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Rodger W. Smith, 1-800-451-1294
Callon Petroleum Company Reports Results For Third Quarter, First Nine Months of 2007
Natchez, MS (November 5, 2007)—Callon Petroleum Company (NYSE: CPE) today reported results of operations for both the three and the nine-month periods ended September 30, 2007.
Third Quarter and Nine Months 2007 Net Income. For the quarter ended September 30, 2007, the company reported net income of $2.3 million, or $0.11 per share. This compares to net income of $9.6 million, or $0.45 per share, for the same period in 2006. For the nine months ended September 30, 2007, Callon reported net income of $10.7 million, or $0.50 per share. This compares with net income of $34.7 million, or $1.64 per share during the same period of 2006. The declines in net income for the three and nine months ended September 30, 2007, when compared to 2006, are primarily attributable to an increase in interest expense associated with the financing of the previously announced acquisition of BP’s interest in the Entrada Field, lower 2007 oil production at the Medusa Field after the completion of remedial work on the Medusa A-1 well in late 2006 restored production at a lower rate, and an increase in the depletion, depreciation and amortization rate. All per share amounts are on a diluted basis.
Third Quarter and Nine Months 2007 Operating Results. Operating results for the three months ended September 30, 2007 include oil and gas sales of $37.9 million from average production of 45.4 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $44.9 million from average production of 54.3 MMcfe/d during the comparable 2006 period. The average price, after the impact of hedging, received per thousand cubic feet of natural gas (Mcf) for the quarter ended September 30, 2007 decreased to $7.73, compared to $7.79 for the quarter ended September 30, 2006. The average price, after the impact of hedging, received per barrel of oil (Bbl) in the third quarter of 2007 increased to $71.29, compared to $62.31 during 2006. Oil and gas sales for the first nine months of 2007 totaled $126.8 million from average production of 53.2 MMcfe/d. This corresponds to sales of $137.5 million from average production of 56.0 MMcfe/d during the same period in 2006. The average price, after the impact of hedging, received per Mcf in the nine-month period ended September 30, 2007 decreased to $7.97, compared to $8.20 during the first nine months of 2006, while the average price, after the impact of hedging, received per Bbl in the first nine months of 2007 increased to $62.09, compared to $58.33 during the same period in 2006.
Third Quarter and Nine Months 2007 Discretionary Cash Flow. Discretionary cash flow for the three-month period ended September 30, 2007 totaled $21.0 million compared to $31.2 million during the comparable prior year period. Net cash flow provided by operating activities, as defined by GAAP, totaled $19.8 million and $31.4 million during the quarters ended September 30, 2007 and 2006, respectively. Discretionary cash flow for the first nine months of 2007 totaled $79.4 million compared to $100.1 million during the same period in 2006. Net cash flow provided by operating activities, as defined by GAAP, totaled $89.9 million and $106.7 million during the nine-month periods ended September 30, 2007 and 2006, respectively. (See “Non-GAAP Financial Measure” that follows and the accompanying 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 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 |
Nine Months Ended |
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(In thousands) |
September 30, |
September 30, |
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2007 2006 |
2007 2006 |
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Discretionary cash flow |
$21,012 |
$ 31,230 |
$79,404 |
$100,110 |
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Net working capital changes and other changes |
(1,248) |
151 |
10,516 |
6,613 |
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Net cash flow provided by operating activities |
$19,764 |
$ 31,381 |
$89,920 |
$106,723 |
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Production and Price Information: |
Three Months Ended |
Nine Months Ended |
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September 30, |
September 30, |
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2007 |
2006 |
2007 |
2006 |
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Production: |
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Oil (MBbls) |
223 |
381 |
774 |
1,340 |
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Gas (MMcf) |
2,840 |
2,710 |
9,883 |
7,241 |
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Gas equivalent (MMcfe) |
4,179 |
4,998 |
14,527 |
15,278 |
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Average daily (MMcfe) |
45.4 |
54.3 |
53.2 |
56.0 |
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Average prices: |
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Oil ($/Bbl) (a) |
$71.29 |
$62.31 |
$62.09 |
$58.33 |
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Gas ($/Mcf) |
$ 7.73 |
$ 7.79 |
$ 7.97 |
$ 8.20 |
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Gas equivalent ($/Mcfe) |
$ 9.06 |
$ 8.98 |
$ 8.73 |
$ 9.00 |
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Additional per Mcfe data: |
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Sales price
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$ 9.06 |
$ 8.98 |
$ 8.73 |
$ 9.00 |
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Lease operating expenses |
1.28
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1.61 |
1.41 |
1.40 |
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Operating margin |
$ 7.78 |
$ 7.37 |
$ 7.32 |
$ 7.60 |
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Depletion |
$ 3.81 |
$ 3.00 |
$ 3.90 |
$ 2.85 |
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General and administrative (net of management fees) |
$ 0.62 |
$ 0.58 |
$ 0.49 |
$ 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 |
$75.37 |
$70.51 |
$66.21 |
$68.23 |
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Basis differentials and quality adjustments
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( 2.96) |
( 6.91) |
( 4.45) |
( 7.81) |
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Transportation
|
( 1.12) |
( 1.29) |
( 1.13) |
( 1.28) |
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Hedging |
-- |
-- |
1.46 |
( 0.81) |
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Averaged realized oil price |
$71.29 |
$62.31 |
$62.09 |
$58.33 |
Callon Petroleum Company
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
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September 30, |
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December 31, |
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2007 |
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2006 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ 3,175 |
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$ 1,896 |
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Accounts receivable |
21,664 |
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32,166 |
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Restricted investments |
604 |
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4,306 |
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Fair market value of derivatives |
2,185 |
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13,311 |
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Other current assets |
6,385 |
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5,973 |
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Total current assets |
34,013 |
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57,652 |
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Oil and gas properties, full-cost accounting method: |
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Evaluated properties |
1,313,382 |
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1,096,907 |
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Less accumulated depreciation, depletion and amortization |
(661,279) |
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(604,682) |
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652,103 |
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492,225 |
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Unevaluated properties excluded from amortization |
67,394 |
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54,802 |
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Total oil and gas properties |
719,497 |
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547,027 |
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Other property and equipment, net |
2,014 |
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1,996 |
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Restricted investments |
3,959 |
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1,935 |
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Investment in Medusa Spar LLC |
12,641 |
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12,580 |
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Other assets, net |
8,289 |
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4,337 |
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Total assets |
$ 780,413 |
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$ 625,527 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
$ 27,035 |
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$ 46,611 |
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Asset retirement obligations |
7,175 |
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14,355 |
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Current maturities of long-term debt |
-- |
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213 |
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Total current liabilities |
34,210 |
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61,179 |
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Long-term debt |
391,451 |
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225,521 |
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Asset retirement obligations |
25,286 |
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26,824 |
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Deferred tax liability |
32,330 |
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30,054 |
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Accrued liabilities to be refinanced |
10,000 |
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-- |
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Other long-term liabilities |
1,265 |
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586 |
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Total liabilities |
494,542 |
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344,164 |
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Stockholders' equity: |
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Preferred Stock, $.01 par value, 2,500,000 shares authorized; |
-- |
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-- |
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Common Stock, $.01 par value, 30,000,000 shares authorized; 20,879,220 and 20,747,773 shares outstanding at September 30, 2007 and December 31, 2006, respectively |
209 |
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207 |
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222,448 |
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220,785 |
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Other comprehensive income |
843 |
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8,652 |
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Retained earnings |
62,371 |
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51,719 |
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Total stockholders' equity |
285,871 |
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281,363 |
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Total liabilities and stockholders' equity |
$ 780,413 |
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$ 625,527 |
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Callon Petroleum Company
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2007 |
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2006 |
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2007 |
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2006 |
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Operating revenues: |
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Oil sales |
$ 15,912 |
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$ 23,754 |
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$ 48,058 |
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$ 78,133 |
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Gas sales |
21,957 |
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21,124 |
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78,769 |
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59,383 |
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Total operating revenues |
37,869 |
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44,878 |
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126,827 |
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137,516 |
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Operating expenses: |
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Lease operating expenses |
5,338 |
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8,070 |
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20,550 |
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21,340 |
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Depreciation, depletion and amortization |
15,931 |
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14,973 |
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56,597 |
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43,600 |
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General an | |||||||||