Strategy

A Strategic Approach Focused on Progression

At Callon Petroleum, we’re leveraging our meaningful infrastructure investments and focusing on our progression to full-field development. This is allowing us to shift towards a sustainable long-term development model. We expect our business strategy to drive increased capital efficiency and corporate returns by employing larger pad concepts as part of an integrated technical and operational approach to multi-zone resource monetization.

Optimize Existing Operations

We’re optimizing the development of our multi-zone resource base through thoughtful plans of depletion which are educated by extensive analysis of subsurface data and empirical well results.

Strategy in Action

Our evolution within the Permian Basin.

2014: INITIAL BUILDING PHASE
~ 19,000 net surface acres (1)
~ 5,650 Boe/d of production (2014)
2 rigs running
27 net wells completed
YE13: 15 MMBoe Proved Reserves
2019: TRANSITION TO FULL ASSET DEVELOPMENT
~ 85,000 net surface acres
Forecast production growth of ~25%
4-6 rigs and 1-2 completion crews
Estimated 47-49net wells PoP
YE18: 239 MMBoe Proved Reserves

Maintain Strong Margins

We’re maintaining strong cash margins per unit of production via cost management and proactive investments in production infrastructure.



Industry leading operating margins

8%

Cash margin of $31.82/Boe represents an 8% CAGR over the last two years.

$2.03

Cash G&A of $2.03/Boe declined ~ 6% sequentially.

$119.7M

Adj. EBITDA1 of $119.7MM representing +1% sequential margin improvement as the unhedged realized sales price declined 15% Q/Q

Improve Capital Efficiency

Improving the capital efficiency of our operations in terms of both well productivity and capital outlays, including supporting facilities.



Strategy in Action

Driving capital efficiency via larger pad development.


  • We have an increased opportunity for longer laterals as a result of blocking up acreage and executing quality trades.
  • Our improvements to operational efficiency drive cost reductions on a lateral foot basis.
  • We’re consistently lowering development costs across the portfolio without assumed service cost deflation.
13% OPERATIONAL CAPITAL
6% NET LATERAL FEET
22% NET LATERAL FOOTAGE PER $1 MM OF OPERATIONAL CAPEX

Long-term Value Creation

Maturing our asset base into a sustainable operating model for profitable reinvestment of cash flows for attractive, long-term returns on capital.



Strategy in Action

Our broad-scale initiatives across the basin.

  • Field optimization and infrastructure investments are driving down operating costs and increasing productivity.
  • Successfully integrating new core assets that are overlaying legacy Spur footprint with an increased development pace.
  • Advancing our multi-interval development program to enhance long-term recovery and overall resource management.
  • Our new strategic water management agreements, combined with our growing recycling program, increase reliability, reduce capital needs and mitigate environmental impact.
  • Testing our new intervals and enhanced completion concepts to unlock additional value and organic inventory upside.

Grow Inventory of
Operational Assets

Growing our inventory of well locations through the delineation of emerging targets on our existing acreage positions and selective acquisitions of leasehold rights and mineral interests in areas complementary to our existing core operating areas.

Strategy in Action

Improving our net acre value.

INFILL ACREAGE ADDITIONS

  • Acquired 3,158 net acres within/contiguous to Spur footprint in 2H18
  • 100% HBP; ~77% NRI
  • Enhance scaled program development

LEASEHOLD ACTIVITY

  • Trades: ~ 4,325 net acres
  • Leasing and additions: ~ 3,100 net acres

MINERAL RIGHTS

  • Acquired over 1,600 net mineral acres across core development areas
  • Highly accretive with near-term planned development

INCREASING ASSET RATIONALIZATION

  • Non-core asset sales and continued trade activity expected through 2019
  • 3,540 net acres divested in 2018

Preserve Our Strong Financial Position

Preserving a strong financial position, focusing on appropriate capital allocation
decisions under various commodity pricing scenarios, prudent risk management and
robust liquidity.


Strategy in Action

Highlights of our financial positioning4.

  • Progressing toward free cash flow generation from field level to corporate-level with 4Q19 target at $50/Bbl5
  • Focused on reducing leverage to meet long-term targets, < 2.0x Net Debt6 / Adjusted EBITDA(X)
  • Strong liquidity position that is supported by a Revolving Credit Facility that has an elected commitment amount of $850MM under a $1.1B borrowing base
  • Flexible capital structure given no near-term debt maturities

  1. Based on CPE calculated Adjusted EBITDA, a non-GAAP financial measure. Please see the Non-GAAP reconciliation disclosures in the Appendix.
  2. Based on standardized Bloomberg calculations for Adjusted EBITDA(X) for over 55 publicly traded E&Ps. Adjusted EBITDA(X) is a non-GAAP financial measure. Please see the Non-GAAP reconciliation disclosures in the Appendix.
  3. As of 2/25/19; 4Q18 consensus averages were utilized for companies yet to report financials.
  4. Based on current elected commitment amount. All figures are as of 12/31/18 and reflect certain items, such as letters of credit, not specifically shown in the capitalization table.
  5. WTI benchmark pricing. Assumes Henry Hub benchmark pricing of $2.75/mmbtu.
  6. Net debt is a non-GAAP financial measure. Please refer to the Appendix for reconciliation.
Callon Petroleum is recognized as one of the top places to work in 2017, 2018, and 2019 by the Houston Chronicle.

Callon Petroleum is recognized as one of the top places to work in 2017, 2018, and 2019 by the Houston Chronicle.

Subscribe

Email Alerts

Sign up