Callon Petroleum Company Reports 25% Increase in Net Income
NATCHEZ, Miss.--
Callon Petroleum Company (NYSE: CPE) today reported results of operations for the quarter ended March 31, 2008.
First Quarter 2008 Net Income. For the quarter ended March 31, 2008, the company reported net income of $7.6 million, or $0.35 per share, a 25% increase over net income of $5.8 million, or $0.27 per share, for the same period in 2007.
First Quarter 2008 Operating Results. First quarter 2008 oil and gas sales totaled $45.0 million from production of 42.1 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $45.5 million from production of 60.3 MMcfe/d during the same period in 2007. The average price received per thousand cubic feet of natural gas in the first quarter of 2008 increased to $9.50, compared to $7.97 during the first quarter of 2007, while the average price received per barrel of oil in the first quarter of 2008 increased to $86.66, compared to $55.53 during the same period in 2007. All average realized price amounts are after the impact of hedging.
First Quarter 2008 Discretionary Cash Flow. Discretionary cash flow for the quarter ended March 31, 2008 totaled $29.0 million compared to $33.5 million during the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $35.1 million and $32.9 million during the quarters ended March 31, 2008 and 2007, respectively. (See "Non-GAAP Financial Measure" that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)
Non-GAAP Financial Measure - This news release refers to a non-GAAP financial measure as "discretionary cash flow." Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. The company also has included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.
Production and Price Information: Three Months Ended -------------------------------------------------- March 31, ------------------- 2008 2007 --------- --------- Production: Oil (MBbls) 290 288 Gas (MMcf) 2,090 3,702 Gas equivalent (MMcfe) 3,828 5,427 Average daily (MMcfe) 42.1 60.3 Average prices: Oil ($/Bbl) (a) $ 86.66 $ 55.53 Gas ($/Mcf) $ 9.50 $ 7.97 Gas equivalent ($/Mcfe) $ 11.75 $ 8.38 Additional per Mcfe data: Sales price $ 11.75 $ 8.38 Lease operating expenses 1.35 1.22 --------- --------- Operating margin $ 10.40 $ 7.16 ========= ========= Depletion $ 3.93 $ 4.03 General and administrative (net of management fees) $ 0.69 $ 0.41 (a) Below is a reconciliation of the average NYMEX price to the average realized sales price per barrel of oil: Average NYMEX oil price $ 97.90 $ 58.27 Basis differentials and quality adjustments ( 3.65) ( 5.11) Transportation ( 1.25) ( 1.14) Hedging ( 6.34) 3.51 --------- --------- Averaged realized oil price $ 86.66 $ 55.53 ========= =========
Reconciliation of Non-GAAP Financial Measure: Three Months Ended -------------------------------------------------- (In thousands) March 31, ------------------- 2008 2007 --------- --------- Discretionary cash flow $ 29,043 $ 33,506 Net working capital changes and other changes 6,088 ( 637) --------- --------- Net cash flow provided by operating activities $ 35,131 $ 32,869 ========= =========
Callon Petroleum Company Consolidated Balance Sheets (In thousands, except share data) (Unaudited) March 31, December 31, 2008 2007 ------------ ------------ ASSETS -------------------------------------------- Current assets: Cash and cash equivalents $ 42,312 $ 53,250 Accounts receivable 22,899 22,073 Restricted investments 141 100 Other current assets 1,890 6,592 ------------ ------------ Total current assets 67,242 82,015 ------------ ------------ Oil and gas properties, full-cost accounting method: Evaluated properties 1,391,964 1,349,904 Less accumulated depreciation, depletion and amortization (753,403) (738,374) ------------ ------------ 638,561 611,530 Unevaluated properties excluded from amortization 61,347 70,176 ------------ ------------ Total oil and gas properties 699,908 681,706 ------------ ------------ Other property and equipment, net 2,137 1,986 Restricted investments 4,525 4,525 Investment in Medusa Spar LLC 12,740 12,673 Other assets, net 7,473 9,577 ------------ ------------ Total assets $ 794,025 $ 792,482 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY -------------------------------------------- Current liabilities: Accounts payable and accrued liabilities $ 25,096 $ 37,698 Asset retirement obligations 9,470 9,810 Fair market value of derivatives 8,613 5,205 ------------ ------------ Total current liabilities 43,179 52,713 ------------ ------------ Long-term debt 392,589 392,012 Asset retirement obligations 27,849 27,027 Deferred tax liability 35,094 32,190 Other long-term liabilities 2,018 1,465 ------------ ------------ Total liabilities 500,729 505,407 ------------ ------------ Stockholders' equity: Preferred Stock, $.01 par value, 2,500,000 shares authorized; -- -- Common Stock, $.01 par value, 30,000,000 shares authorized; 20,941,779 and 20,891,145 shares outstanding at March 31, 2008 and December 31, 2007, respectively 209 209 Capital in excess of par value 224,140 223,336 Other comprehensive income (5,598) (3,383) Retained earnings 74,545 66,913 ------------ ------------ Total stockholders' equity 293,296 287,075 ------------ ------------ Total liabilities and stockholders' equity $ 794,025 $ 792,482 ============ ============
Callon Petroleum Company Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, ------------------- 2008 2007 --------- --------- Operating revenues: Oil sales $ 25,096 $ 15,968 Gas sales 19,864 29,516 --------- --------- Total operating revenues 44,960 45,484 --------- --------- Operating expenses: Lease operating expenses 5,178 6,599 Depreciation, depletion and amortization 15,029 21,847 General and administrative 2,652 2,221 Accretion expense 1,032 1,112 --------- --------- Total operating expenses 23,891 31,779 --------- --------- Income from operations 21,069 13,705 --------- --------- Other (income) expenses: Interest expense 9,940 4,585 Other income (472) (325) --------- --------- Total other (income) expenses 9,468 4,260 --------- --------- Income before income taxes 11,601 9,445 Income tax expense 4,082 3,803 --------- --------- Income before equity in earnings of Medusa Spar LLC 7,519 5,642 Equity in earnings of Medusa Spar LLC, net of tax 113 161 --------- --------- Net income $ 7,632 $ 5,803 ========= ========= Net income per share: Basic $ 0.37 $ 0.28 ========= ========= Diluted $ 0.35 $ 0.27 ========= ========= Shares used in computing net income per share: Basic 20,871 20,722 ========= ========= Diluted 21,644 21,193 ========= =========
Callon Petroleum Company Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended ------------------- March 31, March 31, 2008 2007 --------- --------- Cash flows from operating activities: Net income $ 7,632 $ 5,803 Adjustments to reconcile net income to cash provided by operating activities: Depreciation, depletion and amortization 15,213 22,039 Accretion expense 1,032 1,112 Amortization of deferred financing costs 873 569 Equity in earnings of Medusa Spar LLC (113) (161) Deferred income tax expense 4,082 3,803 Non-cash charge related to compensation plans 371 341 Excess tax benefits from share-based payment arrangements (47) -- Changes in current assets and liabilities: Accounts receivable (648) 3,407 Other current assets 4,702 917 Current liabilities (252) (5,554) Change in gas balancing receivable 923 12 Change in gas balancing payable 557 122 Change in other long-term liabilities (4) (3) Change in other assets, net 810 462 --------- --------- Cash provided by operating activities 35,131 32,869 --------- --------- Cash flows from investing activities: Capital expenditures (46,208) (24,332) Entrada acquisition -- (7,500) Distribution from Medusa Spar LLC 108 186 --------- --------- Cash used by investing activities (46,100) (31,646) --------- --------- Cash flows from financing activities: Increases in debt -- 11,000 Payments on debt -- (11,000) Equity issued related to employee stock plans (16) -- Excess tax benefits from share-based payment arrangements 47 -- Capital leases -- (55) --------- --------- Cash provided (used) by financing activities 31 (55) --------- --------- Net decrease in cash and cash equivalents (10,938) 1,168 Cash and cash equivalents: Balance, beginning of period 53,250 1,896 --------- --------- Balance, end of period $ 42,312 $ 3,064 ========= =========
Callon Petroleum Company is engaged in the exploration, development, acquisition and operation of oil and gas properties in the Gulf Coast region. The majority of Callon's properties and operations are concentrated in the offshore waters of the Gulf of Mexico.
This news release is posted on the company's website at www.callon.com and will be archived there for subsequent review. It can be accessed from the "News Releases" link on the left side of the homepage.
It should be noted that this news release contains projections and other 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. These projections and 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 are discussed in our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K, available on our website or the SEC's website at www.sec.gov.
Source: Callon Petroleum Company
Released May 7, 2008