NATCHEZ, Miss., Oct. 2, 2017 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today
announced a revised production guidance range of 22,450 to 22,600
barrels of oil equivalent per day ("Boe/d") for the third quarter
of 2017, reduced from a previous guidance range of 23,000 to 25,000
Boe/d. Prior guidance of 77% oil production and estimates for
expenses and operational capital expenditures for the third quarter
are unchanged.
The revision is related in part to a heightened level of
non-productive time during the completion of wells in the quarter
caused by an approximate 20% reduction in average efficiency across
all vendors involved with completion operations compared to the
second quarter of 2017. As a result, cycle times for wells were
extended and associated production contributions were delayed.
Moreover, these increased cycle times also lengthened the amount of
production downtime from offsetting wells that were shut-in for the
completion operation and, hence, delayed the timing of returning
wells to production. Over 2,500 net Boe/d of established production
from offsetting wells was affected by completion operations in the
quarter.
In addition, the short-term, derivative impacts of Hurricane
Harvey included:
- shortages of diesel fuel for drilling and completion equipment,
causing operational delays;
- oil pipeline curtailments that limited production optimization
on recently completed wells; and
- elevated natural gas gathering line pressures that necessitated
intermittent flaring and created increased backpressure on
producing wells.
The Company also revised its full-year 2017 production guidance
to a range of 22,000 to 23,000 Boe/d (78% oil). The updated
estimates reflect:
- the new guidance range for the third quarter;
- a baseline assumption that elevated operational inefficiencies
across several key oil service functions will be experienced into
year-end (under this scenario of reduced efficiency, Callon
anticipates that approximately three fewer net wells will be placed
on production during the year relative to previous operational
plans); and
- an annualized production reduction of 200 Boe/d due to
deferrals of non-operated activity, including approximately 650
Boe/d of impact in the fourth quarter of 2017.
Joe Gatto, President and Chief
Executive Officer of the Company commented, "The Callon team has
been working closely with all of its oil service partners to work
through the challenges presented by an increasingly robust level of
industry activity. We firmly believe this is a transitory issue for
us and our fellow operators, and we expect to return to previous
levels of efficiency as we strengthen working relationships with
new oil service personnel and additional capacity relieves near
term service pressures. Importantly, we have experienced some level
of improvement on recent pads and don't expect these
short-term issues to have any meaningful impact on our operating
plan and outlook for 2018. In addition, we have been pleased with
the lease operating expense reductions we have achieved during the
year due to our proactive investments in infrastructure that will
benefit us even more over the long-term development of our asset
base."
About Callon Petroleum
Callon Petroleum Company is an independent energy company
focused on the acquisition, development, exploration, and operation
of oil and natural gas properties in the Permian Basin in
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
Statements
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 wells anticipated to be
drilled and placed on production; future levels of drilling
activity, oil service costs and associated production and cash flow
expectations; the Company's 2017 guidance and capital expenditure
forecast; estimated reserve quantities and the present value
thereof; and the implementation of the Company's business plans and
strategy, as well as statements including the words "believe,"
"expect," "plans" and words of similar meaning. These statements
reflect the Company's current views with respect to future events
and financial performance. No assurances can be given, however,
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. 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 and natural gas prices, ability to
drill and complete wells, operational, regulatory and environment
risks, our ability to finance our activities and other risks more
fully discussed in our filings with the Securities and Exchange
Commission, including our Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q, available on our website or the SEC's website
at www.sec.gov.
For further information contact:
Mark Brewer
Callon Petroleum Company
1-800-451-1294
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SOURCE Callon Petroleum Company