Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Welcome to the second-quarter 2004 earnings call for Carrizo Oil and Gas. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS) As a reminder this conference is being recorded Monday, August 16, 2004. This call will be rebroadcast beginning August 16th through August 30th 2004. To access that broadcast please dial 1-800-633-8284 or 402-977-9140 and enter reservation number 2120556. Your speakers for today are Chip Johnson, President and Chief Executive Officer of Carrizo Oil and Gas, and Paul Boling, Vice President and Chief Financial Officer. Also on the call is Allen Connell. I would now like to turn the conference over to Mr. Chip Johnson. Please go ahead sir.
CHIP JOHNSON, PRESIDENT & CEO, CARRIZO OIL & GAS: Welcome to everybody on the call. Our format today will be similar to the one we used before; Paul Boling will go over the numbers for the second quarter and then I'll give a brief summary of our operational status right now and then we will open it up to questions and answers. Paul, do oyu want to get started?
PAUL BOLING, CFO, CARRIZO OIL & GAS: Financial performance in the second quarter of 2004 was very strong, starting with record oil and gas revenues of 12 million compared to the previous all-time record of 10.9 million in the first quarter 2004. Natural gas prices were also strong at $6.07 per Mcf, and $35.27 per barrel in the second quarter of 2004 compared to $5.91 per Mcf and $33.33 per barrel in the first quarter 2004.
Our second-quarter 2004 production level of 1.99 Bcfe was 18 percent higher than the 1.68 Bcfe produced during the second quarter of '03. It is important to note that our second-quarter production of 21.8 MMcfe per day does not include the impact of production from the BP America No. 1, or the new Peel (ph) Ranch and Encinitas well put online late in the second quarter or after July 1st, or the LOE (indiscernible) and E No. 1 well which is expected to be put online in early September.
Our EBITDA was a record 8.3 million in the second quarter 2004, for 43 cents and 41 cents per basic and fully diluted share respectively, compared to 5.7 million or 40 cents and 34 cents per basic and diluted share respectively. The increase is largely due to increased revenues, partially offset by higher lease operation and G&A expenses. Oil and gas operating expenses in the second-quarter '04 were 2 million in the second quarter, or 0.2 million higher than the second quarter of '03 largely due to higher production taxes.
Depreciation, depreciation and amortization expenses were 3.6 million or 1 million higher than the second quarter of '03 primarily due to one, an increase in the D&A (ph) rate for Mcfe rate due to the additions of the crude property cost base and two, an 18 percent increase in our production volumes. G&A expenses were 1.6 million in the second quarter of '04 or 0.3 million higher than the second quarter of '03. This is largely due to higher professional fees, 0.2 million, in connection with our Sarbanes-Oxley compliance project ongoing. Also the recent amendment to the terms of our Senior Subordinated Notes which includes the extension of pick (ph) interest through December 15 of '06 and the one year extension of the maturity at December 15, 2008. Also in part the increase in G&A was due to higher salary and benefit cost of 0.1 million. Our projection is that for the remaining two quarters our G&A cost should run around 1.5 million on average.
Pinnacle Gas Resources our minority-owned subsidiary recorded a 0.3 million after-tax charge to Carrizo or 1.8 cents per fully diluted share largely comprised of the quarterly dividend on the preferred stock which is held by Credit Suisse First Boston. Pinnacles production continues to grow, however, and it's currently estimated to be about 12 MMcfe per day. Noncash stock option compensation expense was 0.7 million, or 0.5 million after-tax, or 2.3 per share fully diluted. For the second quarter of '04. This is directly attributable to increased value of employee stock options that were repriced back in 2000. Again this is a non-cash expense, it's a GAAP requirement to be recorded in that fashion.
Net income available for the common in the second quarter of '04 was 2 million or 10 cents for both basic and fully diluted shares, which includes the after-tax impact of one, the noncash stock option compensation expense of 0.5 million or 2.3 per fully diluted, and two, the noncash equity loss of Pinnacle of 0.3 million or 1.8 cents per share fully diluted.
Moving on to the Company's six-month results, financial performance in the first half of 2004 set new records starting with a record oil and gas revenues of 22.8 million, up 3.3 million or 17 percent compared to the 19.5 million in the first half of 2003. Including the effects of hedging which were negligible, natural gas prices were also strong at $6 per Mcf and 34.41 per barrel in the …