CARRIZO OIL & GAS INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>exh103.txt
<TEXT>
                                                                    EXHIBIT 10.3

THIS  STOCK   PLEDGE  AND   SECURITY   AGREEMENT  IS  SUBJECT  TO  THAT  CERTAIN
SUBORDINATION AGREEMENT,  DATED OCTOBER 29, 2004, BETWEEN PCRL INVESTMENTS L.P.,
AND OTHERS, SAME BEING MORE PARTICULARLY  IDENTIFIED AND DESCRIBED AT SECTION 20
BELOW.

                       STOCK PLEDGE AND SECURITY AGREEMENT

     THIS STOCK PLEDGE AND SECURITY  AGREEMENT  (this  "Agreement") is dated and
effective as of October 29, 2004 by Carrizo Oil & Gas, Inc., a Texas corporation
(hereinafter  referred to as "Grantor"),  in favor of PCRL  Investments  L.P., a
Texas limited  partnership  (the  "Collateral  Agent"),  as Collateral Agent for
itself  and each of the  financial  institutions  (the  "Holders")  which now or
hereafter  become a holder of any of the Notes pursuant to that certain Purchase
Agreement (as defined below),  to secure the  Indebtedness (as defined below) of
the Grantor.

                                    Recitals

     A. The Grantor,  the Collateral  Agent,  and the Holders are the parties to
that certain Purchase Agreement of even date herewith.

     B. Pursuant to the Purchase Agreement, the Grantor has agreed to enter into
and execute this Agreement.

                                    AGREEMENT

     NOW,  THEREFORE,  in  consideration  of the  premises,  the Grantor and the
Collateral  Agent (for the ratable  benefit of the  Holders) do hereby agree and
obligate themselves as follows:

     Section 1.  Definitions.  Any  capitalized  term  defined  in the  Purchase
Agreement  (as defined  below) and not otherwise  defined  herein shall have the
meaning given to such term in the Purchase Agreement. In addition, the following
terms shall have the following meanings when used in this Agreement:

     AGREEMENT.  The term  "Agreement"  refers to this Stock Pledge and Security
     Agreement  as this  agreement  may be  modified,  restated,  or  amended in
     writing  from time to time,  and to any  exhibits  or  attachments  to this
     Agreement.

     CCBM.  The term "CCBM" means CCBM,  Inc., a Delaware  corporation,  and its
     successors and assigns.

     COLLATERAL.  The term "Collateral"  refers  individually,  collectively and
     interchangeably  to the Collateral as more fully described in Section 2 (A)
     of this Agreement.

                                       1
<PAGE>

     GRANTOR.  The  term  "Grantor"  means  Carrizo  Oil & Gas,  Inc.,  a  Texas
     corporation, and its successors and assigns.

     HOLDERS.  The term "Holders"  means each Purchaser  listed on Schedule 2 of
     the Purchase Agreement (so long as it holds the Notes) and any other holder
     of any of the Notes.

     INDEBTEDNESS. The term "Indebtedness" refers individually, collectively and
     interchangeably  to (i) the present and future  indebtedness,  obligations,
     and liabilities of Grantor arising under the Purchase Agreement,  including
     the Notes, as well as any future renewals,  modifications, or extensions to
     any one or more of the Notes,  (ii) all  present  and future  indebtedness,
     obligations and liabilities of Company or any Guarantor to the Holders,  or
     any  Affiliate  of any Holders,  arising  under or in  connection  with any
     Hedging  Agreements and (iii) all  obligations of Grantor arising under the
     Registration  Rights  Agreement,   including,   without   limitation,   all
     obligations  of  Grantor to  repurchase  shares of Common  Stock  issued in
     satisfaction of the Indebtedness described in the foregoing clause (i).

     NOTES. The term "Notes" refers to the 10% Senior Subordinated Secured Notes
     due December 15, 2008 in the maximum  aggregate initial principal amount of
     up to  $28,000,000,  issued  by the  Grantor  to  any  Holder  as  amended,
     modified, restated or supplemented from time to time.

     PURCHASE AGREEMENT.  The term "Purchase  Agreement" means that certain Note
     Purchase  Agreement  of even  dated  herewith  by and  among  Grantor,  the
     Collateral Agent, and the Purchasers, as the same may hereafter be amended,
     modified, and/or restated from time to time and in effect.

     REGISTRATION  RIGHTS AGREEMENT.  The term  "Registration  Rights Agreement"
     means that certain  Registration Rights Agreement of even dated herewith by
     and among Grantor and the Purchasers, as the same may hereafter be amended,
     modified, and/or restated from time to time and in effect.

     SECURITYHOLDERS AGREEMENT. The term "Securityholders  Agreement" means that
     certain SECURITYHOLDERS  AGREEMENT,  dated as of June 23, 2003 by and among
     Pinnacle  Gas  Resources,  Inc.,  a Delaware  corporation,  CCBM,  Inc.,  a
     Delaware  corporation,  Rocky Mountain Gas,  Inc., a Wyoming  corporation ,
     each of the CSFB  Parties  (as defined  herein),  Peter G.  Schoonmaker,  a
     natural person , Gary Uhland, a natural person,  Carrizo Oil & Gas, Inc., a
     Texas  corporation and U.S.  Energy  Corporation,  a Delaware  corporation.
     "CSFB Parties"  means,  collectively,  DLJ MB Partners III GmbH & Co. KG, a
     limited company organized under the laws of Germany,  DLJ Offshore Partners
     III,  C.V.,  a  partnership  organized  under  the  laws of the  Netherland
     Antilles,  DLJ Offshore Partners III1, C.V., a partnership


                                       2
<PAGE>

     organized under the laws of the Netherland Antilles,  DLJ Offshore Partners
     III2,  C.V.,  a  partnership  organized  under  the laws of the  Netherland
     Antilles, Millennium Partners II, L.P., a Delaware limited partnership, DLJ
     Merchant Banking Partners III, L.P., a Delaware  limited  partnership,  and
     MBP III Plan Investors, L.P., a Delaware limited partnership.

     Section 2. Security  Interest.  (A) To secure the full and punctual payment
and  performance  of all present  and future  Indebtedness,  the Grantor  hereby
pledges,  transfers and grants to the Collateral  Agent (for the ratable benefit
of the Holders) a continuing  security  interest in and to all of the  following
property of the Grantor,  whether now owned or existing or hereafter acquired or
arising (collectively the "Collateral"):

     1000 shares of the capital stock of CCBM  represented by Certificate No. 1,
     dated June 29, 2001,  registered in the Grantor's  name,  together with any
     additional shares of stock issued by CCBM to the Grantor hereafter as stock
     dividends, stock splits or otherwise, or shares received as a result of any
     merger or consolidation of CCBM, all cash,  liquidation and other dividends
     now or hereafter  declared thereon,  all stock redemption  payments and all
     other monies due or to become due thereunder, all stock warrants,  options,
     pre-emptive rights,  rights of first refusal, and other rights to subscribe
     to, purchase or receive any shares of common stock or other  securities now
     or  hereafter  incident  thereto  or  declared  or  granted  in  connection
     therewith,  and  all  distributions  (whether  made in  cash,  instruments,
     income,  or other  property) made or to be made in connection  therewith or
     incident  thereto,  and all  proceeds  of all or any of the  foregoing,  in
     whatever form, and all proceeds of such proceeds.

     (B) The security interest is granted as security only and shall not subject
the Collateral  Agent and/or the Holders to, or transfer or in any way affect or
modify,  any  obligation  or liability of the Grantor with respect to any of the
Collateral or any transaction in connection therewith.

     Section 3. Delivery of  Collateral.  Subject to the terms and conditions of
the   Subordination   Agreement,   the  Collateral   Agent,  or  its  designated
representative,  hereby  accepts the  delivery of the  Collateral  on behalf the
Holders and on behalf of any future transferee of the  Indebtedness.  Subject to
the terms and  conditions  of the  Subordination  Agreement,  the  Grantor  will
execute and deliver to the Collateral  Agent, or its designated  representative,
all assignments,  endorsements,  powers and other documents reasonably requested
at any time and from time to time by the  Collateral  Agent or the Holders  with
respect to the  Collateral  and the rights and powers  granted to the Collateral
Agent or the Holders hereunder, and will deliver to the Collateral Agent, or its
designated  representative,  any stock certificates representing stock dividends
on, or stock splits of, any of the Collateral, together with a stock power fully
executed in blank.

     Section  4.  Representations.  Subject to the terms and  conditions  of the
Subordination  Agreement,  the Grantor has not  performed any acts or signed any
agreements  which might prevent the  Collateral  Agent from enforcing any of the
terms  of  this  Agreement  or  which  would  limit  any of  them  in  any  such
enforcement.  Except for the Senior Credit Documents,  no security  agreement or
similar or  equivalent  document or  instrument  covering all or any part of the
Collateral  has been  executed by the Grantor and remains in effect.  Subject to
the terms and conditions of the


                                       3
<PAGE>

Subordination Agreement, no Collateral is in the possession of any Person (other
than the Grantor)  asserting  any claim  thereto or security  interest  therein,
except  that  the  Collateral  Agent or its  designee  may  have  possession  of
Collateral as contemplated  hereby.  The Grantor further represents and warrants
as follows:

     (a)  There are no  outstanding  options,  warrants  or similar  rights with
          respect to the Collateral;

     (b)  The  Grantor  has  the  full  power  and  authority  to  grant  to the
          Collateral Agent a valid and enforceable perfected and continuing lien
          on and security interest in the Collateral pursuant to this Agreement;

     (c)  The  Collateral  delivered to the  Collateral  Agent is fully paid and
          non-assessable,  duly and  validly  authorized  and issued  and,  upon
          execution  hereof,  will be duly and validly pledged to the Collateral
          Agent in accordance with all provisions of applicable law;

     (d)  The  Grantor  has good and  marketable  title to, and is the legal and
          registered  owner of,  the  Collateral,  free and clear of all  liens,
          except for the security  interest  created pursuant to this Agreement,
          and except for the lien and  security  interest  granted to the Senior
          Agent;

     (e)  Upon the execution and delivery of this  Agreement and the delivery to
          the Collateral Agent of the Collateral,  the Collateral Agent (for the
          ratable  benefit of the  Holders)  shall have a valid and  enforceable
          lien on and security interest in and to the Collateral;  such lien and
          security  interest shall constitute a perfected  security  interest in
          such Collateral, and except for the lien and security interest granted
          to the Senior Agent, superior to the rights and equitable interests of
          all other persons in the Collateral;

     (f)  The  execution,  delivery  and  performance  of this  Agreement by the
          Grantor and the granting of a valid and enforceable  lien and security
          interest in the  Collateral  will not (i) violate any provision of any
          law, any judgment, order, rule or regulation of any court, arbitration
          panel, or other governmental authority,  domestic or foreign, or other
          person,  (ii)  violate  any  provision  of any  indenture,  agreement,
          mortgage, contract or other instrument to which the Grantor is a party
          or by which any of its properties, assets or revenues are bound, or be
          in conflict  with,  result in an  acceleration  of any obligation or a
          breach  of or  constitute  (with  notice  or  lapse of time or both) a
          default under, any such indenture,  agreement,  mortgage,  contract or
          other instrument, or (iii) result in the creation or imposition of any
          lien on any of the  properties,  assets or  revenues  of the  Grantor,
          except those in favor of the Collateral Agent as provided herein.

                                       4
<PAGE>

     (g)  This Agreement has been duly executed and delivered by the Grantor and
          constitutes  the legal,  valid and binding  obligation  of the Grantor
          enforceable against it in accordance with its terms;

     (h)  No  registration  with or consent or approval  of, or other action by,
          any governmental  authority,  domestic or foreign,  or other person is
          required  (other than such  approvals or consents  which may have been
          obtained) in connection  with the execution,  delivery and performance
          of this Agreement and the granting of the valid and  enforceable  lien
          and security  interest in the  Collateral  in favor of the  Collateral
          Agent;

     (i)  The  Collateral  constitutes  not less  than  100% of the  issued  and
          outstanding Capital Stock of CCBM;

     (j)  The Grantor  represents and warrants that until the Collateral Agent's
          security  interest in the  Collateral is terminated by the  Collateral
          Agent, that the Collateral shall at all times constitute not less than
          100% of the  issued  and  outstanding  Capital  Stock of CCBM.  To the
          extent  necessary,  the  Grantor  agrees  that it shall not approve or
          authorize any issuance of Capital Stock by CCBM if such issuance would
          reduce the  Collateral  below the 100%  calculation  mentioned  in the
          preceding sentence;

     (k)  The Grantor  represents  and warrants  that it is a  corporation  duly
          organized under the laws of its state of incorporation. As of the date
          hereof, Grantor's mailing address and the location of is its principal
          place of business (if it only has one) or its chief  executive  office
          (if it has more than one  place of  business)  is at 14701 St.  Mary's
          Lane,  Suite 800,  Houston,  TX 77079.  Grantor  also  represents  and
          warrants that it has not conducted  business under any name except the
          name in which it has executed this Agreement,  which is the exact name
          as it appears in the Grantor's  organizational  documents, as amended,
          as filed with the  Grantor's  jurisdiction  of  organization.  Grantor
          represents  and  warrants  that its  Federal  employer  identification
          number is 76-0415919.  Grantor  agrees that it will notify  Collateral
          Agent in writing should Grantor ever change its name, legal status, or
          change or obtain a new Federal employer identification number. Grantor
          further agrees to notify  Collateral Agent in writing of any change in
          Grantor's  mailing  address or the  location  of  Grantor's  principal
          office; and

     (l)  The  Grantor  represents  and  warrants  that it shall not execute any
          amendment to or modification of the Securityholders  Agreement without
          first obtaining the prior written consent of Collateral Agent.

     Section 5. Voting Rights.  (A) So long as no Event of Default (as such term
is defined in the Purchase Agreement) shall have occurred and be continuing, the
Grantor shall have the right,  from time to time,  to exercise  voting and other
consensual rights to give approvals, ratifications and


                                       5
<PAGE>

waivers pertaining to the Collateral,  and the Collateral Agent upon receiving a
written  request from the Grantor  accompanied by a certificate  stating that no
Event of Default has  occurred  will  deliver to the Grantor (or as specified in
such  request)  such  proxies,  approvals,  ratifications,   waivers  and  other
instruments pertaining to the Collateral as may be specified in such request and
be in form and substance satisfactory to the Collateral Agent.

     (B) Upon the occurrence and during the  continuance of an Event of Default,
the Collateral Agent shall have the right, at the Collateral  Agent's option, to
exercise the voting and other consensual rights to give approvals, ratifications
and waivers and to take any other action with respect to all the Collateral with
the same force and effect as if the Collateral Agent (for the ratable benefit of
the Holders) was the absolute and sole owner thereof, and the Grantor's right to
exercise  such  voting and other  consensual  rights  shall,  at the  Collateral
Agent's option, cease and become vested in the Collateral Agent.

     Section 6. Remedies upon Default.  (A) Upon the  occurrence  and during the
continuance  of an Event of Default  (as such term is  defined  in the  Purchase
Agreement) the Collateral Agent may exercise all rights of a secured party under
the Uniform  Commercial  Code and other  applicable  law  (including the Uniform
Commercial  Code as in effect from time to time in any applicable  jurisdiction)
and, in addition,  the Collateral  Agent may, without being required to give any
notice,  except as herein provided or as may be required by mandatory provisions
of law, (i) transfer  the whole or any part of the  Collateral  into the name of
Collateral Agent or its nominee(s); (ii) sell the Collateral or any part thereof
at a broker's board or on a securities exchange; or (iii) sell the Collateral or
any part thereof at public or private sale, for cash,  upon credit or for future
delivery,  and at  such  price  or  prices  as the  Collateral  Agent  may  deem
satisfactory.  The  Collateral  Agent may be the  purchaser of any or all of the
Collateral  so sold at any  public  sale  (or,  if the  Collateral  is of a type
customarily sold in a recognized  market or is of a type which is the subject of
widely distributed standard price quotations,  at any private sale). The Grantor
will  execute  and  deliver  such  documents  and take such other  action as the
Collateral Agent deems necessary or advisable in order that any such sale may be
made in compliance with law. Upon any such sale the Collateral  Agent shall have
the  right  to  deliver,  assign  and  transfer  to the  purchaser  thereof  the
Collateral so sold. Each purchaser at any such sale shall hold the Collateral so
sold to it  absolutely  and free  from any  claim or right of  whatsoever  kind,
including  any equity or right of redemption of the Grantor which may be waived,
and the Grantor,  to the extent permitted by law, hereby specifically waives all
rights of redemption,  stay or appraisal  which it has or may have under any law
now existing or hereafter adopted.  The Grantor agrees that ten (10) days' prior
written notice of the time and place of any sale or other  intended  disposition
of  any of the  Collateral  constitutes  "reasonable  notification"  within  the
meaning  of  Section  9-612 of the  Uniform  Commercial  Code (or any  successor
provision from time to time in effect) except that shorter or no notice shall be
reasonable  as to any  Collateral  which is  perishable  or threatens to decline
speedily in value or is of a type customarily sold on a recognized  market.  The
notice (if any) of such sale shall (1) in case of a public sale,  state the time
and place fixed for such sale, and (2) in the case of a private sale,  state the
day after which such sale may be consummated. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels,  as the
Collateral  Agent may determine.  The Collateral Agent shall not be obligated to
make any such sale


                                       6
<PAGE>

pursuant  to any such  notice.  The  Collateral  Agent  may,  without  notice or
publication,  adjourn  any  public  or  private  sale or  cause  the  same to be
adjourned from time to time by  announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future  delivery,  the  Collateral so sold may be retained by the Collateral
Agent  until  the  selling  price  is paid  by the  purchaser  thereof,  but the
Collateral  Agent shall not incur any  liability  in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice.

     (B) The  Collateral  Agent,  instead of exercising the power of sale herein
conferred  upon  it,  may  proceed  by a suit or suits  at law or in  equity  to
foreclose  the  security  interests  and sell  the  Collateral,  or any  portion
thereof,  under  a  judgment  or  decree  of a  court  or  courts  of  competent
jurisdiction.  The Grantor does by these presents  consent,  agree and stipulate
that upon the  occurrence  of an Event of  Default  it shall be  lawful  for the
Collateral Agent, and the Grantor does hereby authorize the Collateral Agent, to
cause all and singular the  Collateral to be seized and sold under  executory or
ordinary process, at the Collateral Agent's sole option,  without  appraisement,
appraisement  being hereby expressly waived, as an entirety or in parcels as the
Collateral Agent may determine,  to the highest bidder,  and otherwise  exercise
the rights,  powers and remedies  afforded herein and under  applicable New York
law.

     (C) The  Grantor  recognizes  that the  Collateral  Agent  may be unable to
effect a public  sale of all or part of the  Collateral  by  reason  of  certain
prohibitions contained in the Securities Act of 1933, as amended, and applicable
state  securities  laws but may be  compelled  to resort to one or more  private
sales to a restricted group of purchasers who will be obligated to agree,  among
other things,  to acquire all or a part of the Collateral for their own account,
for investment,  and not with a view to the  distribution or resale thereof.  If
the Collateral  Agent deems it advisable to do so for the foregoing or for other
reasons,  the Collateral Agent is authorized to limit the prospective bidders on
or purchasers of any of the Collateral to such a restricted  group of purchasers
and may cause to be placed on  certificates  for any or all of the  Collateral a
legend  to the  effect  that such  security  has not been  registered  under the
Securities  Act of 1933, as amended,  and may not be disposed of in violation of
the provision of said act, and to impose such other limitations or conditions in
connection  with  any such  sale as the  Collateral  Agent  deems  necessary  or
advisable  in order to comply  with said act or any  other  securities  or other
laws. The Grantor  acknowledges  and agrees that any private sale so made may be
at  prices  and on  other  terms  less  favorable  to the  seller  than  if such
Collateral  were  sold at  public  sale  and that the  Collateral  Agent  has no
obligation to delay the sale of such Collateral for the period of time necessary
to  permit  the  registration  of such  Collateral  for  public  sale  under any
securities  laws. The Grantor agrees that a private sale or sales made under the
foregoing  circumstances  shall be deemed  to have  been made in a  commercially
reasonable  manner. If any consent,  approval,  or authorization of any federal,
state, municipal or other governmental department, agency or authority should be
necessary to effectuate any sale or other disposition of the Collateral,  or any
partial sale or other  disposition of the  Collateral,  the Grantor will execute
all  applications  and other  instruments as may be required in connection  with
securing any such consent,  approval or authorization and will otherwise use its
best  efforts to secure  same.  In addition,  if the  Collateral  is disposed of
pursuant to Rule 144, the Grantor  agrees to complete and execute a Form 144, or
comparable  successor form, at the Collateral  Agent's request;  and the


                                       7
<PAGE>

Grantor  agrees to provide any  material  adverse  information  in regard to the
current and prospective  operations of any corporation  whose stock  constitutes
all or a portion of the  Collateral of which the Grantor has knowledge and which
has not been publicly  disclosed,  and the Grantor hereby  acknowledges that the
Grantor's  failure to provide  such  information  may result in criminal  and/or
civil liability.

     (D) In addition,  to the extent  permitted by  applicable  law, the Grantor
hereby  unconditionally and irrevocably  authorizes and instructs CCBM, upon the
occurrence and continuance of an Event of Default,  to transfer record ownership
of the Collateral to the Holders.  Notice of said  occurrence and continuance of
an Event of  Default  to CCBM shall be the  issuance  of a written  notification
thereof by the Collateral Agent to CCBM.

     (E) Application of Proceeds.  All payments received by the Collateral Agent
and/or the Holders  hereunder  shall be applied by the Holders to payment of the
Indebtedness  in the  following  order unless a court of competent  jurisdiction
shall otherwise direct:

     (i)  FIRST,  to payment of all costs and expenses of the  Collateral  Agent
          incurred in connection  with the  collection  and  enforcement  of the
          Indebtedness  or of any security  interest  granted to the  Collateral
          Agent for the benefit of the Holders in connection with any collateral
          securing the Indebtedness;

     (ii) SECOND,  to payment of that portion of the  Indebtedness  constituting
          accrued and unpaid interest and fees, to the Collateral  Agent and the
          Holders and their  Affiliates  in  accordance  with the amount of such
          accrued and unpaid interest and fees owing to each of them;

     (iii)THIRD,  to payment of the  principal  outstanding  under the Notes and
          any amount due by the Grantor to Holders (or any affiliate of Holders)
          under Hedging  Agreements (to the extent  constituting  Indebtedness);
          and

     (iv) FOURTH, to payment of any remaining Indebtedness.

     (F)  Notwithstanding  anything herein to the contrary,  the Grantor and the
Collateral  Agent hereby  acknowledge  and agree,  among  themselves and for the
benefit of Pinnacle that (i) insofar and only insofar as the Pinnacle Shares (as
defined  below)  are  concerned,  each  agrees  to be bound by the  terms of the
Securityholders  Agreement,  (ii) the  Collateral  Agent shall notify (using the
names  and  addresses  of  such  parties  as  provided  in  Section  9.5  of the
Securityholders  Agreement) Pinnacle and the nonpledging Shareholder (as defined
in the  Securityholders  Agreement)  of  the  date,  time  and  location  of any
foreclosure upon pledged or encumbered  Collateral at least 60 days prior to the
foreclosure,  (iii)  that any  notice  of  foreclosure  shall be deemed to be an
Involuntary  Transfer subject to Section 5.6 of the  Securityholders  Agreement,
and (iv) if Pinnacle elects to purchase the Pinnacle shares held by Grantor (the
"Pinnacle Shares") pursuant to Section 5.6 of the Securityholders Agreement, the
foreclosure  shall  not be held  and  the  Pinnacle  Shares  shall  be sold  and
delivered  by the  Collateral  Agent and the Grantor to the Persons  entitled to
purchase such Pinnacle Shares under Section 5.6 of the Securityholders


                                       8
<PAGE>

Agreement in accordance with Section 5.6 of the  Securityholders  Agreement.  If
for any reason the pledged  Collateral is foreclosed upon, the foreclosure shall
be considered an  Involuntary  Transfer and the provisions of Section 5.6 of the
Securityholders Agreement shall govern.

     Section 7.  Limitation on Duty.  Beyond the exercise of reasonable  care in
the  custody  thereof,  the  Collateral  Agent  shall  have  no  duty  as to any
Collateral in its  possession or control or in the  possession or control of the
Holders or bailee or any income thereon. The Collateral Agent shall be deemed to
have  exercised  reasonable  care  in  the  custody  of  the  Collateral  in its
possession if the Collateral is accorded treatment  substantially  equal to that
which it accords its own property,  and shall not be liable or  responsible  for
any loss or damage to any of the Collateral,  or for any diminution in the value
thereof,  by  reason of the act or  omission  of any  broker or other  Holder or
bailee  selected by the Collateral  Agent in good faith.  The  Collateral  Agent
shall be deemed to have  exercised  reasonable  care with  respect to any of the
Collateral in its possession if the Collateral  Agent takes such action for that
purpose as the Grantor shall  reasonably  request in writing;  but no failure to
comply with any such request shall,  of itself,  be deemed a failure to exercise
reasonable care.

     Section 8. Appointment of Collateral  Agent. At any time or times, in order
to comply  with any legal  requirement  in any  jurisdiction,  the  Holders  may
appoint a bank or trust company or one or more other Persons with such power and
authority  as may be necessary  for the  effectual  operation of the  provisions
hereof and may be specified in the instrument of appointment.

     Section 9. Revised  Article 9. Grantor hereby confirms that by signing this
Agreement, that Grantor has authenticated this Agreement,  within the meaning of
Revised  Article 9 of the Uniform  Commercial Code as now or hereafter in effect
in any jurisdiction  ("Revised Article 9"). This Agreement shall constitute full
authorization  in favor of the Collateral  Agent to file  appropriate  financing
statements, initial or "in lieu" financing statements,  continuation statements,
and  statements of amendment,  with or without  Grantor's  signature,  as may be
necessary or advisable  to perfect and maintain the  perfection  and priority of
the security  interest  granted to the Holders in this Agreement,  including any
such filings containing such information required by Part 5 of Revised Article 9
for the  sufficiency  or filing office  acceptance  of any financing  statement,
continuation   statement  or  amendment,   including   whether   Grantor  is  an
organization, the type of organization and any organization number issued to the
Grantor.  Grantor  shall  furnish  such  information  to  Collateral  Agent upon
Collateral  Agent's  request.  Any  such  financing   statements,   continuation
statements  or  amendments  requiring  the signature of Grantor may be signed by
Collateral Agent on Grantor's  behalf.  Any such filings by Collateral Agent may
be by delivery of originals or photocopies, by electronic communication, or such
other authorized form of communication as may be therein permitted.

     Section 10.  Expenses.  In the event that the Grantor  fails to comply with
any provisions of the Purchase Agreement or this Agreement,  such that the value
of any  Collateral  or the validity,  perfection,  rank or value of any security
interest  hereunder is thereby  diminished or  potentially  diminished or put at
risk, the Collateral  Agent may upon reasonable  prior notice,  but shall not be
required to, effect such  compliance  on behalf of the Grantor,  and the Grantor
shall  reimburse  the  Collateral  Agent for the costs  thereof on  demand.  All
insurance  expenses  and  all  expenses  of


                                       9
<PAGE>

protecting,  storing, appraising,  preparing for sale, handling, maintaining and
shipping the  Collateral,  any and all excise,  property,  sales,  and use taxes
imposed by any federal,  state or local authority on any of the Collateral,  all
expenses in respect of periodic  appraisals and inspections of the Collateral to
the  extent  the same may be  reasonably  requested  from time to time,  and all
expenses in respect of the sale or other disposition  thereof shall be borne and
paid by the  Grantor,  and if the  Grantor  fails to  promptly  pay any  portion
thereof  when due,  the  Collateral  Agent may, at its option,  but shall not be
required to, pay the same and charge the  Grantor's  account  therefor,  and the
Grantor agrees to reimburse the Collateral Agent therefor on demand.  Subject to
Section  11.8 of the  Purchase  Agreement,  all sums so paid or  incurred by the
Collateral  Agent for any of the  foregoing and any and all other sums for which
the Grantor may become liable  hereunder  and all costs and expenses  (including
reasonable  attorneys'  fees,  legal  expenses and court costs)  incurred by the
Collateral  Agent in enforcing or protecting any of the rights or remedies under
this Agreement,  together with interest thereon until paid at the rate equal the
then  highest  rate  of  interest  charged  on  the  principal  of  any  of  the
Indebtedness  due under the Notes plus one  percent  (1%),  shall be  additional
Indebtedness  hereunder and the Grantor  agrees to pay all of the foregoing sums
promptly on demand.

     Section  11.   Termination.   This  Agreement   shall  terminate  upon  the
satisfaction of all of the following conditions: (1) upon the payment in full of
the  Indebtedness,  (2) the  termination  of the  Purchase  Agreement  (and  all
obligations of the Holders  thereunder),  (3) the termination of all obligations
with respect to Hedging  Agreements (to the extent  constituting  Indebtedness),
(4) the payment of all  obligations  with respect to Hedging  Agreements (to the
extent  constituting  Indebtedness),  and,  (5) in the event any  portion of the
Indebtedness was paid by the issuance of shares of Common Stock to any Holder of
a Note, the earlier of (a) the expiration of the Repurchase Period (as such term
is defined in the Registration  Rights  Agreement) or (b) sale by such Holder of
all such shares of Common  Stock.  Upon request of the Grantor,  the  Collateral
Agent shall deliver the remaining  Collateral (if any) to the Grantor unless any
Senior Indebtedness (as defined in the Subordination Agreement) is outstanding.

     Section 12.  Notices.  Any notice or demand  which,  by  provision  of this
Agreement,  is required or permitted  to be given or served to the Grantor,  the
Collateral  Agent,  the  Holders,  and/or  CCBM  shall be  deemed  to have  been
sufficiently  given and served for all purposes if made in  accordance  with the
Purchase Agreement.

     Section 13. Amendment. Neither this Agreement nor any provisions hereof may
be changed, waived,  discharged or terminated orally or in any manner other than
by an instrument in writing signed by the party against whom  enforcement of the
change, waiver, discharge or termination is sought.

     Section  14.  Waivers.  No course of dealing on the part of the  Collateral
Agent or the Holders, their officers, employees,  consultants or agents, nor any
failure  or delay  by the  Collateral  Agent  or the  Holders  with  respect  to
exercising any of its rights,  powers or privileges  under this Agreement  shall
operate as a waiver thereof.

                                       10
<PAGE>

     Section 15.  Cumulative  Rights.  The rights and remedies of the Collateral
Agent and the Holders under this Agreement  shall be cumulative and the exercise
or partial  exercise of any such right or remedy shall not preclude the exercise
of any other right or remedy.

     Section 16. Titles of Sections.  All titles or headings to sections of this
Agreement are only for the convenience of the parties and shall not be construed
to have any  effect  or  meaning  with  respect  to the  other  content  of such
sections,  such other content being  controlling as to the agreement between the
parties hereto.

     SECTION 17.  GOVERNING  LAW.  THIS  AGREEMENT IS A CONTRACT  MADE UNDER AND
SHALL BE  CONSTRUED  IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE UNITED
STATES OF AMERICA AND THE STATE OF NEW YORK.

     Section 18. Successors and Assigns. All covenants and agreements made by or
on behalf of the Grantor in this Agreement  shall bind Grantor's  successors and
assigns and shall inure to the benefit of the Collateral Agent, the Holders (and
in the  case  of  Hedging  Agreements,  Affiliates  of any  Holders)  and  their
successors  and assigns.  This  Agreement  is for the benefit of the  Collateral
Agent and the Holders  and for such other  Person or Persons as may from time to
time  become  or be  the  holders  of any of  the  Indebtedness  (including  any
Affiliates of any Holders with respect to obligations under Hedging Agreements),
and this Agreement shall be  transferable  with the same force and effect and to
the same extent as the  Indebtedness  may be  transferable,  it being understood
that, upon the transfer or assignment by the Collateral  Agent or the Holders of
any of the Indebtedness, the legal holder of such Indebtedness shall have all of
the rights  granted to the  Collateral  Agent and the Holders (or  Affiliates of
such Holders with respect to obligations  under Hedging  Agreements)  under this
Agreement.

     Section 19.  Counterparts.  This  Agreement  may be executed in two or more
counterparts,  and it shall not be necessary  that the signatures of all parties
hereto be contained on any one counterpart  hereof,  each  counterpart  shall be
deemed an original,  but all of which when taken together  shall  constitute one
and the same instrument.

     Section  20.  Subordination  Agreement.  Reference  is made  herein for all
purposes to that certain Subordination Agreement (the "Subordination Agreement")
dated as of October  29,  2004,  executed  among the  Collateral  Agent,  in its
capacity as collateral agent for the financial institutions and investment funds
party to the Purchase  Agreement,  Hibernia  National  Bank,  in its capacity as
administrative  agent (the "Senior Agent") for the financial  institutions party
to the Senior  Credit  Agreement  and Company.  Notwithstanding  anything to the
contrary  herein,  until such time as the Senior  Indebtedness  (as such term is
defined  in the  Subordination  Agreement)  is paid in full and the  commitments
evidenced by the Senior Credit Documents have been terminated, the provisions of
this Stock Pledge and Security  Agreement  are subject to the terms,  covenants,
conditions and provisions of the  Subordination  Agreement,  which,  among other
things,  provide  that  the  interests  of the  Collateral  Agent  in and to the
Collateral  shall be inferior,  and subordinate to the interests of Senior Agent
in  accordance  with  the   Subordination   Agreement.   In  the  event  of  any
inconsistency between the terms and provisions of this Stock


                                       11
<PAGE>

Pledge  and  Security  Agreement  and the  Subordination  Agreement,  the terms,
covenants,  conditions  and  provisions  of the  Subordination  Agreement  shall
prevail until such time as the Senior  Indebtedness  (as such term is defined in
the  Subordination  Agreement) is paid in full and the commitments  evidenced by
the Senior Credit Documents have been terminated.

     THIS  WRITTEN  STOCK  PLEDGE  AND  SECURITY  AGREEMENT  AND THE OTHER  LOAN
DOCUMENTS  REPRESENT  THE FINAL  AGREEMENT  BETWEEN  THE  PARTIES AND MAY NOT BE
CONTRADICTED  BY  EVIDENCE  OF  PRIOR,   CONTEMPORANEOUS,   OR  SUBSEQUENT  ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL  AGREEMENTS  BETWEEN THE
PARTIES.

                  [Remainder of page intentionally left blank.]




                                       12
<PAGE>

     IN WITNESS  WHEREOF,  the Grantor and the Collateral Agent have caused this
Agreement to be duly executed as of the date first above written.


                                            GRANTOR:

                                            CARRIZO OIL & GAS, INC.


                                            By: /s/ PAUL F. BOLING
                                                -------------------
                                            Name: Paul F. Boling
                                            Title:  Vice President and
                                                    Chief Financial Officer


                                            COLLATERAL AGENT:

                                            PCRL INVESTMENTS L.P.,
                                            Collateral Agent for the Holders


                                            By: /s/ WILLIAM E. ROSE
                                                -------------------
                                            Name: William E. Rose
                                            Title: Authorized Signatory



</TEXT>
</DOCUMENT>
