HOUSTON, April 8, 2019 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) ("Callon" or "we") today announced it
has entered into a definitive agreement regarding the sale of
certain non-core assets in the Midland Basin for initial cash proceeds of
$260 million, subject to customary
purchase price adjustments. The agreement also provides for
potential incremental cash payments of up to $60 million based upon future commodity prices
with upside participation starting at the $60/Bbl West Texas Intermediate level.
Joe Gatto, President and Chief
Executive Officer commented, "We are delivering on our commitment
to drive enhanced capital efficiency by monetizing lower margin,
non-core properties that have not competed for capital on a
sustained basis. The proceeds from this divestiture will accelerate
our debt reduction initiatives and also provide the opportunity to
retire our preferred stock, reducing our cash financing costs. In
addition, the transaction streamlines our business with a resulting
focus on three core operating areas. We are actively optimizing our
operations, which we believe will reduce capital intensity and
increase returns on capital for our shareholders."
The divestiture encompasses our Ranger operating area in the
southern Midland Basin which
includes approximately 9,850 net Wolfcamp acres (66% working
interest), over 80 currently producing horizontal wells that have
been drilled since 2012 and 70 net, delineated locations that
exceed our internal threshold of an IRR of greater than 25% at
strip pricing. Daily production from these assets averaged
approximately 4,000 Boe/d (52% oil) in February 2019. Our capital plans for the year are
unchanged as there was no planned activity in the Ranger area for
2019. Updated full year guidance will be provided upon closing of
the sale.
In addition to the pending divestiture, we completed a strategic
trade during the first quarter of 2019 that expanded our contiguous
position in northwest Howard
County through the addition of two incremental long-lateral
DSUs in exchange for low working interest properties in
Midland County. The trade resulted
in a net increase of approximately 167 net acres to Callon's
Midland Basin leasehold position
and generated $14 million in cash
proceeds to Callon. Our resulting asset base is now well-positioned
for the efficient, large pad development model that we are
increasingly deploying across our portfolio.
Jefferies LLC acted as exclusive financial advisor to Callon in
connection with the Ranger divestiture transaction.
About Callon Petroleum
Callon Petroleum Company is an independent energy company
focused on the acquisition and development of unconventional
onshore oil and natural gas reserves in the Permian Basin in
West Texas.
This news release is posted on Callon's website at
www.callon.com, and will be archived 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 and associated production and cash flow expectations;
Callon's 2019 production guidance and capital expenditure forecast;
estimated reserve quantities and the present value thereof; and the
implementation of Callon's business plans and strategy, as well as
statements including the words "believe," "expect," "plans," "may,"
"will," "should," "could," and words of similar meaning. These
statements reflect Callon'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, 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 on which such statement is made and Callon 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 Callon's future results and could cause results to
differ materially from those expressed in Callon's forward-looking
statements include the volatility of oil and natural gas prices,
ability to drill and complete wells, operational, regulatory and
environment risks, cost and availability of equipment and labor,
Callon's ability to finance Callon's activities and other risks
more fully discussed in Callon's filings with the Securities and
Exchange Commission, including Callon's Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, available on Callon's website
or the SEC's website at www.sec.gov.
For further information contact
Mark Brewer
281-589-5200
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SOURCE Callon Petroleum Company