For further information contact
Rodger W. Smith, 1-800-451-1294
Callon Petroleum Company Reports Results For Fourth Quarter, Full Year 2006
Fourth Quarter and Full Year 2006 Net Income. For the year ended December 31, 2006, the company reported record net income of $40.6 million, or $1.90 per diluted share. This compares to net income of $26.8 million, or $1.28 per share on a diluted basis, for the same period in 2005. For the three months ended December 31, 2006, Callon reported net income of $5.9 million, or $0.27 per diluted share. This compares with net income of $4.3 million, or $0.20 per diluted share during the fourth quarter of 2005, which included production downtime because of tropical storms and hurricane activity (“inclement weather”).
Fourth Quarter and Full Year 2006 Operating Results. Operating results for the year ended December 31, 2006 include record oil and gas sales of $182.3 million from average production of 56.9 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $141.3 million from average daily production of 51.5 MMcfe/d during 2005 which was impacted by inclement weather. The average price, after the impact of hedging, received per thousand cubic feet of natural gas for the year ended December 31, 2006 decreased to $8.07, compared to $8.35 for the year ended December 31, 2005, while the average price, after the impact of hedging, received per barrel of oil in 2006 increased to $57.33, compared to $41.61 during 2005. Fourth quarter of 2006 oil and gas sales totaled $44.8 million from production of 59.8 MMcfe/d. This corresponds to sales of $24.9 million from production of 27.6 MMcfe/d during the same period in 2005, which was impacted by inclement weather. The average price, after the impact of hedging, received per thousand cubic feet of natural gas in the fourth quarter of 2006 decreased to $7.82, compared to $12.20 during the fourth quarter of 2005, while the average price, after the impact of hedging, received per barrel of oil in the fourth quarter of 2006 increased to $52.77, compared to $45.93 during the same period in 2005.
Fourth Quarter and Full Year 2006 Discretionary Cash Flow. Discretionary cash flow for the year ended December 31, 2006 totaled $133.0 million compared to $93.5 million during the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled a record $135.5 million and $74.0 million during the years ended December 31, 2006 and 2005, respectively. Fourth quarter of 2006 discretionary cash flow totaled $32.9 million compared to $11.6 million during the same period in 2005. Net cash flow provided (used) by operating activities, as defined by GAAP, totaled $28.8 million and $(12.1) million during the three-month periods ended December 31, 2006 and 2005, respectively. (See “Non-GAAP Financial Measure” that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)
Non-GAAP Financial Measure - This news release refers to a non-GAAP financial measure as “discretionary cash flow.” Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt. The company also 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 may not relate to the period in which the operating activities occurred. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.
Reconciliation of Non-GAAP Financial Measure: |
Three Months Ended |
Full Year Ended |
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(In thousands) |
December 31, |
December 31, |
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2006 2005 |
2006 2005 |
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Discretionary cash flow |
$32,913 |
$ 11,579 |
$133,023 |
$93,452 |
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Net working capital changes and other changes |
(4,152) |
(23,660) |
2,461 |
(19,442) |
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Net cash flow provided (used) by operating activities |
$28,761 |
$(12,081) |
$135,484 |
$74,010 |
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Production and Price Information: |
Three Months Ended |
Full Year Ended |
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December 31, December 31, |
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2006 |
2005 |
2006 |
2005 |
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Production: |
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Oil (MBbls) |
294 |
224 |
1,634 |
1,837 |
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Gas (MMcf) |
3,736 |
1,198 |
10,977 |
7,768 |
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Gas equivalent (MMcfe) |
5,500 |
2,541 |
20,780 |
18,787 |
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Average daily (MMcfe) |
59.8 |
27.6 |
56.9 |
51.5 |
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Average prices: |
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Oil ($/Bbl) (a) |
$52.77 |
$45.93 |
$57.33 |
$41.61 |
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Gas ($/Mcf) |
$ 7.82 |
$12.20 |
$ 8.07 |
$ 8.35 |
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Gas equivalent ($/Mcfe) |
$ 8.14 |
$ 9.79 |
$ 8.77 |
$ 7.52 |
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Additional per Mcfe data: |
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Sales price
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$ 8.14 |
$ 9.79 |
$ 8.77 |
$ 7.52 |
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Lease operating expenses |
1.37 |
2.36 |
1.39 |
1.30 |
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Operating margin |
$ 6.77 |
$ 7.43 |
$ 7.38 |
$ 6.22 |
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Depletion |
$ 3.94 |
$ 2.58 |
$ 3.14 |
$ 2.39 |
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General and administrative (net of management fees) |
$ 0.37 |
$ 0.78 |
$ 0.41 |
$ 0.43 |
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(a) Below is a reconciliation of the average NYMEX price to the |
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average realized sales price per barrel of oil: |
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Average NYMEX oil price |
$60.19 |
$60.02 |
$66.22 |
$56.57 |
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Basis differentials and quality adjustments |
( 6.56) |
( 6.44) |
( 7.03) |
( 8.45) |
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Transportation |
( 1.16) |
( 1.08) |
( 1.25) |
( 1.26) |
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Hedging |
0.30 |
( 6.57) |
( 0.61) |
( 5.25) |
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Averaged realized oil price |
$52.77 |
$45.93 |
$57.33 |
$41.61 |
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Consolidated Balance Sheets
(In thousands, except share data)
December 31,
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2006 |
2005 |
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Current assets: |
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Cash and cash equivalents |
$
1,896 |
$ 2,565 |
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Accounts receivable |
32,166 |
33,195 |
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Deferred tax asset |
-- |
26,770 |
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Restricted investments |
4,306 |
4,110 |
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Fair market value of derivatives |
13,311 |
889 |
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Other current assets |
5,973 |
1,998 |
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Total current assets |
57,652 |
69,527 |
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Oil and gas properties, full-cost accounting method: |
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Evaluated properties |
1,096,907 |
937,698 |
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Less accumulated depreciation, depletion and amortization |
(604,682) |
(539,399) |
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492,225 |
398,299 |
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Unevaluated properties excluded from amortization |
54,802 |
49,065 |
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Total oil and gas properties |
547,027 |
447,364 |
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Other property and equipment, net |
1,996 |
1,605 |
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Long-term gas balancing receivable |
714 |
403 |
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Restricted investments |
1,935 |
1,858 |
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Investment in Medusa Spar LLC |
12,580 |
11,389 |
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Other assets, net |
3,623 |
1,630 |
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Total assets |
$ 625,527 |
$ 533,776 |
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Current liabilities: |
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Accounts payable and accrued liabilities |
$
43,086 |
$ 39,323 |
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Fair market value of derivatives |
-- |
1,247 |
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Undistributed oil and gas revenues |
3,525 |
721 |
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Asset retirement obligations |
14,355 |
21,660 |
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Current maturities of long-term debt |
213 |
263 |
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Total current liabilities |
61,179 |
63,214 |
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Long-term debt |
225,521 |
188,813 |
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Asset retirement obligations |
26,824 |
16,613 |
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Deferred tax liability |
30,054 |
31,633 |
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Accrued liabilities to be refinanced |
-- |
5,000 |
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Other long-term liabilities |
586 |
455 |
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Total liabilities |
344,164 |
305,728 |
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Stockholders' equity: |
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Preferred Stock, $.01 par value; 2,500,000 shares authorized; |
-- |
-- |
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Common Stock, $.01 par value; 30,000,000 shares |
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