EX-99.1 2 d27671exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
For further information contact
Rodger Smith, 1-800-451-1294
FOR IMMEDIATE RELEASE
     Callon Petroleum Company Reports Results
     For Second Quarter, First Six Months of 2005
     Natchez, MS (August 4, 2005)—Callon Petroleum Company (NYSE: CPE) today reported results of operations for both the quarter and the six-month period ended June 30, 2005.
     Second Quarter 2005 Net Income. Net income for the quarter was $9.3 million, or $0.46 per diluted share, after a non-cash charge of $928,000, or $0.03 per diluted share, attributable to the accelerated vesting of performance shares of common stock for an executive officer and two directors of the company, two of whom are deceased. The company reported net income of $9.7 million, or $0.58 per share on a diluted basis, for the same period in 2004.
     Second Quarter 2005 Operating Results. Oil and gas sales totaled $41.7 million from average production of 64 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $37.6 million from average daily production of 73 MMcfe/d during the same period in 2004. During the second quarter of 2005, crude oil represented approximately 60% of the company’s total production. The average price realized per barrel of oil in the second quarter of 2005 increased to $41.53 compared to $30.03 during the second three months of 2004, while the average price realized per thousand cubic feet of natural gas in the second quarter of 2005 increased to $7.43 compared to $6.28 during the same period a year earlier.
     Six Months 2005 Net Income. Net income increased to $18.8 million, or $0.92 per diluted share, compared to net income of $11.8 million, or $0.75 per share on a diluted basis, for the same period in 2004.
     Six Months 2005 Operating Results. Oil and gas sales totaled $84.7 million from average production of 69 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $69.5 million from average daily production of 68 MMcfe/d during the same period in 2004. Crude oil represented 59% of total production. The average price received per barrel of oil increased to $39.41 compared to $30.32 during the same period in 2004, while the average price realized per thousand cubic feet of natural gas for the six-month period ended June 30, 2005 increased to $7.15 compared to $6.11 during the same period a year earlier.
     Second Quarter 2005 Discretionary Cash Flow. Discretionary cash flow increased by 19% to $30.4 million compared to $25.6 million during the second three months of the previous year. Net cash flow provided by

 

 

operating activities, as defined by GAAP, totaled $32.2 million and $21.9 million during the three-month period ended June 30, 2005 and 2004, respectively. (See “Non-GAAP Financial Measure” that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)
     Six Months 2005 Discretionary Cash Flow. Discretionary cash flow totaled $61.8 million compared to $43.5 million during the first six months of the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $53.6 million and $39.8 million during the six-month period ended June 30, 2005 and 2004, 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 this measure is a financial indicator of the company’s ability to fund capital expenditures and service debt. Callon also believes this non-GAAP financial measure of cash flow is useful information to investors because it is widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry. Many investors use the published research of these analysts in making their investment decisions. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.
Reconciliation of Non-GAAP Financial Measure:
                                 
    Three Months Ended   Six Months Ended
(In thousands)   June 30,   June 30,
    2005   2004   2005   2004
Discretionary cash flow
   $ 30,424     $ 25,625     $ 61,838     $ 43,524  
Net working capital changes and other changes
     1,798       (3,764 )     (8,285 )     (3,760 )
 
                                
Net cash flow provided by operating activities
   $ 32,222     $ 21,861     $ 53,553     $ 39,764  
 
                                

 

 

Consolidated Condensed Balance Sheets:
(In thousands)
                 
    June 30,   December 31,
    2005   2004
    (Unaudited)        
Cash and cash equivalents
   $ 18,723     $ 3,266  
Oil and gas properties, net
     407,526       406,690  
All other assets
     56,194       47,567  
 
                
Total assets
   $ 482,443     $ 457,523  
 
                
 
                
Long-term debt including current maturities
   $ 188,435     $ 192,927  
All other liabilities
     78,583       66,284  
Stockholders’ equity
     215,425       198,312  
 
                
Total liabilities and stockholders’ equity
   $ 482,443     $ 457,523  
 
                
Production and Price Information:
                                 
    Three Months   Six Months
    Ended   Ended
    June 30,   June 30,
    2005   2004   2005   2004
Production:
                                
Oil (MBbls)
     590       539       1,230       978  
Gas (MMcf)
     2,313       3,412       5,060       6,520  
Gas equivalent (MMcfe)
     5,850       6,648       12,443       12,390  
Average daily (MMcfe)
     64.3       73.1       68.7       68.1  
 
                                
Average prices:
                                
Oil ($/Bbl) (a)
   $ 41.53     $ 30.03     $ 39.41     $ 30.32  
Gas ($/Mcf)
   $ 7.43     $ 6.28     $ 7.15     $ 6.11  
Gas equivalent ($/Mcfe)
   $ 7.12     $ 5.66     $ 6.81     $ 5.61  
 
                                
(a) Below is a reconciliation of the average NYMEX price to the Average realized sales price per barrel of oil:
                                
 
                                
Average NYMEX oil price
   $ 53.17     $ 38.31     $ 51.51     $ 36.73  
Basis differentials and quality adjustments
     (7.37 )     (3.09 )     (6.89 )     (2.31 )
Transportation
     (1.28 )     (1.30 )     (1.30 )     (1.28 )
Hedging
     (2.99 )     (3.89 )     (3.91 )     (2.82 )
 
                                
 
                                
Averaged realized oil price
   $ 41.53     $ 30.03     $ 39.41     $ 30.32  
 
                                

 

 

Callon Petroleum Company
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2005   2004   2005   2004
Operating revenues:
                                
Oil and gas sales
   $ 41,668     $ 37,606     $ 84,680     $ 69,525  
 
                                
 
                                
Operating expenses:
                                
Lease operating expenses
     6,197       6,123       12,733       11,291  
Depreciation, depletion and amortization
     13,671       14,476       29,079       26,311  
General and administrative
     2,801       1,537       4,495       5,330  
Accretion expense
     770       914       1,631       1,730  
Derivative expense
     533       13       912       89  
 
                                
Total operating expenses
     23,972       23,063       48,850       44,751  
 
                                
 
                                
Income from operations
     17,696       14,543       35,830       24,774  
 
                                
 
                                
Other (income) expenses:
                                
Interest expense
     4,265       5,436       8,834       11,327  
Other income
     (96 )     (290 )     (298 )     (376 )
Loss on early extinguishment of debt
     —       —       —       2,472  
 
                                
Total other (income) expenses
     4,169       5,146       8,536       13,423  
 
                                
 
                                
Income before income taxes
     13,527       9,397       27,294       11,351  
Income tax expense
     4,735       —       9,553       —  
 
                                
 
                                
Income before Medusa Spar LLC
     8,792       9,397       17,741       11,351  
Income from Medusa Spar LLC net of tax
     519       333       1,045       481  
 
                                
 
                                
Net income
     9,311       9,730       18,786       11,832  
Preferred stock dividends
     —       319       318       638  
 
                                
Net income available to common shares
   $ 9,311     $ 9,411     $ 18,468     $ 11,194  
 
                                
 
                                
Net income per common share:
                                
Basic
   $ 0.52     $ 0.66     $ 1.04     $ 0.80  
 
                                
Diluted
   $ 0.46     $ 0.58     $ 0.92     $ 0.75  
 
                                
 
                                
Shares used in computing net income:
                                
Basic
     17,736       14,251       17,703       14,035  
 
                                
Diluted
     20,345       16,877       20,511       15,761  
 
                                

 

 

     Callon Petroleum Company is engaged in the exploration, development, acquisition and operation of oil and gas properties primarily in the Gulf Coast region. Callon’s properties and operations are geographically 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.
     The company would like to point out 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 include:
  •   general economic conditions;
 
  •   volatility of oil and natural gas prices;
 
  •   uncertainty of estimates of oil and natural gas reserves;
 
  •   impact of competition;
 
  •   availability and cost of seismic, drilling and other equipment;
 
  •   operating hazards inherent in the exploration for and production of oil and natural gas;
 
  •   difficulties encountered during the exploration for and production of oil and natural gas;
 
  •   difficulties encountered in delivering oil and natural gas to commercial markets;
 
  •   changes in customer demand and producers’ supply;
 
  •   uncertainty of our ability to attract capital;
 
  •   compliance with, or the effect of changes in, the extensive governmental regulations regarding the oil and natural gas business;
 
  •   actions of operators of our oil and gas properties;
 
  •   weather conditions; and
 
  •   the risk factors discussed in our filings with the Securities and Exchange Commission, including those in our Annual Report for the year ended December 31, 2004 on
 
      Form 10-K.
     The preceding estimates reflect our review of continuing operations only. These estimates do not take into account any material transactions such as sales of debt and equity securities, acquisitions or divestitures of assets, and formations of joint ventures. We continually review these types of transaction and may engage in one or more of these types of transactions without prior notice.
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