LETTER TO SHAREHOLDERS

To be successful in baseball, the GM and other management must make a number of strategic decisions to put a winning team on the field. Not only do they have to assemble a roster of talented players, they also have to find a team with the right chemistry. And while the nucleus of a team typically comes from a strong farm system, organizations have to supplement this by making trades or acquiring players through free agency in order to have a championship-caliber team.

There are many parallels between this process and what we have striven to do at Carrizo. As we entered 2017, we had a position in five different oil and gas plays across the U.S., each of which we had built primarily through organic leasing efforts. And while we could have generated future growth by continuing our operations in all of them, we felt a better strategy for maximizing value for our shareholders would be to focus on one or two, making sure we had enough scale in each to be able to run an efficient development program that generated strong returns. We also identified balance sheet improvement as an area that could help maximize shareholder value. In the past, we believed carrying a higher amount of financial leverage was an acceptable level of risk for an E&P company, as this resulted in a lower cost of capital. However, with the increased volatility in commodity prices, we now think it is prudent to run the business with a lower amount of financial leverage, and have targeted bringing this down below 2x over time.

We elected to build the new Carrizo by focusing our efforts on the Eagle Ford Shale and Delaware Basin, as these two plays consistently rank among the top three most economical plays in the U.S. Additionally, as both plays are in Texas, the risk of excessively onerous regulations is lower than in the other regions where we operated. As we had an excellent position in the volatile oil window of the Eagle Ford Shale, our focus was on building additional scale in the Delaware Basin. We were able to achieve this last August when we closed on the acquisition of more than 16,500 net acres in the core of the Delaware Basin, bringing our position in the play to more than 42,000 net acres.

Once we had achieved a core position in our two focus basins, we shifted our focus to streamlining the portfolio and reducing our leverage. During the last four months of 2017, we announced the sale of our assets in other plays, as well as the sale of our downdip assets in the Eagle Ford Shale. In total, the announced proceeds from these sales were more than $530 million, and we used this to help retire $470 million of long-term debt and $50 million of preferred securities. This has helped us reduce our leverage by more than a turn since mid-2017.

As a result of these strategic moves, we currently have a focused portfolio that provides us with a deep inventory of high-return drilling locations. We currently have more than 1,100 net derisked locations in our inventory, with another 600-plus potential net locations in the Delaware Basin depending on how many additional layers are economical. This should allow us to generate profitable growth for many years.

For 2018, our planned capital program is $750-$800 million, up from $652 million in 2017 as we have more activity planned in the Delaware Basin. Our program is relatively balanced between the two plays, with approximately 55% of the capital earmarked for the Eagle Ford Shale and the balance for the Delaware Basin. Based on this level of spending, we expect to grow our production by approximately 10% during the year, or more than 30% pro forma for our acquisition and divestiture activity.

In closing, we would like to recognize our employees and contractors, whose hard work and dedication, as well as willingness to be shifted around following our transformational year, have us well positioned for future success.