What happened

Shares of Carrizo Oil & Gas Inc (NASDAQ:CRZO) jumped nearly 13% by 1:45 p.m. EDT on Tuesday after the company reported stronger-than-expected first-quarter results.

So what

Carrizo Oil & Gas produced an average of 51,257 barrels of oil equivalent per day (BOE/D) during the first quarter, which was well above the high end of the company's 48,600 to 49,800 BOE/D guidance range. Output was up 11% year over year and more than 40% after adjusting for recent asset sales, thanks mainly to the earlier-than-expected completion of some necessary infrastructure in the Delaware Basin. That high-end production rate enabled the company to earn an adjusted $39.5 million, or $0.48 per share, during the quarter, which beat expectations by $0.14 per share.

A pipeline and an oil pump at sunset.

Image source: Getty Images.

That strong start to the year kept Carrizo on pace to hit its full-year forecast to produce 58,500 to 60,100 BOE/D this year, which would be 10% higher than last year at the midpoint, and a 30% increase after adjusting for asset sales. Further, the company still believes it can achieve that production rate while sticking to its $750 million to $800 million budget, which is worth noting given that service and equipment cost inflation has impacted the budgets of its peers.

Now what

Carrizo's focus will be to develop its core assets in the Delaware and Eagle Ford, where it currently has a decade's worth of highly profitable drilling locations remaining. While those positions could create value for investors -- very quickly if activist investors get their way -- they need an iron stomach given Carrizo's small size and volatile stock price. Because of that, investors looking for an oil play might want to consider one of these oil stock bargains instead.

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