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

 

FOR IMMEDIATE RELEASE

 

Callon Petroleum Company Reports Results For Third Quarter, First Nine Months of 2004

     

      Natchez, MS (November 8, 2004)—Callon Petroleum Company (NYSE: CPE/CPE.PrA) today reported results of operations for both the quarter and the nine-month period ended September 30, 2004. 

 

      For the three-month period ended September 30, 2004, Callon reported net income of $546,000, or $0.01 per diluted share which included charges of $532,000, or $0.03 per diluted share, attributable to early extinguishment of debt and $731,000, or $0.04 per diluted share, for ineffective hedges in accordance with SFAS No. 133 as a result of Hurricane Ivan’s production interruption for the month of October 2004.  The company reported a net loss of $2.0 million, or $0.17 per share on a diluted basis, for the same period in 2003.

 

Operating results for the three-month period ended September 30, 2004 include a 67% increase in oil and gas sales to $25.1 million from average production of 50.6 million cubic feet of natural gas equivalent per day (MMcfe/d).  This corresponds to sales of $15.1 million from average daily production of 33.3 MMcfe/d during the same period in 2003.  On September 13, several of our fields were shut-in due to the approach of Hurricane Ivan.  As a result of the adverse aftermath of that severe storm, the company had to defer production of approximately 9 million cubic feet of natural gas equivalent per day during the third quarter of 2004.

 

The average price, after the impact of hedging, received per thousand cubic feet of natural gas in the third quarter of 2004 increased to $6.11 compared to $4.97 during the third quarter of 2003, while the average price, after the impact of hedging, received per barrel of oil in the third quarter of 2004 increased slightly to $27.83 compared to $26.76 during the same period a year earlier.

 

For the nine months ended September 30, 2004, the company reported net income of $12.4 million, or $0.74 per diluted share. This compares to a net loss of $1.3 million, or $0.17 per share on a diluted basis, for the same period in 2003.

 

Operating results for the nine-month period ended September 30, 2004 include a 73% increase in oil and gas sales to $94.7 million from average production of 62.2 million cubic feet of natural gas equivalent per day (MMcfe/d).  This corresponds to sales of $54.8 million from average daily production of 37.4 MMcfe/d during the same period in 2003.  The average price, after the impact of hedging, received per thousand cubic feet of natural gas for the nine-month period ended September 30, 2004 increased to $6.11 compared to $5.43 during the first nine months in 2003, while the average price, after the impact of hedging, received per barrel of oil increased slightly to $29.63 compared to $28.15 during the same period a year earlier.

 

For the three months ended September 30, 2004, discretionary cash flow totaled $13.4 million compared to $6.0 million during the same period of the previous year.  Net cash flow provided by operating activities, as defined by GAAP, totaled $14.9 million and $7.3 million during the three-month periods ended September 30, 2004 and 2003, respectively. (See “Non-GAAP Financial Measure” that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)

 

For the nine months ended September 30, 2004, discretionary cash flow totaled $56.9 million compared to $27.3 million during the first nine months of the previous year.  Net cash flow provided by operating activities, as defined by GAAP, totaled $54.7 million and $31.2 million during the nine-month periods ended September 30, 2004 and 2003, 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 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 of Non-GAAP Financial Measure:

 Three Months Ended

  Nine Months Ended

(In thousands)          

            September     30,

  September 30,

 

2004                            2003

          2004                     2003

   Discretionary cash flow

     $13,407

  $  6,007

 $56,931

   $27,278

   Net working capital changes and other changes

         1,498

 

      1,317

 

   (2,262)

    3,919

   Net cash flow provided by operating activities

     $14,905

  $  7,324

 $54,669

   $31,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets:

 

(In thousands)

 

 

     September 30,

  December 31,

 

      2004

  2003

 

         (Unaudited)

 

Cash and cash equivalents

                 $   6,821

              $ 8,700

Restricted cash

                      --                  

               63,345

Oil and gas properties, net

                  397,071

             390,163

All other assets

                    37,113

               33,824

      Total assets

                $441,005

            $496,032

 

 

 

Long-term debt excluding current maturities

                $187,080

            $214,885

All other liabilities

                    72,377

              147,886

Stockholders’ equity

                  181,548

              133,261

      Total liabilities and stockholders’ equity

                $441,005

            $496,032

 

 

 

 

Production and Price Information:

Three Months

Ended

Nine Months

Ended

 

September 30,

September 30,

 

  2004

     2003

 2004

  2003

Production:

 

 

 

 

   Oil (MBbls)

  376

      49

  1,354

    140

   Gas (MMcf)

  2,405

 2,772

  8,924

  9,365

   Gas equivalent (MMcfe)

  4,659  

 3,068

17,050

10,206

   Average daily (MMcfe)

   50.6

   33.3

   62.2

   37.4

 

 

 

 

 

Average prices:

 

 

 

 

   Oil ($/Bbl)

$27.83

$26.76

$29.63

 $28.15

   Gas ($/Mcf)

$  6.11

$  4.97

$  6.11

 $  5.43

   Gas equivalent ($/Mcfe)

$  5.40

$  4.92

$  5.55

 $  5.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callon Petroleum Company

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)                                                

 

 

Three Months Ended

 

   

    Nine Months Ended

 

 

 

            September 30,

 

          September 30,

 

 

    2004

 

    2003

 

    2004

 

     2003

 

Operating revenues:

          

 

 

 

 

 

 

 

  Oil and gas sales

$ 25,138

 

$ 15,082

 

$  94,663

 

$ 54,759

 

    Total operating revenues

25,138

 

15,082

 

94,663

 

54,759

 

    

 

 

         

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

  Lease operating expenses

5,771

 

2,659

 

17,062

 

8,003

 

  Depreciation, depletion and amortization

10,147

 

6,416

 

36,458

 

20,769

 

  General and administrative

1,509

 

1,068

 

6,839

 

3,704

 

  Accretion expense

825

 

772

 

2,555

 

2,214

 

  Derivative expense (income)

1,519

 

(199)

 

1,608

 

335

 

     Total operating expenses

19,771

 

10,716

 

64,522

 

35,025