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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 2003

           

            Natchez, MS (November 11, 2003)—Callon Petroleum Company (NYSE: CPE/CPE.PrA)

today reported its results of operations for both the quarter and the nine-month period ended

September 30, 2003.  

 

            Results for the three-month period ended September 30, 2003 include a net loss of $2.0 million, or $0.17 per diluted share. This compares to a net loss of $1.3 million, or $0.12 per share on a diluted basis, for the same period in 2002. 

 

Operating results for the three-month period ended September 30, 2003 include oil and gas sales of $15.1 million from average production of 33 million cubic feet of natural gas equivalent per day (MMcfe/d).  This corresponds to sales of $15.8 million from average daily production of 45 MMcfe/d during the same period in 2002.  During the third quarter of 2003, natural gas represented approximately 90 percent of the company’s total production. The average price received per thousand cubic feet of natural gas in the third quarter of 2003 increased by 53 percent to $4.97 compared to $3.24 during the third quarter of 2002, while the average price received per barrel of oil in the third quarter of 2003 increased by 9 percent to $26.76 compared to $24.60 during the same period a year earlier.

 

For the nine months ended September 30, 2003, the company reported a net loss of $1.3 million, or $0.17 per diluted share after the cumulative effect of change in accounting principle related to Statement of Financial Accounting Standards (SFAS) No.143 (“Accounting for Asset Retirement Obligations”). This compares to a net loss of $1.4 million, or $0.18 per share on a diluted basis, for the same period in 2002.

 

On January 1, 2003, the company adopted SFAS No. 143, which required companies to record the fair value of a liability for legal obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.  The impact of adopting the statement resulted in a gain of $181,000, net of tax, which was reported in the first quarter of 2003 as a cumulative effect of the change in accounting principle.

 

Operating results for the nine-month period ended September 30, 2003 include oil and gas sales of $54.8 million from average production of 37 million cubic feet of natural gas equivalent per day (MMcfe/d).  This corresponds to sales of $42.1 million from average daily production of 42 MMcfe/d during the same period in 2002.  The average price received per thousand cubic feet of natural gas for the nine-month period ended September 30, 2003 increased by 82 percent to $5.43 compared to $2.98 during the first nine months in 2002, while the average price received per barrel of oil increased by 26 percent to $28.15 compared to $22.29 during the same period a year earlier.

 

During the third quarter of 2003, Callon Petroleum Company generated discretionary cash flow of $6.2 million compared to $6.9 million generated during the same period a year ago.  Net cash flow provided by operating activities, as defined by generally accepted accounting principles (GAAP), totaled

$7.3 million and $2.6 million during the three months ended September 30, 2003 and 2002, respectively.  For the nine-month period ended September 30, 2003, discretionary cash flow totaled $26.9 million compared to $17.2 million during the first nine months of the previous year.  Net cash flow provided by operating activities, as defined by GAAP, totaled $31.2 million and $4.4 million during the nine months ended September 30, 2003 and 2002, 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.)

 

Callon Petroleum Company is engaged in the exploration, development, acquisition and operation of oil and gas properties primarily in the Gulf Coast region.

 

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.

 

           

                       

 

 

 

Callon Petroleum Company

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share amounts)

 

 

 

Three Months Ended

 

 Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

    2003

 

    2002

 

    2003

 

     2002

 

Operating revenues:

          

 

 

 

 

 

 

 

  Oil and gas sales

$  15,082

 

$ 15,763

 

$  54,759

 

$ 42,121

 

    Total operating revenues

15,082

 

15,763

 

54,759

 

42,121

 

    

 

 

          

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

  Lease operating expenses

2,659

 

2,832

 

8,003

 

8,201

 

  Depreciation, depletion and amortization

6,416

 

6,763

 

20,769

 

18,840

 

  General and administrative

1,068

 

1,070

 

3,704

 

3,508

 

  Accretion expense

772

 

--

 

2,214

 

--

 

  Loss on mark-to-market commodity derivative contracts

          (199)

 

18

 

335

 

788

 

     Total operating expenses

10,716

 

10,683

 

35,025

 

31,337

 

 

 

 

 

 

 

 

 

 

  Income from operations

4,366

 

5,080

 

     19,734

 

10,784

 

  Other (income) expenses:

 

 

 

 

 

 

 

 

  Interest expense

7,554

 

       7,103

 

        22,225

 

     18,736

 

  Other income

(70)

 

(23)

 

(226)

 

(845)

 

  Gain on sale of pipeline

--

 

            --

 

--

 

(2,454)

 

  Gain on sale of Enron derivatives

--

 

            --

 

--

 

(2,479)

 

     Total other (income) expenses

7,484

 

       7,080

 

      21,999

 

      12,958

 

 

 

 

 

 

 

 

 

 

   Income (loss) before income taxes

(3,118)

 

(2,000)

 

       (2,265)

 

(2,174)

 

   Income tax expense (benefit)

(1,092)

 

(700)

 

      ( 793)

 

(761)

 

   Income (loss) before cumulative effect of change in

 

 

 

 

 

 

 

 

      accounting principle

(2,026)

 

(1,300)