Exhibit 99.1
Callon Petroleum Company Announces Second Quarter 2022 Results
HOUSTON, TX (August 3, 2022) - Callon Petroleum Company (NYSE: CPE) (“Callon” or the “Company”) today reported results of operations for the three and six months ended June 30, 2022.
Presentation slides accompanying this earnings release are available on the Company’s website at www.callon.com located on the “Presentations” page within the Investors section of the site.
Second Quarter 2022 and Recent Highlights
Delivered production of approximately 100.7 MBoe/d (61% oil and 81% liquids) in the second quarter of 2022
Increased Delaware Basin well productivity in 2022 by approximately 20% over 2021 as co-development offset spacing and completions initiatives are implemented
Generated net cash provided by operating activities of $372.3 million and adjusted free cash flow of $125.6 million
Reported net income of $348.0 million, or $5.62 per diluted share, adjusted EBITDA of $418.5 million, and adjusted income of $227.8 million, or $3.68 per diluted share
Achieved an operating margin of $67.58 per Boe, a sequential increase of over 15%
Executed a refinancing transaction that extended maturities and reduced term balances, with total debt balance of $2.5 billion at June 30 after continued debt reduction
“Callon continues to execute on important steps to solidify a foundation for durable free cash flow generation” said Joe Gatto, President and Chief Executive Officer. “In the inflationary environment that we operate in today, and likely for the foreseeable future, operating margins are critical to our cash generation objectives. In our most recent quarter, our operating margins increased to almost $70 per Boe produced, our eighth consecutive quarterly increase, which drove unhedged adjusted EBITDA of over $600 million. When our industry leading margins are combined with demonstrated well productivity gains in the Delaware and drilling and completion efficiencies across the portfolio, we expect to drive more efficient conversion of EBITDA into free cash flow. These cash flow benefits will be further enhanced in the near-term with a steadily decreasing impact of financial hedges and a reduced interest expense burden as debt continues to be reduced.”
Callon Operations Update
At June 30, 2022, Callon had 1,377 gross (1,229.3 net) wells producing from established flow units in the Permian and Eagle Ford. Net daily production for the three months ended June 30, 2022 was 100.7 MBoe/d (61% oil and 81% liquids).
Production volumes for the quarter include the impact of the following items:
Increased Workover Activity – Callon experienced a higher level of well failures than historical trends due to intermittent power disruptions and the timing of useful equipment lives. During these outages, Callon accelerated its artificial lift initiatives, which provide production and runtime benefits, primarily in Delaware Basin South. Given the additional time to complete these conversion and repair projects, which were roughly double the level executed in the first quarter, downtime was elevated in the second quarter. Portions of this activity were previously planned to occur later in the year and, as a result, workovers and associated downtime for this initiative should be reduced going forward relative to our previous forecast.
Conversion of Midland Basin Gathering Contract – Natural gas and NGL volumes increased from the conversion of a Midland Basin gathering contract from a percentage of proceeds to fee-based which resulted in a reduction in oil cut for the quarter.
Operated drilling and completion activity for the three months ended June 30, 2022 are summarized in the table below:
Three Months Ended June 30, 2022
DrilledCompletedPlaced on Production
RegionGrossNetGrossNetGrossNet
Delaware Basin11 10.9 5.9 11 10.1 
Midland Basin16 14.3 6.3 6.0 
Eagle Ford Shale7.4 15 13.0 15 13.0 
Total35 32.6 28 25.2 33 29.1 
For the three months ended June 30, 2022, Callon drilled 35 gross (32.6 net) wells and placed a combined 33 gross (29.1 net) wells on production. Completions operations for the quarter included 6 gross (5.9 net) wells in the Delaware Basin, 7 gross (6.3 net) wells in the Midland Basin, and 15 gross (13.0 net) wells in the Eagle Ford Shale. Callon placed 11 gross (10.1 net) wells on production in the Delaware Basin, 7 gross (6.0 net) wells in the Midland Basin, and 15 gross (13.0 net) wells in the Eagle Ford Shale. The average lateral length for the wells completed during the second quarter was 8,281 feet. Operated completions during the second quarter consisted of 4 Upper Wolfcamp A wells and 2 Lower Wolfcamp A wells in the Delaware Basin; 2 Lower Spraberry wells, 3 Wolfcamp A wells and 2 Wolfcamp B wells in the Midland Basin; and 15 lower Eagle Ford Shale wells.



Leverage and Liquidity Update
On June 9, 2022, Callon priced $600 million principal amount of 7.50% Senior Notes due 2030 in a private offering. On June 24, 2022, the Company deposited with the trustee the proceeds from the offering of the 7.50% Senior Notes due 2030, along with borrowings under the Credit Facility, to redeem all of its outstanding 6.125% Senior Notes due 2024 and 9.0% Second Lien Notes due 2025. As of June 30, 2022, the drawn balance on the facility was $779.0 million and cash balances were $6.1 million. The Company intends to continue its application of organic free cash flow towards repayment of debt balances related to the credit facility and other debt instruments.
Third Quarter Activity Outlook and Guidance
Callon is currently running six rigs, with three rigs in the Delaware Basin, two rigs in the Midland Basin and one rig in the Eagle Ford which the Company will be dropping in the coming days. Callon plans to utilize two to three completion crews for the third quarter, supporting new production across the Midland, Delaware and Eagle Ford positions.
For the third quarter, the Company expects to produce between 102 and 105 MBoe/d (63% oil) with between 38 and 42 gross wells (33 and 36 net) placed on production. In addition, Callon projects an operational capital spending level of between $245 and $255 million on an accrual basis.
For full year 2022, Callon is increasing the bottom end of its production guidance to between 102 and 105 MBoe/d (63% oil) to reflect underlying Permian well performance that is above expectations, and an increase in natural gas and NGL volumes from the Midland Basin gathering contract conversion. The revised guidance is available in the accompanying presentation.
Capital Expenditures
For the three months ended June 30, 2022, Callon incurred $237.8 million in operational capital expenditures on an accrual basis. Total capital expenditures, inclusive of capitalized expenses, are detailed below on an accrual and cash basis:
Three Months Ended June 30, 2022
OperationalCapitalizedCapitalizedTotal Capital
Capital (a)
InterestG&AExpenditures
(In thousands)
Cash basis (b)
$181,071 $19,958 $11,432 $212,461 
Timing adjustments (c)
65,110 4,459 — 69,569 
Non-cash items(8,369)1,887 (147)(6,629)
   Accrual basis$237,812 $26,304 $11,285 $275,401 
(a)Includes drilling, completions, facilities and equipment, but excludes land, seismic and asset retirement costs.
(b)Cash basis is presented here to help users of financial information reconcile amounts from the cash flow statement to the balance sheet by accounting for timing related changes in working capital that align with our development pace and rig count.
(c)Includes timing adjustments related to cash disbursements in the current period for capital expenditures incurred in the prior period.



Hedge Portfolio Summary
As of July 29, 2022, Callon had the following outstanding oil and natural gas derivative contracts:
For the RemainderFor the Full YearFor the Full Year
Oil Contracts (WTI)202220232024
Swap Contracts
Total volume (Bbls)3,634,000 1,538,500 — 
Weighted average price per Bbl$64.83 $81.04 $— 
Collar Contracts with Short Puts (Three-Way Collars)
Total volume (Bbls)— 1,825,000 — 
Weighted average price per Bbl
Ceiling (short call)$— $90.00 $— 
Floor (long put)$— $70.00 $— 
Floor (short put)$— $50.00 $— 
Collar Contracts
Total volume (Bbls)2,392,000 2,730,000 — 
Weighted average price per Bbl
Ceiling (short call)$70.12 $87.15 $— 
Floor (long put)$60.00 $71.92 $— 
Short Call Swaption Contracts (a)
Total volume (Bbls)— — 1,830,000 
Weighted average price per Bbl$— $— $80.30 
Oil Contracts (Midland Basis Differential)
Swap Contracts
Total volume (Bbls)1,196,000 — — 
Weighted average price per Bbl$0.50 $— $— 
(a)    The 2024 short call swaption contracts have exercise expiration dates of December 29, 2023.
For the RemainderFor the Full Year
Natural Gas Contracts (Henry Hub)20222023
Swap Contracts
Total volume (MMBtu)6,150,000 — 
Weighted average price per MMBtu$3.62 $— 
Collar Contracts
Total volume (MMBtu)5,510,000 6,640,000 
Weighted average price per MMBtu
Ceiling (short call)$5.96 $6.60 
Floor (long put)$4.21 $4.48 
Natural Gas Contracts (Waha Basis Differential)
Swap Contracts
Total volume (MMBtu)1,220,000 6,080,000 
Weighted average price per MMBtu($0.75)($0.75)




Operating and Financial Results
The following table presents summary information for the periods indicated:
Three Months Ended
 June 30, 2022March 31, 2022June 30, 2021
Total production  
Oil (MBbls)
Permian4,2904,4693,232
Eagle Ford1,2991,3771,870
Total oil5,5895,8465,102
Natural gas (MMcf)
Permian8,8758,5907,138
Eagle Ford1,4371,5251,745
Total natural gas10,31210,1158,883
NGLs (MBbls)
Permian1,6221,4551,216
Eagle Ford232252299
Total NGLs1,8541,7071,515
Total production (MBoe)
Permian7,3917,3565,637
Eagle Ford1,7711,8832,460
Total barrels of oil equivalent9,1629,2398,097
Total daily production (Boe/d)
Permian81,21681,73361,948
Eagle Ford19,46920,92227,033
Total barrels of oil equivalent100,685102,65588,981
Oil as % of total daily production61 %63 %63 %
Average realized sales price (excluding impact of settled derivatives)
  
Oil (per Bbl)
Permian$110.71$94.52$65.08
Eagle Ford111.5395.0265.83
Total oil$110.90$94.64$65.36
Natural gas (per Mcf)
Permian$6.14$4.20$2.68
Eagle Ford7.275.182.82
Total natural gas$6.29$4.35$2.71
NGLs (per Bbl)
Permian$41.06$40.25$24.71
Eagle Ford38.5335.9322.00
Total NGLs$40.74$39.61$24.17
Average realized sales price (per Boe)
Permian$80.64$70.29$46.04
Eagle Ford92.7578.5054.72
Total average realized sales price$82.98$71.97$48.68
Average realized sales price (including impact of settled derivatives)
Oil (per Bbl)$82.27$73.78$46.82
Natural gas (per Mcf)3.913.592.25
NGLs (per Bbl)40.7437.3423.21
Total average realized sales price (per Boe)$62.84$57.52$36.31




Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
Revenues (in thousands) (a)
Oil
Permian$474,936$422,404$210,340
Eagle Ford144,876130,845123,102
Total oil$619,812$553,249$333,442
Natural gas
Permian$54,469$36,069$19,152
Eagle Ford10,4447,9074,928
Total natural gas$64,913$43,976$24,080
NGLs
Permian$66,592$58,563$30,047
Eagle Ford8,9389,0556,578
Total NGLs$75,530$67,618$36,625
Total revenues
Permian$595,997$517,036$259,539
Eagle Ford164,258147,807134,608
Total revenues$760,255$664,843$394,147
Additional per Boe data
Sales price (b)
Permian$80.64$70.29$46.04
Eagle Ford92.7578.5054.72
Total sales price
$82.98$71.97$48.68
Lease operating expense
Permian$7.33$6.85$4.60
Eagle Ford10.598.998.34
Total lease operating expense$7.96$7.29$5.74
Production and ad valorem taxes
Permian$4.66$3.89$2.53
Eagle Ford5.894.823.12
Total production and ad valorem taxes$4.90$4.08$2.71
Gathering, transportation and processing
Permian$2.69$2.33$2.75
Eagle Ford1.931.921.84
Total gathering, transportation and processing$2.54$2.25$2.47
Operating margin
Permian$65.96$57.22$36.16
Eagle Ford74.3462.7741.42
Total operating margin$67.58$58.35$37.76
   Depreciation, depletion and amortization$11.94$11.15$10.27
   General and administrative$1.19$1.85$1.37
   Adjusted G&A
      Cash component (c)
$1.54$1.40$0.71
      Non-cash component$0.20$0.14$0.21
(a)Excludes sales of oil and gas purchased from third parties.
(b)Excludes the impact of settled derivatives.
(c)Excludes the change in fair value and amortization of share-based incentive awards.
Revenue. For the quarter ended June 30, 2022, Callon reported revenue of $760.3 million, which excluded revenue from sales of commodities purchased from a third party of $153.4 million. Revenues including the loss from the settlement of derivative contracts




(“Adjusted Total Revenue”) were $575.7 million, reflecting the impact of a $184.6 million loss from the settlement of derivative contracts. Average daily production and average realized prices, including and excluding the effects of hedging, are detailed above.
Commodity Derivatives. For the quarter ended June 30, 2022, the net loss on commodity derivative contracts includes the following (in thousands):
Three Months Ended
June 30, 2022
Loss on oil derivatives$75,910 
Loss on natural gas derivatives5,738 
Loss on NGL derivatives— 
Loss on commodity derivative contracts$81,648 
For the quarter ended June 30, 2022, the cash paid for commodity derivative settlements includes the following (in thousands):
Three Months Ended
June 30, 2022
Cash paid on oil derivatives, net($162,334)
Cash paid on natural gas derivatives, net(21,808)
Cash paid on NGL derivatives, net(2,255)
Cash paid for commodity derivative settlements, net($186,397)
Lease Operating Expenses, including workover (“LOE”). LOE for the three months ended June 30, 2022 was $72.9 million, or $7.96 per Boe, compared to LOE of $67.3 million, or $7.29 per Boe, in the first quarter of 2022. The sequential increase in LOE was primarily due to increases in workover costs as well as certain operating costs such as fuel, power and equipment rentals. The increase in LOE per Boe was due to the increases in operating costs mentioned above as well as the distribution of fixed costs spread over lower production volumes.
Production and Ad Valorem Taxes. Production and ad valorem taxes for the three months ended June 30, 2022 were approximately 5.9% of total revenue excluding revenue from sales of commodities purchased from a third-party and before the impact of derivative settlements, or $4.90 per Boe.
Gathering, Transportation and Processing. Gathering, transportation and processing expense for the three months ended June 30, 2022 was $23.3 million, or $2.54 per Boe, as compared to $20.8 million, or $2.25 per Boe, in the first quarter of 2022. This increase in gathering, transportation and processing expense was primarily due to a new contract entered into during the second quarter of 2022 as well as inflationary cost increases.
Depreciation, Depletion and Amortization (“DD&A”). DD&A for the three months ended June 30, 2022 was $11.94 per Boe compared to $11.15 per Boe in the first quarter of 2022. The increase in DD&A per Boe was primarily attributable to higher capital expenditures during the three months ended June 30, 2022 and increases in future development cost assumptions.
General and Administrative Expense (“G&A”). G&A for the three months ended June 30, 2022 and March 31, 2022 was $10.9 million and $17.1 million, respectively. G&A, excluding non-cash incentive share-based compensation valuation adjustments, (“Adjusted G&A”) was $16.0 million for the three months ended June 30, 2022 compared to $14.3 million for the first quarter of 2022. The cash component of Adjusted G&A increased to $14.1 million for the three months ended June 30, 2022 compared to $13.0 million for the first quarter of 2022 primarily as a result of higher compensation costs during the quarter.
The following table reconciles total G&A to Adjusted G&A - cash component and full cash G&A (in thousands):
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
Total G&A$10,909 $17,121 $11,065 
Change in the fair value of liability share-based awards
(non-cash)
5,071 (2,851)(3,555)
Adjusted G&A – total15,980 14,270 7,510 
Equity-settled, share-based compensation (non-cash)(1,861)(1,315)(1,724)
Adjusted G&A – cash component$14,119 $12,955 $5,786 
Capitalized cash G&A11,432 9,703 7,404 
Full cash G&A$25,551 $22,658 $13,190 




Income Tax. Callon provides for income taxes at the statutory rate of 21% adjusted for permanent differences expected to be realized. We recorded income tax expense of $3.0 million and $0.5 million for the three months ended June 30, 2022 and March 31, 2022, respectively. Since the second quarter of 2020, we have concluded that it is more likely than not that the net deferred tax assets will not be realized and have recorded a full valuation allowance against our deferred tax assets. As long as we continue to conclude that the valuation allowance is necessary, we will not have significant deferred tax expense or benefit.
Adjusted Income, Adjusted EBITDA and Unhedged Adjusted EBITDA. The following tables reconcile the Company’s net income (loss) to adjusted income, adjusted EBITDA and unhedged adjusted EBITDA:
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
(In thousands, except per share data)
Net income (loss)$348,009 $39,737 ($11,695)
Loss on derivative contracts81,648 358,300 190,463 
Loss on commodity derivative settlements, net(184,558)(133,476)(100,128)
Non-cash (benefit) expense related to share-based awards(3,210)4,166 5,279 
Merger, integration, transaction and other1,051 (13)5,584 
Loss on extinguishment of debt42,417 — — 
Tax effect on adjustments above (a)
13,157 (48,085)(21,252)
Change in valuation allowance(70,704)(7,963)2,079 
Adjusted income$227,810 $212,666 $70,330 
Net income (loss) per diluted share$5.62 $0.64 ($0.25)
Adjusted income per diluted share$3.68 $3.43 $1.49 
Basic weighted average common shares outstanding61,679 61,487 46,267 
Diluted weighted average common shares outstanding (GAAP)61,909 62,065 46,267 
Effect of potentially dilutive instruments— — 862 
Adjusted diluted weighted average common shares outstanding61,909 62,065 47,129 
(a) Calculated using the federal statutory rate of 21%.
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
(In thousands)
Net income (loss)$348,009 $39,737 ($11,695)
Loss on derivative contracts81,648 358,300 190,463 
Loss on commodity derivative settlements, net(184,558)(133,476)(100,128)
Non-cash (benefit) expense related to share-based awards(3,210)4,166 5,279 
Merger, integration, transaction and other1,051 (13)5,584 
Income tax (benefit) expense3,009 484 (478)
Interest expense, net20,691 21,558 24,634 
Depreciation, depletion and amortization109,409 102,979 83,128 
Loss on extinguishment of debt42,417 — — 
Adjusted EBITDA$418,466 $393,735 $196,787 
Add: Loss on commodity derivative settlements, net184,558 133,476 100,128 
Unhedged adjusted EBITDA$603,024 $527,211 $296,915 




Adjusted Free Cash Flow. The following table reconciles the Company’s net cash provided by operating activities to unhedged adjusted EBITDA, adjusted EBITDA and adjusted free cash flow:
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
(In thousands)
Net cash provided by operating activities$372,325 $281,270 $175,603 
Changes in working capital and other25,096 123,805 13,520 
Changes in accrued hedge settlements1,839 (31,951)(14,719)
Loss on commodity derivative settlements, net184,558 133,476 100,128 
Cash interest expense, net19,206 19,842 22,383 
Merger, integration and transaction— 769 — 
Unhedged adjusted EBITDA$603,024 $527,211 $296,915 
Less: Loss on commodity derivative settlements, net184,558 133,476 100,128 
Adjusted EBITDA$418,466 $393,735 $196,787 
Less: Operational capital expenditures (accrual)237,812 157,378 138,321 
Less: Capitalized cash interest24,416 23,506 21,740 
Less: Cash interest expense, net19,206 19,842 22,383 
Less: Capitalized cash G&A11,432 9,703 7,404 
Adjusted free cash flow$125,600 $183,306 $6,939 
Adjusted Discretionary Cash Flow. The following table reconciles the Company’s net cash provided by operating activities to adjusted discretionary cash flow:
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
(In thousands)
Net cash provided by operating activities$372,325 $281,270 $175,603 
Changes in working capital23,342 126,997 11,709 
Merger, integration and transaction— 769 — 
Adjusted discretionary cash flow$395,667 $409,036 $187,312 
Adjusted Total Revenue. Adjusted total revenue is reconciled to total operating revenues, which excludes revenue from sales of commodities purchased from a third party, in the following table:
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
(In thousands)
Operating revenues
Oil$619,812 $553,249 $333,442 
Natural gas64,913 43,976 24,080 
NGLs75,530 67,618 36,625 
Total operating revenues$760,255 $664,843 $394,147 
Impact of settled derivatives(184,558)(133,476)(100,128)
Adjusted total revenue$575,697 $531,367 $294,019 
Net Debt. The following table reconciles the Company’s total debt to net debt:
June 30, 2022March 31,
2022
December 31, 2021September 30, 2021June 30, 2021
(In thousands)
Total debt$2,516,337 $2,623,282 $2,694,115 $2,809,610 $2,865,154 
Unamortized premiums, discount, and deferred loan costs, net20,684 26,639 28,806 48,311 37,487 
Adjusted total debt$2,537,021 $2,649,921 $2,722,921 $2,857,921 $2,902,641 
Less: Cash and cash equivalents6,100 4,150 9,882 3,699 3,800 
Net debt$2,530,921 $2,645,771 $2,713,039 $2,854,222 $2,898,841 




Callon Petroleum Company
Consolidated Balance Sheets
(In thousands, except par and share amounts)
(Unaudited)
June 30, 2022December 31, 2021
ASSETS
Current assets:
   Cash and cash equivalents$6,100 $9,882 
   Accounts receivable, net360,955 232,436 
   Fair value of derivatives— 22,381 
   Other current assets37,960 30,745 
      Total current assets405,015 295,444 
Oil and natural gas properties, full cost accounting method:  
   Evaluated properties, net3,573,282 3,352,821 
   Unevaluated properties1,876,531 1,812,827 
      Total oil and natural gas properties, net5,449,813 5,165,648 
Other property and equipment, net26,332 28,128 
Deferred financing costs14,961 18,125 
Other assets, net52,209 40,158 
   Total assets$5,948,330 $5,547,503 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
   Accounts payable and accrued liabilities$606,093 $569,991 
   Fair value of derivatives301,362 185,977 
   Other current liabilities134,581 116,523 
      Total current liabilities1,042,036 872,491 
Long-term debt2,516,337 2,694,115 
Asset retirement obligations57,427 54,458 
Fair value of derivatives21,251 11,409 
Other long-term liabilities51,942 49,262 
   Total liabilities3,688,993 3,681,735 
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 130,000,000 and 78,750,000 shares authorized; 61,715,672 and 61,370,684 shares outstanding, respectively
617 614 
   Capital in excess of par value4,018,178 4,012,358 
   Accumulated deficit(1,759,458)(2,147,204)
      Total stockholders’ equity2,259,337 1,865,768 
Total liabilities and stockholders’ equity$5,948,330 $5,547,503 




Callon Petroleum Company
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Operating Revenues:
Oil$619,812 $333,442 $1,173,061 $600,487 
Natural gas64,913 24,080 108,889 48,300 
Natural gas liquids75,530 36,625 143,148 65,982 
Sales of purchased oil and gas153,365 46,252 265,740 85,511 
Total operating revenues913,620 440,399 1,690,838 800,280 
Operating Expenses:
Lease operating72,940 46,460 140,268 86,913 
Production and ad valorem taxes44,873 21,958 82,551 40,397 
Gathering, transportation and processing23,267 20,031 44,042 38,012 
Cost of purchased oil and gas155,397 49,249 266,668 90,166 
Depreciation, depletion and amortization109,409 83,128 212,388 154,115 
General and administrative10,909 11,065 28,030 27,864 
Merger, integration and transaction— — 769 — 
Total operating expenses416,795 231,891 774,716 437,467 
Income From Operations496,825 208,508 916,122 362,813 
Other (Income) Expenses:
Interest expense, net of capitalized amounts20,691 24,634 42,249 49,050 
Loss on derivative contracts81,648 190,463 439,948 404,986 
Loss on extinguishment of debt42,417 — 42,417 — 
Other (income) expense1,051 5,584 269 2,278 
Total other expense145,807 220,681 524,883 456,314 
Income (Loss) Before Income Taxes351,018 (12,173)391,239 (93,501)
Income tax benefit (expense)(3,009)478 (3,493)1,399 
Net Income (Loss)$348,009 ($11,695)$387,746 ($92,102)
Net Income (Loss) Per Common Share:
Basic$5.64 ($0.25)$6.30 ($2.07)
Diluted$5.62 ($0.25)$6.26 ($2.07)
Weighted Average Common Shares Outstanding:
Basic61,679 46,267 61,583 44,439 
Diluted61,909 46,267 61,956 44,439 






Callon Petroleum Company
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Three Months Ended
June 30,
Six Months Ended June 30,
 2022202120222021
Cash flows from operating activities:  
Net income (loss)$348,009 ($11,695)$387,746 ($92,102)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
  Depreciation, depletion and amortization109,409 83,128 212,388 154,115 
  Amortization of non-cash debt related items, net1,485 2,252 3,201 4,508 
  Loss on derivative contracts81,648 190,463 439,948 404,986 
  Cash paid for commodity derivative settlements, net(186,397)(85,409)(287,922)(127,571)
  Loss on extinguishment of debt42,417 — 42,417 — 
  Non-cash (benefit) expense related to share-based awards(3,210)5,279 956 12,887 
  Other, net2,306 3,294 5,200 4,511 
  Changes in current assets and liabilities:
    Accounts receivable(14,072)(21,674)(130,394)(67,357)
    Other current assets(3,317)(4,567)(7,497)(7,423)
    Accounts payable and accrued liabilities(5,953)14,532 (18,940)26,714 
    Cash received for settlements of contingent consideration arrangements, net— — 6,492 — 
    Net cash provided by operating activities372,325 175,603 653,595 313,268 
Cash flows from investing activities:
Capital expenditures(212,461)(149,662)(413,939)(251,003)
Acquisition of oil and gas properties(6,536)(1,447)(15,945)(2,215)
Proceeds from sales of assets106 31,611 4,590 31,611 
Cash paid for settlement of contingent consideration arrangement— — (19,171)— 
Other, net5,074 625 8,709 4,220 
    Net cash used in investing activities(213,817)(118,873)(435,756)(217,387)
Cash flows from financing activities:
Borrowings on Credit Facility1,051,000 433,500 1,724,000 736,500 
Payments on Credit Facility(984,000)(508,500)(1,730,000)(846,500)
Issuance of 7.50% Senior Notes due 2030600,000 — 600,000 — 
Redemption of 6.125% Senior Notes due 2024(467,287)— (467,287)— 
Redemption of 9.00% Second Lien Senior Secured Notes due 2025(339,507)— (339,507)— 
Cash received for settlement of contingent consideration arrangement— — 8,512 — 
Payment of deferred financing costs(10,542)— (10,542)— 
Other, net(6,222)(2,280)(6,797)(2,317)
    Net cash used in financing activities(156,558)(77,280)(221,621)(112,317)
Net change in cash and cash equivalents1,950 (20,550)(3,782)(16,436)
  Balance, beginning of period4,150 24,350 9,882 20,236 
  Balance, end of period$6,100 $3,800 $6,100 $3,800 




Non-GAAP Financial Measures
This news release refers to non-GAAP financial measures such as “adjusted free cash flow,” “adjusted EBITDA,” “unhedged adjusted EBITDA,” “operating margin,” “adjusted income,” “adjusted income per diluted share,” “adjusted diluted weighted average common shares outstanding,” “adjusted discretionary cash flow,” “adjusted total revenue,” “adjusted G&A,” “full cash G&A,” and “net debt.” These measures, detailed below, are provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP (including the notes), included in our filings with the U.S. Securities and Exchange Commission (the “SEC”) and posted on our website.
Adjusted free cash flow is a supplemental non-GAAP measure that is defined by the Company as adjusted EBITDA less operational capital expenditures (accrual), capitalized cash interest, capitalized cash G&A (which excludes capitalized expense related to share-based awards), and cash interest expense, net. We believe adjusted free cash flow provides useful information to investors because it is a comparable metric against other companies in the industry and is a widely accepted financial indicator of an oil and natural gas company’s ability to generate cash for the use of internally funding their capital development program and to service or incur debt. Adjusted free cash flow is not a measure of a company’s financial performance under GAAP and should not be considered as an alternative to net cash provided by operating activities, or as a measure of liquidity, or as an alternative to net income (loss).
Callon calculates adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization, (gains) losses on derivative instruments excluding net settled derivative instruments, impairment of evaluated oil and gas properties, non-cash share-based compensation expense, merger, integration and transaction expense, (gain) loss on extinguishment of debt, and certain other expenses. Adjusted EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss), cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. However, the Company believes that adjusted EBITDA provides useful information to investors because it provides additional information with respect to our performance or ability to meet our future debt service, capital expenditures and working capital requirements. Because adjusted EBITDA excludes some, but not all, items that affect net income (loss) and may vary among companies, the adjusted EBITDA presented above may not be comparable to similarly titled measures of other companies.
Callon calculates unhedged adjusted EBITDA as adjusted EBITDA, as defined above, excluding the impact of net settled derivative instruments. Unhedged adjusted EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss), cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. However, the Company believes that unhedged adjusted EBITDA provides useful information to investors because it provides additional information with respect to our performance without the impact of our settled derivative instruments. Because unhedged adjusted EBITDA excludes some, but not all, items that affect net income (loss) and may vary among companies, the unhedged adjusted EBITDA presented above may not be comparable to similarly titled measures of other companies.
Callon believes that operating margin is a comparable metric against other companies in the industry and is useful to investors because it is an indicator of an oil and natural gas company’s operating profitability per unit of production. Operating margin is a supplemental non-GAAP measure that is defined by the Company as oil, natural gas, and NGL revenues sales price less lease operating expense; production and ad valorem taxes; and gathering, transportation and processing fees divided by total production for the period.
Adjusted income and adjusted income per diluted share are supplemental non-GAAP measures that Callon believes are useful to investors because they provide readers with a meaningful measure of our profitability before recording certain items whose timing or amount cannot be reasonably determined. These measures exclude the net of tax effects of these items and non-cash valuation adjustments, which are detailed in the reconciliation provided. Adjusted income and adjusted income per diluted share are not measures of financial performance under GAAP. Accordingly, neither should be considered as a substitute for net income (loss), operating income (loss), or other income data prepared in accordance with GAAP. However, the Company believes that adjusted income and adjusted income per diluted share provide additional information with respect to our performance. Because adjusted income and adjusted income per diluted share exclude some, but not all, items that affect net income (loss) and may vary among companies, the adjusted income and adjusted income per diluted share presented above may not be comparable to similarly titled measures of other companies.
Adjusted diluted weighted average common shares outstanding is a non-GAAP financial measure which includes the effect of potentially dilutive instruments that, under certain circumstances described below, are excluded from diluted weighted average common shares outstanding, the most directly comparable GAAP financial measure. When a net loss



exists, all potentially dilutive instruments are anti-dilutive to the net loss per common share and therefore excluded from the computation of diluted weighted average common shares outstanding. The effect of potentially dilutive instruments are included in the computation of adjusted diluted weighted average common shares outstanding for purposes of computing adjusted income per diluted share.
Adjusted discretionary cash flow is a supplemental non-GAAP measure that Callon believes provides useful information to investors because it is a comparable metric against other companies in the industry and is a widely accepted financial indicator of an oil and natural gas company’s ability to generate cash for the use of internally funding their capital development program and to service or incur debt. Adjusted discretionary cash flow is defined by Callon as net cash provided by operating activities before changes in working capital and merger, integration and transaction expenses. Callon 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 the cash flow effect may not be reflected the period in which the operating activities occurred. Adjusted discretionary cash flow is not a measure of a company’s financial performance under GAAP and should not be considered as an alternative to net cash provided by operating activities, or as a measure of liquidity, or as an alternative to net income (loss).
Callon believes that the non-GAAP measure of adjusted total revenue (which is revenue including the gain or loss from the settlement of derivative contracts) is useful to investors because it provides readers with a revenue value more comparable to other companies who engage in price risk management activities through the use of commodity derivative instruments and reflects the results of derivative settlements with expected cash flow impacts within total revenues.
Adjusted G&A is a supplemental non-GAAP financial measure that excludes non-cash incentive share-based compensation valuation adjustments and adjusted G&A - cash component further excludes equity-settled, share-based compensation expenses. Callon believes that the non-GAAP measure of adjusted G&A and adjusted G&A - cash component are useful to investors because they provide for greater comparability period-over-period. In addition, adjusted G&A - cash component provides a meaningful measure of our recurring G&A expense.
Full cash G&A is a supplemental non-GAAP financial measure that Callon defines as adjusted G&A – cash component plus capitalized G&A excluding capitalized expense related to share-based awards. Callon believes that the non-GAAP measure of full cash G&A is useful to investors because it provides a meaningful measure of our total recurring cash G&A costs, whether expensed or capitalized, and provides for greater comparability on a period-over-period basis.
Net debt is a supplemental non-GAAP measure that is defined by the Company as total debt excluding unamortized premiums, discount, and deferred loan costs, less cash and cash equivalents. Net debt should not be considered an alternative to, or more meaningful than, total debt, the most directly comparable GAAP measure. Management uses net debt to determine the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. We believe this metric is useful to analysts and investors in determining the Company’s leverage position since the Company has the ability to, and may decide to, use a portion of its cash and cash equivalents to reduce debt. This metric is sometimes presented as a ratio with Adjusted EBITDA in order to provide investors with another means of evaluating the Company’s ability to service its existing debt obligations as well as any future increase in the amount of such obligations. This ratio is referred to by the Company as its leverage ratio.




Earnings Call Information
The Company will host a conference call on Thursday, August 4, 2022, to discuss second quarter 2022 financial and operating results, outlook and guidance for the remainder of 2022, and current corporate strategy and initiatives.
Please join Callon Petroleum Company via the Internet for a webcast of the conference call:
Date/Time:     Thursday, August 4, 2022, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time)
Webcast:     Select “News and Events” under the “Investors” section of the Company’s website: www.callon.com.
An archive of the conference call webcast will also be available at www.callon.com under the “Investors” section of the website.
About Callon Petroleum Company
Callon Petroleum Company is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of South and West Texas.
Cautionary Statement Regarding Forward-Looking Information
This news release contains 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. Forward-looking statements include all statements regarding wells anticipated to be drilled and placed on production; future levels of development activity and associated production, capital expenditures and cash flow expectations; the Company’s production and expenditure guidance; estimated reserve quantities and the present value thereof; future debt levels and leverage; and the implementation of the Company’s business plans and strategy, as well as statements including the words “believe,” “expect,” “plans,” “may,” “will,” “should,” “could,” and words of similar meaning. These statements reflect the Company’s current views with respect to future events and financial performance based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. 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. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. 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 include the volatility of oil and natural gas prices; changes in the supply of and demand for oil and natural gas, including as a result of the COVID-19 pandemic and various governmental actions taken to mitigate its impact or actions by, or disputes among members of OPEC and other oil and natural gas producing countries with respect to production levels or other matters related to the price of oil; our ability to drill and complete wells; operational, regulatory and environment risks; the cost and availability of equipment and labor; our ability to finance our development activities at expected costs or at expected times or at all; our inability to realize the benefits of recent transactions; currently unknown risks and liabilities relating to the newly acquired assets and operations; adverse actions by third parties involved with the transactions; risks that are not yet known or material to us; and other risks more fully discussed in our filings with the SEC, including our most recent Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, available on our website or the SEC’s website at www.sec.gov. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
Contact Information
Kevin Smith
Director of Investor Relations
Callon Petroleum Company
ir@callon.com
(281) 589-5200