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Carrizo Oil & Gas, Inc. Announces the Acquisition of a Significant Acreage Interest Prospective for Coalbed Methane.

HOUSTON, July 10 /PRNewswire/ --

Carrizo Oil & Gas, Inc. (Nasdaq: CRZO) today announced that the Company, through a wholly-owned subsidiary, CCBM, Inc. ("CCBM"), has acquired 50 percent of the working interests held by Rocky Mountain Gas, Inc. ("RMG") in approximately 107,000 net mineral acres prospective for coalbed methane located in the Powder River Basin in Wyoming and Montana and in southwestern Wyoming. RMG is a subsidiary of U.S. Energy Corp. (Nasdaq: USEG) and Crested Corp. (OTC Bulletin Board: CBAG) D/B/A USECC. The interests acquired by CCBM are in areas with proven coal accumulations and are believed to contain potential unrisked gas reserves of over 250 Bcfe. Approximately 35,000 of the 107,000 net mineral acres are subject to an option arrangement which could allow the Company to earn 50 percent of RMG's interest in up to approximately 12,000 additional net mineral acres, depending on future participation by other working interest owners.

As consideration for the interests, CCBM paid RMG $7.5 million in the form of a non-recourse promissory note (the "Note") secured solely by CCBM's interest in the undeveloped acreage. The Note provides for monthly principal payments of $125,000, plus interest at eight percent per annum, and is payable over a 42 month term. Carrizo plans to spend up to $5 million for drilling costs on this acreage over the next 18 months, 50% of which would be spent pursuant to an obligation by Carrizo to fund $2.5 million of drilling costs on behalf of RMG. Two wells have been drilled and are being completed for de-watering test. RMG has permits to drill an additional 44 gross wells in Wyoming and Montana and is entitled to receive, under existing regulations, permits to drill another 77 gross wells in Montana, all of which RMG and CCBM would expect to participate in along with the other working interest owners. RMG will operate jointly owned wells subject to a management committee comprised of an equal number of RMG and Carrizo representatives.

"We are pleased to become a working interest partner with Rocky Mountain Gas, Inc. and to have the opportunity to participate in the development of these project areas," commented S. P. Johnson IV, Carrizo's President & Chief Executive Officer. "This acreage position is expected to afford Carrizo the opportunity to add significant long-life relatively low-risk gas reserves to compliment our higher potential exploration drilling program in the onshore Gulf coast areas of Texas and Louisiana."

"This is an attractive transaction for both parties," commented Steven A. Webster, Carrizo's Chairman. "Rocky Mountain Gas, Inc. has assembled a large acreage position in areas highly prospective for coalbed methane. This transaction will facilitate development of these properties, allowing both companies to build on this base and take advantage of the positive long term fundamentals for natural gas."

Carrizo Oil & Gas, Inc., is a Houston-based energy company engaged in the exploration, development, exploitation and production of oil and natural gas in proven onshore trends primarily along the Texas and Louisiana Gulf Coast regions. Carrizo controls significant prospective acreage blocks and utilizes advanced 3-D seismic techniques to identify potential oil and gas reserves and drilling opportunities.

Cautionary Note to U.S. Investors

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as "potential unrisked gas reserves", that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-K, File No. 0-22915, available from us at 14701 St. Mary's Lane, Suite 800, Houston, Texas 77079. You can also obtain this form from the SEC by calling 1-800-SEC-0330.

Statements in this news release, including but not limited to those relating to the results, potential effects, schedule, prospects or estimates of costs for current or future drilling or wells, estimates of potential gas reserves, number of permits which may be issued or future wells in which CCBM may participate, the operation of jointly owned wells, the ability to add significant low-risk gas reserves, long term fundamentals for natural gas 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 the results and dependence on exploratory drilling operations, operating risks, oil and natural gas price levels, permitting issues, decisions to participate in wells, actions by other working interest owners, risks of nonoperated wells, land issues, availability of equipment, weather and other risks described in the Company's most recent Form 10-K and other filings with the Securities and Exchange Commission.

Contact: Carrizo Oil & Gas, Inc.

B. Allen Connell, Director of Investor Relations

Frank A. Wojtek, Chief Financial Officer

(281) 496-1352

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Geographic Code:1USA
Date:Jul 10, 2001
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