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 in Texas.

2014: INITIAL BUILDING PHASE

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

2019: TRANSITION TO FULL ASSET DEVELOPMENT

~85,000 net surface acres
41,331 Boe/d of production (2019)
4-6 rigs running
41.7 net wells completed
YE18: 239 MMBoe Proved Reserves
2020 and Beyond: Expansion and Life-of-Field Development

2020 and Beyond: Expansion and Life-of-Field Development

~180,000 net surface acres
Three-year production
CAGR of 1% - 4%
65% - 75% reinvestment rate
Sustain production and increase FCF

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

$33.46

Boe Operating Margin

$1.26

Boe Cash G&A

$5.55

Boe Lease Operating Expense

Source

First Quarter 2021

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.

2014

2014

By the end of 2014, we held over 27,000 net acres in the Midland Basin.

2016

2016

By the end of 2016, we expanded our footprint with acquisitions in both the Midland Basin and Southwern Delawarwe Basin.

2019

2019

We continued expanding our footprint in the Delaware Basin and by the end of 2019, added the Eagle Ford Shale to our portfolio.

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 positioning1.

  • Projecting $500 to $800 million in adjusted free cash flow through 2023 at oil prices between $50 and $60 WTI per barrel2
  • Strong liquidity position that is supported by a Revolving Credit Facility with a $1.6 billion borrowing base3
  • Focused on reducing leverage to meet long-term targets, < 2.5x Net Debt4/ Adjusted EBITDA(X) by year-end 2022
  • Flexible capital structure given no near-term debt maturities
  1. Based on current elected commitment amount.  All figures are as of 3/31/21 and reflect certain items, such as letters of credit, not specifically shown in the capitalization table.
  2. Estimated value for combined FCF generation from 2021-2023 at $50-$60/Bbl WTI utilizing a reinvestment rate of 75% for 2022 and 2023.
  3. Revolving Credit Facility reaffirmed as of May 3, 2021.
  4. Net debt is a non-GAAP financial measure. Please refer to the Appendix for reconciliation.
Callon Petroleum is honored to be recognized as a Top Workplace by the Houston Chronicle!

Callon Petroleum is honored to be recognized as a Top Workplace by the Houston Chronicle!

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