HOUSTON, May 6, 2019
/PRNewswire/ -- Callon Petroleum Company (NYSE: CPE) ("Callon"
or the "Company") today reported results of operations for the
three months ended March 31, 2019.
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.
Highlights
- Increased production to 40.3 Mboe/d (79% oil), an increase of
52% year-over-year
- Generated an operating margin of $32.57 per Boe
- Recently completed a five-well pad in the southern portion of
WildHorse, developing an entire half section in the Wolfcamp A
- Initial 2nd Bone Spring shale well placed on
production in the Delaware and
showing positive early performance
- Continued strong production from a Middle Spraberry well
drilled at Monarch as part of multi-well, co-development of three
flow units
- Improved completion efficiency, measured in stages per day, by
more than 25% compared to the same period in 2018
- Reduced average drilling and completion costs by 15%
sequentially, resulting in an average cost per lateral foot below
$1,000
- Announced the pending sale of certain non-core assets in the
southern Midland Basin for estimated gross proceeds of $260 million, with potential contingency payments
of up to $60 million based upon
average annual commodity prices over a three-year period
- Reaffirmed a borrowing base of $1.1
billion, pro forma for the pending non-core asset sale
"We are ahead of our plan to build out an inventory of drilled,
uncompleted wells to extend our usage of a larger pad development
model, applying this concept to the Delaware Basin as we continue to build upon
our success in the Midland Basin. Capitalizing on the efficiencies
of larger development, we delivered a sequential decrease in
average drilling and completion cost per lateral foot of 15% in the
first quarter. Our drilling plan is quickly progressing to the
point where we will decrease to four drilling rigs and start larger
Delaware Basin pad completions
towards the end of the second quarter." commented Joe Gatto, President and Chief Executive
Officer. He continued, "The previously announced sale of our Ranger
properties will streamline our operations with a focus on three
core operating areas with well-established infrastructure. Since we
did not have any planned Ranger activity in 2019, the divestiture
will not impact our base 2019 activity levels, but will allow us to
optimize our 2020 capital allocation with the removal of Ranger
drilling obligations. Upon closing, all cash proceeds will be
directed to bolstering our financial position. We remain focused on
executing our 2019 plan within our previously announced budget
range, with the benefit of incremental cash flow from commodity
realizations above our planning case flowing to the bottom line and
the benefit our shareholders."
Operations Update
At March 31, 2019, we had 524 gross (395.4 net) horizontal
wells producing from eight established flow units in the Permian
Basin. Net daily production for the three months ended
March 31, 2019 grew 52% to 40.3 Mboe/d (79% oil) as compared
to the same period of 2018.
For the three months ended March 31, 2019, we drilled 21
gross (16.4 net) horizontal wells, and placed a combined 13 gross
(11.2 net) horizontal wells on production. Wells placed on
production during the quarter were completed in the Lower
Spraberry, Middle Spraberry, Wolfcamp A and Wolfcamp B within the
Midland Basin and the Lower Wolfcamp A within the Delaware Basin.
Midland Basin
We brought 11 gross (9.2 net) wells on production in the Midland
Basin during the first quarter with the majority of activity coming
from our Monarch area. Our Middle Spraberry well, the Kendra Amanda
PSA 33 MS, an 8,000 foot lateral, which was completed as part of a
multi-well pad project, has achieved a 30-day average production
rate of approximately 110 Boe per thousand lateral feet (90% oil)
and continues to perform well.
Near the end of the quarter, in the WildHorse area in
Howard County, we began flowback
on a five-well pad that employed half section development in the
Wolfcamp A. While not all wells have reached 30 days of production,
the combined five-well average for current accumulated production
includes an average peak rate of over 1,500 Boe per day (92% oil)
or approximately 175 Boe per thousand lateral feet.
The previously disclosed outage at a third party gas processing
facility in Martin County has been
resolved and we currently do not forecast any impact to second
quarter production.
Delaware Basin
At our Spur area in
Ward County, we placed on
production the Wally World A1 01LA and A2 02LA, both Lower Wolfcamp
A wells, which together have achieved cumulative production of over
100,000 Boe (84% oil) during their first 30 days of production.
Recently, a two-well pad featuring 2nd Bone Spring shale
and Lower Wolfcamp A co-development at Spur, was completed and placed on production.
Both wells have performed as expected during their limited time on
production and we will continue to monitor and compare to third
party offsets in the area.
The field optimization project that was initiated during the
first quarter of 2019 is progressing and is expected to be
completed near the end of the second quarter. We currently
expect deferred production related to wells shut in for repairs to
average 1,600 Boe per day (79% oil) for the second quarter.
Capital Expenditures
For the three months ended March 31, 2019, we incurred
$155.2 million in operational capital
expenditures (including other items) on an accrual basis as
compared to $141.2 million in the
fourth quarter of 2018. Total capital expenditures, inclusive of
capitalized expenses, are detailed below on an accrual and cash
basis (in thousands):
|
|
Three Months Ended
March 31, 2019
|
|
|
Operational
|
|
Capitalized
|
|
Capitalized
|
|
Total
Capital
|
|
|
Capital
(a)
|
|
Interest
|
|
G&A
|
|
Expenditures
|
Cash basis
(b)
|
|
$
|
164,277
|
|
|
$
|
18,589
|
|
|
$
|
10,345
|
|
|
$
|
193,211
|
|
Timing adjustments
(c)
|
|
(9,109)
|
|
|
1,255
|
|
|
—
|
|
|
(7,854)
|
|
Non-cash
items
|
|
—
|
|
|
—
|
|
|
354
|
|
|
354
|
|
Accrual
basis
|
|
$
|
155,168
|
|
|
$
|
19,844
|
|
|
$
|
10,699
|
|
|
$
|
185,711
|
|
|
|
(a)
|
Includes seismic,
land 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.
|
Operating and Financial Results
The following table presents summary information for the periods
indicated:
|
|
Three Months
Ended
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Net
production
|
|
|
|
|
|
|
Oil
(MBbls)
|
|
2,858
|
|
|
3,076
|
|
|
1,851
|
|
Natural gas
(MMcf)
|
|
4,619
|
|
|
4,225
|
|
|
3,240
|
|
Total
(Mboe)
|
|
3,628
|
|
|
3,780
|
|
|
2,391
|
|
Average daily
production (Boe/d)
|
|
40,311
|
|
|
41,087
|
|
|
26,567
|
|
% oil
(Boe basis)
|
|
79
|
%
|
|
81
|
%
|
|
77
|
%
|
Oil and natural
gas revenues (in thousands)
|
|
|
|
|
|
|
Oil
revenue
|
|
$
|
141,098
|
|
|
$
|
150,398
|
|
|
$
|
115,286
|
|
Natural
gas revenue
|
|
11,949
|
|
|
11,497
|
|
|
12,154
|
|
Total
revenue
|
|
153,047
|
|
|
161,895
|
|
|
127,440
|
|
Impact
of settled derivatives
|
|
(290)
|
|
|
(1,594)
|
|
|
(8,459)
|
|
Adjusted Total Revenue
(i)
|
|
$
|
152,757
|
|
|
$
|
160,301
|
|
|
$
|
118,981
|
|
Average realized
sales price (excluding impact of settled
derivatives)
|
|
|
|
|
|
|
Oil (per
Bbl)
|
|
$
|
49.37
|
|
|
$
|
48.89
|
|
|
$
|
62.28
|
|
Natural
gas (per Mcf)
|
|
2.59
|
|
|
2.72
|
|
|
3.75
|
|
Total
(per BOE)
|
|
42.18
|
|
|
42.83
|
|
|
53.30
|
|
Average realized
sales price (including impact of settled
derivatives)
|
|
|
|
|
|
|
Oil (per
Bbl)
|
|
$
|
48.83
|
|
|
$
|
48.52
|
|
|
$
|
57.47
|
|
Natural
gas (per Mcf)
|
|
2.86
|
|
|
2.62
|
|
|
3.89
|
|
Total
(per BOE)
|
|
42.11
|
|
|
42.41
|
|
|
49.76
|
|
Additional per BOE
data
|
|
|
|
|
|
|
Sales
price (a)
|
|
$
|
42.18
|
|
|
$
|
42.83
|
|
|
$
|
53.30
|
|
Lease operating
expense
|
|
6.63
|
|
|
6.47
|
|
|
5.45
|
|
Production
taxes
|
|
2.98
|
|
|
2.51
|
|
|
3.54
|
|
Operating margin
|
|
$
|
32.57
|
|
|
$
|
33.85
|
|
|
$
|
44.31
|
|
|
|
|
|
|
|
|
Depletion, depreciation and amortization
|
|
$
|
16.47
|
|
|
$
|
15.74
|
|
|
$
|
14.81
|
|
Adjusted
G&A (b)
|
|
|
|
|
|
|
Cash component
(c)
|
|
$
|
2.28
|
|
|
$
|
2.03
|
|
|
$
|
2.74
|
|
Non-cash
component
|
|
0.44
|
|
|
0.50
|
|
|
0.51
|
|
|
|
(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 and
corporate depreciation and amortization.
|
Total Revenue. For the quarter ended March 31,
2019, Callon reported total revenue of $153.0 million and total revenue including
settled derivatives ("Adjusted Total Revenue," a non-GAAP financial
measure(i)) of $152.8
million, including the impact of a $0.3 million loss from the settlement of
derivative contracts. The table above reconciles Adjusted Total
Revenue to the related GAAP measure of the Company's total
operating revenue. Average daily production for the quarter was
40.3 Mboe/d compared to average daily production of 41.1 Mboe/d in
the fourth quarter of 2018. Average realized prices, including and
excluding the effects of hedging, are detailed above.
Hedging impacts. For the quarter ended March 31,
2019, Callon recognized the following hedging-related items (in
thousands, except per unit data):
|
Three Months Ended
March 31, 2019
|
|
In
Thousands
|
|
Per
Unit
|
Oil
derivatives
|
|
|
|
Net loss on
settlements
|
$
|
(1,542)
|
|
|
$
|
(0.54)
|
|
Net loss on fair
value adjustments
|
(66,826)
|
|
|
|
Total
loss on oil derivatives
|
$
|
(68,368)
|
|
|
|
Natural gas
derivatives
|
|
|
|
Net gain on
settlements
|
$
|
1,252
|
|
|
$
|
0.27
|
|
Net loss on fair
value adjustments
|
(144)
|
|
|
|
Total
gain on natural gas derivatives
|
$
|
1,108
|
|
|
|
Total oil &
natural gas derivatives
|
|
|
|
Net loss on
settlements
|
$
|
(290)
|
|
|
$
|
(0.07)
|
|
Net loss on fair
value adjustments
|
(66,970)
|
|
|
|
Total
loss on total oil & natural gas derivatives
|
$
|
(67,260)
|
|
|
|
Lease Operating Expenses, including workover
("LOE"). LOE per Boe for the three months ended
March 31, 2019 was $6.63 per
Boe, compared to LOE of $6.47 per Boe
in the fourth quarter of 2018. The increase on a per unit basis was
primarily attributed to a 1.9% decrease in daily production.
Production Taxes, including ad valorem taxes. Production
taxes were $2.98 per Boe for the
three months ended March 31, 2019, representing approximately
7.1% of total revenue before the impact of derivative
settlements.
Depreciation, Depletion and Amortization
("DD&A"). DD&A for the three months ended
March 31, 2019 was $16.47 per
Boe compared to $15.74 per Boe in the
fourth quarter of 2018. The increase on a per unit basis was
primarily attributable to an increase in our depreciable asset base
and assumed future development costs related to undeveloped proved
reserves relative to our estimated proved reserves as a result of
additions made through our horizontal drilling efforts.
General and Administrative ("G&A"). G&A,
excluding certain non-cash incentive share-based compensation
valuation adjustments, ("Adjusted G&A", a non-GAAP
measure(i)) was $9.9
million, or $2.72 per Boe, for
the three months ended March 31, 2019 compared to $9.6 million, or $2.53 per Boe, for the fourth quarter of 2018.
The cash component of Adjusted G&A was $8.3 million, or $2.28 per Boe, for the three months ended
March 31, 2019 compared to $7.7
million, or $2.03 per Boe, for
the fourth quarter of 2018.
For the three months ended March 31, 2019, G&A and
Adjusted G&A, which excludes the amortization of
equity-settled, share-based incentive awards and corporate
depreciation and amortization, are calculated as follows (in
thousands):
|
Three Months
Ended
March 31, 2019
|
Total G&A
expense
|
$
|
11,753
|
|
Change
in the fair value of liability share-based awards
(non-cash)
|
(1,889)
|
|
Adjusted G&A –
total
|
9,864
|
|
Restricted stock share-based compensation (non-cash)
|
(1,500)
|
|
Corporate depreciation & amortization (non-cash)
|
(88)
|
|
Adjusted G&A –
cash component
|
$
|
8,276
|
|
Settled share-based awards. During the first quarter of
2019, the Company settled certain of the outstanding share-based
award agreements of two former officers of the Company, resulting
in the $3.0 million recorded on the
consolidated statements of operations as settled share-based
awards.
Income tax expense. Callon provides for income taxes at
the statutory rate of 21% adjusted for permanent differences
expected to be realized. We recorded an income tax benefit of
$5.1 million for the three months
ended March 31, 2019, compared to income tax expense of
$5.6 million for the three months
ended December 31, 2018. The change
in income tax is primarily related to the change in our tax
position in 2018, when the Company's tax position transitioned from
a net deferred tax asset position to a net deferred tax liability
position, thereby unwinding the valuation allowance balance to
$0 as of December 31, 2018.
2019 Guidance
The Company is maintaining the current full year guidance until
the announced sale of non-core assets closes, which is expected to
occur during the second quarter. Upon closing, the Company will
update applicable guidance categories, but does not expect any
changes to the operational capital guidance for the year.
|
|
First
Quarter
|
|
Full
Year
|
|
|
2019
Actual
|
|
2019
Guidance
|
Total production
(Mboe/d)
|
|
40.3
|
|
39.5 -
41.5
|
% oil
|
|
79%
|
|
77% - 78%
|
Income statement
expenses (per Boe)
|
|
|
|
|
LOE, including
workovers
|
|
$6.63
|
|
$5.50 -
$6.50
|
Production taxes,
including ad valorem (% unhedged revenue)
|
|
7%
|
|
7%
|
Adjusted
G&A: cash component (a)
|
|
$2.28
|
|
$2.00 -
$2.50
|
Adjusted
G&A: non-cash component (b)
|
|
$0.44
|
|
$0.50 -
$1.00
|
Cash
interest expense (c)
|
|
$0.00
|
|
$0.00
|
Effective income tax
rate
|
|
21%
|
|
22%
|
Capital
expenditures ($MM, accrual basis)
|
|
|
|
|
Total operational
(d)
|
|
$155
|
|
$500 -
$525
|
Capitalized interest
and G&A expenses
|
|
$31
|
|
$100 -
$105
|
Net operated
horizontal wells placed on production
|
|
11
|
|
47 - 49
|
|
|
(a)
|
Excludes stock-based
compensation and corporate depreciation and amortization. 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)
|
All interest expense
anticipated to be capitalized.
|
(d)
|
Includes facilities,
equipment, seismic, land and other items. Excludes capitalized
expenses.
|
Hedge Portfolio Summary
The following tables summarize our open derivative positions as
of March 31, 2019 for the periods indicated:
|
For the
Remainder
|
|
For the Full
Year
|
Oil contracts
(WTI)
|
of
2019
|
|
of
2020
|
Puts
|
|
|
|
Total
volume (Bbls)
|
687,500
|
|
|
—
|
|
Weighted
average price per Bbl
|
$
|
65.00
|
|
|
$
|
—
|
|
Put
spreads
|
|
|
|
Total volume
(Bbls)
|
687,500
|
|
|
—
|
|
Weighted average
price per Bbl
|
|
|
|
Floor (long
put)
|
$
|
65.00
|
|
|
$
|
—
|
|
Floor (short
put)
|
$
|
42.50
|
|
|
$
|
—
|
|
Collar contracts
combined with short puts (three-way collars)
|
|
|
|
Total volume
(Bbls)
|
3,484,000
|
|
|
915,000
|
|
Weighted average
price per Bbl
|
|
|
|
Ceiling (short
call)
|
$
|
67.56
|
|
|
$
|
65.02
|
|
Floor (long
put)
|
$
|
56.58
|
|
|
$
|
55.00
|
|
Floor (short
put)
|
$
|
43.62
|
|
|
$
|
45.00
|
|
Collar contracts
(two-way collars)
|
|
|
|
Total volume
(Bbls)
|
—
|
|
|
732,000
|
|
Weighted average
price per Bbl
|
|
|
|
Ceiling (short
call)
|
$
|
—
|
|
|
$
|
64.63
|
|
Floor (long
put)
|
$
|
—
|
|
|
$
|
55.00
|
|
|
|
|
|
Oil contracts
(Midland basis differential)
|
|
|
|
Swap
contracts
|
|
|
|
Total volume
(Bbls)
|
5,102,000
|
|
|
4,576,000
|
|
Weighted average
price per Bbl
|
$
|
(3.95)
|
|
|
$
|
(1.29)
|
|
|
|
|
|
Natural gas
contracts (Henry Hub)
|
|
|
|
Collar contracts
(two-way collars)
|
|
|
|
Total
volume (MMBtu)
|
2,697,500
|
|
|
—
|
|
Weighted
average price per MMBtu
|
|
|
|
Ceiling (short
call)
|
$
|
3.68
|
|
|
$
|
—
|
|
Floor (long
put)
|
$
|
3.09
|
|
|
$
|
—
|
|
Swap
contracts
|
|
|
|
Total
volume (MMBtu)
|
1,852,000
|
|
|
—
|
|
Weighted
average price per MMBtu
|
$
|
2.88
|
|
|
$
|
—
|
|
|
|
|
|
Natural gas
contracts (Waha basis differential)
|
|
|
|
Swap
contracts
|
|
|
|
Total
volume (MMBtu)
|
5,961,000
|
|
|
4,758,000
|
|
Weighted
average price per MMBtu
|
$
|
(1.19)
|
|
|
$
|
(1.12)
|
|
Income (Loss) Available to Common Shareholders. The
Company reported net loss available to common shareholders of
$21.4 million for the three months
ended March 31, 2019 and Adjusted Income available to common
shareholders of $35.4 million, or
$0.16 per fully diluted share.
Adjusted Income per fully diluted common share, a non-GAAP
financial measure(i), adjusts our income available to
common stockholders to reflect our theoretical tax provision for
prior period quarters as if the valuation allowance did not exist.
The following tables reconcile to the related GAAP measure the
Company's income available to common stockholders to Adjusted
Income and the Company's net income to Adjusted
EBITDA(i), a non-GAAP financial measure, (in
thousands):
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Income (loss)
available to common stockholders
|
$
|
(21,367)
|
|
|
$
|
154,370
|
|
|
$
|
53,937
|
|
(Gain)
loss on derivatives, net of settlements
|
66,970
|
|
|
(105,512)
|
|
|
(3,978)
|
|
Change
in the fair value of share-based awards
|
1,881
|
|
|
(1,053)
|
|
|
1,012
|
|
Settled
share-based awards
|
3,024
|
|
|
—
|
|
|
—
|
|
Tax effect on
adjustments above
|
(15,094)
|
|
|
22,379
|
|
|
622
|
|
Change in valuation
allowance
|
—
|
|
|
(30,281)
|
|
|
(11,753)
|
|
Adjusted Income
(i)
|
$
|
35,414
|
|
|
$
|
39,903
|
|
|
$
|
39,840
|
|
Adjusted Income per
fully diluted common share (i)
|
$
|
0.16
|
|
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Net income
(loss)
|
$
|
(19,543)
|
|
|
$
|
156,194
|
|
|
$
|
55,761
|
|
(Gain)
loss on derivatives, net of settlements
|
66,970
|
|
|
(105,512)
|
|
|
(3,978)
|
|
Non-cash
stock-based compensation expense
|
3,402
|
|
|
770
|
|
|
2,143
|
|
Settled
share-based awards
|
3,024
|
|
|
—
|
|
|
—
|
|
Acquisition expense
|
157
|
|
|
1,333
|
|
|
548
|
|
Income
tax (benefit) expense
|
(5,149)
|
|
|
5,647
|
|
|
495
|
|
Interest
expense
|
738
|
|
|
735
|
|
|
460
|
|
Depreciation, depletion and amortization
|
60,672
|
|
|
60,301
|
|
|
36,066
|
|
Accretion expense
|
241
|
|
|
248
|
|
|
218
|
|
Adjusted EBITDA
(i)
|
$
|
110,512
|
|
|
$
|
119,716
|
|
|
$
|
91,713
|
|
Discretionary Cash Flow. Discretionary cash flow, a
non-GAAP measure(i), for the three months ended
March 31, 2019 was $110.4
million and is reconciled to operating cash flow in the
following table (in thousands):
|
Three Months
Ended
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
(loss)
|
$
|
(19,543)
|
|
|
$
|
156,194
|
|
|
$
|
55,761
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
Depreciation, depletion and amortization
|
60,672
|
|
|
60,301
|
|
|
36,066
|
|
Accretion expense
|
241
|
|
|
248
|
|
|
218
|
|
Amortization of non-cash debt related items
|
738
|
|
|
734
|
|
|
453
|
|
Deferred
income tax (benefit) expense
|
(5,149)
|
|
|
5,647
|
|
|
495
|
|
(Gain)
loss on derivatives, net of settlements
|
66,970
|
|
|
(105,512)
|
|
|
(3,978)
|
|
(Gain)
loss on sale of other property and equipment
|
28
|
|
|
(64)
|
|
|
—
|
|
Non-cash
expense related to equity share-based awards
|
4,545
|
|
|
1,823
|
|
|
1,131
|
|
Change
in the fair value of liability share-based awards
|
1,881
|
|
|
(1,053)
|
|
|
1,012
|
|
Discretionary cash
flow (i)
|
$
|
110,383
|
|
|
$
|
118,318
|
|
|
$
|
91,158
|
|
Changes
in working capital
|
(33,864)
|
|
|
33,710
|
|
|
4,512
|
|
Payments
to settle asset retirement obligations
|
(664)
|
|
|
(389)
|
|
|
(366)
|
|
Payments
to settle vested liability share-based awards
|
(1,296)
|
|
|
—
|
|
|
(3,089)
|
|
Net cash provided by
operating activities
|
$
|
74,559
|
|
|
$
|
151,639
|
|
|
$
|
92,215
|
|
Callon Petroleum
Company
|
Consolidated
Balance Sheets
|
(in thousands,
except par and per share data)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
Unaudited
|
|
|
Current
assets:
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
10,482
|
|
|
$
|
16,051
|
|
Accounts
receivable
|
|
137,110
|
|
|
131,720
|
|
Fair
value of derivatives
|
|
11,372
|
|
|
65,114
|
|
Other
current assets
|
|
12,034
|
|
|
9,740
|
|
Total current
assets
|
|
170,998
|
|
|
222,625
|
|
Oil and natural gas
properties, full cost accounting method:
|
|
|
|
|
Evaluated
properties
|
|
4,760,071
|
|
|
4,585,020
|
|
Less
accumulated depreciation, depletion, amortization and
impairment
|
|
(2,333,589)
|
|
|
(2,270,675)
|
|
Evaluated
oil and natural gas properties, net
|
|
2,426,482
|
|
|
2,314,345
|
|
Unevaluated properties
|
|
1,432,118
|
|
|
1,404,513
|
|
Total oil and natural
gas properties, net
|
|
3,858,600
|
|
|
3,718,858
|
|
Operating lease
right-of-use assets
|
|
40,977
|
|
|
—
|
|
Other property and
equipment, net
|
|
22,413
|
|
|
21,901
|
|
Restricted
investments
|
|
3,450
|
|
|
3,424
|
|
Deferred financing
costs
|
|
5,742
|
|
|
6,087
|
|
Fair value of
derivatives
|
|
385
|
|
|
—
|
|
Other assets,
net
|
|
6,269
|
|
|
6,278
|
|
Total
assets
|
|
$
|
4,108,834
|
|
|
$
|
3,979,173
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
230,990
|
|
|
$
|
261,184
|
|
Operating lease liabilities
|
|
29,134
|
|
|
—
|
|
Accrued
interest
|
|
25,920
|
|
|
24,665
|
|
Cash-settleable restricted stock unit awards
|
|
1,060
|
|
|
1,390
|
|
Asset
retirement obligations
|
|
3,771
|
|
|
3,887
|
|
Fair
value of derivatives
|
|
24,550
|
|
|
10,480
|
|
Other
current liabilities
|
|
8,512
|
|
|
13,310
|
|
Total current
liabilities
|
|
323,937
|
|
|
314,916
|
|
Senior secured
revolving credit facility
|
|
330,000
|
|
|
200,000
|
|
6.125% senior
unsecured notes due 2024
|
|
595,971
|
|
|
595,788
|
|
6.375% senior
unsecured notes due 2026
|
|
393,896
|
|
|
393,685
|
|
Operating lease
liabilities
|
|
11,751
|
|
|
—
|
|
Asset retirement
obligations
|
|
10,189
|
|
|
10,405
|
|
Cash-settleable
restricted stock unit awards
|
|
2,252
|
|
|
2,067
|
|
Deferred tax
liability
|
|
4,415
|
|
|
9,564
|
|
Fair value of
derivatives
|
|
6,983
|
|
|
7,440
|
|
Other long-term
liabilities
|
|
995
|
|
|
100
|
|
Total
liabilities
|
|
1,680,389
|
|
|
1,533,965
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, series A cumulative, $0.01 par value and $50.00
liquidation preference, 2,500,000 shares authorized; 1,458,948
shares outstanding
|
|
15
|
|
|
15
|
|
Common
stock, $0.01 par value, 300,000,000 shares authorized; 227,884,091
and 227,582,575 shares outstanding, respectively
|
|
2,279
|
|
|
2,276
|
|
Capital
in excess of par value
|
|
2,481,879
|
|
|
2,477,278
|
|
Accumulated deficit
|
|
(55,728)
|
|
|
(34,361)
|
|
Total stockholders'
equity
|
|
2,428,445
|
|
|
2,445,208
|
|
Total liabilities and
stockholders' equity
|
|
$
|
4,108,834
|
|
|
$
|
3,979,173
|
|
Callon Petroleum
Company
|
Consolidated
Statements of Operations
|
(Unaudited; in
thousands, except per share data)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Operating
revenues:
|
|
|
|
Oil sales
|
$
|
141,098
|
|
|
$
|
115,286
|
|
Natural gas
sales
|
11,949
|
|
|
12,154
|
|
Total operating
revenues
|
153,047
|
|
|
127,440
|
|
Operating
expenses:
|
|
|
|
Lease operating
expenses
|
24,067
|
|
|
13,039
|
|
Production
taxes
|
10,813
|
|
|
8,463
|
|
Depreciation,
depletion and amortization
|
59,767
|
|
|
35,417
|
|
General and
administrative
|
11,753
|
|
|
8,769
|
|
Settled share-based
awards
|
3,024
|
|
|
—
|
|
Accretion
expense
|
241
|
|
|
218
|
|
Acquisition
expense
|
157
|
|
|
548
|
|
Total operating
expenses
|
109,822
|
|
|
66,454
|
|
Income from
operations
|
43,225
|
|
|
60,986
|
|
Other (income)
expenses:
|
|
|
|
Interest expense, net
of capitalized amounts
|
738
|
|
|
460
|
|
Loss on derivative
contracts
|
67,260
|
|
|
4,481
|
|
Other
income
|
(81)
|
|
|
(211)
|
|
Total other (income)
expense
|
67,917
|
|
|
4,730
|
|
Income (loss) before
income taxes
|
(24,692)
|
|
|
56,256
|
|
Income tax (benefit)
expense
|
(5,149)
|
|
|
495
|
|
Net income
(loss)
|
(19,543)
|
|
|
55,761
|
|
Preferred stock
dividends
|
(1,824)
|
|
|
(1,824)
|
|
Income (loss)
available to common stockholders
|
$
|
(21,367)
|
|
|
$
|
53,937
|
|
Income per common
share:
|
|
|
|
Basic
|
$
|
(0.09)
|
|
|
$
|
0.27
|
|
Diluted
|
$
|
(0.09)
|
|
|
$
|
0.27
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
227,784
|
|
|
201,921
|
|
Diluted
|
227,784
|
|
|
202,588
|
|
Callon Petroleum
Company
|
Consolidated
Statements of Cash Flows
|
(Unaudited; in
thousands)
|
|
|
Three Months Ended
March 31,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
(19,543)
|
|
|
$
|
55,761
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Depreciation, depletion and amortization
|
60,672
|
|
|
36,066
|
|
Accretion
expense
|
241
|
|
|
218
|
|
Amortization of non-cash debt related items
|
738
|
|
|
453
|
|
Deferred
income tax (benefit) expense
|
(5,149)
|
|
|
495
|
|
(Gain)
loss on derivatives, net of settlements
|
66,970
|
|
|
(3,978)
|
|
Loss on
sale of other property and equipment
|
28
|
|
|
—
|
|
Non-cash
expense related to equity share-based awards
|
4,545
|
|
|
1,131
|
|
Change in
the fair value of liability share-based awards
|
1,881
|
|
|
1,012
|
|
Payments
to settle asset retirement obligations
|
(664)
|
|
|
(366)
|
|
Payments
for cash-settled restricted stock unit awards
|
(1,296)
|
|
|
(3,089)
|
|
Changes in current
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(5,390)
|
|
|
(8,067)
|
|
Other
current assets
|
(2,294)
|
|
|
61
|
|
Current
liabilities
|
(26,003)
|
|
|
12,938
|
|
Other
|
(177)
|
|
|
(420)
|
|
Net cash provided
by operating activities
|
74,559
|
|
|
92,215
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(193,211)
|
|
|
(111,330)
|
|
Acquisitions
|
(27,947)
|
|
|
(38,923)
|
|
Acquisition
deposit
|
—
|
|
|
900
|
|
Proceeds from sale of
assets
|
13,879
|
|
|
—
|
|
Net cash used in
investing activities
|
(207,279)
|
|
|
(149,353)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings on senior
secured revolving credit facility
|
220,000
|
|
|
80,000
|
|
Payments on senior
secured revolving credit facility
|
(90,000)
|
|
|
(30,000)
|
|
Payment of preferred
stock dividends
|
(1,824)
|
|
|
(1,824)
|
|
Tax withholdings
related to restricted stock units
|
(1,025)
|
|
|
(560)
|
|
Net cash provided
by financing activities
|
127,151
|
|
|
47,616
|
|
Net change in cash
and cash equivalents
|
(5,569)
|
|
|
(9,522)
|
|
Balance, beginning of
period
|
16,051
|
|
|
27,995
|
|
Balance, end of
period
|
10,482
|
|
|
18,473
|
|
|
|
|
|
Non-GAAP Financial Measures and Reconciliations
This news release refers to non-GAAP financial measures such as
"Discretionary Cash Flow," "Adjusted G&A," "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.
- Callon believes that the non-GAAP measure of discretionary 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. Discretionary cash flow is defined by Callon as net cash
provided by operating activities before changes in working capital
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. 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 certain non-recurring expenses and non-cash valuation
adjustments related to incentive compensation plans, as well as
non-cash corporate depreciation and amortization expense. 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 here within details all
adjustments to G&A on a GAAP basis to arrive at Adjusted
G&A.
- Callon believes that the non-GAAP measure of Adjusted Income
available to common shareholders ("Adjusted Income") and Adjusted
Income per diluted share 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 here
within.
- Callon calculates adjusted earnings before interest, income
taxes, depreciation, depletion and amortization ("Adjusted EBITDA")
as Adjusted Income plus interest expense, income tax expense
(benefit) and depreciation, depletion and amortization expense.
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.
Earnings Call Information
The Company will host a conference call on Tuesday, May 7,
2019, to discuss first quarter 2019 financial and operating
results.
Please join Callon Petroleum Company via the Internet for a
webcast of the conference call:
Date/Time:
|
Tuesday, May 7, 2019,
at 8:00 a.m. Central Time (9:00 a.m. Eastern Time)
|
Webcast:
|
Select "IR Calendar"
under the "Investors" section of the website:
www.callon.com.
|
Presentation
Slides:
|
Select
"Presentations" under the "Investors" section of the website:
www.callon.com.
|
Alternatively, you may join by telephone using the following
numbers:
Toll Free:
|
1-888-317-6003
|
Canada Toll
Free:
|
1-866-284-3684
|
International:
|
1-412-317-6061
|
Access
code:
|
3634060
|
An archive of the conference call webcast will be available at
www.callon.com under the "Investors" section of the website.
About Callon Petroleum Company
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 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 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.
Contact Information
Mark Brewer
Director of Investor Relations
Callon Petroleum Company
ir@callon.com
1-281-589-5200
i)
|
See "Non-GAAP
Financial Measures and Reconciliations" included within this
release for related disclosures and calculations
|
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content:http://www.prnewswire.com/news-releases/callon-petroleum-company-announces-first-quarter-2019-results-300844478.html
SOURCE Callon Petroleum Company