Quarterly report pursuant to Section 13 or 15(d)

Description of Business and Basis of Presentation

v2.4.0.6
Description of Business and Basis of Presentation
6 Months Ended
Jun. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation

Description of Business

Callon Petroleum Company has been engaged in the exploration, development, acquisition and production of oil and natural gas properties since 1950. The Company was incorporated under the laws of the state of Delaware in 1994 and succeeded to the business of a publicly traded limited partnership, a joint venture with a consortium of European investors and an independent energy company partially owned by a member of current management. As used herein, the “Company,” “Callon,” “we,” “us,” and “our” refer to Callon Petroleum Company and its predecessors and subsidiaries unless the context requires otherwise.

The Company’s properties and operations are geographically concentrated onshore in Texas and Louisiana and the offshore waters of the Gulf of Mexico.

Basis of Presentation

Unless otherwise indicated, all amounts included within the footnotes to the financial statements are presented in thousands, except for per-share, per-hedge, well and acreage data.

The interim consolidated financial statements of the Company have been prepared in accordance with (1) accounting principles generally accepted in the United States (“US GAAP”), (2) the Securities and Exchange Commission’s instructions to Quarterly Report on Form 10-Q and (3) Rule 10-01 of Regulation S-X, and include the accounts of the Company, and its subsidiary, Callon Petroleum Operating Company (“CPOC”). CPOC also has subsidiaries, namely Callon Offshore Production, Inc. and Mississippi Marketing, Inc. CPOC also includes its former wholly owned subsidiary, Callon Entrada Company (“Callon Entrada”), which as discussed in Note 9 was reconsolidated in the Company's financial statements effective April 29, 2011.

These interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date.

Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.

In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, including normal recurring adjustments and all intercompany account and transaction eliminations, necessary to present fairly the Company's financial position, the results of its operations and its cash flows for the periods indicated.  When necessary to ensure consistent presentation, certain prior year amounts may be reclassified. To the extent the amounts reclassified are material, we have either footnoted them within the Company's disclosures or have noted the items within this footnote.

Prior period correction of an immaterial error

During the second quarter of 2012, we determined that a prior reporting period had a misstatement caused by an error in adjusting the Company's deferred tax position at December 31, 2011. Management concluded that the impact of this error on the prior reporting period is immaterial. However, given that the adjustment to correct the error in 2012 would have a material impact on the 2012 financial statements, we have corrected the prior period financial statements in this current Form 10-Q in accordance with SEC guidance. The adjustment had no effect on the Company's cash flow, and the information included in this Form 10-Q sets forth the effects of this correction on the previously reported Balance Sheet and Income Statement as of December 31, 2011 as follows:
 
 
As Reported
 
Adjustment
 
As Adjusted
 
 
 
 
 
 
 
Balance Sheet:
 
 
 
 
 
 
Deferred tax asset
 
$
63,496

 
$
2,247

 
$
65,743

Total assets
 
367,460

 
2,247

 
369,707

Retained deficit
 
(127,537
)
 
2,247

 
(125,290
)
Total stockholders' equity
 
198,955

 
2,247

 
201,202

Total liabilities and stockholders' equity
 
367,460

 
2,247

 
369,707

 
 
 
 
 
 
 
Income Statement:
 
 
 
 
 
 
Income tax benefit
 
(67,036
)
 
(2,247
)
 
(69,283
)
Net income available to common shares
 
104,149

 
2,247

 
106,396

Net income per common share - Basic
 
2.75

 
0.06

 
2.81

Net income per common share - Diluted
 
2.70

 
0.06

 
2.76