EX-99.1 2 d34085exv99w1.htm PRESS RELEASE - MARCH 14, 2006 exv99w1
 

EXHIBIT 99.1
For further information contact
Rodger W. Smith 1-800-451-1294
FOR IMMEDIATE RELEASE
          Callon Petroleum Company Reports
          Fourth Quarter, Full-Year Results for 2005
          Natchez, MS (March 14, 2006)—Callon Petroleum Company (NYSE: CPE) today reported its results of operations for both the three-month period and year ended December 31, 2005.
          Fourth Quarter and Full-Year 2005 Net Income. The company reported record net income for the full-year 2005 of $26.8 million, or $1.28 per share, compared to net income for 2004 of $21.5 million, or $1.22 per share. For the fourth quarter of 2005, net income totaled $4.3 million, or $0.20 per share, compared to net income of $9.1 million, or $0.45 per share, for the same period in 2004. Net income for the quarter and full-year ended December 31, 2004 included an income tax benefit of $6.7 million after reversing a valuation allowance that was established during 2003, with an impact on earnings per share of $0.33 and $0.38 for the quarter and full-year 2004, respectively. All per share amounts are on a diluted basis.
          As further discussed below, approximately 62 percent and 24 percent of the company’s production for the quarter and full-year ended December 31, 2005, respectively, was deferred because of forced downtime at its major producing properties caused by the effects of tropical storms and hurricanes. (See “2005 Tropical Storm and Hurricane Activity” which follows.)
          Fourth Quarter and Full-Year 2005 Operating Results. For the fourth quarter oil and gas sales totaled $24.9 million from average production of 27.6 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $25.1 million from average daily production of 51.6 MMcfe/d for the same period in 2004. During the fourth quarter of 2005, natural gas represented approximately 47 percent of the company’s total production. For the year ended December 31, 2005, oil and gas sales totaled $141.3 million from average production of 51.5 MMcfe/d. This corresponds to sales of $119.8 million from average daily production of 59.6 MMcfe/d during the same period in 2004.
          The average price received per thousand cubic feet of natural gas in the fourth quarter of 2005 increased by 95 percent to $12.20 compared to $6.27 during the fourth quarter of 2004, while the average price received per barrel of oil in the fourth quarter of 2005 increased by 81 percent to $45.93 compared to $25.44 for the same period in 2004. The average price received per thousand cubic feet of natural gas for the year ended December 31, 2005 increased by 36 percent to $8.35 compared to $6.15 for the same period in 2004, while the average price received per barrel of oil increased by 45 percent to $41.61 compared to $28.71 for the same period in 2004.
          2005 Discretionary Cash Flow. For the year ended December 31, 2005, discretionary cash flow totaled $93.5 million compared to $71.2 million for the same period in 2004. Net cash flow provided by operating activities, as defined by GAAP, totaled $74.0 million and $70.9 million during the years ended December 31, 2005 and 2004, respectively. (See “Non-GAAP Financial Measure” that follows and the accompanying financial information for a reconciliation of discretionary cash flow, a non-GAAP measure, 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. Discretionary cash flow is defined as cash flow provided by operating activities before net working capital changes. 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 periods 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.
          2005 Tropical Storm and Hurricane Activity – Tropical storms followed by the devastation wrought by Hurricanes Katrina and Rita caused us to experience substantial downtime during the third and fourth quarters of 2005. This was primarily because of damage to transmission lines and production facilities owned by third parties that process our crude oil and natural gas.
          Our major fields, Medusa, Habanero, High Island Block 119 and Mobile Bay Blocks 863, 864, 907, 953 and 955, incurred damage; but the fields were repaired and brought back online in the fourth quarter of 2005 and January 2006.

 

     Tropical storms and hurricanes during 2005 resulted in a significant reduction of production which in turn decreased our net income and cash flow. Listed below are our major properties which incurred deferred production:
         
Field   Downtime Days
Medusa
     102  
Habanero
     85  
Mobile Block 864 Unit
     48  
Mobile 953
     48  
Mobile 955
     136  
High Island 119
     102  
     These major properties accounted for 86% of our production during 2005.
                 
Consolidated Condensed Balance Sheets:   December 31,     December 31,  
(In thousands)   2005     2004  
Cash and cash equivalents
   $ 2,565     $ 3,266  
Oil and gas properties, net
     447,364       406,690  
All other assets
     83,847       47,567  
 
            
 
                
Total assets
   $ 533,776     $ 457,523  
 
            
 
                
Long-term debt including current maturities
   $ 189,076     $ 192,927  
All other liabilities
     116,652       66,284  
Stockholders’ equity
     228,048       198,312  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 533,776     $ 457,523  
 
            
                                 
    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
Production and Price Information:   2005   2004   2005   2004
Production:
                                
Oil (MBbls)
     224       381       1,837       1,736  
Gas (MMcf)
     1,198       2,462       7,768       11,387  
Total Production (MMcfe)
     2,541       4,751       18,787       21,801  
Average daily (MMcfe)
     27.6       51.6       51.5       59.6  
 
                                
Average prices:
                                
Oil ($/Bbl)
   $ 45.93     $ 25.44     $ 41.61     $ 28.71  
Gas ($/Mcf)
   $ 12.20     $ 6.27     $ 8.35     $ 6.15  
Gas equivalent ($/Mcfe)
   $ 9.79     $ 5.29     $ 7.52     $ 5.50  

 

 

                                 
Reconciliation Non-GAAP Financial Measure:   Three Months Ended     Twelve Months Ended  
(In thousands)   December 31,     December 31,  
    2005     2004     2005     2004  
Discretionary cash flow
   $ 11,579     $ 14,290     $ 93,452     $ 71,221  
Net working capital changes and other changes
     (23,660 )     1,949       (19,442 )     (313 )
 
                        
 
                                
Net cash flow provided (used) by operating activities
   $ (12,081 )   $ 16,239     $ 74,010     $ 70,908  
 
                        

 

 

Callon Petroleum Company
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share amounts)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2005     2004     2005     2004  
Operating revenues:
                                
Oil and gas sales
   $ 24,888     $ 25,139     $ 141,290     $ 119,802  
 
                        
 
                                
Operating expenses:
                                
Lease operating expenses
     5,995       5,246       24,377       22,308  
Depreciation, depletion and amortization
     6,554       10,995       44,946       47,453  
General and administrative
     1,992       1,919       8,085       8,758  
Accretion expense
     1,054       845       3,549       3,400  
Derivative expense
     (490 )     (237 )     6,028       1,371  
 
 
                        
Total operating expenses
     15,105       18,768       86,985       83,290  
 
                        
 
Income from operations
     9,783       6,371       54,305       36,512  
 
                        
Other (income) expenses:
                                
Interest expense
     3,776       4,299       16,660       20,137  
Other income
     (348 )     (46 )     (998 )     (357 )
Loss on early extinguishment of debt
     —       —       —       3,004  
 
                        
Total other (income) expenses
     3,428       4,253       15,662       22,784  
 
                        
 
                                
Income (loss) before income taxes
     6,355       2,118       38,643       13,728  
Income tax expense (benefit)
     2,098       (6,697 )     13,209       (6,697 )
 
                        
 
                                
Net income before Medusa Spar LLC
     4,257       8,815       25,434       20,425  
Income from Medusa Spar LLC, net of tax
     50       308       1,342       1,076  
 
                        
 
                                
Net income
     4,307       9,123       26,776       21,501  
 
                                
Preferred stock dividends
     —       317       318       1,272  
 
                        
Net income (loss) available to common shares
   $ 4,307     $ 8,806     $ 26,458     $ 20,229  
 
                        
 
                                
Net income per common share:
                                
Basic
   $ 0.22     $ 0.50     $ 1.43     $ 1.28  
 
                        
Diluted
   $ 0.20     $ 0.45     $ 1.28     $ 1.22  
 
                        
 
                                
Shares used in computing net income (loss):
                                
Basic
     19,272       17,561       18,453       15,796  
 
                        
Diluted
     21,276       20,375       20,883       17,678  
 
                        

 

 

     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.
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.
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