Callon Petroleum Company Announces Third Quarter 2017 Results

NATCHEZ, Miss., Nov. 6, 2017 /PRNewswire/ -- Callon Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today reported results of operations for the three months ended September 30, 2017.

Presentation slides accompanying this earnings release are available on the Company's website at www.callon.com located on the "Presentations" page within the Investors section of the site.

Financial and operational highlights for the third quarter of 2017, and other recent data points include:

  • Increased production by 36% year-over-year, with an increased percentage of oil volumes
  • Reduced lease operating expense by 9% on a sequential basis to $5.08 per BOE, contributing to a total reduction of 23% since the first quarter of 2017
  • Generated a third quarter operating margin of $32.58 per BOE
  • First operated Delaware Basin Lower Wolfcamp A well had a 24 hour peak flowing rate of 238 BOE/d per 1,000' (82% oil)
  • Successful return to Ranger drilling program with two Lower Wolfcamp B wells outperforming previous type curves

Joe Gatto, Chief Executive Officer and President commented, "This quarter's results speak to our team's commitment to generating strong returns by focusing on driving down costs while extracting the best well results possible from our premier asset base. Consistent improvement in our already strong cash margins, despite production deferrals during the quarter, is evidence that we are taking the correct steps to create shareholder value. Our goal is to manage growth as a function of creating returns on our capital investment. We have been consistent in our focus on these priorities and will continue to be into 2018." He continued, "Callon's well results were strong across all four of our operations areas during the third quarter, including our first operated well in the Delaware Basin. Early well results in the fourth quarter have been equally strong and we are excited about our prospects for 2018."

Operations Update

At September 30, 2017, we had 218 gross (161.2 net) horizontal wells producing from seven established flow units in the Permian Basin. Net daily production for the three months ended September 30, 2017 grew approximately 36% to 22.5 thousand barrels of oil equivalent per day (approximately 77% oil) as compared to the same period of 2016.

For the three months ended September 30, 2017, we operated four horizontal drilling rigs, drilling 13 gross (10.3 net) horizontal wells in the Spur, WildHorse, Ranger and Monarch areas. We placed a combined 11 gross (10.1 net) horizontal wells on production in the quarter in these areas.

In the Delaware Basin, we drilled and completed our first operated Lower Wolfcamp A well, the Sleeping Indian A1 #1LA well.  The well is currently outperforming the 7,500 foot type curve, with an oil cut of approximately 82%. We recently completed our second operated well, the Saratoga A1 #7LA and have placed the well on flowback. We expect to commence multi-well pad development prior to the end of this year with co-development of the Upper and Lower Wolfcamp A.

In the Midland Basin, we were active across all three focus areas: WildHorse, Ranger and Monarch. In Howard County at our WildHorse area, we placed multiple Wolfcamp A wells on production during the second half of the quarter. The wells are cleaning up and have shown similar productivity to our previous wells in the area on an early time basis. Our plans are to continue program development of multiple zones across our footprint and we also expect to test tighter Wolfcamp A spacing, at 10 wells per section, in 2018.

In Reagan County at our Ranger area, our first operated Lower Wolfcamp B wells since 2015 are outperforming the type curve by more than 20%. During the quarter, we drilled our first Wolfcamp C well in this area, which is scheduled for completion during the fourth quarter along with two additional Lower Wolfcamp B wells. We currently do not account for any Wolfcamp C locations in our delineated inventory.

At our Monarch area in Midland County, we drilled a three-well pad consisting of our longest wells to date at an average of over 21,000 feet true measured depth. The completed lateral length for these wells averaged approximately 10,600 feet and the wells are entering their fourth week of flowback.

Infrastructure investment continued to be a key focus in the third quarter. We realized an impressive reduction in lease operating expenses this quarter, and we expect this infrastructure investment to continue to improve operating margins as well as position Callon as an environmentally-responsible operator for the long term. We continued to invest in saltwater disposal wells in the Midland Basin and Delaware Basin, resulting in increased disposal capacity and reduced disposal costs.  In addition, we have begun utilizing recycled water volumes in the Midland Basin and are currently preparing infrastructure at our Spur asset to implement water recycling for our planned two rig program in 2018. Importantly, after developing a substantial base of Callon-owned infrastructure, we are now positioned to selectively monetize portions of our asset base while ensuring reliable operations. As an initial step in this initiative, we expect to complete at least $20 million of such transactions in the fourth quarter, with other identified transactions expected to close by the end of the first quarter of 2018.

Capital Expenditures


For the three months ended September 30, 2017, we incurred $112.7 million in cash operational capital expenditures (excluding other items) compared to $64.0 million in the second quarter of 2017. Total capital expenditures, inclusive of capitalized expenses, are detailed below on an accrual and cash basis (in thousands):




Three Months Ended September 30, 2017



Operational




Capitalized


Capitalized


Total Capital



Capital


Other (a)


Interest


G&A


Expenditures

Cash basis (b)


$

112,667



$

3,767



$

479



$

4,215



$

121,128


Timing adjustments (c)


711





9,119





9,830


Non-cash items








1,133



1,133


   Accrual (GAAP) basis


$

113,378



$

3,767



$

9,598



$

5,348



$

132,091




(a)

Includes seismic, land and other items.

(b)

Cash basis is a non-GAAP measure that we believe helps users of the financial information reconcile amounts to the cash flow statement and to account for timing related operational changes such as our development pace and rig count.

(c)

Includes timing adjustments related to cash disbursements in the current period for capital expenditures incurred in the prior period.

 

Operating and Financial Results


The following table presents summary information for the periods indicated:




Three Months Ended



September 30, 2017


June 30, 2017


September 30, 2016

Net production:







Oil (MBbls)


1,591



1,596



1,153


Natural gas (MMcf)


2,900



2,550



2,244


Total production (MBOE)


2,074



2,021



1,527


Average daily production (BOE/d)


22,543



22,209



16,598


   % oil (BOE basis)


77

%


79

%


76

%

Oil and natural gas revenues (in thousands):







   Oil revenue


$

73,349



$

72,885



$

49,095


   Natural gas revenue


11,265



9,398



6,832


      Total revenue


84,614



82,283



55,927


   Impact of cash-settled derivatives


(1,214)



(267)



4,091


      Adjusted Total Revenue (i)


$

83,400



$

82,016



$

60,018


Average realized sales price:







   Oil (Bbl) (excluding impact of cash settled derivatives)


$

46.10



$

45.67



$

42.58


   Oil (Bbl) (including impact of cash settled derivatives)


45.24



45.47



46.27


   Natural gas (Mcf) (excluding impact of cash settled derivatives)


$

3.88



$

3.69



$

3.04


   Natural gas (Mcf) (including impact of cash settled derivatives)


3.94



3.70



2.97


   Total (BOE) (excluding impact of cash settled derivatives)


$

40.80



$

40.71



$

36.63


   Total (BOE) (including impact of cash settled derivatives)


40.21



40.58



39.30


Additional per BOE data:







   Sales price (excluding impact of cash settled derivatives)


$

40.80



$

40.71



$

36.63


      Lease operating expense (excluding gathering and treating







      expense)


5.08



5.56



6.16


      Gathering and treating expense


0.52



0.45



0.36


      Production taxes


2.62



2.38



2.28


   Operating margin


$

32.58



$

32.32



$

27.83









   Depletion, depreciation and amortization


$

13.75



$

12.97



$

11.33


   Adjusted G&A (a)







      Cash component (b)


$

2.50



$

2.67



$

2.38


      Non-cash component


0.65



0.53



0.58




(a)

Excludes certain non-recurring expenses and non-cash valuation adjustments. See the reconciliation provided within this press release for a reconciliation of G&A expense on a GAAP basis to Adjusted G&A expense.

(b)

Excludes the amortization of equity-settled share-based incentive awards and corporate depreciation and amortization.

Total Revenue. For the quarter ended September 30, 2017, Callon reported total revenue of $84.6 million and total revenue including cash-settled derivatives ("Adjusted Total Revenue," a non-GAAP financial measure(i)) of $83.4 million, including the impact of a $1.2 million loss from the settlement of derivative contracts. The table above reconciles Adjusted Total Revenue to the related GAAP measure of the Company's revenue. Average daily production for the quarter was 22.5 MBOE/d compared to average daily production of 22.2 MBOE/d in the second quarter of 2017. Average realized prices, including and excluding the effects of hedging, are detailed below.

Hedging impacts. For the quarter ended September 30, 2017, Callon recognized the following hedging-related items (in thousands, except per unit data):


In Thousands


Per Unit

Oil derivatives




Net loss on settlements

$

(1,373)



$

(0.86)


Net loss on fair value adjustments

(12,811)




   Total loss on oil derivatives

$

(14,184)




Natural gas derivatives




Net gain on settlements

$

159



$

0.06


Net loss on fair value adjustments

(137)




   Total gain on natural gas derivatives

$

22




Total oil & natural gas derivatives




Net loss on settlements

$

(1,214)



$

(0.59)


Net loss on fair value adjustments

(12,948)




   Total loss on total oil & natural gas derivatives

$

(14,162)




Lease Operating Expenses, including workover and gathering expense ("LOE"). LOE per BOE for the three months ended September 30, 2017 was $5.60 per BOE, compared to LOE of $6.01 per BOE in the second quarter of 2017. The decrease in this metric resulted primarily from a decrease in the number of workovers period over period.

Production Taxes, including ad valorem taxes. Production taxes were $2.62 per BOE for the three months ended September 30, 2017, representing approximately 6.4% of total revenue before the impact of derivative settlements.

Depreciation, Depletion and Amortization ("DD&A"). DD&A for the three months ended September 30, 2017 was $13.75 per BOE compared to $12.97 per BOE in the second quarter of 2017. The increase on a per unit basis was primarily attributable to greater increases in our depreciable asset base and assumed future development costs related to undeveloped proved reserves as compared to the estimated total proved reserve base.

General and Administrative ("G&A"). G&A, excluding certain non-cash incentive share-based compensation valuation adjustments, ("Adjusted G&A", a non-GAAP measure(i)) was $6.5 million, or $3.15 per BOE, for the three months ended September 30, 2017 compared to $6.5 million, or $3.20 per BOE, for the second quarter of 2017. The cash component of Adjusted G&A was $5.2 million, or $2.50 per BOE, for the three months ended September 30, 2017 compared to $5.4 million, or $2.67 per BOE, for the second quarter of 2017.

For the three months ended September 30, 2017, G&A and Adjusted G&A, which excludes the amortization of equity-settled, share-based incentive awards and corporate depreciation and amortization, are calculated as follows (in thousands):


Three Months Ended
September 30, 2017

Total G&A expense

$

7,259


   Less: Change in the fair value of liability share-based awards (non-cash)

(731)


Adjusted G&A – total

6,528


   Less: Restricted stock share-based compensation (non-cash)

(1,198)


   Less: Corporate depreciation & amortization (non-cash)

(146)


Adjusted G&A – cash component

$

5,184


Income tax expense. Callon typically provides for income taxes at a statutory rate of 35% adjusted for permanent differences expected to be realized, which primarily relate to non-deductible executive compensation expenses and state income taxes. We recorded an income tax expense of $0.2 million for the three months ended September 30, 2017 which relates to deferred State of Texas gross margin tax. At September 30, 2017 we had a valuation allowance of $109.8 million. Adjusted Income per fully diluted common share, a non-GAAP financial measure(i), adjusts our income (loss) available to common stockholders to reflect our theoretical tax provision of $6.1 million (or $0.03 per diluted share) for the quarter as if the valuation allowance did not exist.

2017 Guidance Update




Fourth Quarter



2017 Guidance

Total production (BOE/d)


24,000 - 25,500

% oil


77 %

Income Statement Expenses (per BOE)



LOE, including workovers


$5.75 - $6.25

Gathering and treating


$0.55 - $0.65

Production taxes, including ad valorem (% unhedged revenue)


7%

   Adjusted G&A: cash component (a)


$2.25 - $2.50

   Adjusted G&A: non-cash component (b)


$0.55 - $0.65

   Interest expense (c)


$0.00

Effective income tax rate


0%

Capital expenditures ($MM, accrual basis)



Total Operational (net of monetizations) (d)


$108 - $112 ($88 - $92)

Capitalized expenses (cash component)


$13 - $17

Net operated horizontal well completions



Midland Basin


~12

Delaware Basin


~1



(a)

Excludes stock-based compensation and corporate depreciation and amortization. See the Non-GAAP related disclosures referenced in the footnote (b) below.

(b)

Excludes certain non-recurring expenses and non-cash valuation adjustments. The reconciliation above provides a reconciliation of third quarter 2017 G&A expense on a GAAP basis to Adjusted G&A expense, a non-GAAP measure. The Company is unable to present a quantitative reconciliation of this forward-looking non-GAAP financial measure without unreasonable effort because of the number of estimated variables that could affect the final value. Accordingly, investors are cautioned not to place undue reliance on this information.

(c)

All interest expense anticipated to be capitalized.

(d)

Includes seismic, land and other items. Excludes capitalized expenses.

 

Hedge Portfolio Summary


The following tables summarize our open derivative positions for the periods indicated:



For the Remainder of


For the Full Year of

Oil contracts (WTI)

2017


2018

Swap contracts combined with short puts (enhanced swaps)




Total volume (MBbls)

184




Weighted average price per Bbl




  Swap

$

44.50



$


  Short put option

$

30.00



$


Swap contracts




Total volume (MBbls)

184



1,825


Weighted average price per Bbl

$

45.74



$

51.42


Deferred premium put spread option




Total volume (MBbls)

253




Premium per Bbl

$

2.45



$


Weighted average price per Bbl




  Long put option

$

50.00



$


  Short put option

$

40.00



$


Collar contracts (two-way collars)




Total volume (MBbls)

340




Weighted average price per Bbl




  Ceiling (short call)

$

58.19



$


  Floor (long put)

$

47.50



$


Call option contracts




Total volume (MBbls)

169




 Premium per Bbl

$

1.82



$


Weighted average price per Bbl




   Short call strike price (a)

$

50.00



$


     Long call strike price (a)

$

50.00



$


Collar contracts combined with short puts (three-way collars)




Total volume (MBbls)



3,468


Weighted average price per Bbl




  Ceiling (short call option)

$



$

60.86


  Floor (long put option)

$



$

48.95


  Short put option

$



$

39.21




(a)

Offsetting contracts.

 


For the Remainder of


For the Full Year of

Oil contracts (Midland basis differential)

2017


2018

Swap contracts




Volume (MBbls)

552



5,109


Weighted average price per Bbl

$

(0.52)



$

(0.90)










 


For the Remainder of


For the Full Year of

Natural gas contracts (Henry Hub)

2017


2018

Collar contracts combined with short puts (three-way collars)




Total volume (BBtu)

368




Weighted average price per MMBtu




  Ceiling (short call option)

$

3.71



$


  Floor (long put option)

$

3.00



$


  Short put option

$

2.50



$


Collar contracts (two-way collars)




Total volume (BBtu)

856



720


Weighted average price per MMBtu




  Ceiling (short call option)

$

3.77



$

3.84


  Floor (long put option)

$

3.23



$

3.40


Swap contracts




Total volume (BBtu)

124




Weighted average price per MMBtu

$

3.39



$


Income (Loss) Available to Common Shareholders. The Company reported net income available to common shareholders of $15.3 million for the three months ended September 30, 2017 and Adjusted Income available to common shareholders of $18.1 million, or $0.09 per diluted share. Adjusted Income per fully diluted common share, a non-GAAP financial measure(i), adjusts our income (loss) available to common stockholders to reflect our theoretical tax provision for the quarter as if the valuation allowance did not exist. The following tables reconcile to the related GAAP measure the Company's income (loss) available to common stockholders to Adjusted Income and the Company's net income (loss) to Adjusted EBITDA (in thousands):


Three Months Ended


September 30, 2017


June 30, 2017


September 30, 2016

Income available to common stockholders

$

15,257



$

31,566



$

19,315


   Change in valuation allowance

(6,064)



(11,194)



(7,907)


   Net (gain) loss on derivatives, net of settlements

8,416



(6,995)



(679)


   Change in the fair value of share-based awards

475



(315)



2,192


   Settled share-based awards



4,128




Adjusted Income

$

18,084



$

17,190



$

12,921


Adjusted Income per fully diluted common share

$

0.09



$

0.09



$

0.09





Three Months Ended


September 30, 2017


June 30, 2017


September 30, 2016

Net income

$

17,081



$

33,390



$

21,139


   Net (gain) loss on derivatives, net of settlements

12,947



(10,761)



(1,044)


   Non-cash stock-based compensation expense

1,952



499



4,150


   Settled share-based awards



6,351




   Acquisition expense

205



2,373



456


   Income tax (benefit) expense

237



322



(62)


   Interest expense

444



589



831


   Depreciation, depletion and amortization

29,132



26,765



17,733


   Accretion expense

131



208



187


Adjusted EBITDA

$

62,129



$

59,736



$

43,390


Discretionary Cash Flow. Discretionary cash flow, a non-GAAP measure(i), for the three months ended September 30, 2017 was $61.9 million and is reconciled to operating cash flow in the following table (in thousands):


Three Months Ended


September 30, 2017


June 30, 2017


September 30, 2016

Cash flows from operating activities:






Net income

$

17,081



$

33,390



$

21,139


Adjustments to reconcile net income to cash provided by operating activities:

   Depreciation, depletion and amortization

29,132



26,765



17,733


   Accretion expense

131



208



187


   Amortization of non-cash debt related items

441



589



810


   Deferred income tax expense

237



323



(62)


   Net (gain) loss on derivatives, net of settlements

12,947



(10,761)



(1,044)


   Loss on sale of other property and equipment



62




   Non-cash expense related to equity share-based awards

1,219



4,865



608


   Change in the fair value of liability share-based awards

732



1,982



3,371


Discretionary cash flow

$

61,920



$

57,423



$

42,742


   Changes in working capital

$

(7,777)



$

(8,968)



$

2,927


   Payments to settle asset retirement obligations

(250)



(816)



(576)


   Payments to settle vested liability share-based awards



(4,511)




Net cash provided by operating activities

$

53,893



$

43,128



$

45,093


 

Callon Petroleum Company

Consolidated Balance Sheets

(in thousands, except par and per share values and share data)



September 30, 2017


December 31, 2016

ASSETS

Unaudited



Current assets:




Cash and cash equivalents

$

61,609



$

652,993


Accounts receivable

81,973



69,783


Fair value of derivatives

3,333



103


Other current assets

2,583



2,247


Total current assets

149,498



725,126


Oil and natural gas properties, full cost accounting method:




Evaluated properties

3,283,985



2,754,353


Less accumulated depreciation, depletion, amortization and impairment

(2,026,809)



(1,947,673)


Net evaluated oil and natural gas properties

1,257,176



806,680


Unevaluated properties

1,173,614



668,721


Total oil and natural gas properties

2,430,790



1,475,401


Other property and equipment, net

18,626



14,114


Restricted investments

3,362



3,332


Deferred financing costs

5,209



3,092


Fair value of derivatives

1,121




Acquisition deposit



46,138


Prepaid

4,650




Other assets, net

827



384


Total assets

$

2,614,083



$

2,267,587


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

147,338



$

95,577


Accrued interest

18,375



6,057


Cash-settleable restricted stock unit awards

4,158



8,919


Asset retirement obligations

1,841



2,729


Fair value of derivatives

6,380



18,268


Total current liabilities

178,092



131,550


Senior secured revolving credit facility




6.125% senior unsecured notes due 2024, net of unamortized deferred financing costs

595,115



390,219


Asset retirement obligations

3,163



3,932


Cash-settleable restricted stock unit awards

2,626



8,071


Deferred tax liability

1,158



90


Fair value of derivatives

659



28


Other long-term liabilities

405



295


Total liabilities

781,218



534,185


Commitments and contingencies




Stockholders' equity:




Preferred stock, series A cumulative, $0.01 par value and $50.00 liquidation preference, 2,500,000 shares authorized; 1,458,948 shares outstanding

15



15


Common stock, $0.01 par value, 300,000,000 shares authorized; 201,827,995 and 201,041,320 shares outstanding, respectively

2,018



2,010


Capital in excess of par value

2,179,258



2,171,514


Accumulated deficit

(348,426)



(440,137)


Total stockholders' equity

1,832,865



1,733,402


Total liabilities and stockholders' equity

$

2,614,083



$

2,267,587


 

Callon Petroleum Company

Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)



Three Months Ended September 30,


Nine Months Ended September 30,


2017


2016


2017


2016

Operating revenues:








Oil sales

$

73,349



$

49,095



$

218,242



$

117,093


Natural gas sales

11,265



6,832



30,019



14,677


Total operating revenues

84,614



55,927



248,261



131,770


Operating expenses:








Lease operating expenses

11,624



9,961



36,708



24,229


Production taxes

5,444



3,478



16,168



8,153


Depreciation, depletion and amortization

28,525



17,303



79,172



49,318


General and administrative

7,259



7,891



18,894



19,755


Settled share-based awards





6,351




Accretion expense

131



187



523



762


Write-down of oil and natural gas properties







95,788


Acquisition expense

205



456



3,027



2,410


Total operating expenses

53,188



39,276



160,843



200,415


Income (loss) from operations

31,426



16,651



87,418



(68,645)


Other (income) expenses:








Interest expense, net of capitalized amounts

444



831



1,698



10,502


(Gain) loss on derivative contracts

14,162



(5,135)



(11,636)



11,281


Other income

(498)



(122)



(1,270)



(299)


Total other (income) expense

14,108



(4,426)



(11,208)



21,484


Income (loss) before income taxes

17,318



21,077



98,626



(90,129)


Income tax (benefit) expense

237



(62)



1,026



(62)


Net income (loss)

17,081



21,139



97,600



(90,067)


Preferred stock dividends

(1,824)



(1,824)



(5,471)



(5,471)


Income (loss) available to common stockholders

$

15,257



$

19,315



$

92,129



$

(95,538)


Income (loss) per common share:








Basic

$

0.08



$

0.14



$

0.46



$

(0.85)


Diluted

$

0.08



$

0.14



$

0.46



$

(0.85)


Shares used in computing income (loss) per common share:







Basic

201,827



136,983



201,422



112,925


Diluted

202,337



137,483



201,995



112,925


 

Callon Petroleum Company

Consolidated Statements of Cash Flows

(Unaudited; in thousands)



Three Months Ended September 30,


Nine Months Ended September 30,


2017


2016


2017


2016

Cash flows from operating activities:








Net income (loss)

$

17,081



$

21,139



$

97,600



$

(90,067)


Adjustments to reconcile net income (loss) to cash provided by operating activities:

Depreciation, depletion and amortization

29,132



17,733



80,829



50,560


Write-down of oil and natural gas properties







95,788


Accretion expense

131



187



523



762


Amortization of non-cash debt related items

441



810



1,695



2,371


Deferred income tax (benefit) expense

237



(62)



1,026



(62)


Net (gain) loss on derivatives, net of settlements

12,947



(1,044)



(15,608)



27,105


Loss on sale of other property and equipment





62




Non-cash expense related to equity share-based awards

1,219



778



7,014



1,954


Change in the fair value of liability share-based awards

732



3,371



2,423



6,045


Payments to settle asset retirement obligations

(250)



(576)



(1,831)



(895)


Changes in current assets and liabilities:








Accounts receivable

(4,338)



(11,608)



(12,148)



(16,444)


Other current assets

(38)



54



(336)



(251)


Current liabilities

1,854



15,702



7,534



19,815


Change in other long-term liabilities

1





121



86


Change in long-term prepaid

(4,650)





(4,650)




Change in other assets, net

(606)



(1,221)



(1,376)



(1,671)


Payments to settle vested liability share-based awards





(13,173)



(10,300)


Net cash provided by operating activities

53,893



45,263



149,705



84,796


Cash flows from investing activities:








Capital expenditures

(121,128)



(47,418)



(267,218)



(122,698)


Acquisitions

(8,015)



(18,033)



(714,504)



(302,057)


Acquisition deposit



(32,700)



46,138



(32,700)


Proceeds from sales of mineral interests and equipment



(708)





22,923


Net cash used in investing activities

(129,143)



(98,859)



(935,584)



(434,532)


Cash flows from financing activities:








Borrowings on senior secured revolving credit facility



74,000





217,000


Payments on senior secured revolving credit facility



(114,000)





(257,000)


Issuance of 6.125% senior unsecured notes due 2024





200,000




Premium on the issuance of 6.125% senior unsecured notes due 2024





8,250




Issuance of common stock



421,908





722,715


Payment of preferred stock dividends

(1,824)



(1,824)



(5,471)



(5,471)


Payment of deferred financing costs

(401)



(640)



(7,166)



(640)


Tax withholdings related to restricted stock units

(65)



(170)



(1,118)



(2,207)


Net cash provided by financing activities

(2,290)



379,274



194,495



674,397


Net change in cash and cash equivalents

(77,540)



325,678



(591,384)



324,661


Balance, beginning of period

139,149



207



652,993



1,224


Balance, end of period

$

61,609



$

325,885



$

61,609



$

325,885


Non-GAAP Financial Measures and Reconciliations

This news release refers to non-GAAP financial measures such as "Discretionary Cash Flow," "Adjusted G&A," "Adjusted Income," "Adjusted EBITDA," and "Adjusted Total Revenue." These measures, detailed below, are provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP (including the notes), included in our SEC filings and posted on our website.

  • Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and natural gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. The Company also has included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements, which the company may not control and may not relate to the period in which the operating activities occurred. Discretionary cash flow is calculated using net income (loss) adjusted for certain items including depreciation, depletion and amortization, the impact of financial derivatives (including the mark-to-market effects, net of cash settlements and premiums paid or received related to our financial derivatives), remaining asset retirement obligations related to our divested offshore properties, restructuring and other non-recurring costs, deferred income taxes and other non-cash income items.
  • Callon believes that the non-GAAP measure of Adjusted G&A is useful to investors because it provides readers with a meaningful measure of our recurring G&A expense and provides for greater comparability period-over-period. The table above details all adjustments to G&A on a GAAP basis to arrive at Adjusted G&A.
  • We believe that the non-GAAP measure of Adjusted Income available to common shareholders ("Adjusted Income") and Adjusted Income per diluted share are useful to investors because they provide readers with a meaningful measure of our profitability before recording certain items whose timing or amount cannot be reasonably determined. These measures exclude the net of tax effects of certain non-recurring items and non-cash valuation adjustments, which are detailed in the reconciliation provided above. Prior to being tax-effected and excluded, the amounts reflected in the determination of Adjusted Income and Adjusted Income per diluted share above were computed in accordance with GAAP.
  • We calculate Adjusted Earnings before Interest, Income Taxes, Depreciation, Depletion and Amortization ("Adjusted EBITDA") as Adjusted Income plus interest expense, income tax expense (benefit) and depreciation, depletion and amortization expense. Adjusted EBITDA is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income (loss), operating income (loss), cash flow provided by operating activities or other income or cash flow data prepared in accordance with GAAP. However, we believe that Adjusted EBITDA provides additional information with respect to our performance or ability to meet our future debt service, capital expenditures and working capital requirements. Because Adjusted EBITDA excludes some, but not all, items that affect net income (loss) and may vary among companies, the Adjusted EBITDA we present may not be comparable to similarly titled measures of other companies.
  • We believe that the non-GAAP measure of Adjusted Total Revenue is useful to investors because it provides readers with a revenue value more comparable to other companies who account for derivative contracts and hedges and include their effects in revenue. We believe Adjusted Total Revenue is also useful to investors as a measure of the actual cash inflows generated during the period.

Earnings Call Information

The Company will host a conference call on Tuesday, November 7, 2017, to discuss third quarter 2017 financial and operating results.

Please join Callon Petroleum Company via the Internet for a webcast of the conference call:

Date/Time:

Tuesday, November 7, 2017, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time)

Webcast:

Select "IR Calendar" under the "Investors" section of the website: www.callon.com.

Presentation Slides:

Select "Presentations" under the "Investors" section of the website: www.callon.com.

Alternatively, you may join by telephone using the following numbers:

Toll Free:

1-888-317-6003

Canada Toll Free:

1-866-284-3684

International:

1-412-317-6061

Access code:

6326656

An archive of the conference call webcast will also be available at www.callon.com under the "Investors" section of the website.

About Callon Petroleum

Callon Petroleum Company is an independent energy company focused on the acquisition, development, exploration, and operation of oil and natural gas properties in the Permian Basin in West Texas.

This news release is posted on the Company's website at www.callon.com and will be archived there for subsequent review under the "News" link on the top of the homepage.

Cautionary Statement Regarding Forward Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include all statements regarding wells anticipated to be drilled and placed on production; future levels of drilling activity and associated production and cash flow expectations; the Company's 2017 guidance and capital expenditure forecast; estimated reserve quantities and the present value thereof; and the implementation of the Company's business plans and strategy, as well as statements including the words "believe," "expect," "plans" and words of similar meaning. These statements reflect the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved, and actual results could differ materially from those projected as a result of certain factors. Some of the factors which could affect our future results and could cause results to differ materially from those expressed in our forward-looking statements include the volatility of oil and natural gas prices, ability to drill and complete wells, operational, regulatory and environment risks, our ability to finance our activities and other risks more fully discussed in our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on our website or the SEC's website at www.sec.gov.

For further information contact:
Mark Brewer
Director of Investor Relations
Callon Petroleum Company
ir@callon.com
1-800-451-1294




i)  

See "Non-GAAP Financial Measures and Reconciliations" included within this release for related disclosures and calculations

 

View original content:http://www.prnewswire.com/news-releases/callon-petroleum-company-announces-third-quarter-2017-results-300550288.html

SOURCE Callon Petroleum Company