NATCHEZ, Miss., May 24, 2018 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today
announced that its wholly owned subsidiary, Callon Petroleum
Operating Company, has entered into a definitive agreement to
acquire certain producing oil and gas properties and undeveloped
acreage for total consideration of $570
million in cash from Cimarex Energy Co. The Company intends
to fund the cash purchase price with the net proceeds of an equity
offering announced concurrently with the announcement of this
acquisition, cash on hand and/or incurrence of long-term
indebtedness.
Key attributes of the acquisition include:
- the addition of approximately 28,657 net surface acres to our
Spur operating area in the Delaware Basin, over 90% held by production,
that is directly adjacent and highly complementary to our existing
position;
- current net production of approximately 6,831 barrels of oil
equivalent per day (approximately 73% oil) for the first quarter of
2018, based on information provided by the seller;
- estimated delineated base inventory of 212 net identified
horizontal drilling locations targeting the Third Bone Spring,
Wolfcamp A and Wolfcamp B zones, with approximately 86% to be
operated by Callon. Over 60% of the inventory is comprised of well
locations with laterals of 7,500 feet or more;
- meaningful opportunities for enhanced development efficiencies
from increased scale, integration of infrastructure and multi-well
pad development; and
- additional potential horizontal drilling locations from
emerging prospective zones in the Second Bone Spring and Wolfcamp C
formations.
On a pro forma basis, assuming the closing of the acquisition,
Callon's aggregate Permian Basin position will include
approximately 86,000 net surface acres concentrated in four core
operating areas within both the Midland and Delaware Basins.
Joe Gatto, President and Chief
Executive Officer commented, "This acquisition of highly
complementary assets is an important step in continuing to build
upon our Delaware Basin entry in
late 2016. Upon completion, we will own a leasehold position of
almost 47,500 net acres in our Spur operating area and over 86,000
net acres in the broader Permian Basin. Given the location of the
acquired position and associated established infrastructure, we are
positioned to benefit from increased lateral lengths on the
combined position as well as scale benefits from larger pad
development concepts." He continued, "Importantly, this acquisition
includes a substantial amount of mature, oil-weighted production
that provides a solid, current return on capital employed and
drives immediate accretion on several key operational and financial
metrics. Minimal drilling obligations, multiple target zones and a
highly contiguous operated position all contribute to operational
flexibility which will enhance our developmental efficiency while
also affording organic inventory growth opportunities in emerging
zones within our expanded Spur footprint. Looking forward, we
expect the acquisition to contribute to a total fourth quarter 2018
exit rate of over 40,000 boepd, assuming only minimal incremental
activity above our existing base program, and improved optionality
for an increase in our development plans for 2019."
The pending acquisition is expected to close on or before
September 10, 2018, subject to the
completion of customary closing conditions.
Website Presentation
The Company has posted on its
website, as of May 24, 2018, a
presentation that includes additional information on the pending
transaction. The presentation, entitled "Acquisition Overview" may
be found by navigating our website at www.callon.com, selecting
"Investors" then "Presentations."
About Callon Petroleum Company
Callon 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.
About Cimarex Energy Co.
Cimarex is a Denver-based
independent oil and gas exploration and production company with
principal operations in the Mid-Continent and Permian Basin areas
of the U.S.
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, as amended.
Forward-looking statements include all statements regarding the
consummation of the pending acquisition and completion of related
financings and the time frame in which these transactions will
occur, the expected benefits of the Company and its shareholders
from completing the acquisition, 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 Company's ability to
realize the anticipated benefits of the pending acquisition, the
forfeiture of our deposit under the acquisition agreement and other
risks are 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 the Company's
website or the SEC's website at www.sec.gov.
For further information contact:
Mark Brewer
Director of Investor Relations
281-589-5279
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SOURCE Callon Petroleum Company