HOUSTON, Aug. 4, 2020 /PRNewswire/ -- Callon Petroleum
Company (NYSE: CPE) ("Callon" or the "Company") today reported
results of operations for the three and six months ended
June 30, 2020.
Presentation slides accompanying this earnings release are
available on the Company's website at www.callon.com located on the
"Presentations" page within the Investors section of the site.
Recent Highlights
- Delivered production of approximately 108.7 Mboe/d (65% oil),
above the high end of guidance, for the second quarter of 2020
- Posted accrued operational capital spending of $85.1 million, 15% below the second quarter
target of $100 million
- Generated net cash from operating activities of $97.8 million and free cash flow1 of
$18.0 million for the second
quarter
- Loss available to common stockholders of $1,564.7 million, or $3.94 per fully diluted share, driven by an
impairment of evaluated oil and gas properties of $1,276.5 million, adjusted EBITDA1 of
$153.4 million, and adjusted income
per share1 of $0.01 for
the second quarter of 2020
- Achieved lease operating expense ("LOE") of $50.8 million or $5.14 per Boe for the second quarter of 2020, an
improvement of 10% over the comparable three-month period ended
March 31, 2020
- Lowered cost structure with total operating expenses, including
full cash G&A costs1, of $9.58/Boe in the quarter, 16% below the prior
quarter
- Reduced Delaware and Midland
drilling and completion costs versus the prior quarter by
approximately $100 per 1,000 lateral
feet, representing incremental savings of 11% and 17%
respectively
- Announced a 1-for-10 reverse stock split effective as of the
close of business on August 7,
2020
Joe Gatto, President and Chief
Executive Officer commented, "Our operational and financial results
for the second quarter reflect Callon's commitment to thoughtful
capital allocation and operational execution that we have overlaid
on an exceptional, diversified asset base. As oil markets began to
erode in March, our team acted quickly to reduce capital activity
while maintaining a clear focus on near and long-term operating
goals. As a result, our drilling and completion costs are down
across the board, second quarter production was well ahead of
estimates, and operating costs continue to decline beyond our
targeted synergy goals."
He continued, "Our success in reducing our cost structure,
combined with leading capital efficiency from strong well
productivity and well cost reductions, positioned us to generate
free cash flow this quarter. This is just the first step as we have
developed a longer-term plan designed to consistently generate free
cash flow while maintaining production levels with a reduced
reinvestment rate. After moving past the working capital cash
impact of expenditures incurred in the first quarter, a meaningful
portion of which added to our current inventory of drilled,
uncompleted wells, we will be dedicating all of our expected free
cash flow to credit facility reductions and forecast our current
credit facility balance to decline into year end and continue into
2021."
Mr. Gatto also shared, "Despite tremendous business, social, and
personal hurdles resulting from the current pandemic and extreme
turbulence in the financial markets, our team has remained focused
on synergy realization and the integration of people, systems, and
processes. Our operational and financial results highlight our
progress as an organization and I applaud the Callon team for
persevering through an incredibly difficult past few months.
Importantly, we remain committed to their safety and that of our
vendors, partners, and communities."
Operations Update
At June 30, 2020, Callon had 1,471 gross (1,298.0 net)
horizontal wells producing from established flow units in the
Permian Basin and Eagle Ford Shale. Net daily production for the
three months ended June 30, 2020 grew 168% to 108.7 Mboe/d
(65% oil), as compared to the same period of 2019.
For the three months ended June 30, 2020, Callon drilled 29
gross (27.0 net) horizontal wells and placed a combined 26 gross
(24.9 net) horizontal wells on production. During the course of the
quarter, all rigs and completion crews ceased activity upon
completion of projects in progress. The Company does not have any
active rigs or completion crews at this time but does intend to
resume development activity during the third quarter. Near-term
operational activity will be focused on completing a drilled,
uncompleted inventory of approximately 70 wells in both the Permian
Basin and Eagle Ford Shale with one dedicated completion crew. The
Company also intends to return two to three drilling rigs to
service later in the third quarter for the balance of the year.
During the second quarter in the Delaware Basin, the seven-well Dorothy Sansom
project was placed on production in April, consisting of targets in
the 3rd Bone Spring Shale, Wolfcamp A (2), Upper Wolfcamp B, Lower
Wolfcamp B (2), and Wolfcamp C. Initial results have been positive
with cumulative production (adjusted for shut-ins during the
quarter) matching or exceeding production from primary zones in the
Crowley-St. Clair project which was completed in 2019. Comparable
wells in the Wolfcamp A and B zones on the Dorothy Sansom project
were drilled and completed offsetting parent wells, unlike the
unbounded Crowley-St. Claire wells.
The current performance is encouraging for future development of
offset wells in the area.
At the WildHorse area in the Midland Basin, the Company brought
online the nine-well Dunkin/Horton/Wright project that had
previously been deferred during the early portion of the quarter.
The project consists of Wolfcamp A wells (4), Lower Spraberry wells
(3), and a Wolfcamp B and Middle Spraberry test. Initial production
from the Wolfcamp A and B has exceeded expectations and
significantly outperformed 2019 vintage Wolfcamp A offsets in the
immediate area through the first fifty days. Early results from the
Middle Spraberry are encouraging for potential future development
in the area as production currently continues to outpace initial
type curve estimates.
In the Eagle Ford, the Company placed on production the Pena
project with a portion of the wells reaching first production at
the very end of March and the remainder falling into early April.
These wells have produced over 75,000 cumulative Boe (~90% oil) on
average (1.2 MMBoe in total) through the first 120 days online,
matching type curve expectations.
During the second quarter, Callon saw additional gains in
operational efficiency, with average development costs improving.
Some of the highlights include:
- Delaware well costs further
reduced to approximately $850 per
lateral foot, an 11% improvement versus the previous quarter and a
23% improvement versus our 2019 average of $1,100 per lateral foot; and
- Midland Basin well costs are now approaching approximately
$500 per lateral foot, a 17%
improvement over the first quarter and 37% improvement over
2019
Marketing
The Company entered into short-term fixed price contracts in May
and June for Eagle Ford Shale production to secure firm
transportation and also mitigate the effect of the calendar month
average ("CMA") roll calculation on realized pricing. Those fixed
price contracts have since returned to our previous MEH linked
pricing structure. Callon recently secured incremental firm
transportation for production volumes to ensure delivery of barrels
produced from the Eagle Ford assets to improve market options for
the future.
In addition, the Company has entered into a multi-year agreement
with a diverse global player in waterborne oil markets that will be
purchasing up to 10,000 barrels per day of oil of Permian Basin
production at Brent-linked prices for volumes delivered under our
firm transportation agreement to the Houston Ship Channel area on
the Echo Pipeline. In April, we began delivering 15,000 barrels per
day into the Corpus refinery complex under our firm transportation
agreement on Gray Oak pipeline.
These barrels are part of multi-year term sales agreements
receiving a combination of Brent and MEH based pricing.
Minimal production volumes that were voluntarily shut-in by the
Company during the second quarter have been returned to production.
The Company is not subject to repayment of volumes or cover cost at
second quarter pricing since it met all sales obligations during
the quarter.
Capital Expenditures
For the three months ended June 30, 2020, Callon incurred
$85.1 million in operational capital
expenditures on an accrual basis. Total capital expenditures,
inclusive of capitalized expenses, are detailed below on an accrual
and cash basis:
|
|
Three Months Ended
June 30, 2020
|
|
|
Operational
|
|
Capitalized
|
|
Capitalized
|
|
Total
Capital
|
|
|
Capital
(a)
|
|
Interest
|
|
G&A
|
|
Expenditures
|
|
|
(In
thousands)
|
Cash basis
(b)
|
|
$174,594
|
|
|
$24,787
|
|
|
$6,740
|
|
|
$206,121
|
|
Timing adjustments
(c)
|
|
(90,780)
|
|
|
(3,863)
|
|
|
—
|
|
|
(94,643)
|
|
Non-cash
items
|
|
1,273
|
|
|
—
|
|
|
2,162
|
|
|
3,435
|
|
Accrual
basis
|
|
$85,087
|
|
|
$20,924
|
|
|
$8,902
|
|
|
$114,913
|
|
|
|
(a)
|
Includes seismic,
land, technology, and other items.
|
(b)
|
Cash basis is
presented here to help users of financial information reconcile
amounts from the cash flow statement to the balance sheet by
accounting for timing related changes in working capital that align
with our development pace and rig count.
|
(c)
|
Includes timing
adjustments related to cash disbursements in the current period for
capital expenditures incurred in the prior period.
|
Hedging
For the three months ended June 30,
2020, Callon recognized a hedge gain of $84.2 million consisting of settled positions and
monetization of certain future oil positions. During the course of
the quarter and through July, the Company has continued to add
hedge coverage for oil, natural gas, and ethane in 2021, and
restructured certain oil swaps for the remaining six months of 2020
into two-way collars providing additional upside for oil prices to
as high as $45 per barrel. Average
floor prices for the second half of 2020 for WTI NYMEX oil
contracts are approximately $40 per
barrel covering just over nine million barrels of production, or
roughly 80% of projected oil production for the remainder of
2020.
The Company took advantage of an improved natural gas outlook
and entered into a combination of NYMEX Henry Hub swaps and collars
for 2021 providing coverage for over 22,000 BBtu or just over
60,000 MMBtu per day at an average floor price $2.61 per MMBtu. Natural gas production is now
approximately 70% hedged for the remainder of 2020 and just over
60% hedged for 2021. Details regarding the Company's full hedge
positions can be found in the hedge summary within the earnings
release or within the appendix of the second quarter 2020 earnings
slide deck on the website.
Operating and Financial Results
The following table presents summary information for the periods
indicated:
|
|
Three Months
Ended
|
|
|
June 30,
2020
|
|
March 31,
2020
|
|
June 30,
2019
|
Net
production
|
|
|
|
|
|
|
Oil
(MBbls)
|
|
6,396
|
|
|
5,847
|
|
|
2,848
|
|
Natural gas
(MMcf)
|
|
11,009
|
|
|
9,793
|
|
|
5,031
|
|
NGLs
(MBbls)
|
|
1,657
|
|
|
1,707
|
|
|
—
|
|
Total barrels of oil
equivalent (MBoe)
|
|
9,888
|
|
|
9,186
|
|
|
3,687
|
|
Total daily
production (Boe/d)
|
|
108,664
|
|
|
100,955
|
|
|
40,516
|
|
Oil as % of total
daily production
|
|
65
|
%
|
|
64
|
%
|
|
77
|
%
|
Average realized
sales price
(excluding impact of
settled derivatives)
|
|
|
|
|
|
|
Oil (per
Bbl)
|
|
$20.41
|
|
|
$45.45
|
|
|
$56.44
|
|
Natural gas (per
Mcf)
|
|
1.11
|
|
|
0.62
|
|
|
1.26
|
|
NGLs (per
Bbl)
|
|
8.74
|
|
|
10.62
|
|
|
—
|
|
Total (per
BOE)
|
|
15.90
|
|
|
31.56
|
|
|
45.31
|
|
Average realized
sales price
(including impact of
settled derivatives)
|
|
|
|
|
|
|
Oil (per
Bbl)
|
|
$33.82
|
|
|
$48.90
|
|
|
$54.87
|
|
Natural gas (per
Mcf)
|
|
0.97
|
|
|
1.13
|
|
|
1.91
|
|
NGLs (per
Bbl)
|
|
8.74
|
|
|
10.62
|
|
|
—
|
|
Total (per
Boe)
|
|
24.42
|
|
|
34.30
|
|
|
44.99
|
|
Revenues
(in thousands)
|
|
|
|
|
|
|
Oil
|
|
$130,513
|
|
|
$265,767
|
|
|
$160,728
|
|
Natural
gas
|
|
12,242
|
|
|
6,029
|
|
|
6,324
|
|
NGLs
|
|
14,479
|
|
|
18,123
|
|
|
—
|
|
Total
revenues
|
|
157,234
|
|
|
289,919
|
|
|
167,052
|
|
Additional per Boe
data
|
|
|
|
|
|
|
Sales price
(a)
|
|
$15.90
|
|
|
$31.56
|
|
|
$45.31
|
|
Lease operating
expense
|
|
5.14
|
|
|
5.70
|
|
|
6.18
|
|
Production
taxes
|
|
1.05
|
|
|
2.14
|
|
|
3.02
|
|
Gathering,
transportation and processing
|
|
2.03
|
|
|
1.57
|
|
|
—
|
|
Operating
margin
|
|
$7.68
|
|
|
$22.15
|
|
|
$36.11
|
|
|
|
|
|
|
|
|
Depletion, depreciation and amortization
|
|
$14.05
|
|
|
$14.31
|
|
|
$17.12
|
|
General
and administrative (G&A)
|
|
$1.01
|
|
|
$0.91
|
|
|
$2.87
|
|
Adjusted
G&A (b)
|
|
|
|
|
|
|
Cash component
(c)
|
|
$0.69
|
|
|
$1.20
|
|
|
$2.42
|
|
Non-cash
component
|
|
0.15
|
|
|
0.41
|
|
|
0.68
|
|
|
|
(a)
|
Excludes the impact
of settled derivatives.
|
(b)
|
Excludes certain
non-recurring expenses and non-cash valuation adjustments. Adjusted
G&A is a non-GAAP financial measure; see the reconciliation
provided within this press release for a reconciliation of G&A
expense on a GAAP basis to Adjusted G&A expense.
|
(c)
|
Excludes the
amortization of equity-settled, share-based incentive
awards.
|
Total Revenue. For the quarter ended
June 30, 2020, Callon reported total revenue of $157.2 million and total revenue including the
gain or loss from the settlement of derivative contracts ("Adjusted
Total Revenue"(1)) of $241.4
million, reflecting the impact of an $84.2 million gain from the settlement of
derivative contracts. Average daily production for the quarter was
108.7 Mboe/d, compared to average daily production of 101.0 Mboe/d
in the first quarter of 2020. Average realized prices, including
and excluding the effects of hedging, are detailed above.
Hedging impacts. For the quarter ended June 30,
2020, the net (gain) loss on commodity derivative contracts
includes the following (in thousands):
|
Three Months
Ended
June 30, 2020
|
(Gain) loss on oil
derivatives
|
$122,369
|
(Gain) loss on
natural gas derivatives
|
4,695
|
(Gain) loss on NGL
derivatives
|
(4)
|
(Gain) loss on
commodity derivative contracts
|
$127,060
|
For the quarter ended June 30, 2020, the cash (paid)
received for commodity derivative settlements includes the
following (in thousands):
|
Three Months
Ended
June 30, 2020
|
Cash (paid) received
on oil derivatives
|
$100,470
|
Cash (paid) received
on natural gas derivatives
|
(1,782)
|
Cash received for
commodity derivative settlements
|
$98,688
|
Lease Operating Expenses, including workover
("LOE"). LOE per Boe for the three months ended
June 30, 2020 was $5.14 per Boe,
compared to LOE of $5.70 per Boe in
the first quarter of 2020. The decrease in LOE per Boe was driven
by improved field practices and a reduction in workovers during the
second quarter of 2020 as compared to the first quarter of
2020.
Production Taxes, including ad valorem
taxes. Production taxes were $1.05 per Boe for the three months ended
June 30, 2020, representing approximately 6.6% of total
revenue before the impact of derivative settlements.
Gathering, Transportation and Processing
Expenses. Gathering, transportation and processing costs
for the three months ended June 30, 2020 were $20.0 million as compared to $14.4 million in the first quarter of 2020 due to
firm transportation contracts that began in the second quarter of
2020. In 2020, the Company began reporting gathering,
transportation and processing costs separately due to the
assumption of processing agreements in the Carrizo acquisition and
certain contract modifications effective January 1, 2020. As such, the Company now records
contractual fees associated with gathering, processing, treating
and compression, as well as any transportation fees incurred to
deliver the product to the purchaser, as gathering, transportation
and processing expense. These fees were historically recorded as a
reduction of revenue depending on when control transferred to the
purchaser.
Depreciation, Depletion and Amortization
("DD&A"). DD&A for the three months ended
June 30, 2020 was consistent at $14.05 per Boe compared to $14.31 per Boe in the first quarter of 2020.
Impairment of Evaluated Oil and Gas Properties. Callon
recognized an impairment of evaluated oil and gas properties of
$1.3 billion for the three months
ended June 30, 2020 due primarily to declines in the average
realized prices for sales of oil and gas. The decrease in the
trailing 12-month average realized price as of June 30, 2020 resulted in a reduction our proved
oil and gas reserve volumes of less than 2% of our December 31, 2019 proved oil and gas reserves
volumes. The Company did not recognize an impairment of evaluated
oil and gas properties during the first quarter of 2020.
G&A. G&A for the three months ended
June 30, 2020 was $10.0 million,
or $1.01 per Boe, and G&A,
excluding certain non-cash incentive share-based compensation
valuation adjustments, ("Adjusted G&A" 1) was
$8.3 million, or $0.84 per Boe, for the three months ended
June 30, 2020 compared to $14.8
million, or $1.62 per Boe, for
the first quarter of 2020. The cash component of Adjusted G&A
was $6.8 million, or $0.69 per Boe, for the three months ended
June 30, 2020 compared to $11.1
million, or $1.20 per Boe, for
the first quarter of 2020. The reductions in G&A were driven by
the realization of post-merger synergies and further reductions to
payroll and non-payroll expenses following the pandemic, including
compensation reductions for executives and the board of
directors.
For the three months ended June 30, 2020 and March 31,
2020, G&A and Adjusted G&A, which excludes the amortization
of equity-settled and share-based incentive awards, are calculated
as follows (in thousands):
|
Three Months
Ended
|
|
June 30,
2020
|
|
March 31,
2020
|
Total G&A
expense
|
$10,024
|
|
|
$8,325
|
|
Change
in the fair value of liability share-based awards
(non-cash)
|
(1,720)
|
|
|
6,516
|
|
Adjusted G&A –
total
|
8,304
|
|
|
14,841
|
|
Restricted stock share-based compensation (non-cash) and other
non-recurring expenses
|
(1,509)
|
|
|
(3,776)
|
|
Adjusted G&A –
cash component
|
$6,795
|
|
|
$11,065
|
|
|
|
|
|
Capitalized cash
G&A
|
$6,740
|
|
|
$7,570
|
|
Full Cash G&A
Costs
|
$13,535
|
|
|
$18,635
|
|
Income Tax Expense. Callon provides for income taxes
at the statutory rate of 21% adjusted for permanent
differences expected to be realized. Callon recorded income tax
expense of $51.3 million for the
three months ended June 30, 2020, compared to income tax
expense of $64.0 million for the
three months ended March 31, 2020. Primarily as a result of
the impairment of evaluated oil and gas properties recognized
during the second quarter of 2020, Callon recorded a valuation
allowance against its net deferred tax assets reducing the net
deferred tax assets to zero.
Loss Available to Common Stockholders. We recorded a loss
available to common stockholders for the three months ended
June 30, 2020 of $1.6 billion, or $3.94 per diluted share, as compared to income
available to common stockholders of $216.6
million, or $0.55 per diluted
share, for the first quarter of 2020. The loss was primarily due to
the impairment of evaluated oil and gas properties of $1.3 billion as well as a loss on derivative
contracts of approximately $127.0
million recorded during the second quarter of 2020.
Adjusted EBITDA1. Adjusted EBITDA for the
second quarter of 2020 was $153.4
million as compared to $217.5
million for the first quarter of 2020. The decrease in
Adjusted EBITDA from the first quarter of 2020 was primarily due to
an approximate 30% decrease in the average realized price of oil.
This was partially offset by increased sequential production as
well as a decrease in operating expenses as described
above.
Guidance
Callon is reinstating guidance for the full year and updating
previous ranges to reflect adjustments to its operational plan and
associated expectations.
|
|
Full
Year
|
|
|
2020
Guidance
|
Total production
(Mboe/d)
|
|
99.0 -
101.0
|
Oil
production
|
|
64%
|
Gas
production
|
|
18%
|
NGL
production
|
|
18%
|
Income statement
expenses ($MM)
|
|
|
LOE, including
workovers
|
|
$205 -
$215
|
Gathering, processing,
and transportation
|
|
$60 - $65
|
Production taxes,
including ad valorem (% unhedged revenue)
|
|
7%
|
Adjusted G&A: cash
component (a)
|
|
$30 - $35
|
Adjusted G&A:
non-cash component (b)
|
|
$5 - $7
|
Cash interest
expense
|
|
$90 - $95
|
Effective income tax
rate (%)
|
|
22%
|
Capital
expenditures ($MM, accrual basis)
|
|
|
Total operational
capital (c)
|
|
$500 -
$525
|
Capitalized
interest
|
|
$80 - $85
|
Capitalized
G&A
|
|
$25 - $30
|
Gross operated
wells drilled / completed
|
|
87-89 /
80-82
|
|
|
(a)
|
Excludes the
amortization of equity-settled, share-based incentive awards.
Adjusted G&A is a non-GAAP financial measure; see the
reconciliation provided within this press release for a
reconciliation of G&A expense on a GAAP basis to Adjusted
G&A expense.
|
(b)
|
Excludes certain
non-recurring expenses and non-cash valuation adjustments. Adjusted
G&A is a non-GAAP financial measure; see the reconciliation
provided within this press release for a reconciliation of G&A
expense on a GAAP basis to Adjusted G&A expense.
|
(c)
|
Includes facilities,
equipment, seismic, land and other items. Excludes capitalized
expenses.
|
In addition to the updated 2020 guidance provided in the
previous table, the Company's initial outlook for 2021 for a
"maintenance capital" plan will include average daily production of
90 to 95 MBoe per day from an operational capital spending level of
approximately $400 million.
Management believes that this program at current prices will yield
meaningful additional free cash flow.
Reverse Stock Split
Today the Company also announced that its Board of Directors has
approved a reverse stock split of the Company's outstanding shares
of common stock at a ratio of 1-for-10, which was approved by the
Company's shareholders at the Company's annual meeting of
shareholders on June 8, 2020. The
reverse stock split will become effective as of the close of
business on August 7, 2020 and the
Company's common stock will begin trading on a split-adjusted basis
on the NYSE at market open on August 10,
2020. The par value of the common stock will not be adjusted
in connection with the reverse stock split.
The reverse stock split is intended to, among other things,
improve the opportunity for institutional ownership. Upon
completion of the reverse stock split, each 10 pre-split shares of
common stock outstanding will be automatically combined into one
issued and outstanding share of common stock. Any fractional shares
that result from the reverse stock split will be canceled, and
shareholders who would otherwise hold fractional shares as a result
of the reverse stock split will be entitled to receive cash
(without interest and subject to applicable withholding taxes) in
lieu of such fractional shares. The number of outstanding shares of
common stock will be reduced from approximately 397,476,674 as of
July 31, 2020 to approximately
39,747,667 shares (without giving effect to the liquidation of
fractional shares). The Board has also approved a proportionate
reduction of the total number of authorized shares of the Company's
common stock pursuant to an amendment to the Company's Certificate
of Incorporation. The total number of shares of common stock that
the Company is authorized to issue will be reduced from 525,000,000
to 52,500,000 shares.
Second Quarter 2020 Earnings Conference Call
The Company's conference call to discuss second quarter results
is scheduled for Wednesday, August 5,
2020, at 8:00 am CDT. The
presentation slides and associated webcast can both be found at
www.callon.com located on the "News/Events" page within the
Investors section on the site or by clicking on the link below.
www.callon.com/investors/news-events/ir-calendar
Hedge Portfolio Summary
The following tables summarize Callon's open derivative
contracts for the remaining two quarters of 2020 and the full year
2021, updated for changes through July 31,
2020:
|
For the
Remainder
|
|
|
For the Full
Year
|
|
Oil contracts
(WTI)
|
of
2020
|
|
|
of
2021
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
6,291,880
|
|
|
|
1,377,000
|
|
|
Weighted
average price per Bbl
|
$42.08
|
|
|
|
$42.00
|
|
|
Collar contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
2,863,040
|
|
|
|
3,741,250
|
|
|
Weighted
average price per Bbl
|
|
|
|
|
|
Ceiling
(short call)
|
$45.00
|
|
|
|
$45.02
|
|
|
Floor
(long put)
|
$35.00
|
|
|
|
$40.00
|
|
|
Short
put contracts
|
|
|
|
|
|
Total volume
(Bbls)
|
1,104,000
|
|
|
|
—
|
|
|
Weighted average price
per Bbl
|
$42.50
|
|
|
|
$—
|
|
|
Long
call contracts
|
|
|
|
|
|
Total volume (Bbls)
|
920,000
|
|
|
|
—
|
|
|
Weighted average price per Bbl
|
$67.50
|
|
|
|
$—
|
|
|
Short
call contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
920,000
|
|
(a)
|
|
4,825,300
|
|
(a)
|
Weighted
average price per Bbl
|
$55.00
|
|
|
|
$63.62
|
|
|
Short
call swaption contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
—
|
|
|
|
730,000
|
|
(b)
|
Weighted
average price per Bbl
|
$—
|
|
|
|
$47.00
|
|
|
|
|
|
|
|
|
Oil contracts (WTI
Calendar Month Average Roll)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total volume
(Bbls)
|
3,864,000
|
|
|
|
—
|
|
|
Weighted average price
per Bbl
|
($2.75)
|
|
|
|
$—
|
|
|
|
|
|
|
|
|
Oil contracts
(Brent ICE)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
184,000
|
|
|
|
1,272,450
|
|
|
Weighted
average price per Bbl
|
$46.15
|
|
|
|
$38.24
|
|
|
|
|
|
|
|
|
Oil contracts
(Midland basis differential)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
3,094,700
|
|
|
|
4,015,100
|
|
|
Weighted
average price per Bbl
|
($1.75)
|
|
|
|
$0.40
|
|
|
|
|
|
|
|
|
Oil contracts
(Argus Houston MEH basis differential)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
3,256,004
|
|
|
|
—
|
|
|
Weighted
average price per Bbl
|
$0.06
|
|
|
|
$—
|
|
|
Oil contracts
(Argus Houston MEH swaps)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
368,000
|
|
|
|
2,969,050
|
|
|
Weighted
average price per Bbl
|
$57.71
|
|
|
|
$39.48
|
|
|
|
|
(a)
|
Premiums from the
sale of call options were used to increase the fixed price of
certain simultaneously executed price swaps.
|
(b)
|
The short call
swaption contract has an exercise expiration date of October 30,
2020.
|
|
For the
Remainder
|
|
|
For the Full
Year
|
Natural gas
contracts (Henry Hub)
|
of
2020
|
|
|
of
2021
|
Swap
contracts
|
|
|
|
|
Total volume
(MMBtu)
|
8,566,000
|
|
|
|
12,923,000
|
|
Weighted average price
per MMBtu
|
$2.07
|
|
|
|
$2.66
|
|
Collar contracts (three-way collars)
|
|
|
|
|
Total volume
(MMBtu)
|
2,755,000
|
|
|
|
1,350,000
|
|
Weighted average price
per MMBtu
|
|
|
|
|
Ceiling (short call)
|
$2.73
|
|
|
|
$2.70
|
|
Floor (long put)
|
$2.47
|
|
|
|
$2.42
|
|
Floor (short put)
|
$2.00
|
|
|
|
$2.00
|
|
Collar contracts
(two-way collars)
|
|
|
|
|
Total volume
(MMBtu)
|
1,525,000
|
|
|
|
7,750,000
|
|
Weighted average price
per MMBtu
|
|
|
|
|
Ceiling (short call)
|
$3.25
|
|
|
|
$2.93
|
|
Floor (long put)
|
$2.67
|
|
|
|
$2.55
|
|
Long
call contracts
|
|
|
|
|
Total volume
(MMBtu)
|
3,036,000
|
|
|
|
—
|
|
Weighted average price
per MMBtu
|
$3.50
|
|
|
|
$—
|
|
Short
call contracts
|
|
|
|
|
Total volume
(MMBtu)
|
6,072,000
|
|
|
|
7,300,000
|
|
Weighted average price
per MMBtu
|
$3.50
|
|
|
|
$3.09
|
|
|
|
|
|
|
Natural gas
contracts (Waha basis differential)
|
|
|
|
|
Swap
contracts
|
|
|
|
|
Total volume
(MMBtu)
|
12,885,000
|
|
|
|
6,387,500
|
|
Weighted average price
per MMBtu
|
($0.92)
|
|
|
|
($0.58)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Remainder
|
|
|
For the Full
Year
|
NGL contracts
(OPIS Mont Belvieu Purity Ethane)
|
of
2020
|
|
|
of
2021
|
Swap
contracts
|
|
|
|
|
Total volume
(Bbls)
|
—
|
|
|
|
1,825,000
|
|
Weighted average price
per Bbl
|
$—
|
|
|
|
$7.62
|
|
Adjusted Income and Adjusted EBITDA. The
Company reported loss available to common stockholders of
$1,564.7 million, or $3.94 per fully diluted share, for the three
months ended June 30, 2020, and adjusted income available to
common stockholders of $2.1 million,
or $0.01 per fully diluted share. The
following tables reconcile the Company's income (loss) available to
common stockholders to adjusted income, and the Company's net
income (loss) to adjusted EBITDA:
|
Three Months
Ended
|
|
June 30,
2020
|
|
March 31,
2020
|
|
June 30,
2019
|
|
(In thousands,
except per share data)
|
Income (loss)
available to common stockholders
|
($1,564,731)
|
|
|
$216,565
|
|
|
$53,357
|
|
(Gain) loss on
derivative contracts
|
126,965
|
|
|
(251,969)
|
|
|
(14,036)
|
|
Gain (loss) on
commodity derivative settlements, net
|
84,208
|
|
|
25,126
|
|
|
(1,157)
|
|
Non-cash stock-based
compensation expense (benefit)
|
2,761
|
|
|
(2,972)
|
|
|
904
|
|
Impairment of
evaluated oil and gas properties
|
1,276,518
|
|
|
—
|
|
|
—
|
|
Merger and
integration expense
|
8,067
|
|
|
15,830
|
|
|
—
|
|
Other (income)
expense
|
6,759
|
|
|
(1,029)
|
|
|
770
|
|
Tax effect on
adjustments above(a)
|
(316,108)
|
|
|
45,153
|
|
|
2,839
|
|
Change in valuation
allowance
|
377,645
|
|
|
—
|
|
|
—
|
|
Adjusted
Income
|
$2,084
|
|
|
$46,704
|
|
|
$42,677
|
|
Adjusted Income per
fully diluted common share
|
$0.01
|
|
|
$0.12
|
|
|
$0.19
|
|
|
|
|
|
|
|
Basic WASO
|
397,084
|
|
|
396,682
|
|
|
228,051
|
|
Diluted WASO
(GAAP)
|
397,084
|
|
|
396,836
|
|
|
228,411
|
|
Effective of
potentially dilutive instruments
|
114
|
|
|
—
|
|
|
—
|
|
Adjusted Diluted
WASO
|
397,198
|
|
|
396,836
|
|
|
228,411
|
|
|
|
(a)
|
Calculated using the
federal statutory rate of 21%.
|
|
Three Months
Ended
|
|
June 30,
2020
|
|
March 31,
2020
|
|
June 30,
2019
|
|
(In
thousands)
|
Net income
(loss)
|
($1,564,731)
|
|
|
$216,565
|
|
|
$55,180
|
|
(Gain)
loss on derivative contracts
|
126,965
|
|
|
(251,969)
|
|
|
(14,036)
|
|
Gain
(loss) on commodity derivative settlements, net
|
84,208
|
|
|
25,126
|
|
|
(1,157)
|
|
Non-cash
stock-based compensation expense (benefit)
|
2,761
|
|
|
(2,972)
|
|
|
904
|
|
Impairment of
evaluated oil and gas properties
|
1,276,518
|
|
|
—
|
|
|
—
|
|
Merger
and integration expense
|
8,067
|
|
|
15,830
|
|
|
—
|
|
Other
(income) expense
|
6,759
|
|
|
(1,029)
|
|
|
935
|
|
Income
tax expense
|
51,251
|
|
|
64,048
|
|
|
16,691
|
|
Interest
expense
|
22,682
|
|
|
20,478
|
|
|
741
|
|
Depreciation, depletion and amortization
|
138,930
|
|
|
131,463
|
|
|
64,590
|
|
Adjusted
EBITDA
|
$153,410
|
|
|
$217,540
|
|
|
$123,848
|
|
Free Cash Flow. Free cash flow was $18.0 million for the three months ended
June 30, 2020. Free cash flow is
reconciled to operating cash flow in the following table:
|
|
Three Months
Ended
|
|
|
June 30,
2020
|
|
|
(In
thousands)
|
Net cash provided by
operating activities
|
|
$97,801
|
|
Changes in working
capital and other
|
|
40,078
|
|
Change in accrued hedge
settlement
|
|
(14,480)
|
|
Cash interest
expense
|
|
21,944
|
|
Merger and integration
expense
|
|
8,067
|
|
Adjusted
EBITDA
|
|
153,410
|
|
Less: Operational
capital (accrual)
|
|
85,087
|
|
Less: Capitalized
interest
|
|
20,924
|
|
Less: Interest
expense
|
|
22,682
|
|
Less: Capitalized
cash G&A (excludes stock-based compensation)
|
|
6,740
|
|
Free cash
flow
|
|
$17,977
|
|
Adjusted Discretionary Cash Flow. Operating cash
flow was $97.8 million and adjusted
discretionary cash flow was $142.7
million for the three months ended June 30, 2020.
Adjusted discretionary cash flow is reconciled to operating cash
flow in the following table:
|
Three Months
Ended
|
|
June 30,
2020
|
|
March 31,
2020
|
|
June 30,
2019
|
|
(In
thousands)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
(loss)
|
($1,564,731)
|
|
|
$216,565
|
|
|
$55,180
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation, depletion and amortization
|
138,930
|
|
|
131,463
|
|
|
64,590
|
|
Impairment of evaluated oil and gas properties
|
1,276,518
|
|
|
—
|
|
|
—
|
|
Amortization of non-cash debt related items
|
738
|
|
|
407
|
|
|
741
|
|
Deferred
income tax expense
|
51,251
|
|
|
64,048
|
|
|
16,691
|
|
(Gain)
loss on derivative contracts
|
126,965
|
|
|
(251,969)
|
|
|
(14,036)
|
|
Cash
(paid) received for commodity derivative settlements,
net
|
98,688
|
|
|
2,613
|
|
|
(1,157)
|
|
(Gain)
loss on sale of other property and equipment
|
—
|
|
|
—
|
|
|
21
|
|
Non-cash
stock-based compensation expense (benefit)
|
2,761
|
|
|
(2,972)
|
|
|
904
|
|
Non-cash
loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
Merger
and integration expense
|
8,067
|
|
|
15,830
|
|
|
—
|
|
Other,
net
|
3,521
|
|
|
890
|
|
|
—
|
|
Adjusted
discretionary cash flow
|
$142,708
|
|
|
$176,875
|
|
|
$122,934
|
|
Changes
in working capital
|
(36,839)
|
|
|
31,404
|
|
|
27,789
|
|
Payments
to settle asset retirement obligations
|
—
|
|
|
—
|
|
|
(107)
|
|
Merger
and integration expense
|
(8,067)
|
|
|
(15,830)
|
|
|
—
|
|
Payments
to settle vested liability share-based awards
|
(1)
|
|
|
(754)
|
|
|
(129)
|
|
Net cash provided by
operating activities
|
$97,801
|
|
|
$191,695
|
|
|
$150,487
|
|
Adjusted Total Revenue. Adjusted total revenue for the
three months ended June 30, 2020 was $241.4 million and is reconciled to total
operating revenues in the following table:
|
|
Three Months
Ended
|
|
|
June 30,
2020
|
|
March 31,
2020
|
|
June 30,
2019
|
|
|
(In
thousands)
|
Operating
Revenues
|
|
|
|
|
|
|
Oil
|
|
$130,513
|
|
|
$265,767
|
|
|
$160,728
|
|
Natural
gas
|
|
12,242
|
|
|
6,029
|
|
|
6,324
|
|
Natural gas
liquids
|
|
14,479
|
|
|
18,123
|
|
|
—
|
|
Total operating
revenues
|
|
$157,234
|
|
|
$289,919
|
|
|
$167,052
|
|
Gain (loss) on
commodity derivative settlements, net
|
|
84,208
|
|
|
25,126
|
|
|
(1,157)
|
|
Adjusted total
revenue
|
|
$241,442
|
|
$315,045
|
|
$165,895
|
Callon Petroleum
Company
|
Consolidated
Balance Sheets
|
(In thousands,
except par and per share data)
|
(Unaudited)
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$7,500
|
|
|
$13,341
|
|
Accounts receivable,
net
|
|
95,839
|
|
|
209,463
|
|
Fair value of
derivatives
|
|
31,563
|
|
|
26,056
|
|
Other current
assets
|
|
28,828
|
|
|
19,814
|
|
Total current
assets
|
|
163,730
|
|
|
268,674
|
|
Oil and natural gas
properties, full cost accounting method:
|
|
|
|
|
Evaluated
properties
|
|
3,777,956
|
|
|
4,682,994
|
|
Unevaluated
properties
|
|
1,762,860
|
|
|
1,986,124
|
|
Total oil and natural
gas properties, net
|
|
5,540,816
|
|
|
6,669,118
|
|
Operating lease
right-of-use assets
|
|
35,926
|
|
|
63,908
|
|
Other property and
equipment, net
|
|
32,444
|
|
|
35,253
|
|
Deferred tax
asset
|
|
—
|
|
|
115,720
|
|
Deferred financing
costs
|
|
25,993
|
|
|
22,233
|
|
Other assets,
net
|
|
11,224
|
|
|
19,932
|
|
Total
assets
|
|
$5,810,133
|
|
|
$7,194,838
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$405,596
|
|
|
$511,622
|
|
Operating lease
liabilities
|
|
24,355
|
|
|
42,858
|
|
Fair value of
derivatives
|
|
32,683
|
|
|
71,197
|
|
Other current
liabilities
|
|
15,053
|
|
|
26,570
|
|
Total current
liabilities
|
|
477,687
|
|
|
652,247
|
|
Long-term
debt
|
|
3,350,730
|
|
|
3,186,109
|
|
Operating lease
liabilities
|
|
30,729
|
|
|
37,088
|
|
Asset retirement
obligations
|
|
48,765
|
|
|
48,860
|
|
Fair value of
derivatives
|
|
8,678
|
|
|
32,695
|
|
Other long-term
liabilities
|
|
12,160
|
|
|
14,531
|
|
Total
liabilities
|
|
3,928,749
|
|
|
3,971,530
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.01 par
value, 525,000,000 shares authorized; 397,396,922
and 396,600,022 shares outstanding,
respectively
|
|
3,974
|
|
|
3,966
|
|
Capital in excess of
par value
|
|
3,204,310
|
|
|
3,198,076
|
|
Retained earnings
(Accumulated deficit)
|
|
(1,326,900)
|
|
|
21,266
|
|
Total stockholders'
equity
|
|
1,881,384
|
|
|
3,223,308
|
|
Total liabilities and
stockholders' equity
|
|
$5,810,133
|
|
|
$7,194,838
|
|
Callon Petroleum
Company
|
Consolidated
Statements of Operations
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating
revenues:
|
|
|
|
|
|
|
|
Oil
|
$130,513
|
|
|
$160,728
|
|
|
$396,280
|
|
|
$301,826
|
|
Natural gas
|
12,242
|
|
|
6,324
|
|
|
18,271
|
|
|
18,273
|
|
Natural gas
liquids
|
14,479
|
|
|
—
|
|
|
32,602
|
|
|
—
|
|
Total operating
revenues
|
157,234
|
|
|
167,052
|
|
|
447,153
|
|
|
320,099
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Lease
operating
|
50,838
|
|
|
22,776
|
|
|
103,221
|
|
|
46,843
|
|
Production and ad
valorem taxes
|
10,361
|
|
|
11,131
|
|
|
30,041
|
|
|
21,944
|
|
Gathering,
transportation and processing
|
20,037
|
|
|
—
|
|
|
34,415
|
|
|
—
|
|
Depreciation,
depletion and amortization
|
138,930
|
|
|
63,137
|
|
|
270,393
|
|
|
123,145
|
|
General and
administrative
|
10,024
|
|
|
10,564
|
|
|
18,349
|
|
|
25,341
|
|
Impairment of
evaluated oil and gas properties
|
1,276,518
|
|
|
—
|
|
|
1,276,518
|
|
|
—
|
|
Merger and integration
expenses
|
8,067
|
|
|
—
|
|
|
23,897
|
|
|
—
|
|
Other
operating
|
4,135
|
|
|
935
|
|
|
4,135
|
|
|
1,092
|
|
Total operating
expenses
|
1,518,910
|
|
|
108,543
|
|
|
1,760,969
|
|
|
218,365
|
|
Income (Loss) From
Operations
|
(1,361,676)
|
|
|
58,509
|
|
|
(1,313,816)
|
|
|
101,734
|
|
|
|
|
|
|
|
|
|
Other (Income)
Expenses:
|
|
|
|
|
|
|
|
Interest expense, net
of capitalized amounts
|
22,682
|
|
|
741
|
|
|
43,160
|
|
|
1,479
|
|
(Gain) loss on
derivative contracts
|
126,965
|
|
|
(14,036)
|
|
|
(125,004)
|
|
|
53,224
|
|
Other (income)
expense
|
2,157
|
|
|
(67)
|
|
|
895
|
|
|
(148)
|
|
Total other (income)
expense
|
151,804
|
|
|
(13,362)
|
|
|
(80,949)
|
|
|
54,555
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
(1,513,480)
|
|
|
71,871
|
|
|
(1,232,867)
|
|
|
47,179
|
|
Income tax
expense
|
(51,251)
|
|
|
(16,691)
|
|
|
(115,299)
|
|
|
(11,542)
|
|
Net Income
(Loss)
|
(1,564,731)
|
|
|
55,180
|
|
|
(1,348,166)
|
|
|
35,637
|
|
Preferred stock
dividends
|
—
|
|
|
(1,823)
|
|
|
—
|
|
|
(3,647)
|
|
Income (Loss)
Available to Common Stockholders
|
($1,564,731)
|
|
|
$53,357
|
|
|
($1,348,166)
|
|
|
$31,990
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Available to Common Stockholders Per Common Share:
|
|
|
|
|
|
|
|
Basic
|
($3.94)
|
|
|
$0.23
|
|
|
($3.40)
|
|
|
$0.14
|
|
Diluted
|
($3.94)
|
|
|
$0.23
|
|
|
($3.40)
|
|
|
$0.14
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
Basic
|
397,084
|
|
|
228,051
|
|
|
396,884
|
|
|
227,917
|
|
Diluted
|
397,084
|
|
|
228,411
|
|
|
396,884
|
|
|
228,599
|
|
Callon Petroleum
Company
|
Consolidated
Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
Three Months Ended
June
30,
|
|
Six Months Ended
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
($1,564,731)
|
|
|
$55,180
|
|
|
($1,348,166)
|
|
|
$35,637
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
138,930
|
|
|
64,590
|
|
|
270,393
|
|
|
125,503
|
|
Impairment of
evaluated oil and gas properties
|
1,276,518
|
|
|
—
|
|
|
1,276,518
|
|
|
—
|
|
Amortization of
non-cash debt related items
|
738
|
|
|
741
|
|
|
1,145
|
|
|
1,479
|
|
Deferred income tax
expense
|
51,251
|
|
|
16,691
|
|
|
115,299
|
|
|
11,542
|
|
(Gain) loss on
derivative contracts
|
126,965
|
|
|
(14,036)
|
|
|
(125,004)
|
|
|
53,224
|
|
Cash (paid) received
for commodity derivative settlements
|
98,688
|
|
|
(1,157)
|
|
|
101,301
|
|
|
(1,447)
|
|
Loss on sale of other
property and equipment
|
—
|
|
|
21
|
|
|
—
|
|
|
49
|
|
Non-cash expense
related to equity share-based awards
|
1,041
|
|
|
1,754
|
|
|
4,817
|
|
|
6,299
|
|
Change in the fair
value of liability share-based awards
|
1,720
|
|
|
(850)
|
|
|
(5,028)
|
|
|
1,031
|
|
Payments to settle
asset retirement obligations
|
—
|
|
|
(107)
|
|
|
—
|
|
|
(771)
|
|
Payments for
cash-settled restricted stock unit awards
|
(1)
|
|
|
(129)
|
|
|
(755)
|
|
|
(1,425)
|
|
Other, net
|
3,521
|
|
|
—
|
|
|
4,411
|
|
|
—
|
|
Changes in current
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(2,833)
|
|
|
44,071
|
|
|
113,040
|
|
|
38,681
|
|
Other current
assets
|
(3,567)
|
|
|
(3,807)
|
|
|
(4,348)
|
|
|
(6,101)
|
|
Current
liabilities
|
(30,439)
|
|
|
(10,251)
|
|
|
(114,127)
|
|
|
(36,254)
|
|
Other
|
—
|
|
|
(2,224)
|
|
|
—
|
|
|
(2,401)
|
|
Net cash provided
by operating activities
|
97,801
|
|
|
150,487
|
|
|
289,496
|
|
|
225,046
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(206,121)
|
|
|
(166,219)
|
|
|
(430,569)
|
|
|
(359,430)
|
|
Acquisitions
|
—
|
|
|
(11,423)
|
|
|
—
|
|
|
(39,370)
|
|
Proceeds from sale of
assets
|
(161)
|
|
|
260,417
|
|
|
10,079
|
|
|
274,296
|
|
Cash paid for
settlements of contingent consideration arrangements,
net
|
—
|
|
|
—
|
|
|
(40,000)
|
|
|
—
|
|
Other, net
|
6,992
|
|
|
—
|
|
|
6,834
|
|
|
—
|
|
Net cash provided
by (used in) investing activities
|
(199,290)
|
|
|
82,775
|
|
|
(453,656)
|
|
|
(124,504)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Borrowings on senior
secured revolving credit facility
|
484,500
|
|
|
140,000
|
|
|
4,775,500
|
|
|
360,000
|
|
Payments on senior
secured revolving credit facility
|
(384,500)
|
|
|
(365,000)
|
|
|
(4,610,500)
|
|
|
(455,000)
|
|
Payment of preferred
stock dividends
|
—
|
|
|
(1,823)
|
|
|
—
|
|
|
(3,647)
|
|
Payment of deferred
financing costs
|
(5,736)
|
|
|
(31)
|
|
|
(6,011)
|
|
|
(31)
|
|
Tax withholdings
related to restricted stock units
|
(75)
|
|
|
(833)
|
|
|
(388)
|
|
|
(1,858)
|
|
Other, net
|
—
|
|
|
(5)
|
|
|
(282)
|
|
|
(5)
|
|
Net cash provided
by (used in) financing activities
|
94,189
|
|
|
(227,692)
|
|
|
158,319
|
|
|
(100,541)
|
|
Net change in cash
and cash equivalents
|
(7,300)
|
|
|
5,570
|
|
|
(5,841)
|
|
|
1
|
|
Balance, beginning of
period
|
14,800
|
|
|
10,482
|
|
|
13,341
|
|
|
16,051
|
|
Balance, end of
period
|
$7,500
|
|
|
$16,052
|
|
|
$7,500
|
|
|
$16,052
|
|
Non-GAAP Financial Measures
This news release refers to non-GAAP financial measures such as
"Free Cash Flow," "Adjusted Discretionary Cash Flow," "Adjusted
G&A," "Full Cash G&A Costs," "Adjusted Income," "Adjusted
EBITDA" and "Adjusted Total Revenue." These measures, detailed
below, are provided in addition to, and not as an alternative for,
and should be read in conjunction with, the information contained
in our financial statements prepared in accordance with GAAP
(including the notes), included in our SEC filings and posted on
our website.
- Free Cash Flow is a supplemental non-GAAP measure that is
defined by the Company as Adjusted EBITDA less operational capital,
capitalized interest, net interest expense and capitalized G&A
excluding capitalized expense related to share-based awards. We
believe free cash flow is a comparable metric against other
companies in the industry and is a widely accepted financial
indicator of an oil and natural gas company's ability to generate
cash for the use of internally funding their capital development
program and to service or incur debt. Free cash flow is not a
measure of a company's financial performance under GAAP and should
not be considered as an alternative to net cash provided by
operating activities, or as a measure of liquidity, or as an
alternative to net income (loss).
- Adjusted Discretionary Cash Flow is a supplemental non-GAAP
measure that Callon believes is a comparable metric against other
companies in the industry and is a widely accepted financial
indicator of an oil and natural gas company's ability to generate
cash for the use of internally funding their capital development
program and to service or incur debt. Adjusted Discretionary Cash
Flow is defined by Callon as net cash provided by operating
activities before changes in working capital, merger and
integration expenses, and payments to settle asset retirement
obligations and vested liability share-based awards. Callon has
included this information because changes in operating assets and
liabilities relate to the timing of cash receipts and
disbursements, which the Company may not control and the cash flow
effect may not be reflected the period in which the operating
activities occurred. Adjusted Discretionary Cash Flow is not a
measure of a company's financial performance under GAAP and should
not be considered as an alternative to net cash provided by
operating activities (as defined under GAAP), or as a measure of
liquidity, or as an alternative to net income.
- Adjusted general and administrative expense ("Adjusted
G&A") is a supplemental non-GAAP financial measure that
excludes non-cash valuation adjustments related to incentive
compensation plans. Callon believes that the non-GAAP measure of
Adjusted G&A is useful to investors because it provides readers
with a meaningful measure of our recurring G&A expense and
provides for greater comparability period-over-period. The table
contained within this release details all adjustments to G&A on
a GAAP basis to arrive at Adjusted G&A.
- Full Cash G&A Costs is a supplemental non-GAAP financial
measure that Callon defines as Adjusted G&A – cash component
plus capitalized G&A excluding capitalized expense related to
share-based awards. Callon believes that the non-GAAP measure of
Full Cash G&A Costs is useful because it provides users with a
meaningful measure of our total recurring cash G&A costs,
whether expensed or capitalized, and provides for greater
comparability on a period-over-period basis. See the reconciliation
provided above for further details.
- Adjusted Income available to common stockholders ("Adjusted
Income") and Adjusted Income per fully diluted common share are
supplemental non-GAAP measures that Callon believes are useful to
investors because they provide readers with a meaningful measure of
our profitability before recording certain items whose timing or
amount cannot be reasonably determined. These measures exclude the
net of tax effects of certain non-recurring items and non-cash
valuation adjustments, which are detailed in the reconciliation
provided.
- Adjusted diluted weighted average common shares outstanding
("Adjusted Diluted WASO") is a non-GAAP financial measure which
includes the effect of potentially dilutive instruments that, under
certain circumstances described below, are excluded from diluted
weighted average common shares outstanding ("Diluted WASO"), the
most directly comparable GAAP financial measure. When a loss
available to common stockholders exists, all potentially dilutive
instruments are anti-dilutive to the loss available to common
stockholders per common share and therefore excluded from the
computation of Diluted WASO. The effect of potentially dilutive
instruments are included in the computation of Adjusted Diluted
WASO for purposes of computing Adjusted Income per fully diluted
common share.
- Callon calculates adjusted earnings before interest, income
taxes, depreciation, depletion and amortization ("Adjusted EBITDA")
as net income (loss) before interest expense, income tax expense
(benefit), depreciation, depletion and amortization, (gains) losses
on derivative instruments excluding net settled derivative
instruments, non-cash stock-based compensation expense, merger and
integration expense, loss on extinguishment of debt, and other
operating expenses. Adjusted EBITDA is not a measure of financial
performance under GAAP. Accordingly, it should not be considered as
a substitute for net income (loss), operating income (loss), cash
flow provided by operating activities or other income or cash flow
data prepared in accordance with GAAP. However, the Company
believes that Adjusted EBITDA provides additional information with
respect to our performance or ability to meet our future debt
service, capital expenditures and working capital requirements.
Because Adjusted EBITDA excludes some, but not all, items that
affect net income (loss) and may vary among companies, the Adjusted
EBITDA presented may not be comparable to similarly titled measures
of other companies.
- Callon believes that the non-GAAP measure of Adjusted Total
Revenue is useful to investors because it provides readers with a
revenue value more comparable to other companies who engage in
price risk management activities through the use of commodity
derivative instruments and reflects the results of derivative
settlements with expected cash flow impacts within total
revenues.
About Callon Petroleum Company
Callon Petroleum is an independent oil and natural gas company
focused on the acquisition, exploration and development of
high-quality assets in the leading oil plays of South and
West Texas.
This news release is posted on the Company's website at
www.callon.com and will be archived there for subsequent review
under the "News" link on the top of the homepage.
Cautionary Statement Regarding Forward-Looking
Information
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking
statements include all statements regarding the Company's wells
anticipated to be drilled and placed on production; future levels
of drilling activity and associated production and cash flow
expectations; the Company's production guidance and capital
expenditure forecast; estimated reserve quantities and the present
value thereof; anticipated returns and financial position; and the
implementation of the Company's business plans and strategy, as
well as statements including the words "believe," "expect," "may,"
"will," "forecast," "outlook," "plans" and words of similar
meaning. These statements reflect the Company's current views with
respect to future events and financial performance based on
management's experience and perception of historical trends,
current conditions, anticipated future developments and other
factors believed to be appropriate. No assurances can be given,
however, as of this date, that these events will occur or that
these projections will be achieved, and actual results could differ
materially from those projected as a result of certain factors. Any
forward-looking statement speaks only as of the date of which such
statement is made and the Company undertakes no obligation to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Some of the factors which could affect
our future results and could cause results to differ materially
from those expressed in our forward-looking statements include the
volatility of oil, natural gas and natural gas liquids ("NGLs")
prices or a prolonged period of low oil, natural gas or NGLs prices
and the effects of actions by, or disputes among or between
significant oil and natural gas producing countries, general
economic conditions, including the availability of credit and
access to existing lines of credit; the effects of excess supply of
oil and natural gas resulting from reduced demand caused by the
COVID-19 pandemic and the actions of certain oil and natural gas
producing countries; our ability to drill and complete wells;
operational, regulatory and environment risks; cost and
availability of equipment and labor; our ability to finance our
activities; the ultimate timing, outcome and results of integrating
the operations of Carrizo Oil & Gas, Inc. and Callon; and the
ability of the combined company to realize anticipated synergies
and other benefits in the timeframe expected or at all; and other
risks more fully discussed in our filings with the Securities and
Exchange Commission (the "SEC"), including our most recent Annual
Report on Form 10-K and Quarterly Report on Form 10-Q and
subsequent Quarterly Reports on Form 10-Q, available on our website
or the SEC's website at www.sec.gov.
Contact Information
Mark Brewer
Director of Investor Relations
Callon Petroleum Company
ir@callon.com
(281) 589-5200
1) See "Non-GAAP Financial Measures and
Reconciliations" included within this release for related
disclosures and calculations.
View original
content:http://www.prnewswire.com/news-releases/callon-petroleum-company-announces-second-quarter-2020-results-301106056.html
SOURCE Callon Petroleum Company