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Rodger Smith, 1-800-451-1294

 

FOR IMMEDIATE RELEASE

 

Callon Petroleum Company Reports Results For Third Quarter, First Nine Months of 2006

           


            Natchez, MS (November 7, 2006)—Callon Petroleum Company (NYSE: CPE) today reported results of operations for both the quarter and the nine-month period ended

September 30, 2006.

 

            Third Quarter 2006 Net Income.  For the three months ended September 30, 2006, Callon reported net income of $9.6 million, or $0.45 per diluted share. This compares with net income of $3.7 million, or $0.17 per diluted share during the same period of last year, which included charges of $3.8 million, or $0.11 per diluted share, for ineffective derivatives in accordance with SFAS No.133, related to production downtime because of tropical storm and hurricane activity.

 

Third Quarter 2006 Operating Results.  Oil and gas sales totaled $44.9 million from production of 54.3 million cubic feet of natural gas equivalent per day (MMcfe/d).  This corresponds to sales of $31.7 million from production of 41.3 MMcfe/d during the same period in 2005 which was negatively impacted by tropical storm and hurricane activity.  The average price, after the impact of hedging, received per thousand cubic feet of natural gas in the third quarter of 2006 decreased to $7.79 compared to $9.32 during the third quarter of 2005, while the average price, after the impact of hedging, received per barrel of oil in the third quarter of 2006 increased to $62.31 compared to $46.16 during the same period a year earlier.

 

Nine Months 2006 Net Income.  For the nine months ended September 30, 2006, the company reported net income of $34.7 million, or $1.64 per diluted share. This compares to net income of $22.5 million, or $1.09 per share on a diluted basis, for the same period in 2005.

 

Nine Months 2006 Operating Results.  Operating results for the nine-month period ended September 30, 2006 include oil and gas sales of $137.5 million from average production of 56.0 MMcfe/d.  This corresponds to sales of $116.4 million from average daily production of 59.5 MMcfe/d during the same period in 2005.  The average price, after the impact of hedging, received per thousand cubic feet of natural gas for the nine-month period ended September 30, 2006 increased to $8.20 compared to $7.65 during the first nine months in 2005, while the average price, after the impact of hedging, received per barrel of oil increased to $58.33 compared to $41.01 during the same period a year earlier.

 

Third Quarter 2006 Discretionary Cash Flow. Discretionary cash flow totaled $31.2 million compared to $20.0 million during the same period of the previous year.  Net cash flow provided by operating activities, as defined by GAAP, totaled $31.4 million and $32.5 million during the three-month periods ended September 30, 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.)

 

Nine Months 2006 Discretionary Cash Flow. Discretionary cash flow totaled $100.1 million compared to $81.9 million during the first nine months of the previous year.  Net cash flow provided by operating activities, as defined by GAAP, totaled $106.7 million and $86.1 million during the nine-month periods ended September 30, 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

       Nine Months Ended

(In thousands)                                                                   

            September 30,

            September 30,

 

        2006                  2005

       2006                 2005      

   Discretionary cash flow

      $31,230

     $20,035

   $100,110

     $81,873

   Net working capital changes and other changes

             151

       12,503

         6,613

         4,218

   Net cash flow provided by operating activities

      $31,381

     $32,538

   $106,723

     $86,091

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets:

 

(In thousands)

 

(Unaudited)

     September 30,

  December 31,

 

      2006

  2005

 

            

 

Current assets

              $ 50,607

         $  69,527

Oil and gas properties, net

                521,368

           447,364

All other assets

                  26,903

             16,885

      Total assets

              $598,878

         $533,776

 

 

 

Current liabilities

              $  50,936

         $  63,214

Long-term debt

                202,075

         $188,813

All other liabilities

                  69,041

             53,701

Stockholders’ equity

                276,826

           228,048

      Total liabilities and stockholders’ equity

              $598,878

         $533,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Production and Price Information:

Three Months

Ended

Nine Months

Ended

 

September 30,

September 30,

 

  2006

  2005

  2006

  2005

Production:

 

 

 

 

   Oil (MBbls)

    381

    382

  1,340

  1,613

   Gas (MMcf)

  2,710

  1,510

  7,241

  6,570

   Gas equivalent (MMcfe)

  4,998

  3,804

15,278

16,246

   Average daily (MMcfe)

   54.3

   41.3

   56.0

   59.5

 

 

 

 

 

Average prices:

 

 

 

 

   Oil ($/Bbl) (a)

$62.31

 $46.16

$58.33

$41.01

   Gas ($/Mcf)

$  7.79

 $  9.32

$  8.20

$ 7.65

   Gas equivalent ($/Mcfe)

$  8.98

 $  8.34

$  9.00

$ 7.16

 

 

 

 

 

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

 

 

 

 

      average realized sales price per barrel of oil:

 

 

 

 

 

 

 

 

 

Average NYMEX oil price

$70.51

$63.19

$68.23

$55.40

      Basis differentials and quality adjustments

 

(  6.91)

(  6.98)

(  7.81)

(  8.04)

      Transportation

 

(  1.29)

(  1.25)

(  1.28)

(  1.28)

      Hedging

    --__

(  8.80)

(  0.81)

(  5.07)

Averaged realized oil price

$62.31

$46.16

$58.33

$41.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callon Petroleum Company

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

                                               

 

 

       Three Months Ended 

 

   

      Nine Months Ended

 

 

           September 30,

 

          September 30,

 

    2006

 

    2005

 

    2006

 

     2005

Operating revenues:

          

 

 

 

 

 

 

  Oil and gas sales

$ 44,878

 

$ 31,722

 

$137,516

 

$116,402

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

  Lease operating expenses

8,070

 

5,649

 

21,340

 

18,382

  Depreciation, depletion and amortization

14,973

 

9,313

 

43,600

 

38,392

  General and administrative

2,908

 

1,598

 

6,558

 

6,093

  Accretion expense

1,082

 

864

 

3,832

 

2,495

  Derivative expense

30

 

5,606

 

150

 

6,518

     Total operating expenses

27,063

 

23,030

 

75,480

 

71,880

 

 

 

 

 

 

 

 

  Income from operations

17,815

 

8,692

 

     62,036

 

44,522

 

 

 

 

 

 

 

 

  Other (income) expenses:

 

 

 

 

 

 

 

  Interest expense

4,027

 

        4,050

 

      12,303

 

    12,884

  Other (income)

(354)

 

(352)

 

(1,354)

 

      (650)

     Total other (income) expenses

3,673

 

        3,698

 

      10,949

 

    12,234

 

 

 

 

 

 

 

 

  Income before income taxes

14,142

 

4,994

 

   51,087

 

   32,288

  Income tax expense

4,856

 

1,558

 

      17,700

 

    11,111

 

 

 

 

 

 

 

 

  Income before Medusa Spar LLC 

9,286

 

3,436

 

33,387

 

21,177

  Income from Medusa Spar LLC net of tax

344

 

247

 

1,313

 

1,292

     

 

 

 

 

 

 

 

  Net income

     9,630

 

    3,683

 

34,700

 

    22,469

  Preferred stock dividends

           --

 

             --

 

         --

 

         318

  Net income available to common shares

$  9,630

 

$  3,683

 

$  34,700

 

$  22,151

 

 

 

 

 

 

 

 

  Net income per common share:

 

 

 

 

 

 

 

    Basic

$    0.47

 

$   0.19

 

$     1.74

 

 $     1.23

    Diluted

$    0.45

 

$   0.17

 

$     1.64

 

 $     1.09

 

 

 

 

 

 

 

 

  Shares used in computing net income:

 

 

 

 

 

 

 

    Basic

20,650

 

19,132

 

19,919

 

17,998

    Diluted

21,326

 

21,235

 

21,154

 

20,545

 

 

 

 

                        Callon Petroleum Company is engaged in the exploration, development, acquisition and operation of oil and gas properties in the Gulf Coast region. The majority of Callon’s properties and operations are concentrated in the offshore waters of the Gulf of Mexico.

 

                        This news release is posted on the company’s website at www.callon.com and will be archived there for subsequent review.  It can be accessed from the “News Releases” link on the left side of the homepage.

 

      It should be noted that this news release contains projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These projections and statements reflect the company’s current views with respect to future events and financial performance.  No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors.  Some of the factors which could affect our future results and could cause results to differ materially from those expressed in our forward-looking statements are discussed in our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K, available on our website or the SEC’s website at www.sec.gov.

 

 

 

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