Callon Petroleum Company Reports Results For Second Quarter, First Six Months of 2007
NATCHEZ, Miss.--
Callon Petroleum Company (NYSE: CPE) today reported results of operations for both the three and the six-month periods ended June 30, 2007.
Second Quarter and Six Months 2007 Net Income. For the quarter ended June 30, 2007, the company reported net income of $2.6 million, or $0.12 per share. This compares to net income of $12.3 million, or $0.57 per share, for the same period in 2006. For the six months ended June 30, 2007, Callon reported net income of $8.4 million, or $0.39 per share. This compares with net income of $25.1 million, or $1.17 per share during the same period of 2006. The second quarter results were impacted by additional interest expense incurred as a result of Callon's April acquisition of BP Exploration and Production Company's 80% working interest in the Entrada Field. All per share amounts are on a diluted basis.
Second Quarter and Six Months 2007 Operating Results. Operating results for the three months ended June 30, 2007 include oil and gas sales of $43.5 million from average production of 54.1 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $47.1 million from average production of 57.6 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 June 30, 2007 increased to $8.17, compared to $7.93 for the quarter ended June 30, 2006. The average price, after the impact of hedging, received per barrel of oil (Bbl) in the second quarter of 2007 increased to $61.47, compared to $59.99 during 2006. Oil and gas sales for the first six months of 2007 totaled $89.0 million from average production of 57.2 MMcfe/d. This corresponds to sales of $92.6 million from average production of 56.8 MMcfe/d during the same period in 2006. The average price, after the impact of hedging, received per Mcf of natural gas in the six-month period of 2007 decreased to $8.07, compared to $8.44 during the first six months of 2006, while the average price, after the impact of hedging, received per Bbl in the first half of 2007 increased to $58.36, compared to $56.74 during the same period in 2006.
Second Quarter and Six Months 2007 Discretionary Cash Flow. Discretionary cash flow for the three-month period ended June 30, 2007 totaled $24.9 million compared to $35.1 million during the comparable prior year period. Net cash flow provided by operating activities, as defined by GAAP, totaled $37.3 million and $34.3 million during the quarters ended June 30, 2007 and 2006, respectively. Discretionary cash flow for the first six months of 2007 totaled $58.4 million compared to $68.9 million during the same period in 2006. Net cash flow provided by operating activities, as defined by GAAP, totaled $70.2 million and $75.3 million during the six-month periods ended June 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 Three Months Six Months
Measure: Ended Ended
--------------------------------------
(In thousands) June 30, June 30,
---------------- ---------------
2007 2006 2007 2006
------- -------- ------- -------
Discretionary cash flow $24,886 $35,100 $58,392 $68,880
Net working capital changes and other
changes 12,401 (774) 11,764 6,462
------- -------- ------- -------
Net cash flow provided by operating
activities $37,287 $34,326 $70,156 $75,342
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Production and Price Information: Three Months Six Months
Ended Ended
---------------------------------------
June 30, June 30,
--------------- ---------------
2007 2006 2007 2006
------- ------- ------- -------
Production:
Oil (MBbls) 263 443 551 958
Gas (MMcf) 3,341 2,581 7,043 4,530
Gas equivalent (MMcfe) 4,920 5,239 10,348 10,281
Average daily (MMcfe) 54.1 57.6 57.2 56.8
Average prices:
Oil ($/Bbl) (a) $61.47 $59.99 $58.36 $56.74
Gas ($/Mcf) $8.17 $7.93 $8.07 $8.44
Gas equivalent ($/Mcfe) $8.84 $8.98 $8.60 $9.01
Additional per Mcfe data:
Sales price $8.84 $8.98 $8.60 $9.01
Lease operating expenses 1.75 1.41 1.47 1.29
------- ------- ------- -------
Operating margin $7.09 $7.57 $7.13 $7.72
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Depletion $3.83 $2.82 $3.93 $2.78
General and administrative (net of
management fees) $0.46 $0.37 $0.43 $0.36
(a) Below is a reconciliation of the
average NYMEX price to the average
realized sales price per barrel of
oil:
Average NYMEX oil price $65.00 $70.70 $61.63 $67.09
Basis differentials and quality
adjustments (2.85) (7.83) (4.18) (7.93)
Transportation (1.14) (1.29) (1.14) (1.28)
Hedging 0.46 (1.59) 2.05 (1.14)
------- ------- ------- -------
Averaged realized oil price $61.47 $59.99 $58.36 $56.74
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Callon Petroleum Company
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
-------------------------------------------
Current assets:
Cash and cash equivalents $29,270 $1,896
Accounts receivable 24,486 32,166
Restricted investments 2,658 4,306
Fair market value of derivatives 4,325 13,311
Other current assets 6,902 5,973
------------ ------------
Total current assets 67,641 57,652
------------ ------------
Oil and gas properties, full-cost
accounting method:
Evaluated properties 1,268,691 1,096,907
Less accumulated depreciation, depletion
and amortization (645,348) (604,682)
------------ ------------
623,343 492,225
Unevaluated properties excluded from
amortization 68,050 54,802
------------ ------------
Total oil and gas properties 691,393 547,027
------------ ------------
Other property and equipment, net 2,104 1,996
Restricted investments 3,749 1,935
Investment in Medusa Spar LLC 12,610 12,580
Other assets, net 11,354 4,337
------------ ------------
Total assets $788,851 $625,527
============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
-------------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $44,721 $46,611
Asset retirement obligations 11,083 14,355
Current maturities of long-term debt -- 213
------------ ------------
Total current liabilities 55,804 61,179
------------ ------------
Long-term debt 390,907 225,521
Asset retirement obligations 23,527 26,824
Deferred tax liability 32,169 30,054
Other long-term liabilities 1,018 586
------------ ------------
Total liabilities 503,425 344,164
------------ ------------
Stockholders' equity:
Preferred Stock, $.01 par value,
2,500,000 shares authorized; -- --
Common Stock, $.01 par value, 30,000,000
shares authorized; 20,754,450 and
20,747,773 shares outstanding at June
30, 2007 and December 31, 2006,
respectively
208 207
Capital in excess of par value 222,304 220,785
Other comprehensive income 2,811 8,652
Retained earnings 60,103 51,719
------------ ------------
Total stockholders' equity 285,426 281,363
------------ ------------
Total liabilities and stockholders'
equity $788,851 $625,527
============ ============
Callon Petroleum Company
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- -----------------
2007 2006 2007 2006
-------- -------- -------- --------
Operating revenues:
Oil sales $16,178 $26,580 $32,146 $54,379
Gas sales 27,296 20,477 56,812 38,259
-------- -------- -------- --------
Total operating revenues 43,474 47,057 88,958 92,638
-------- -------- -------- --------
Operating expenses:
Lease operating expenses 8,613 7,365 15,212 13,270
Depreciation, depletion and
amortization 18,819 14,791 40,666 28,627
General and administrative 2,271 1,924 4,492 3,650
Accretion expense 943 1,331 2,055 2,750
Derivative expense -- 30 -- 120
-------- -------- -------- --------
Total operating expenses 30,646 25,441 62,425 48,417
-------- -------- -------- --------
Income from operations 12,828 21,616 26,533 44,221
-------- -------- -------- --------
Other (income) expenses:
Interest expense 9,172 4,128 13,757 8,276
Other (income) (102) (670) (427) (1,000)
-------- -------- -------- --------
Total other (income) expenses 9,070 3,458 13,330 7,276
-------- -------- -------- --------
Income before income taxes 3,758 18,158 13,203 36,945
Income tax expense 1,315 6,294 5,118 12,844
-------- -------- -------- --------
Income before Medusa Spar LLC 2,443 11,864 8,085 24,101
Income from Medusa Spar LLC net
of tax 138 439 299 969
-------- -------- -------- --------
Net income available to common
shares $2,581 $12,303 $8,384 $25,070
======== ======== ======== ========
Net income per common share:
Basic $0.12 $0.61 $0.40 $1.26
======== ======== ======== ========
Diluted $0.12 $0.57 $0.39 $1.17
======== ======== ======== ========
Shares used in computing net
income:
Basic 20,726 20,314 20,724 19,855
======== ======== ======== ========
Diluted 21,302 21,448 21,248 21,388
======== ======== ======== ========
Callon Petroleum Company
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
------------------
June 30, June 30,
2007 2006
-------- --------
Cash flows from operating activities:
Net income $8,384 $25,070
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation, depletion and amortization 41,095 28,996
Accretion expense 2,055 2,750
Amortization of deferred financing costs 1,314 1,106
Non-cash derivative expense -- 120
Equity in earnings of Medusa Spar LLC (299) (969)
Deferred income tax expense 5,118 12,844
Non-cash charge related to compensation plans 725 267
Excess tax benefits from share-based payment
arrangements -- (1,304)
Changes in current assets and liabilities:
Accounts receivable 6,340 1,282
Other current assets (929) 243
Current liabilities 6,980 5,579
Change in gas balancing receivable (10) (257)
Change in gas balancing payable 437 103
Change in other long-term liabilities (5) 216
Change in other assets, net (1,049) (704)
-------- --------
Cash provided by operating activities 70,156 75,342
-------- --------
Cash flows from investing activities:
Capital expenditures (50,911) (80,015)
Entrada acquisition (150,000) --
Distribution from Medusa Spar LLC 430 370
-------- --------
Cash used by investing activities (200,481) (79,645)
-------- --------
Cash flows from financing activities:
Change in accrued liabilities to be refinanced -- (5,000)
Increases in debt 211,000 39,000
Payments on debt (46,000) (32,000)
Deferred financing costs (6,429) --
Equity issued related to employee stock plans -- (381)
Excess tax benefits from share-based payment
arrangements -- 1,304
Capital leases (872) (139)
-------- --------
Cash provided by financing activities 157,699 2,784
-------- --------
Net increase (decrease) in cash and cash
equivalents 27,374 (1,519)
Cash and cash equivalents:
Balance, beginning of period 1,896 2,565
-------- --------
Balance, end of period $29,270 $1,046
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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 Louisiana, Alabama and 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.
Source: Callon Petroleum Company
Released August 2, 2007