Amendment To First Lien Credit Facility

FIRST AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER



FIRST AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER (hereinafter referred to as the " Amendment ") executed to be effective as of December 19, 2006, by and among CARRIZO OIL & GAS, INC., a Texas corporation (" Borrower "), certain subsidiaries of Borrower, as Guarantors (in such capacity, " Guarantors "), the LENDERS party hereto (the Lenders") and JPMORGAN CHASE BANK, N.A., as Administrative Agent (in its such capacity, " Administrative Agent "). Unless the context otherwise expressly defined herein, capitalized terms used but not defined in this Amendment have the meanings assigned to such terms in the Credit Agreement (as defined below).



WITNESSETH:



WHEREAS, Borrower, Guarantors, Administrative Agent and Lenders have entered unto that certain Credit Agreement, dated as of May 25, 2006, (as amended, supplemented or otherwise modified from time to time, the " Credit Agreement "); and



WHEREAS, Borrower has requested that Administrative Agent and Lenders amend the Credit Agreement to, among other things, (i) permit the incurrence of additional Indebtedness under the Second Lien Facility, (ii) modify the Leverage Ratio, and (iii) redetermine the Borrowing Base and Conforming Borrowing Base; and



WHEREAS, Administrative Agent and Lenders have agreed to do so on the terms and conditions hereinafter set forth;



NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, Borrower, Administrative Agent and Lenders, hereby agree as follows:



SECTION 1. Amendments to Credit Agreement. Subject to the satisfaction or waiver in writing of each condition precedent set forth in Section 3 of this Amendment, and in reliance on the representations, warranties, covenants and agreements contained in this Amendment, the Credit Agreement shall be amended in the manner provided in this Section 1 .



1.1 Additional Definitions. The following definition shall be and hereby is added to Section 1.01 :



" First Amendment Effective Date " means December 19, 2006.



1.2 Amended Definition. The following definition in Section 1.01 of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:



" Change in Control " shall be deemed to have occurred if (a) any "person" or "group" (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) other than the Permitted Investors shall own, directly or indirectly, beneficially or of record, shares representing more than fifty percent (50%) of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Borrower, (b) a majority of





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the seats (other than vacant seats) on the board of directors of the Borrower shall at any time be occupied by persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated, or (c) any change in control (or similar event, however denominated) with respect to the Borrower shall occur under (and not be waived in accordance with) and as defined in the Second Lien Credit Agreement or any indenture or other loan or credit agreement or any other debt instrument evidencing any Material Indebtedness to which the Borrower is a party.



1.3 Borrowing Base Adjustments. Section 3.05 of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:



(a) In the event the Redetermination of the Borrowing Base is not made on or prior to May 1, 2007 as a result of the Borrower failing to comply with the requirements of this Article III with respect to such Redetermination on the dates required without giving effect to any grace or cure period provided in Article IX with respect to any such failure, the Borrowing Base shall be reduced by $1,690,000 on May 1, 2007 and on the first date of each month thereafter (the " Monthly Reduction ") until the Borrowing Base is otherwise redetermined pursuant to this Article III .



(b) In the event the outstanding principal balance of the Indebtedness under the Second Lien Facility exceeds $225,000,000 at any time after the First Amendment Effective Date, the Borrowing Base then in effect shall be reduced by $1.00 for every $4.00 of such additional Indebtedness as of the date such additional Indebtedness is incurred.



1.4 Investment and Holding Company Status. Section 4.08 of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:



Investment Company Status. Neither the Borrower nor any Restricted Subsidiary is an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940.



1.5 Financial Statements; Other Information. Section 6.01(f) of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:



(f) together with the Reserve Reports required under clause (e) above, (i) a report, in reasonable detail, setting forth the Swap Agreements then in effect, the notional volumes of and prices for, on a monthly basis and in the aggregate, the Crude Oil and Natural Gas for each such Swap Agreement and the term of each such Swap Agreement; (ii) if requested by Administrative Agent in writing, a true and correct schedule of the Mortgaged Properties, (iii) if requested by Administrative Agent in writing, the percentage of the Engineered Value of the Borrowing Base that the Mortgaged Properties represent and (iv) a description of the additional Oil and Gas Interests, if any, to be mortgaged by the Credit Parties to comply with Section 6.09 and the Engineered Value thereof;



1.6 Maintenance of Properties; Insurance. Section 6.05 of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:





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Maintenance of Properties; Insurance. The Borrower will, and will cause each Restricted Subsidiary and use commercially reasonable efforts to cause each operator of Borrowing Base Properties to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted. The Borrower shall maintain in effect all insurance required by this Agreement and the Collateral Documents, and the Borrower agrees to comply with the representations and warranties set forth in Section 4.16 . Upon the written request of the Administrative Agent, the Borrower agrees to (a) promptly provide the Administrative Agent with certificates or binders evidencing such insurance coverage on an annual basis, (b) promptly furnish the Administrative Agent with copies of all renewal notices and copies of receipts for paid premiums, and (c) promptly provide the Administrative Agent with certificates or binders evidencing insurance coverage pursuant to all renewal or replacement policies of insurance.



1.7 Mortgages. Section 6.09 of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:



Mortgages . No later than April 2, 2007, and from time to time as requested by the Administrative Agent and in any event to the extent required under the Intercreditor Agreement, the Borrower will, and will cause each Guarantor to, execute and deliver to the Administrative Agent, for the benefit of the Secured Parties, Mortgages in form and substance reasonably acceptable to the Administrative Agent together with such other assignments, conveyances, amendments, agreements and other writings, including, without limitation, UCC-1 financing statements (each duly authorized and executed, as applicable) as the Administrative Agent shall reasonably deem necessary or appropriate to grant, evidence and perfect a valid first priority Lien, subject only to Permitted Liens, in (a) not less than eighty percent (80%) of the Engineered Value of all Borrowing Base Properties (excluding any Oil and Gas Interests in the area known as the Camp Hill Field in Anderson County, Texas) and (b) not less than eighty percent (80%) of the Engineered Value of the Borrower's and each Guarantor's Oil and Gas Interests in the area known as the Camp Hill Field in Anderson County, Texas.



1.8 Title Data. Section 6.10 of the Credit Agreement shall be and hereby is amended in its entirety to read as follows:



Title Data . As soon as available and in any event no later than April 2, 2007, the Borrower will, and will cause each Guarantor to, deliver to the Administrative Agent such opinions of counsel and other evidence of title as the Administrative Agent ...