Callon Petroleum Company (NYSE: CPE) today reported results of operations for the quarter ended March 31, 2009.
First Quarter 2009 Net Income. For the quarter ended March 31, 2009, the company reported net income of $2.4 million, or $0.11 per share, exceeding analysis consensus which was a net loss of $0.07 per share. This compares to net income of $7.6 million, or $0.35 per share, for the same period in 2008.
First Quarter 2009 Operating Results. Oil and gas sales totaled $24.8 million from production of 33.6 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $45.0 million from production of 42.1 MMcfe/d during the same period in 2008. The average price received per thousand cubic feet of natural gas decreased to $6.13, compared to $9.50 during the first quarter of 2008, while the average price received per barrel of oil decreased to $60.59, compared to $86.66 during the same period in 2008. All average realized price amounts are after the impact of hedging, which added $7.9 million to oil and gas sales.
First Quarter 2009 Discretionary Cash Flow. Discretionary cash flow for the quarter ended March 31, 2009 totaled $14.2 million compared to $29.0 million during the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $2.2 million and $35.1 million during the quarters ended March 31, 2009 and 2008, respectively. (See “Non-GAAP Financial Measure” that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)
Non-GAAP Financial Measure - This news release refers to a non-GAAP financial measure as “discretionary cash flow.” Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt. The company also has included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.
| Production and Price Information: |
Three Months Ended |
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| March 31, | ||||||||
| 2009 | 2008 | |||||||
| Production: | ||||||||
| Oil (MBbls) | 263 | 290 | ||||||
| Gas (MMcf) | 1,447 | 2,090 | ||||||
| Gas equivalent (MMcfe) | 3,026 | 3,828 | ||||||
| Average daily (MMcfe) | 33.6 | 42.1 | ||||||
| Average prices: | ||||||||
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Oil ($/Bbl)(a) |
$ | 60.59 | $ | 86.66 | ||||
| Gas ($/Mcf) | $ | 6.13 | $ | 9.50 | ||||
| Gas equivalent ($/Mcfe) | $ | 8.20 | $ | 11.75 | ||||
| Additional per Mcfe data: | ||||||||
| Sales price | $ | 8.20 | $ | 11.75 | ||||
| Lease operating expenses | 1.33 | 1.35 | ||||||
| Operating margin | $ | 6.87 | $ | 10.40 | ||||
| Depletion | $ | 3.11 | $ | 3.93 | ||||
| General and administrative (net of management fees) | $ | 0.60 | $ | 0.69 | ||||
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(a) Below is a reconciliation of the average NYMEX price to the average realized sales price per barrel of oil: |
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| Average NYMEX oil price | $ | 43.08 | $ | 97.90 | ||||
| Basis differentials and quality adjustments | ( 4.01 | ) | ( 3.65 | ) | ||||
| Transportation | ( 1.35 | ) | ( 1.25 | ) | ||||
| Hedging | 22.87 | ( 6.34 | ) | |||||
| Averaged realized oil price | $ | 60.59 | $ | 86.66 | ||||
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Reconciliation of Non-GAAP Financial Measure: |
Three Months Ended |
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| (In thousands) | March 31, | |||||||
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2009 |
2008 |
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| Discretionary cash flow | $ | 14,230 | $ | 29,043 | ||||
| Net working capital changes and other changes | (11,984 | ) | 6,088 | |||||
| Net cash flow provided by operating activities | $ | 2,246 | $ | 35,131 | ||||
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Callon Petroleum Company |
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Consolidated Balance Sheets |
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(In thousands, except share data) |
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(Unaudited) |
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| March 31, | December 31, | |||||||
| 2009 | 2008 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 651 | $ | 17,126 | ||||
| Accounts receivable | 21,472 | 44,290 | ||||||
| Fair market value of derivatives | 14,857 | 21,780 | ||||||
| Other current assets | 191 | 1,103 | ||||||
| Total current assets | 37,171 | 84,299 | ||||||
| Oil and gas properties, full-cost accounting method: | ||||||||
| Evaluated properties | 1,587,795 | 1,581,698 | ||||||
| Less accumulated depreciation, depletion and amortization | (1,464,687 | ) | (1,455,275 | ) | ||||
| 123,108 | 126,423 | |||||||
| Unevaluated properties excluded from amortization | 28,595 | 32,829 | ||||||
| Total oil and gas properties | 151,703 | 159,252 | ||||||
| Other property and equipment, net | 2,419 | 2,536 | ||||||
| Restricted investments | 4,775 | 4,759 | ||||||
| Investment in Medusa Spar LLC | 12,183 | 12,577 | ||||||
| Other assets, net | 2,172 | 2,667 | ||||||
| Total assets | $ | 210,423 | $ | 266,090 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 23,375 | $ | 76,516 | ||||
| Asset retirement obligations | 9,456 | 9,151 | ||||||
| Total current liabilities | 32,831 | 85,667 | ||||||
| 9.75% Senior Notes | 195,065 | 194,420 | ||||||
| Callon Entrada Credit Facility (non-recourse) | 78,435 | 78,435 | ||||||
| Total long-term debt | 273,500 | 272,855 | ||||||
| Asset retirement obligations | 32,273 | 33,043 | ||||||
| Callon Entrada Credit Facility interest payable (non-recourse) | 3,339 | 2,719 | ||||||
| Other long-term liabilities | 1,638 | 1,610 | ||||||
| Total liabilities | 343,581 | 395,894 | ||||||
| Stockholders' equity: | ||||||||
| Preferred Stock, $.01 par value, 2,500,000 shares authorized; | -- | -- | ||||||
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Common Stock, $.01 par value, 30,000,000 shares authorized; 21,637,470 and 21,621,142 shares outstanding at March 31, 2009 and December 31, 2008, respectively |
216 | 216 | ||||||
| Capital in excess of par value | 228,968 | 227,803 | ||||||
| Other comprehensive income | 7,234 | 14,157 | ||||||
| Retained (deficit) earnings | (369,576 | ) | (371,980 | ) | ||||
| Total stockholders' equity | (133,158 | ) | (129,804 | ) | ||||
| Total liabilities and stockholders' equity | $ | 210,423 | $ | 266,090 | ||||
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Callon Petroleum Company |
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Consolidated Statements of Operations |
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(In thousands, except per share amounts) |
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(Unaudited) |
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| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2009 | 2008 | |||||||
| Operating revenues: | ||||||||
| Oil sales | $ | 15,952 | $ | 25,096 | ||||
| Gas sales | 8,863 | 19,864 | ||||||
| Total operating revenues | 24,815 | 44,960 | ||||||
| Operating expenses: | ||||||||
| Lease operating expenses | 4,039 | 5,178 | ||||||
| Depreciation, depletion and amortization | 9,413 | 15,029 | ||||||
| General and administrative | 1,819 | 2,652 | ||||||
| Accretion expense | 1,038 | 1,032 | ||||||
| Total operating expenses | 16,309 | 23,891 | ||||||
| Income from operations | 8,506 | 21,069 | ||||||
| Other (income) expenses: | ||||||||
| Interest expense | 4,782 | 9,940 | ||||||
| Callon Entrada Credit Facility interest expense (non-recourse) | 1,556 | -- | ||||||
| Other (income) expense | (95 | ) | (472 | ) | ||||
| Total other (income) expenses | 6,243 | 9,468 | ||||||
| Income before income taxes | 2,263 | 11,601 | ||||||
| Income tax (benefit) expense | (24 | ) | 4,082 | |||||
| Income before equity in earnings of Medusa Spar LLC | 2,287 | 7,519 | ||||||
| Equity in earnings of Medusa Spar LLC, net of tax | 117 | 113 | ||||||
| Net income available to common shares | $ | 2,404 | $ | 7,632 | ||||
| Net income per common share: | ||||||||
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Basic |
$ | 0.11 | $ | 0.37 | ||||
| Diluted | $ | 0.11 | $ | 0.35 | ||||
| Shares used in computing net income per common share: | ||||||||
| Basic | 21,607 | 20,871 | ||||||
| Diluted | 21,607 | 21,644 | ||||||
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Callon Petroleum Company |
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Consolidated Statements of Cash Flows |
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(In thousands) |
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(Unaudited) |
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| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2009 | 2008 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 2,404 | $ | 7,632 | ||||
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Adjustments to reconcile net income to cash provided by operating activities:
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| Depreciation, depletion and amortization | 9,629 | 15,213 | ||||||
| Accretion expense | 1,038 | 1,032 | ||||||
| Amortization of deferred financing costs | 731 | 873 | ||||||
| Equity in earnings of Medusa Spar LLC | (117 | ) | (113 | ) | ||||
| Deferred income tax expense | (24 | ) | 4,082 | |||||
| Non-cash charge related to compensation plans | 569 | 371 | ||||||
| Excess tax benefits from share-based payment arrangements | -- | (47 | ) | |||||
| Changes in current assets and liabilities: | ||||||||
| Accounts receivable | 5,761 | (648 | ) | |||||
| Other current assets | 912 | 4,702 | ||||||
| Current liabilities | (19,614 | ) | (252 | ) | ||||
| Change in gas balancing receivable | 319 | 923 | ||||||
| Change in gas balancing payable | 30 | 557 | ||||||
| Change in other long-term liabilities | 618 | (4 | ) | |||||
| Change in other assets, net | (10 | ) | 810 | |||||
| Cash provided by operating activities | 2,246 | 35,131 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (19,295 | ) | (46,208 | ) | ||||
| Distribution from Medusa Spar LLC | 574 | 108 | ||||||
| Cash used in investing activities | (18,721 | ) | (46,100 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Equity issued related to employee stock plans | -- | (16 | ) | |||||
| Excess tax benefits from share-based payment arrangements | -- | 47 | ||||||
| Cash provided by financing activities | -- | 31 | ||||||
| Net decrease in cash and cash equivalents | (16,475 | ) | (10,938 | ) | ||||
| Cash and cash equivalents: | ||||||||
| Balance, beginning of period | 17,126 | 53,250 | ||||||
| Balance, end of period | $ | 651 | $ | 42,312 | ||||
Callon Petroleum Company is engaged in the acquisition, development, exploration 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.
Callon Petroleum Company
Rodger W. Smith, 800-451-1294
