Rodger W.
Smith 1-800-451-1294
Callon Petroleum Company
Reports Fourth Quarter, Full-Year Results for 2005
Fourth Quarter and Full-Year 2005 Net Income. The company reported record net income for the
full-year 2005 of $26.8 million, or $1.28 per share, compared to net income for
2004 of $21.5 million, or $1.22 per share. For the fourth quarter of 2005, net
income totaled $4.3 million, or $0.20 per share, compared to net income of $9.1
million, or $0.45 per share, for the same period in 2004. Net income for the
quarter and full-year ended December 31, 2004 included an income tax benefit of
$6.7 million after reversing a valuation allowance that was established during
2003, with an impact on earnings per share of $0.33 and $0.38 for the quarter
and full-year 2004, respectively. All
per share amounts are on a diluted basis.
As further discussed below, approximately 62
percent and 24 percent of the company’s production for the quarter and
full-year ended December 31, 2005, respectively, was deferred because of forced
downtime at its major producing properties caused by the effects of tropical
storms and hurricanes. (See “2005
Tropical Storm and Hurricane Activity” which follows.)
Fourth
Quarter and Full-Year 2005 Operating Results. For the fourth quarter oil and gas sales
totaled $24.9 million from average production of 27.6 million cubic feet of
natural gas equivalent per day (MMcfe/d).
This corresponds to sales of $25.1 million from average daily production
of 51.6 MMcfe/d for the same period in 2004. During the fourth quarter of 2005, natural gas
represented approximately 47 percent of the company’s total production. For the year ended December 31, 2005, oil and
gas sales totaled $141.3 million from average production of 51.5 MMcfe/d. This
corresponds to sales of $119.8 million from average daily production of 59.6 MMcfe/d during the same period in 2004.
The average price received per thousand
cubic feet of natural gas in the fourth quarter of 2005 increased by 95 percent
to $12.20 compared to $6.27 during the fourth quarter of 2004, while the
average price received per barrel of oil in the fourth quarter of 2005
increased by 81 percent to $45.93 compared to $25.44 for the same period in
2004. The average price received per
thousand cubic feet of natural gas for the year ended December 31, 2005
increased by 36 percent to $8.35 compared to $6.15 for the same period in 2004,
while the average price received per barrel of oil increased by 45 percent to
$41.61 compared to $28.71 for the same period in 2004.
2005 Discretionary Cash
Flow. For
the year ended December 31, 2005, discretionary cash flow totaled $93.5 million
compared to $71.2 million for the same period in 2004. Net cash flow provided by operating
activities, as defined by GAAP, totaled $74.0 million and $70.9 million during
the years ended December 31, 2005 and 2004, respectively. (See “Non-GAAP Financial Measure” that
follows and the accompanying financial information for a reconciliation of
discretionary cash flow, a non-GAAP measure, 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 this measure is a financial indicator of the company’s ability to fund capital expenditures and service debt. Discretionary cash flow is defined as cash flow provided by operating activities before net working capital changes. 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 periods 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.
2005 Tropical Storm and Hurricane Activity
– Tropical storms followed by the
devastation wrought by Hurricanes Katrina and Rita caused us to experience
substantial downtime during the third and fourth quarters of 2005. This was
primarily because of damage to transmission lines and production facilities
owned by third parties that process our crude oil and natural gas.
Our major fields, Medusa, Habanero, High Island Block 119 and Mobile Bay Blocks 863,
864, 907, 953 and 955, incurred damage; but the fields were repaired and
brought back online in the fourth quarter of 2005 and January 2006.
Tropical storms and
hurricanes during 2005 resulted in a significant reduction of production which
in turn decreased our net income and cash flow.
Listed below are our major properties which incurred deferred production:
|
|
Field |
|
Downtime Days |
|
|
|
Medusa |
|
102 |
|
|
|
Habanero |
|
85 |
|
|
|
Mobile Block 864 Unit |
|
48 |
|
|
|
Mobile 953 |
|
48 |
|
|
|
Mobile 955 |
|
136 |
|
|
|
|
|
102 |
|
These major properties accounted for 86% of our production
during 2005.
|
Reconciliation
Non-GAAP Financial Measure: |
Three
Months Ended |
Twelve
Months Ended |
||
|
(In
thousands) |
December
31, |
December
31, |
||
|
|
2005 2004 |
2005 2004 |
||
Discretionary cash flow
|
$ 11,579 |
$ 14,290 |
$ 93,452 |
$71,221 |
|
Net working capital changes and other changes |
(23,660) |
1,949 |
(19,442) |
(313) |
|
Net cash flow provided (used) by operating activities |
$ (12,081) |
$16,239 |
$74,010 |
$70,908 |
|
Consolidated Condensed Balance Sheets: |
December
31, |
December 31, |
|
(In thousands) |
2005 |
2004 |
|
|
|
|
|
Cash and cash equivalents |
$ 2,565 |
$ 3,266 |
|
Oil and gas properties, net |
447,364 |
406,690 |
|
All other assets |
83,847 |
47,567 |
|
Total assets |
$533,776 |
$457,523 |
|
|
|
|
|
Long-term debt including current maturities |
$189,076 |
$192,927 |
|
All other liabilities |
116,652 |
66,284 |
|
Stockholders’ equity |
228,048 |
198,312 |
|
Total liabilities
and stockholders’ equity |
$533,776 |
$457,523 |
|
|
|
|
|
Production and Price Information: |
Three Months Ended |
Twelve Months Ended |
||
|
|
December 31, |
December 31, |
||
|
|
2005 |
2004 |
2005 |
2004 |
|
Production: |
|
|
|
|
|
Oil (MBbls) |
224 |
381 |
1,837 |
1,736 |
|
Gas (MMcf) |
1,198 |
2,462 |
7,768 |
11,387 |
|
Total Production
(MMcfe) |
2,541 |
4,751 |
18,787 |
21,801 |
|
Average daily (MMcfe) |
27.6 |
51.6 |
51.5 |
59.6 |
|
|
|
|
|
|
|
Average prices: |
|
|
|
|
|
Oil ($/Bbl) |
$45.93 |
$25.44 |
$41.61 |
$28.71 |
|
Gas ($/Mcf) |
$12.20 |
$ 6.27 |
$ 8.35 |
$ 6.15 |
|
Gas equivalent
($/Mcfe) |
$ 9.79 |
$ 5.29 |
$ 7.52 |
$ 5.50 |