We may request one unscheduled borrowing base determination
subsequent to each scheduled determination, and the lenders may request
unscheduled determinations at any time. A one-time redetermination is also
scheduled to be made on or before August 1, 2006. In addition, in the event
the
outstanding principal balance of indebtedness under our existing second lien
credit facility exceeds $150 million, the Borrowing Base under the Credit
Facility will be reduced $1.00 for every $4.00 of such additional indebtedness
under our second lien credit facility.
If
the
outstanding principal balance of the revolving loans under the Credit Facility
exceeds the Borrowing Base at any time, we have the option within 30 days to
take any of the following actions, either individually or in combination: make
a
lump sum payment curing the deficiency, pledge additional collateral sufficient
in the lenders' opinion to increase the Borrowing Base and cure the deficiency
or begin making equal monthly principal payments that will cure the deficiency
within the ensuing six-month period. Those payments would be in addition to
any
payments that may come due as a result of the quarterly borrowing base
reductions. Otherwise, any unpaid principal or interest will be due at
maturity.
The
annual interest rate on each base rate borrowing will be (1) the greatest of
the
Agent’s Prime Rate, the Base CD Rate plus 1.0% and the Federal Funds Effective
Rate plus 0.5%, plus (2) a margin between 0.25% and 1.75% (depending on the
current level of borrowing base usage). The interest rate on each Eurodollar
Loan will be the adjusted LIBO Rate plus a margin between 1.5% to 3.0%
(depending on the current level of borrowing base usage).
We
are
subject to certain covenants under the terms of the Credit Facility. These
covenants include, but are not limited to, the maintenance of the following
financial covenants
(1) a
minimum current ratio of 1.0 to 1.0; and (2) a maximum total net debt to
Consolidated EBITDAX (as defined in the Credit Facility) ratio of not more
than
3.5 to 1.0 through June 30, 2006 and 3.25 to 1.0 thereafter. The Credit
Facility also places restrictions on additional indebtedness, dividends to
shareholders, liens, investments, mergers, acquisitions, asset dispositions,
repurchase or redemption of our common stock, speculative commodity
transactions, transactions with affiliates and other matters. The Credit
Facility is subject to customary events of default. If an event of default
occurs and is continuing, the Agent may, or at the request of the Required
Lenders shall, accelerate amounts due under the Credit Facility (except for
a
bankruptcy event of default, in which case such amounts will automatically
become due and payable).
On
May
25, 2006, the Company drew $8.0 million under the Credit Facility, approximately
$7.5 million of which was used to repay in full existing indebtedness under
our
Prior First Lien Credit Agreement (as defined in Item 1.02 below) and to
pay
associated transaction costs. The remaining proceeds are expected to be used
to
fund a portion of our ongoing capital expenditures program and for other
general
corporate purposes.
Amendment
to Incentive Plan
On
May
23, 2006, at the annual meeting of the shareholders of the Company, the
shareholders approved Amendment No.7 (the “Amendment No.7”) to the Company’s
Amended and Restated Incentive Plan (the “Incentive Plan”). Amendment No.7
amends the Incentive Plan to increase by 450,000 shares the number of shares
of
common stock available for issuance under the Incentive Plan. The shareholders
also approved the performance goals set forth in the Incentive Plan in order
to
allow certain grants and awards made to the Company’s executive officers to
qualify as performance-based compensation deductible under Section 162(m) of
the
Internal Revenue Code.
The
foregoing description of Amendment No.7 is not complete and is qualified by
reference to the complete document, which is attached hereto as an exhibit
and
incorporated herein by reference.
Independent
Consultant Restricted Stock Award Agreement
As
previously disclosed, the Company is party to a month-to-month agreement with
San Felipe Resource Company, an entity owned by Steven A. Webster, under which
Mr. Webster provides consulting services to the Company in exchange for a
monthly cash fee. On May 23, 2006, pursuant to the Incentive Plan, the
Compensation Committee awarded to Mr. Webster 4,000 shares of restricted stock
in connection with his performance of these consulting services. The terms
of
the award are governed by an Independent Consultant Restricted Stock Award
Agreement, a form of which is attached hereto as an exhibit and incorporated
herein by reference. Mr. Webster also serves as Chairman of the Board of
Directors of the Company.
By
including information regarding any of the matters described in this Item 1.01
in this Current Report, the Company does not hereby admit to or pass upon the
materiality of such matters.
Item
1.02 Termination
of a Material Definitive Agreement
In
connection with the Company’s execution of and borrowing under the Credit
Facility, as described in Item 1.01, the Company terminated the Second Amended
and Restated Credit Agreement dated as of September 30, 2004 by and among
Carrizo Oil & Gas, Inc., CCBM, Inc., Hibernia National Bank, as Agent, Union
Bank of California, N.A., as co-agent, and Hibernia National Bank and Union
Bank
of California, N.A., as lenders, as amended to date (the “Prior First Lien
Credit Agreement”). A portion of the proceeds of the borrowings under the Credit
Facility were used to repay all outstanding indebtedness under the Prior First
Lien Credit Agreement.
____________________________
Certain
statements in this current report, including but not limited to statements
regarding our capital expenditures program, the acquisition of leases, the
use
of proceeds from the Credit Facility and other statements that are not
historical facts, are forward looking statements that are based on current
expectations. Although the Company believes that its expectations are based
on
reasonable assumptions, it can give no assurance that these expectations will
prove correct. Important factors that could cause actual results to differ
materially from those in the forward looking statements include our results
of
operations, general market conditions, the effect and success of workovers
and
other risks described in our Form 10-K/A for the year ended December 31, 2005
and our other filings with the Securities and Exchange Commission.
Item
9.01. Financial
Statements and Exhibits
(c) Exhibits.
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Exhibit
Number
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Description
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10.1
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10.2
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10.3
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10.4
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
CARRIZO
OIL & GAS, INC.
By:
/s/
Paul F. Boling
Name: Paul
F.
Boling
Title: Vice
President and Chief Financial Officer
Date: May
30, 2006
EXHIBIT
INDEX
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Number
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Exhibit
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10.1
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10.2
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10.3
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10.4
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