EX-99.1 2 d30212exv99w1.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 Third Quarter, First Nine Months of 2005
     Natchez, MS (November 8, 2005) — Callon Petroleum Company (NYSE: CPE) today reported results of operations for both the quarter and the nine-month period ended September 30, 2005.
     Third Quarter 2005 Net Income. Callon reported net income of $3.7 million, or $0.17 per diluted share, after charges of $3.8 million, or $0.11 per diluted share, for fourth quarter 2005 ineffective derivatives in accordance with SFAS No.133 related to production downtime because of tropical storm/hurricane activity. This compares with net income of $546,000, or $0.01 per diluted share during the same period of last year, which included charges of $532,000, or $0.03 per diluted share, attributable to early extinguishment of debt and $731,000, or $0.04 per diluted share, for ineffective derivatives as a result of Hurricane Ivan’s production interruption during the third quarter of 2004.
     Third Quarter 2005 Operating Results. Oil and gas sales totaled $31.7 million from production of 41.3 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $25.1 million from production of 50.6 MMcfe/d during the same period in 2004. On August 27, 2005 several of the company’s fields were shut-in due to the approach of Hurricane Katrina and subsequently, during the next month, due to the approach of Hurricane Rita. Primarily as a result of downtime caused by those two severe storms to third party transmission lines and downstream facilities which process Callon’s crude oil and natural gas, the company had to defer production of approximately 20.3 MMcf/d during the third quarter of 2005. The company had to defer 9 MMcfe/d during the third quarter of 2004 due to Hurricane Ivan. The average price, after the impact of hedging, received per thousand cubic feet of natural gas in the third quarter of 2005 increased to $9.32 compared to $6.11 during the third quarter of 2004, while the average price, after the impact of hedging, received per barrel of oil in the third quarter of 2005 increased to $46.16 compared to $27.83 during the same period a year earlier.
     Nine Months 2005 Net Income. For the nine months ended September 30, 2005, the company reported net income of $22.5 million, or $1.09 per diluted share. This compares to a net income of $12.4 million, or $0.74 per share on a diluted basis, for the same period in 2004.

 

 

     Nine Months 2005 Operating Results. Operating results for the nine-month period ended September 30, 2005 include oil and gas sales of $116.4 million from average production of 59.5 MMcfe/d. This corresponds to sales of $94.7 million from average daily production of 62.2 MMcfe/d during the same period in 2004. The average price, after the impact of hedging, received per thousand cubic feet of natural gas for the nine-month period ended September 30, 2005 increased to $7.65 compared to $6.11 during the first nine months in 2004, while the average price, after the impact of hedging, received per barrel of oil increased to $41.01 compared to $29.63 during the same period a year earlier.
     Third Quarter 2005 Discretionary Cash Flow. Discretionary cash flow totaled $20.0 million compared to $13.4 million during the same period of the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $32.5 million and $14.9 million during the three-month periods ended September 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.)
     Nine Months 2005 Discretionary Cash Flow. Discretionary cash flow totaled $81.9 million compared to $56.9 million during the first nine months of the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $86.1 million and $54.7 million during the nine-month periods ended September 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.
                                 
    Three Months Ended     Nine Months Ended  
Reconciliation of Non-GAAP Financial Measure:   September 30,     September 30,  
(In thousands)   2005     2004     2005     2004  
Discretionary cash flow
   $ 20,035     $ 13,407     $ 81,873     $ 56,931  
Net working capital changes and other changes
     12,503       1,498       4,218       (2,262 )
 
                        
 
                                
Net cash flow provided by operating activities
   $ 32,538     $ 14,905     $ 86,091     $ 54,669  
 
                        

 

 

                 
Consolidated Condensed Balance Sheets:   September 30,     December 31,  
(In thousands)   2005     2004  
    (Unaudited)          
Cash and cash equivalents
   $ 25,797     $ 3,266  
Oil and gas properties, net
     424,755       406,690  
All other assets
     49,978       47,567  
 
            
Total assets
   $ 500,530     $ 457,523  
 
            
 
                
Long-term debt including current maturities
   $ 188,757     $ 192,927  
All other liabilities
     92,751       66,284  
Stockholders’ equity
     219,022       198,312  
 
            
Total liabilities and stockholders’ equity
   $ 500,530     $ 457,523  
 
            
                                 
    Three Months     Nine Months  
    Ended     Ended  
    September 30,     September 30,  
Production and Price Information:   2005     2004     2005     2004  
Production:
                                
Oil (MBbls)
     382       376       1,613       1,354  
Gas (MMcf)
     1,510       2,405       6,570       8,924  
Gas equivalent (MMcfe)
     3,804       4,659       16,246       17,050  
Average daily (MMcfe)
     41.3       50.6       59.5       62.2  
 
                                
Average prices:
                                
Oil ($/Bbl) (a)
   $ 46.16     $ 27.83     $ 41.01     $ 29.63  
Gas ($/Mcf)
   $ 9.32     $ 6.11     $ 7.65     $ 6.11  
Gas equivalent ($/Mcfe)
   $ 8.34     $ 5.40     $ 7.16     $ 5.55  
 
                                
(a) Below is a reconciliation of the average NYMEX price to the average realized sales price per barrel of oil:
                                
 
                                
Average NYMEX oil price
   $ 63.19     $ 43.87     $ 55.40     $ 39.11  
Basis differentials and quality adjustments
     (6.98 )     (4.77 )     (8.04 )     (3.40 )
Transportation
     (1.25 )     (1.27 )     (1.28 )     (1.27 )
Hedging
     (8.80 )     (10.00 )     (5.07 )     (4.81 )
 
                        
Averaged realized oil price
   $ 46.16     $ 27.83     $ 41.01     $ 29.63  
 
                        

 

 

Callon Petroleum Company
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2005     2004     2005     2004  
Operating revenues:
                                
Oil and gas sales
   $ 31,722     $ 25,138     $ 116,402     $ 94,663  
 
                        
 
                                
Operating expenses:
                                
Lease operating expenses
     5,649       5,771       18,382       17,062  
Depreciation, depletion and amortization
     9,313       10,147       38,392       36,458  
General and administrative
     1,598       1,509       6,093       6,839  
Accretion expense
     864       825       2,495       2,555  
Derivative expense
     5,606       1,519       6,518       1,608  
 
                        
Total operating expenses
     23,030       19,771       71,880       64,522  
 
                        
 
                                
Income from operations
     8,692       5,367       44,522       30,141  
 
                        
 
                                
Other (income) expenses:
                                
Interest expense
     4,050       4,511       12,884       15,838  
Other (income) expense
     (352 )     65       (650 )     (311 )
Loss on early extinguishment of debt
     —       532       —       3,004  
 
                        
Total other (income) expenses
     3,698       5,108       12,234       18,531  
 
                        
 
                                
Income before income taxes
     4,994       259       32,288       11,610  
Income tax expense
     1,558       —       11,111       —  
 
                        
 
                                
Income before Medusa Spar LLC
     3,436       259       21,177       11,610  
Income from Medusa Spar LLC, net of tax
     247       287       1,292       768  
 
                        
 
                                
Net income
     3,683       546       22,469       12,378  
Preferred stock dividends
     —       317       318       955  
 
                        
Net income available to common shares
   $ 3,683     $ 229     $ 22,151     $ 11,423  
 
                        
 
                                
Net income per common share:
                                
Basic
   $ 0.19     $ 0.01     $ 1.23     $ 0.75  
 
                        
Diluted
   $ 0.17     $ 0.01     $ 1.09     $ 0.74  
 
                        
 
                                
Shares used in computing net income:
                                
Basic
     19,132       17,552       17,998       15,192  
 
                        
Diluted
     21,235       18,815       20,545       16,762  
 
                        

 

 

     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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