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John S. Weatherly, CFO   1-800-451-1294

 

FOR IMMEDIATE RELEASE

 

Callon Petroleum Company Reports First Quarter 2005 Record Results of Operations

  

   Natchez, MS (May 9, 2005)—Callon Petroleum Company (NYSE: CPE/CPE.PrA) today reported

its results of operations for the three-month period ended March 31, 2005, including record levels for revenues, discretionary cash flow and pre-tax earnings. 

 

   First Quarter 2005 Net Income.  For the three-month period ended March 31, 2005, Callon reported net income of $9.5 million, or $0.46 per diluted share.  For the first quarter of 2004, the company reported net income of $2.1 million, or $0.12 per share on a diluted basis after charges of $2.5 million, or $0.17 per diluted share, attributable to early extinguishment of debt and $2.6 million, or $0.18 per diluted share, resulting from the retirement of two executive officers of the company.

 

First Quarter 2005 Operating Results.   Oil and gas sales totaled $43 million from average production of 73.3 million cubic feet of natural gas equivalent per day (MMcfe/d).  This corresponds to sales of $32 million from average production of 63.1 MMcfe/d during the same period in 2004.   During the first quarter of 2005, natural gas represented approximately 42 percent of the company’s total production. The average price realized per thousand cubic feet of natural gas in the first quarter of 2005 increased by 16 percent to $6.92 compared to $5.94 during the first quarter of 2004, while the average price realized per barrel of oil in the first quarter of 2005 increased by 22 percent to $37.46 compared to $30.67 during the same period a year earlier.

 

First Quarter 2005 Discretionary Cash Flow.  For the quarter ended March 31, 2005, discretionary cash flow increased by 75% to $31.4 million compared to $17.9 million during the three months of the previous year.  Net cash flow provided by operating activities, as defined by GAAP, totaled $21.3 million and $17.9 million during the quarter ended March 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.  Callon also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry.  Many investors use the published research of these analysts in making their investment decisions.  Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.

 

 

                                                                                                                                      

Reconciliation Non-GAAP Financial Measure:

     Three Months Ended

 

(In thousands)

                March 31,

 

 

          2005                2004

 

Discretionary cash flow

     $31,414

 

$17,899

 

Net working capital changes and other changes

      (10,083)

 

           4

 

Net cash flow provided by operating activities

     $21,331

 

$17,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets:

       March 31,

    December 31,

(In thousands)

      2005

     2004

 

           (Unaudited)

 

Cash and cash equivalents

            $    2,895  

          $   3,266   

Oil and gas properties, net

              405,949   

           406,690

All other assets

                52,593

              47,567

      Total assets

            $461,437

          $457,523

 

 

 

Long-term debt including current maturities

              188,130  

          $192,927

All other liabilities

                70,293 

              66,284

Stockholders’ equity

              203,014

            198,312

      Total liabilities and stockholders’ equity

            $461,437

          $457,523

                                                  

 

 

 

 

 

 

 

 

                            

 

 

 

 

Production and Price Information:

Three Months Ended

 

March 31,

 

2005

2004

Production:

 

 

   Oil (MBbls)

641

439

   Gas (MMcf)

2,748

3,108

   Total Production (MMcfe)

6,593

5,743

   Average daily (MMcfe)

73.3

63.1

 

 

 

Average prices:

 

 

   Oil ($/Bbl)  (a)

$37.46

$30.67

   Gas ($/Mcf)

$  6.92

$  5.94

   Gas equivalent ($/Mcfe)

$  6.52

$  5.56

 

 

 

(a) Below is a reconciliation of the average NYMEX price to the

 

 

      average realized sales price per barrel of oil:

 

 

 

 

 

Average NYMEX oil price

$49.85

$35.14

     Basis differentials and quality adjustments

(6.33)

(1.71)

     Transportation

(1.31)

(1.25)

     Hedging

 

(4.75)

(1.51)

Average realized oil price

$37.46

$30.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callon Petroleum Company

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share amounts)

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

    2005

 

    2004

Operating revenues:

          

 

 

  Oil and gas sales

$   43,012 

 

 $   31,919

    

 

 

         

Operating expenses:

 

 

 

  Lease operating expenses

6,536

 

5,168

  Depreciation, depletion and amortization

15,408

 

11,835

  General and administrative

1,694

 

3,793