HOUSTON, Nov. 2, 2020 /PRNewswire/ -- Callon Petroleum
Company (NYSE: CPE) ("Callon" or the "Company") today reported
results of operations for the three and nine months ended
September 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 102.0 Mboe/d (63% oil),
above expectations, for the third quarter of 2020
- Posted accrued operational capital spending of $38.4 million, below consensus estimates, and
lowered the top end of operational capital range to $510 million, a 15% reduction since announcing
the modified development program in May
2020
- Generated net cash from operating activities of $135.7 million and free cash flow1 of
$80.3 million for the third
quarter
- Loss available to common stockholders of $680.4 million, or $17.12 per fully diluted share, driven by an
impairment of evaluated oil and gas properties of $685.0 million, adjusted EBITDA1 of
$170.9 million, and adjusted income
per share1 of $0.64 for
the third quarter of 2020
- Achieved lease operating expense ("LOE") of $45.9 million or $4.89 per Boe for the third quarter of 2020, an
improvement of approximately 10%, on an absolute basis, over the
comparable three-month period ended June 30,
2020
- Resumed completion and drilling activity with recent well costs
for Eagle Ford and Delaware third
quarter completions at $460 and
$825 per lateral foot, respectively,
exceeding previous targets as a result of continued operational
efficiency gains
- Increased liquidity to nearly $600
million and reduced total net debt by approximately
$160 million after transaction
expenses through a series of strategic transactions including the
issuance of $300 million of secured
second lien notes, an overriding royalty interest ("ORRI")
transaction, and a non-operated working interest sale
- Completed the fall borrowing base redetermination with a
reaffirmed borrowing base of $1.7
billion which was subsequently reduced to $1.6 billion, reflecting a minimal reduction to
account for the recent ORRI sale and second lien note issuance
- Entered into a privately negotiated debt exchange of
$286 million of unsecured Senior
Notes for new second lien notes, reducing net debt by an estimated
$128 million, with an option for the
counterparties and their affiliates to exchange additional
unsecured Senior Notes up to approximately $104 million
Joe Gatto, President and Chief
Executive Officer commented, "During the third quarter, our
operations team continued to execute on our cost reduction efforts,
posting meaningful gains that bolstered our free cash flow
generation to approximately $100
million over the last two quarters. These achievements
coupled with our recent strategic initiatives to improve liquidity
and propel our debt reduction efforts have placed us in a much
better position as we look to close out 2020 with the resumption of
moderated development across all three of our asset areas."
He continued, "Well performance from our modified stacking and
spacing program has met or exceeded expectations, confirming the
merits of our life-of-field development model that will preserve
the future value of our inventory while simultaneously delivering
near-term economic returns at current strip prices. Moreover, our
focus on cost control and operational efficiency through scaled
development is pushing us towards even lower cost thresholds that
should generate improved cash flow and lower break-even pricing
over time."
Mr. Gatto closed by sharing, "Alongside these operational and
strategic achievements, we have continued to focus on operating
safely, with a clear vision for reducing our environmental impact,
maintaining our social awareness and treatment of our workforce,
and strengthening our alignment with the needs of our shareholders.
The recent issuance of our inaugural Sustainability report provides
a clear and well-documented picture of where we stand and the path
to continuously improving in each of these three critical areas. As
we finalize the details of our 2021 budget and activity levels, our
focus will be on our debt reduction efforts, maintaining a low cost
development and operations structure, and creating durable and
cogent changes that not only enhance shareholder returns but also
positively impact our employees, communities, and our broader
stakeholder group."
Private Debt Exchange
Callon also announced another meaningful step today in the
execution of its deleveraging plan. On November 2nd, the Company entered into a
privately negotiated agreement with certain holders of its
outstanding unsecured debt securities to exchange $286 million of principal of the Company's
existing unsecured Senior Notes (the "Senior Notes") for
$158 million aggregate principal of
new 9.00% Second Lien Notes due 2025, payable semi-annually (the
"Second Lien Notes"), to be issued by Callon at a weighted average
exchange ratio of approximately $555
per $1,000 of principal exchanged.
Over 60% of the existing Senior Notes to be exchanged are due 2023
and 2024. Upon completion of the exchange, Callon's total net debt
will be reduced by approximately $128
million and total cash interest expense by approximately
$5 million.
In addition, certain other affiliated parties have the option to
exchange up to an additional approximately $104 million of principal of Senior Notes under
the same exchange terms. At full participation, the estimated total
debt reduction and total cash interest expense reduction would be
approximately $175 million and
$7 million, respectively.
Participants in the exchange will also receive between 1.16 and
1.76 million warrants, dependent on final participation levels,
with a strike price of $5.60 which is
consistent with the strike price for the warrants issued recently
in relation to the Company's initial issuance of Second Lien Notes
that was announced on October
1st.
The private debt exchange is scheduled to close on November 17th. Callon currently expects the
borrowing base under its credit facility to remain unchanged at
$1.6 billion, and its next scheduled
redetermination will take place in May
2021.
Operations Update
At September 30, 2020, Callon had 1,479 gross (1,305.9 net)
horizontal wells producing from established flow units in the
Permian Basin and Eagle Ford Shale. Net daily production for the
three months ended September 30, 2020 grew 170% to 102.0
Mboe/d (63% oil), as compared to the same period of 2019.
For the three months ended September 30, 2020, Callon
drilled zero horizontal wells and placed a combined 12 gross (11.4
net) horizontal wells on production, all of which were turned to
production late in the quarter. The Company reactivated two
completion crews, one each in the Eagle Ford and Delaware Basin, both of which completed
previously drilled multi-well projects during September.
Subsequently, one of the two completion crews has been released and
three drilling rigs have resumed operations, two restarting
operations in the Midland and Delaware Basin during September and the third
reactivated in the Eagle Ford during October. The Company expects
to operate three drilling rigs and a single completion crew during
the fourth quarter.
Recent project costs and well performance reflect a continuation
of the operational efficiency levels achieved during the second
quarter of 2020 and support the enhanced stacking and spacing
efforts. Some of the highlights include:
- The Eagle Ford wells placed on production late in the third
quarter averaged over 2,000 feet of completed lateral per day
- The combined six wells came in just below $475 per lateral foot with an average completed
lateral length of approximately 7,500 feet
- In the Delaware, the six-well
Amphitheater pad was placed on production during the final days of
the third quarter and first week of the fourth quarter, with the
project averaging a completion pace of just under nine stages per
day or nearly 1,800 lateral feet per day
- The Amphitheater project averaged approximately 9,400 feet per
well with an average well cost of less than $8 million ($825
per lateral foot)
- Initial production from the six-well Amphitheater pad recently
reached a per well average of over 1,200 Boe per day (gross, ~84%
oil) with total cumulative production of more than 140,000 Boe
(gross, ~84% oil) in just over three weeks of production
- Over 95% of the volumes sourced for the Amphitheater
completions utilized recycled produced water volumes sourced from
Callon's own recycling facilities
Capital Expenditures
For the three months ended September 30, 2020, Callon
incurred $38.4 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
September 30, 2020
|
|
|
Operational
|
|
Capitalized
|
|
Capitalized
|
|
Total
Capital
|
|
|
Capital
(a)
|
|
Interest
|
|
G&A
|
|
Expenditures
|
|
|
(In
thousands)
|
Cash basis
(b)
|
|
$110,689
|
|
|
$17,769
|
|
|
$8,719
|
|
|
$137,177
|
|
Timing adjustments
(c)
|
|
(66,596)
|
|
|
2,906
|
|
|
—
|
|
|
(63,690)
|
|
Non-cash
items
|
|
(5,685)
|
|
|
—
|
|
|
1,532
|
|
|
(4,153)
|
|
Accrual
basis
|
|
$38,408
|
|
|
$20,675
|
|
|
$10,251
|
|
|
$69,334
|
|
|
|
(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. As Callon has
resumed a moderated pace of development activity, management
expects for a more normalized relationship between accrual and
cash-based capex figures in future periods.
|
Hedging
For the three months ended September 30,
2020, Callon recognized a loss from the settlement of
derivative contracts of $5.5 million.
Callon has continued to actively manage its hedge portfolio adding
nearly 5.7 million barrels or 15,500 barrels per day of WTI NYMEX
coverage for 2021. This raises the percentage of NYMEX coverage via
collars to nearly 90% and raises the average ceiling price to over
$46 per barrel, providing incremental
upside while maintaining the price floor within one dollar of the previous weighted average
position. In addition, the Company has improved its Brent-based
hedges, raising the average floor from approximately $38 per barrel to almost $41 per barrel and increasing coverage by just
over 300,000 barrels per year. Additional coverage for natural gas
pricing was achieved through the addition of more than 10,000,000
MMBtu of Waha basis swaps, improving the weighted average
differential by $0.16 per MMBtu.
Accounting for the Company's recent adjustments, total hedge
coverage for 2021 is now more than 60% of anticipated oil
production and just under 60% of anticipated natural gas
production. 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 third 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
|
|
|
September 30,
2020
|
|
June 30,
2020
|
Net
production
|
|
|
|
|
Oil
(MBbls)
|
|
5,875
|
|
|
6,396
|
|
Natural gas
(MMcf)
|
|
10,261
|
|
|
11,009
|
|
NGLs
(MBbls)
|
|
1,802
|
|
|
1,657
|
|
Total barrels of oil
equivalent (MBoe)
|
|
9,387
|
|
|
9,888
|
|
Total daily
production (Boe/d)
|
|
102,029
|
|
|
108,664
|
|
Oil as % of total
daily production
|
|
63
|
%
|
|
65
|
%
|
Average realized
sales price
(excluding impact of
settled derivatives)
|
|
|
|
|
Oil (per
Bbl)
|
|
$39.43
|
|
|
$20.41
|
|
Natural gas (per
Mcf)
|
|
1.47
|
|
|
1.11
|
|
NGLs (per
Bbl)
|
|
12.78
|
|
|
8.74
|
|
Total (per
Boe)
|
|
28.73
|
|
|
15.90
|
|
Average realized
sales price
(including impact of
settled derivatives)
|
|
|
|
|
Oil (per
Bbl)
|
|
$39.00
|
|
|
$33.82
|
|
Natural gas (per
Mcf)
|
|
1.17
|
|
|
0.97
|
|
NGLs (per
Bbl)
|
|
12.78
|
|
|
8.74
|
|
Total (per
Boe)
|
|
28.14
|
|
|
24.42
|
|
Revenues
(in thousands)
|
|
|
|
|
Oil
|
|
$231,654
|
|
|
$130,513
|
|
Natural
gas
|
|
15,034
|
|
|
12,242
|
|
NGLs
|
|
23,025
|
|
|
14,479
|
|
Total
|
|
$269,713
|
|
|
$157,234
|
|
Additional per Boe
data
|
|
|
|
|
Sales price
(a)
|
|
$28.73
|
|
|
$15.90
|
|
Lease operating
expense
|
|
4.89
|
|
|
5.14
|
|
Production
taxes
|
|
1.72
|
|
|
1.05
|
|
Gathering,
transportation and processing
|
|
2.36
|
|
|
2.03
|
|
Operating
margin
|
|
$19.76
|
|
|
$7.68
|
|
|
|
|
|
|
Depletion, depreciation and amortization
|
|
$12.17
|
|
|
$14.05
|
|
General
and administrative (G&A)
|
|
$0.88
|
|
|
$1.01
|
|
Adjusted
G&A 1
|
|
|
|
|
Cash component
(b)
|
|
$0.87
|
|
|
$0.69
|
|
Non-cash
component
|
|
$0.18
|
|
|
$0.15
|
|
|
|
(a)
|
Excludes the impact
of settled derivatives.
|
(b)
|
Excludes the
amortization of equity-settled, share-based incentive
awards.
|
Revenue. For the quarter ended
September 30, 2020, Callon reported revenue of $269.7 million, which excluded revenue from the
sales of commodities purchased from a third-party of $20.3 million. Revenues including the gain or
loss from the settlement of derivative contracts ("Adjusted Total
Revenue"1) were $264.2
million, reflecting the impact of a $5.5 million loss from the settlement of
derivative contracts. Average daily production for the quarter was
102.0 Mboe/d, compared to average daily production of 108.7 Mboe/d
in the second quarter of 2020. Average realized prices, including
and excluding the effects of hedging, are detailed above.
Hedging impacts. For the quarter ended
September 30, 2020, the net (gain) loss on commodity
derivative contracts includes the following (in thousands):
|
Three Months
Ended
September 30, 2020
|
(Gain) loss on oil
derivatives
|
$16,606
|
(Gain) loss on
natural gas derivatives
|
7,296
|
(Gain) loss on NGL
derivatives
|
2,421
|
(Gain) loss on
commodity derivative contracts
|
$26,323
|
For the quarter ended September 30, 2020, the cash (paid)
received for commodity derivative settlements includes the
following (in thousands):
|
Three Months
Ended
September 30, 2020
|
Cash (paid) received
on oil derivatives
|
$2,130
|
Cash (paid) received
on natural gas derivatives
|
(1,677)
|
Cash received for
commodity derivative settlements
|
$453
|
Lease Operating Expenses, including workover
("LOE"). LOE per Boe for the three months ended
September 30, 2020 was $4.89 per
Boe, compared to LOE of $5.14 per Boe
in the second quarter of 2020. The decrease in LOE per Boe was
driven by improved field practices and a reduction in base
operating costs in the third quarter of 2020 as compared to the
second quarter of 2020.
Production Taxes, including ad valorem
taxes. Production taxes were $1.72 per Boe for the three months ended
September 30, 2020, representing approximately 6.0% of revenue
before the impact of derivative settlements.
Gathering, Transportation and Processing
Expenses. Gathering, transportation and processing costs
for the three months ended September 30, 2020 were
$22.2 million as compared to
$20.0 million 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
September 30, 2020 was $12.17
per Boe compared to $14.05 per Boe in
the second quarter of 2020. The decrease in DD&A is primarily
driven by the impairment of evaluated oil and gas properties
recognized in the second quarter of 2020.
Impairment of Evaluated Oil and Gas Properties. Callon
recognized an impairment of evaluated oil and gas properties of
$685.0 million for the three months
ended September 30, 2020 due primarily to the continued
decline in the average realized prices for sales of oil and gas.
The decrease in the trailing 12-month average realized price as of
September 30, 2020 resulted in a reduction of proved oil and
gas reserve volumes of less than 2% of our December 31, 2019 proved oil and gas reserves
volumes. For the three months ended June 30,
2020, the Company recognized an impairment of evaluated oil
and gas properties of $1.3
billion.
G&A. G&A for the three months ended
September 30, 2020 was $8.2
million, or $0.88 per Boe, and
G&A, excluding certain non-cash incentive share-based
compensation valuation adjustments, ("Adjusted G&A"
1) was $9.8 million, or
$1.04 per Boe, for the three months
ended September 30, 2020 compared to $8.3 million, or $0.84 per Boe, for the second quarter of 2020.
The cash component of Adjusted G&A was $8.1 million, or $0.87 per Boe, for the three months ended
September 30, 2020 compared to $6.8
million, or $0.69 per Boe, for
the second quarter of 2020. Adjusted G&A was slightly higher in
the third quarter of 2020 as compared to the second quarter of 2020
due to slightly higher contractor and employee relocation
expenses.
For the three months ended September 30, 2020 and
June 30, 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
|
|
September 30,
2020
|
|
June 30,
2020
|
Total G&A
expense
|
$8,224
|
|
|
$10,024
|
|
Change
in the fair value of liability share-based awards
(non-cash)
|
1,582
|
|
|
(1,720)
|
|
Adjusted G&A –
total
|
9,806
|
|
|
8,304
|
|
Restricted stock share-based compensation (non-cash) and other
non-recurring expenses
|
(1,674)
|
|
|
(1,509)
|
|
Adjusted G&A –
cash component
|
$8,132
|
|
|
$6,795
|
|
|
|
|
|
Capitalized cash
G&A
|
$6,831
|
|
|
$6,740
|
|
Full Cash G&A
Costs
|
$14,963
|
|
|
$13,535
|
|
Income Tax Expense. Callon provides for income taxes
at the statutory rate of 21% adjusted for permanent
differences expected to be realized. As a result of the valuation
allowance that Callon recorded against its net deferred tax assets,
we did not have any income tax expense for the three months ended
September 30, 2020, compared to income tax expense of
$51.3 million for the three months
ended June 30, 2020.
Loss Available to Common Stockholders. We recorded a loss
available to common stockholders for the three months ended
September 30, 2020 of $680.4 million, or $17.12 per diluted share, as compared to a loss
available to common stockholders of $1.6
billion, or $39.41 per diluted
share, for the second quarter of 2020, retroactively adjusted for
the Company's 1-for-10 reverse stock split effective August 7, 2020. The loss was primarily due to the
impairment of evaluated oil and gas properties of $685.0 million for the three months ended
September 30, 2020.
Adjusted EBITDA. Adjusted EBITDA for the third quarter of
2020 was $170.9 million as compared
to $153.4 million for the second
quarter of 2020. The increase in Adjusted EBITDA from the second
quarter of 2020 was primarily due to an approximate 93% increase in
the average realized price of oil. This was partially offset by
decreased sequential production.
Guidance
Callon is updating guidance for the full year and updating
previous ranges to reflect adjustments related to strong well
performance, improved operational efficiency, expanded firm
transportation agreements, and the effect of both the non-operated
properties sale and the ORRI transaction.
|
|
Full
Year
|
|
|
2020
Guidance
|
Total production
(Mboe/d)
|
|
100.0 -
101.0
|
Oil
production
|
|
63%
|
Gas
production
|
|
19%
|
NGL
production
|
|
18%
|
Income statement
expenses ($MM)
|
|
|
LOE, including
workovers
|
|
$200 -
$205
|
Gathering, processing,
and transportation
|
|
$73 - $78
|
Production taxes,
including ad valorem (% unhedged revenue)
|
|
7%
|
Adjusted G&A: cash
component (a)
|
|
$30 - $35
|
Adjusted G&A:
non-cash component (b)
|
|
$3 - $5
|
Cash interest
expense
|
|
$90 - $95
|
Effective income tax
rate (%)
|
|
22%
|
Capital
expenditures ($MM, accrual basis)
|
|
|
Total operational
capital (c)
|
|
$500 -
$510
|
Capitalized
interest
|
|
$85 - $90
|
Capitalized
G&A
|
|
$30 - $33
|
Gross operated
wells drilled / completed
|
|
87 - 89 / 80 -
82
|
|
|
(a)
|
Excludes the
amortization of equity-settled, share-based incentive
awards.
|
(b)
|
Excludes certain
non-recurring expenses and non-cash valuation
adjustments.
|
(c)
|
Includes facilities,
equipment, seismic, land and other items. Excludes capitalized
expense.
|
In August, the Company provided an initial outlook for 2021
which included a "maintenance capital" plan targeting average daily
production of 90 to 95 MBoe per day from an operational capital
spending level of approximately $400
million. For 2021, the Company is now expected to achieve
average daily production of 90 to 92 MBoe per day, with the
reduction resulting from the combined effect of the recent ORRI
transaction and non-operated properties sale, offset partly by
improved well performance and operational efficiency gains. These
improvements are reflected in management's updated expectations of
operational capital spending for 2021 which is now estimated to be
in the range of $375 to $400 million. As a result, management estimates
that this program at current prices will yield meaningful
additional free cash flow.
Third Quarter 2020 Earnings Conference Call
The Company's conference call to discuss third quarter results
is scheduled for Tuesday, November 3,
2020, at 9:00 am CST. 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 remainder of 2020 and the full year 2021, updated
for changes through October 29,
2020:
|
For the
Remainder
|
|
|
For the Full
Year
|
|
Oil contracts
(WTI)
|
of
2020
|
|
|
of
2021
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
2,496,880
|
|
|
|
1,377,000
|
|
|
Weighted
average price per Bbl
|
$42.10
|
|
|
|
$42.00
|
|
|
Collar contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
1,501,440
|
|
|
|
9,423,275
|
|
|
Weighted
average price per Bbl
|
|
|
|
|
|
Ceiling
(short call)
|
$45.00
|
|
|
|
$46.78
|
|
|
Floor
(long put)
|
$35.00
|
|
|
|
$39.21
|
|
|
Short
put contracts
|
|
|
|
|
|
Total volume
(Bbls)
|
552,000
|
|
|
|
—
|
|
|
Weighted average price
per Bbl
|
$42.50
|
|
|
|
$—
|
|
|
Long
call contracts
|
|
|
|
|
|
Total volume (Bbls)
|
460,000
|
|
|
|
—
|
|
|
Weighted average price per Bbl
|
$67.50
|
|
|
|
$—
|
|
|
Short
call contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
460,000
|
|
(2)
|
|
4,825,300
|
|
(2)
|
Weighted
average price per Bbl
|
$55.00
|
|
|
|
$63.62
|
|
|
|
|
|
|
|
|
Oil contracts
(Brent ICE)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
—
|
|
|
|
848,300
|
|
|
Weighted
average price per Bbl
|
$—
|
|
|
|
$37.36
|
|
|
Collar
contracts
|
|
|
|
|
|
Total volume
(Bbls)
|
—
|
|
|
|
730,000
|
|
|
Weighted average price
per Bbl
|
|
|
|
|
|
Ceiling (short
call)
|
$—
|
|
|
|
$50.00
|
|
|
Floor (long
put)
|
$—
|
|
|
|
$45.00
|
|
|
|
|
|
|
|
|
Oil contracts
(Midland basis differential)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
1,380,000
|
|
|
|
3,022,900
|
|
|
Weighted
average price per Bbl
|
($1.89)
|
|
|
|
$0.26
|
|
|
|
|
|
|
|
|
Oil contracts
(Argus Houston MEH basis differential)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
1,435,202
|
|
|
|
—
|
|
|
Weighted
average price per Bbl
|
$0.03
|
|
|
|
$—
|
|
|
Oil contracts
(Argus Houston MEH swaps)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total
volume (Bbls)
|
—
|
|
|
|
1,060,375
|
|
|
Weighted
average price per Bbl
|
$—
|
|
|
|
$38.94
|
|
|
|
|
(2)
|
Premiums from the
sale of call options were used to increase the fixed price of
certain simultaneously executed price swaps.
|
|
For the
Remainder
|
|
|
For the Full
Year
|
|
Natural gas
contracts (Henry Hub)
|
of
2020
|
|
|
of
2021
|
|
Swap
contracts
|
|
|
|
|
|
Total volume
(MMBtu)
|
1,633,000
|
|
|
|
11,123,000
|
|
|
Weighted average price
per MMBtu
|
$2.05
|
|
|
|
$2.60
|
|
|
Collar contracts (three-way collars)
|
|
|
|
|
|
Total volume
(MMBtu)
|
1,525,000
|
|
|
|
1,350,000
|
|
|
Weighted average price
per MMBtu
|
|
|
|
|
|
Ceiling (short call)
|
$2.72
|
|
|
|
$2.70
|
|
|
Floor (long put)
|
$2.45
|
|
|
|
$2.42
|
|
|
Floor (short put)
|
$2.00
|
|
|
|
$2.00
|
|
|
Collar contracts
(two-way collars)
|
|
|
|
|
|
Total volume
(MMBtu)
|
1,525,000
|
|
|
|
9,550,000
|
|
|
Weighted average price
per MMBtu
|
|
|
|
|
|
Ceiling (short call)
|
$3.25
|
|
|
|
$3.04
|
|
|
Floor (long put)
|
$2.67
|
|
|
|
$2.59
|
|
|
Short
call contracts
|
|
|
|
|
|
Total volume
(MMBtu)
|
2,013,000
|
|
|
|
7,300,000
|
|
|
Weighted average price
per MMBtu
|
$3.50
|
|
|
|
$3.09
|
|
|
|
|
|
|
|
|
Natural gas
contracts (Waha basis differential)
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
Total volume
(MMBtu)
|
4,421,000
|
|
|
|
16,425,000
|
|
|
Weighted average price
per MMBtu
|
($0.91)
|
|
|
|
($0.42)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
$680.4 million, or $17.12 per fully diluted share, for the three
months ended September 30, 2020, and adjusted income available
to common stockholders of $25.6
million, or $0.64 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
|
|
September 30,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
|
(In thousands,
except per share data)
|
Income (loss)
available to common stockholders
|
($680,384)
|
|
|
($1,564,731)
|
|
|
$47,180
|
|
(Gain) loss on
derivative contracts
|
27,038
|
|
|
126,965
|
|
|
(21,809)
|
|
Gain (loss) on
commodity derivative settlements, net
|
(5,540)
|
|
|
84,208
|
|
|
1,011
|
|
Non-cash stock-based
compensation expense (benefit)
|
(94)
|
|
|
2,761
|
|
|
644
|
|
Impairment of evaluated
oil and gas properties
|
684,956
|
|
|
1,276,518
|
|
|
—
|
|
Merger and
integration expense
|
2,465
|
|
|
8,067
|
|
|
5,943
|
|
Other (income)
expense
|
3,567
|
|
|
6,759
|
|
|
(175)
|
|
Tax effect on
adjustments above(a)
|
(149,602)
|
|
|
(316,108)
|
|
|
3,021
|
|
Change in valuation
allowance
|
143,152
|
|
|
377,645
|
|
|
—
|
|
Loss on redemption of
preferred stock
|
—
|
|
|
—
|
|
|
8,304
|
|
Adjusted
Income
|
$25,558
|
|
|
$2,084
|
|
|
$44,119
|
|
Adjusted Income per
fully diluted common share
|
$0.64
|
|
|
$0.05
|
|
|
$1.93
|
|
|
|
|
|
|
|
Basic
WASO(b)
|
39,746
|
|
|
39,707
|
|
|
22,831
|
|
Diluted WASO
(GAAP)(b)
|
39,746
|
|
|
39,707
|
|
|
22,846
|
|
Effective of
potentially dilutive instruments(b)
|
35
|
|
|
12
|
|
|
—
|
|
Adjusted Diluted
WASO(b)
|
39,781
|
|
|
39,719
|
|
|
22,846
|
|
|
|
(a)
|
Calculated using the
federal statutory rate of 21%.
|
(b)
|
All share and per
share amounts have been retroactively adjusted for the Company's
1-for-10 reverse stock split effective August 7, 2020.
|
|
Three Months
Ended
|
|
September 30,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
|
(In
thousands)
|
Net income
(loss)
|
($680,384)
|
|
|
($1,564,731)
|
|
|
$55,834
|
|
(Gain)
loss on derivative contracts
|
27,038
|
|
|
126,965
|
|
|
(21,809)
|
|
Gain
(loss) on commodity derivative settlements, net
|
(5,540)
|
|
|
84,208
|
|
|
1,011
|
|
Non-cash
stock-based compensation expense (benefit)
|
(94)
|
|
|
2,761
|
|
|
644
|
|
Impairment of
evaluated oil and gas properties
|
684,956
|
|
|
1,276,518
|
|
|
—
|
|
Merger
and integration expense
|
2,465
|
|
|
8,067
|
|
|
5,943
|
|
Other
(income) expense
|
3,567
|
|
|
6,759
|
|
|
(161)
|
|
Income
tax expense
|
—
|
|
|
51,251
|
|
|
17,902
|
|
Interest
expense
|
24,683
|
|
|
22,682
|
|
|
739
|
|
Depreciation, depletion and amortization
|
114,201
|
|
|
138,930
|
|
|
57,235
|
|
Adjusted
EBITDA
|
$170,892
|
|
|
$153,410
|
|
|
$117,338
|
|
Free Cash Flow. Free cash flow was $80.3 million for the three months ended
September 30, 2020. Free cash flow is reconciled to operating
cash flow in the following table:
|
|
Three Months
Ended
|
|
|
September 30,
2020
|
|
June 30,
2020
|
|
|
(In
thousands)
|
Net cash provided by
operating activities
|
|
$135,701
|
|
|
$97,801
|
|
Changes in working
capital and other
|
|
14,473
|
|
|
40,078
|
|
Change in accrued hedge
settlement
|
|
(5,993)
|
|
|
(14,480)
|
|
Cash interest
expense
|
|
24,246
|
|
|
21,944
|
|
Merger and integration
expense
|
|
2,465
|
|
|
8,067
|
|
Adjusted
EBITDA
|
|
170,892
|
|
|
153,410
|
|
Less: Operational
capital (accrual)
|
|
38,408
|
|
|
85,087
|
|
Less: Capitalized
interest
|
|
20,675
|
|
|
20,924
|
|
Less: Interest
expense
|
|
24,683
|
|
|
22,682
|
|
Less: Capitalized
cash G&A
|
|
6,831
|
|
|
6,740
|
|
Free cash
flow
|
|
$80,295
|
|
|
$17,977
|
|
Adjusted Discretionary Cash Flow. Operating cash
flow was $135.7 million and adjusted
discretionary cash flow was $151.2
million for the three months ended September 30, 2020.
Adjusted discretionary cash flow is reconciled to operating cash
flow in the following table:
|
Three Months
Ended
|
|
September 30,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
|
(In
thousands)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
(loss)
|
($680,384)
|
|
|
($1,564,731)
|
|
|
$55,834
|
|
Adjustments to
reconcile net income (loss) to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation, depletion and amortization
|
114,201
|
|
|
138,930
|
|
|
57,235
|
|
Impairment of evaluated oil and gas properties
|
684,956
|
|
|
1,276,518
|
|
|
—
|
|
Amortization of non-cash debt related items
|
437
|
|
|
738
|
|
|
739
|
|
Deferred
income tax expense
|
—
|
|
|
51,251
|
|
|
17,902
|
|
(Gain)
loss on derivative contracts
|
27,038
|
|
|
126,965
|
|
|
(21,809)
|
|
Cash
(paid) received for commodity derivative settlements,
net
|
453
|
|
|
98,688
|
|
|
1,011
|
|
(Gain)
loss on sale of other property and equipment
|
—
|
|
|
—
|
|
|
(13)
|
|
Non-cash
stock-based compensation expense (benefit)
|
(94)
|
|
|
2,761
|
|
|
644
|
|
Merger
and integration expense
|
2,465
|
|
|
8,067
|
|
|
—
|
|
Other,
net
|
2,099
|
|
|
3,521
|
|
|
—
|
|
Adjusted
discretionary cash flow
|
$151,171
|
|
|
$142,708
|
|
|
$111,543
|
|
Changes
in working capital
|
(12,990)
|
|
|
(36,839)
|
|
|
2,803
|
|
Payments
to settle asset retirement obligations
|
—
|
|
|
—
|
|
|
(654)
|
|
Merger
and integration expense
|
(2,465)
|
|
|
(8,067)
|
|
|
—
|
|
Payments
to settle vested liability share-based awards
|
(15)
|
|
|
(1)
|
|
|
—
|
|
Net cash provided by
operating activities
|
$135,701
|
|
|
$97,801
|
|
|
$113,692
|
|
Adjusted Total Revenue. Adjusted total revenue for the
three months ended September 30, 2020 was $264.2 million and is reconciled to total
operating revenues in the following table:
|
|
Three Months
Ended
|
|
|
September 30,
2020
|
|
June 30,
2020
|
|
September 30,
2019
|
|
|
(In
thousands)
|
Operating
Revenues
|
|
|
|
|
|
|
Oil
|
|
$231,654
|
|
|
$130,513
|
|
|
$148,210
|
|
Natural
gas
|
|
15,034
|
|
|
12,242
|
|
|
7,168
|
|
Natural gas
liquids
|
|
23,025
|
|
|
14,479
|
|
|
—
|
|
Total operating
revenues (3)
|
|
$269,713
|
|
|
$157,234
|
|
|
$155,378
|
|
Gain (loss) on
commodity derivative settlements, net
|
|
(5,540)
|
|
|
84,208
|
|
|
1,011
|
|
Adjusted total
revenue
|
|
$264,173
|
|
|
$241,442
|
|
|
$156,389
|
|
|
|
|
|
(3)
|
Excludes sales of
purchased oil and gas
|
Callon Petroleum
Company
|
Consolidated
Balance Sheets
|
(In thousands,
except par and per share data)
|
(Unaudited)
|
|
|
|
September 30,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$10,500
|
|
|
$13,341
|
|
Accounts receivable,
net
|
|
112,536
|
|
|
209,463
|
|
Fair value of
derivatives
|
|
9,821
|
|
|
26,056
|
|
Other current
assets
|
|
27,049
|
|
|
19,814
|
|
Total current
assets
|
|
159,906
|
|
|
268,674
|
|
Oil and natural gas
properties, full cost accounting method:
|
|
|
|
|
Evaluated
properties
|
|
2,916,542
|
|
|
4,682,994
|
|
Unevaluated
properties
|
|
1,758,132
|
|
|
1,986,124
|
|
Total oil and natural
gas properties, net
|
|
4,674,674
|
|
|
6,669,118
|
|
Operating lease
right-of-use assets
|
|
29,519
|
|
|
63,908
|
|
Other property and
equipment, net
|
|
32,920
|
|
|
35,253
|
|
Deferred tax
asset
|
|
—
|
|
|
115,720
|
|
Deferred financing
costs
|
|
24,850
|
|
|
22,233
|
|
Other assets,
net
|
|
15,472
|
|
|
19,932
|
|
Total
assets
|
|
$4,937,341
|
|
|
$7,194,838
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$332,979
|
|
|
$490,442
|
|
Operating lease
liabilities
|
|
19,458
|
|
|
42,858
|
|
Fair value of
derivatives
|
|
34,950
|
|
|
71,197
|
|
Other current
liabilities
|
|
30,013
|
|
|
47,750
|
|
Total current
liabilities
|
|
417,400
|
|
|
652,247
|
|
Long-term
debt
|
|
3,190,273
|
|
|
3,186,109
|
|
Operating lease
liabilities
|
|
28,906
|
|
|
37,088
|
|
Asset retirement
obligations
|
|
49,542
|
|
|
48,860
|
|
Fair value of
derivatives
|
|
35,705
|
|
|
32,695
|
|
Other long-term
liabilities
|
|
11,411
|
|
|
14,531
|
|
Total
liabilities
|
|
3,733,237
|
|
|
3,971,530
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.01 par
value, 52,500,000 shares authorized; 39,749,985
and 39,659,001 shares outstanding,
respectively(4)
|
|
397
|
|
|
3,966
|
|
Capital in excess of
par value
|
|
3,210,991
|
|
|
3,198,076
|
|
Retained earnings
(Accumulated deficit)
|
|
(2,007,284)
|
|
|
21,266
|
|
Total stockholders'
equity
|
|
1,204,104
|
|
|
3,223,308
|
|
Total liabilities and
stockholders' equity
|
|
$4,937,341
|
|
|
$7,194,838
|
|
|
|
|
|
|
(4)
|
All share amounts
(except par value) have been retroactively adjusted for the
Company's 1-for-10 reverse stock split effective August 7,
2020.
|
Callon Petroleum
Company
|
Consolidated
Statements of Operations
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating
revenues:
|
|
|
|
|
|
|
|
Oil
|
$231,654
|
|
|
$148,210
|
|
|
$627,934
|
|
|
$450,036
|
|
Natural gas
|
15,034
|
|
|
7,168
|
|
|
33,305
|
|
|
25,441
|
|
Natural gas
liquids
|
23,025
|
|
|
—
|
|
|
55,627
|
|
|
—
|
|
Sales of purchased oil
and gas
|
20,313
|
|
|
—
|
|
|
21,469
|
|
|
—
|
|
Total operating
revenues
|
290,026
|
|
|
155,378
|
|
|
738,335
|
|
|
475,477
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Lease
operating
|
45,870
|
|
|
19,668
|
|
|
149,091
|
|
|
66,511
|
|
Production and ad
valorem taxes
|
16,110
|
|
|
11,866
|
|
|
46,151
|
|
|
33,810
|
|
Gathering,
transportation and processing
|
22,200
|
|
|
—
|
|
|
56,615
|
|
|
—
|
|
Cost of purchased oil
and gas
|
21,282
|
|
|
—
|
|
|
22,450
|
|
|
—
|
|
Depreciation,
depletion and amortization
|
114,201
|
|
|
56,130
|
|
|
384,594
|
|
|
179,275
|
|
General and
administrative
|
8,224
|
|
|
9,388
|
|
|
26,573
|
|
|
34,729
|
|
Impairment of
evaluated oil and gas properties
|
684,956
|
|
|
—
|
|
|
1,961,474
|
|
|
—
|
|
Merger and
integration
|
2,465
|
|
|
5,943
|
|
|
26,362
|
|
|
5,943
|
|
Other
operating
|
4,425
|
|
|
(161)
|
|
|
8,548
|
|
|
931
|
|
Total operating
expenses
|
919,733
|
|
|
102,834
|
|
|
2,681,858
|
|
|
321,199
|
|
Income (Loss) From
Operations
|
(629,707)
|
|
|
52,544
|
|
|
(1,943,523)
|
|
|
154,278
|
|
|
|
|
|
|
|
|
|
Other (Income)
Expenses:
|
|
|
|
|
|
|
|
Interest expense, net
of capitalized amounts
|
24,683
|
|
|
739
|
|
|
67,843
|
|
|
2,218
|
|
(Gain) loss on
derivative contracts
|
27,038
|
|
|
(21,809)
|
|
|
(97,966)
|
|
|
31,415
|
|
Other (income)
expense
|
(1,044)
|
|
|
(122)
|
|
|
(149)
|
|
|
(270)
|
|
Total other (income)
expense
|
50,677
|
|
|
(21,192)
|
|
|
(30,272)
|
|
|
33,363
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
(680,384)
|
|
|
73,736
|
|
|
(1,913,251)
|
|
|
120,915
|
|
Income tax
expense
|
—
|
|
|
(17,902)
|
|
|
(115,299)
|
|
|
(29,444)
|
|
Net Income
(Loss)
|
(680,384)
|
|
|
55,834
|
|
|
(2,028,550)
|
|
|
91,471
|
|
Preferred stock
dividends
|
—
|
|
|
(350)
|
|
|
—
|
|
|
(3,997)
|
|
Loss on redemption of
preferred stock
|
—
|
|
|
(8,304)
|
|
|
—
|
|
|
(8,304)
|
|
Income (Loss)
Available to Common Stockholders
|
($680,384)
|
|
|
$47,180
|
|
|
($2,028,550)
|
|
|
$79,170
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Available to Common Stockholders Per Common Share
(4):
|
|
|
|
|
|
|
|
Basic
|
($17.12)
|
|
|
$2.07
|
|
|
($51.09)
|
|
|
$3.47
|
|
Diluted
|
($17.12)
|
|
|
$2.07
|
|
|
($51.09)
|
|
|
$3.47
|
|
Weighted Average
Common Shares Outstanding (4):
|
|
|
|
|
|
|
|
Basic
|
39,746
|
|
|
22,831
|
|
|
39,707
|
|
|
22,805
|
|
Diluted
|
39,746
|
|
|
22,846
|
|
|
39,707
|
|
|
22,841
|
|
|
|
|
|
|
(4)
|
All share and per
share amounts have been retroactively adjusted for the Company's
1-for-10 reverse stock split effective August 7, 2020.
|
Callon Petroleum
Company
|
Consolidated
Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
($680,384)
|
|
|
$55,834
|
|
|
($2,028,550)
|
|
|
$91,471
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
114,201
|
|
|
57,235
|
|
|
384,594
|
|
|
182,738
|
|
Impairment of
evaluated oil and gas properties
|
684,956
|
|
|
—
|
|
|
1,961,474
|
|
|
—
|
|
Amortization of
non-cash debt related items
|
437
|
|
|
739
|
|
|
1,582
|
|
|
2,218
|
|
Deferred income tax
expense
|
—
|
|
|
17,902
|
|
|
115,299
|
|
|
29,444
|
|
(Gain) loss on
derivative contracts
|
27,038
|
|
|
(20,798)
|
|
|
(97,966)
|
|
|
31,415
|
|
Cash (paid) received
for commodity derivative settlements
|
453
|
|
|
—
|
|
|
101,754
|
|
|
(436)
|
|
Loss on sale of other
property and equipment
|
—
|
|
|
(13)
|
|
|
—
|
|
|
36
|
|
Non-cash expense
related to equity share-based awards
|
1,485
|
|
|
1,569
|
|
|
6,302
|
|
|
7,868
|
|
Change in the fair
value of liability share-based awards
|
(1,579)
|
|
|
(925)
|
|
|
(6,607)
|
|
|
106
|
|
Payments to settle
asset retirement obligations
|
—
|
|
|
(654)
|
|
|
—
|
|
|
(1,425)
|
|
Payments for
cash-settled restricted stock unit awards
|
(15)
|
|
|
—
|
|
|
(770)
|
|
|
(1,425)
|
|
Other, net
|
2,099
|
|
|
—
|
|
|
6,510
|
|
|
—
|
|
Changes in current
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(16,930)
|
|
|
(21,081)
|
|
|
96,110
|
|
|
17,600
|
|
Other current
assets
|
(2,208)
|
|
|
929
|
|
|
(6,556)
|
|
|
(5,172)
|
|
Current
liabilities
|
6,148
|
|
|
23,216
|
|
|
(107,979)
|
|
|
(13,038)
|
|
Other
|
—
|
|
|
(261)
|
|
|
—
|
|
|
(2,662)
|
|
Net cash provided
by operating activities
|
135,701
|
|
|
113,692
|
|
|
425,197
|
|
|
338,738
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(137,177)
|
|
|
(143,995)
|
|
|
(567,746)
|
|
|
(503,425)
|
|
Acquisitions
|
—
|
|
|
(1,418)
|
|
|
—
|
|
|
(40,788)
|
|
Proceeds from sale of
assets
|
139,739
|
|
|
5,656
|
|
|
149,818
|
|
|
279,952
|
|
Cash paid for
settlements of contingent consideration arrangements,
net
|
—
|
|
|
—
|
|
|
(40,000)
|
|
|
—
|
|
Other, net
|
1,427
|
|
|
—
|
|
|
8,261
|
|
|
—
|
|
Net cash provided
by (used in) investing activities
|
3,989
|
|
|
(139,757)
|
|
|
(449,667)
|
|
|
(264,261)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Borrowings on senior
secured revolving credit facility
|
312,000
|
|
|
221,000
|
|
|
5,087,500
|
|
|
581,000
|
|
Payments on senior
secured revolving credit facility
|
(737,000)
|
|
|
(126,000)
|
|
|
(5,347,500)
|
|
|
(581,000)
|
|
Issuance of 9.00%
Second Lien Senior Secured Notes due 2025
|
300,000
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
Discount on the
issuance of 9.00% Second Lien Senior Secured Notes due
2025
|
(35,270)
|
|
|
—
|
|
|
(35,270)
|
|
|
—
|
|
Issuance of
warrants
|
23,909
|
|
|
—
|
|
|
23,909
|
|
|
—
|
|
Payment of preferred
stock dividends
|
—
|
|
|
(350)
|
|
|
—
|
|
|
(3,997)
|
|
Payment of deferred
financing costs
|
(301)
|
|
|
—
|
|
|
(6,312)
|
|
|
(31)
|
|
Tax withholdings
related to restricted stock units
|
(107)
|
|
|
(316)
|
|
|
(495)
|
|
|
(2,174)
|
|
Redemption of preferred
stock
|
—
|
|
|
(73,012)
|
|
|
—
|
|
|
(73,017)
|
|
Other, net
|
79
|
|
|
—
|
|
|
(203)
|
|
|
—
|
|
Net cash provided
by (used in) financing activities
|
(136,690)
|
|
|
21,322
|
|
|
21,629
|
|
|
(79,219)
|
|
Net change in cash
and cash equivalents
|
3,000
|
|
|
(4,743)
|
|
|
(2,841)
|
|
|
(4,742)
|
|
Balance, beginning of
period
|
7,500
|
|
|
16,052
|
|
|
13,341
|
|
|
16,051
|
|
Balance, end of
period
|
$10,500
|
|
|
$11,309
|
|
|
$10,500
|
|
|
$11,309
|
|
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 cash
G&A (which excludes 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 these 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 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-third-quarter-2020-results-301165446.html
SOURCE Callon Petroleum Company