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: Expansion and Full Field Development

2020: Expansion and Full Field Development

~200,000 net surface acres
Forecast pro forma production growth of 11%
8-9 rigs and 3 completion crews
Estimated 160 completed wells
YE19: 540 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

73%

Adjusted EBITDA Margin

$2.41

Cash G&A, a 4% sequential decline Q/Q

$150.4M

Adjusted EBITDA, a 28% increase Q/Q

Source

Fourth Quarter 2019

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.
DELAWARE DC&E ($000) / 1,000'
MIDLAND DC&E ($000) / 1,000’
EAGLE FORD DC&E ($000) / 1,000’

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.

Chart

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.

  • Progressing toward free cash flow generation from field level to corporate-level with FY20 target below $50/Bbl2 WTI
  • Focused on reducing leverage to meet long-term targets, < 2.0x Net Debt3 / Adjusted EBITDA(X)
  • Strong liquidity position that is supported by a Revolving Credit Facility with a $2.5 billion borrowing base
  • Flexible capital structure given no near-term debt maturities
  1. 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.
  2. WTI benchmark pricing. Assumes Henry Hub benchmark pricing of $2.75/mmbtu.
  3. 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