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Carrizo Oil & Gas shares jump on higher production

NEW YORK (AP) -- Shares of Carrizo Oil & Gas Inc. rose Monday after the company boosted second-quarter oil production guidance.

THE SPARK: Carrizo expects second-quarter production of 10,800 to 11,200 barrels per day, up from a previous estimate of 9,600 to 10,000 barrels per day.

The company also increased its 2013 crude oil production growth target to 40 percent from 28 percent and its total production growth target to 10 percent from 6 percent.

THE BIG PICTURE: The Houston-based company said results in the Eagle Ford Shale have been better-than-expected, with oil production averaging roughly 9,500 barrels per day through the first two months of the quarter.

Carrizo said its results have been helped by flatter-than-expected decline rates from several of its new wells, successful results from artificial lift installations and less well downtime than expected.

The company backed its previous second-quarter production forecast for natural gas and natural gas liquids of 90 to 94 million cubic feet of equivalent per day, and it expects production to be near the high end of that range.

Carrizo also boosted its capital spending plans for the year to a range of $530 million to $540 million from its previously planned $500 million, saying it now plans to drill more wells than previously expected.

THE ANALYSIS: KeyBanc analyst Jack Aydin, who backed his "Hold" rating for Carrizo, called the increase in estimated crude production for fiscal 2013 "commendable," but "partially expected," saying that the company's previous guidance was conservative.

Aydin also noted that the increase in production largely offsets the increase in capital spending.

THE SHARES: Up $1.76, or 6.7 percent, to $27.92 in afternoon trading, after peaking at $28.02 earlier in the day. Over the past 52 weeks, the stock has traded between $19.04 and $29.50. Since the start of this year, Carrizo shares have risen about 33 percent.