Callon Petroleum Company Reports First Quarter 2009 Results of Operations
NATCHEZ, Miss.-- 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 $35.1 million during the quarters ended March 31, 2009 and 2008, respectively. (See "Non-GAAP Financial Measure" that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)
Non-GAAP Financial Measure - This news release refers to a non-GAAP financial measure as "discretionary cash flow." Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. The company also has included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP.
Production and Price Information: Three Months Ended March 31, 2009 2008 Production: Oil (MBbls) 263 290 Gas (MMcf) 1,447 2,090 Gas equivalent (MMcfe) 3,026 3,828 Average daily (MMcfe) 33.6 42.1 Average prices: Oil ($/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 (a) Below is a reconciliation of the average NYMEX price to the average realized sales price per barrel of oil: 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 Reconciliation of Non-GAAP Financial Measure: Three Months Ended (In thousands) March 31, 2009 2008 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
Callon Petroleum Company Consolidated Balance Sheets (In thousands, except share data) (Unaudited) 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 (1,464,687 ) (1,455,275 ) amortization 123,108 126,423 Unevaluated properties excluded from 28,595 32,829 amortization 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 3,339 2,719 (non-recourse) 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; Common Stock, $.01 par value, 30,000,000 shares authorized; 21,637,470 and 21,621,142 shares 216 216 outstanding at March 31, 2009 and December 31, 2008, respectively 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
Callon Petroleum Company Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) 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 1,556 -- (non-recourse) 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: 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
Callon Petroleum Company Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 31, March 31, 2009 2008 Cash flows from operating activities: Net income $ 2,404 $ 7,632 Adjustments to reconcile net income to cash provided by operating activities: 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 -- (47 ) arrangements 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 -- 47 arrangements 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.
Source: Callon Petroleum Company
Released May 11, 2009