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Property Disclosures and Operating Leases
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9 Months Ended |
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Sep. 30, 2013
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| Property Acquisition and Operating Leases [Abstract] | |
| Property Disclosures and Operating Leases |
Property Disclosures and Operating Leases
In April 2012, the Company took delivery of a drilling rig for a two-year term to support its horizontal drilling program in the Permian Basin. On August 1, 2013, the Company contracted an additional horizontal drilling rig for a one-year term. Lease cost recorded during the three and nine months ended September 30, 2013 was $3,874 and $8,425, respectively. Lease payments will approximate $12,601 in 2013 (with $4,176 remaining at September 30, 2013) and $6,941 in 2014. The agreements include early termination provisions that would reduce the minimum rentals under the agreement, assuming the lessor is unable to re-charter the rig and staffing personnel to another lessee, to $2,760 in 2013 and $4,530 in 2014.
On June 1, 2013, the Company acquired approximately 2,468 gross (2,186 net) acres in Reagan and Upton Counties, Texas, which is located in the southern portion of the Midland Basin and which is prospective for both horizontal and vertical drilling. The acquisition also included seven gross vertical wells and 1,051 barrels of oil equivalent proved reserves. The purchase price of $11,000 was funded using a portion of the proceeds from the preferred stock offering (discussed in Note 9).
Subsequent Event - Offshore Asset Sale
On October 17, 2013, the Company executed a purchase and sale agreement with W&T Offshore, Inc. (“W&T”), an unrelated third-party, pursuant to which W&T agreed to acquire our 15.0% working interest in the Medusa field (Mississippi Canyon blocks 582 and 538), our 10.0% membership interest in Medusa Spar LLC, and substantially all of our remaining Gulf of Mexico shelf properties for net cash consideration of approximately $100,000 before customary purchase price adjustments. W&T paid a deposit of $2,000, which will be applied to the purchase price. On November 5, 2013, the parties closed on a portion of the transaction for which the Company received $76,400 in proceeds. The remainder of the transaction is expected to close with adjusted proceeds of approximately $11,500 on or before November 30, 2013. The final closing of the transaction is subject to satisfaction of customary closing conditions and delivery of the total purchase price subject to adjustment for an acquisition effective date of July 1, 2013.
Also in October of 2013, Callon entered into an agreement to sell its 69% interest in the Swan Lake field for $2,000. This field includes 429 net acres and produced approximately 173 Mcf per day during the three months ended September 30, 2013. This is the Company’s only field in the Haynesville shale.
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