Quarterly report pursuant to Section 13 or 15(d)

Other

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6 Months Ended
Jun. 30, 2018
Other [Abstract]  
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Operating leases

As of June 30, 2018 the Company had contracts for five horizontal drilling rigs. The contract terms, as amended effective as of July 9, 2018, will end on various dates between July 2019 and February 2021. All of the drilling rig contracts provide for early termination, with penalties calculated at a reduced daily rate. In the event that Callon terminated all five drilling contracts as of August 6, 2018, the Company would owe a maximum of $31,342 over the remaining terms of the respective contracts, offset by any revenues earned for replacement work subsequently secured by the contractor. Management does not currently anticipate the early termination of any drilling rig contracts.

Other commitments

In March 2018, the Company entered into a contract for dedicated fracturing and pump down perforating crews, which was effective on April 16, 2018. The term of the agreement is for two years from the effective date.

Subsequent Event

Callon Petroleum Operating Company executed a firm transportation agreement for dedicated capacity on a new pipeline system that will connect with a regional gathering system which currently transports oil volumes under long-term agreements from our properties in Howard, Ward, Reagan and Upton counties to multiple marketing points in the Permian Basin. Subject to completion of the new pipeline system, which will have delivery points in several locations along the Gulf Coast, we will have a long-term 15,000 Bbls per day commitment.

Satisfaction of the volume commitments includes volumes produced by us and other third-party working, royalty, and overriding royalty interest owners whose volumes we market on their behalf.