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HOUSTON, Nov. 2, 2022 /PRNewswire/ -- Callon Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today reported results of operations for the three and nine months ended September 30, 2022.
Presentation slides accompanying this earnings release are available on the Company's website at www.callon.com located on the "Presentations" page within the Investors section of the site.
Third Quarter 2022 and Recent Highlights
"Callon's strong production growth this quarter was the product of increased well productivity and completion efficiencies that improved cycle times of larger scale projects," said Joe Gatto, President and Chief Executive Officer. "Top line growth combined with a reduction in per unit lease operating expenses and capital cost controls drove a sequential 28% increase in net cash provided by operating activities and 18% increase in free cash flow despite lower oil and NGL benchmark pricing. We have generated over $450 million in free cash flow in the first nine months of the year and expect the fourth quarter to be the best quarter of the year for this important measure. Looking forward, we have been proactive in securing key oilfield services for 2023 to ensure repeatable execution of our operational model of scaled co-development that drives more consistent well productivity over time."
Callon Operations Update
At September 30, 2022, Callon had 1,420 gross (1,264.1 net) wells producing from established flow units in the Permian and Eagle Ford. Net daily production for the three months ended September 30, 2022 was 107.3 MBoe/d (62% oil and 82% liquids).
Operated drilling and completion activity for the three months ended September 30, 2022 are summarized in the table below:
Three Months Ended September 30, 2022 | ||||||||||||
Drilled | Completed | Placed on Production | ||||||||||
Region | Gross | Net | Gross | Net | Gross | Net | ||||||
Delaware Basin | 10 | 8.7 | 12 | 10.0 | 10 | 7.1 | ||||||
Midland Basin | 14 | 13.4 | 23 | 20.9 | 22 | 19.9 | ||||||
Eagle Ford | 3 | 3.0 | 11 | 10.4 | 11 | 10.4 | ||||||
Total | 27 | 25.1 | 46 | 41.3 | 43 | 37.4 |
For the three months ended September 30, 2022, Callon drilled 27 gross (25.1 net) wells and placed a combined 43 gross (37.4 net) wells on production. Completions operations for the quarter included 12 gross (10.0 net) wells in the Delaware Basin, 23 gross (20.9 net) wells in the Midland Basin, and 11 gross (10.4 net) wells in the Eagle Ford. Callon placed 10 gross (7.1 net) wells on production in the Delaware Basin, 22 gross (19.9 net) wells in the Midland Basin, and 11 gross (10.4 net) wells in the Eagle Ford. The average lateral length for all wells completed during the third quarter was 7,791 feet. Operated completions during the third quarter consisted of 3 Upper Wolfcamp A wells, 3 Lower Wolfcamp A wells, 2 Wolfcamp A wells, and 4 Wolfcamp B wells in the Delaware Basin; 10 Lower Spraberry wells, 1 Middle Spraberry well, 8 Wolfcamp A wells and 4 Wolfcamp B wells in the Midland Basin; and 10 Lower Eagle Ford Shale wells and 1 Austin Chalk well.
Financial Update
As of September 30, 2022, the drawn balance on the Credit Facility was $636.0 million and cash balances were $4.4 million. On October 19, 2022, Callon and its lenders amended and restated the senior secured revolving credit facility (the "Credit Facility") which extends the maturity to October 19, 2027. The Credit Facility has a borrowing base of $2.0 billion with an elected commitment of $1.5 billion. The Company intends to continue its application of organic free cash flow towards repayment of debt balances related to the Credit Facility and other debt instruments.
In addition, Callon has entered into agreements for the divestiture of approximately $25 million of non-core properties that are anticipated to close during the fourth quarter with proceeds to be used to repay borrowings under the Credit Facility.
Fourth Quarter Activity Outlook and Guidance
Callon entered the fourth quarter running five drilling rigs, with four rigs in the Delaware Basin and one rig in the Midland Basin. A sixth drilling rig was contracted in early October and is anticipated to commence drilling in the fourth quarter. The sixth rig was added earlier than scheduled to secure high-quality drilling services in support of operational plans for early 2023. These plans were recently modified to include numerous larger scale Permian projects that will employ simultaneous operations to benefit overall cycle times and efficiencies. Callon intends to utilize one completion crew in the fourth quarter, supporting new production in the Midland and Delaware Basins, before adding a second dedicated crew for simultaneous completion operations in early 2023.
For the fourth quarter, the Company expects to produce 105 - 108 MBoe/d (63% oil), including the impact of pending divestitures. Wells placed on-line are expected to be 20 - 24 gross wells (19 - 23 net), all of which are located in the Permian Basin. In addition, Callon projects operational capital expenditures of $180 - $195 million on an accrual basis, including the fourth quarter operating activity increases described above. Fourth quarter and full year 2022 guidance is available in the accompanying presentation.
Capital Expenditures
For the three months ended September 30, 2022, Callon incurred $254.7 million in operational capital expenditures on an accrual basis. Total capital expenditures, inclusive of capitalized expenses, are detailed below on an accrual and cash basis:
Three Months Ended September 30, 2022 | ||||||||
Operational | Capitalized | Capitalized | Total Capital | |||||
Capital (a) | Interest | G&A | Expenditures | |||||
(In thousands) | ||||||||
Cash basis (b) | $308,832 | $20,401 | $11,053 | $340,286 | ||||
Timing adjustments (c) | (42,247) | 5,563 | — | (36,684) | ||||
Non-cash items | (11,923) | 1,497 | 1,642 | (8,784) | ||||
Accrual basis | $254,662 | $27,461 | $12,695 | $294,818 |
(a) | Includes drilling, completions, facilities and equipment, but excludes land, seismic and asset retirement costs. |
(b) | Cash basis is presented here to help users of financial information reconcile amounts from the cash flow statement to the balance sheet by accounting for timing related changes in working capital that align with our development pace and rig count. |
(c) | Includes timing adjustments related to cash disbursements in the current period for capital expenditures incurred in the prior period. |
Hedge Portfolio Summary
As of October 28, 2022, Callon had the following outstanding oil and natural gas derivative contracts:
For the Remainder | For the Full Year | For the Full Year | |||
Oil Contracts (WTI) | 2022 | 2023 | 2024 | ||
Swap Contracts | |||||
Total volume (Bbls) | 1,748,000 | 1,541,500 | — | ||
Weighted average price per Bbl | $65.89 | $79.87 | $— | ||
Collar Contracts (Three-Way Collars) | |||||
Total volume (Bbls) | — | 1,825,000 | — | ||
Weighted average price per Bbl | |||||
Ceiling (short call) | $— | $90.00 | $— | ||
Floor (long put) | $— | $70.00 | $— | ||
Floor (short put) | $— | $50.00 | $— | ||
Collar Contracts (Two-Way Collars) | |||||
Total volume (Bbls) | 1,104,000 | 2,365,000 | — | ||
Weighted average price per Bbl | |||||
Ceiling (short call) | $70.16 | $88.26 | $— | ||
Floor (long put) | $60.00 | $72.22 | $— | ||
Short Call Swaption Contracts (a) | |||||
Total volume (Bbls) | — | — | 1,830,000 | ||
Weighted average price per Bbl | $— | $— | $80.30 | ||
Oil Contracts (Midland Basis Differential) | |||||
Swap Contracts | |||||
Total volume (Bbls) | 598,000 | — | — | ||
Weighted average price per Bbl | $0.50 | $— | $— |
(a) | The 2024 short call swaption contracts have exercise expiration dates of December 29, 2023. | ||
For the Remainder | For the Full Year | ||
Natural Gas Contracts (Henry Hub) | 2022 | 2023 | |
Swap Contracts | |||
Total volume (MMBtu) | 1,550,000 | — | |
Weighted average price per MMBtu | $3.62 | $— | |
Collar Contracts | |||
Total volume (MMBtu) | 3,670,000 | 6,640,000 | |
Weighted average price per MMBtu | |||
Ceiling (short call) | $6.91 | $6.60 | |
Floor (long put) | $4.67 | $4.48 | |
Natural Gas Contracts (Waha Basis Differential) | |||
Swap Contracts | |||
Total volume (MMBtu) | 1,220,000 | 6,080,000 | |
Weighted average price per MMBtu | ($0.75) | ($0.75) |
Operating and Financial Results
The following table presents summary information for the periods indicated:
Three Months Ended | ||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||
Total production | ||||||
Oil (MBbls) | ||||||
Permian | 4,567 | 4,290 | 3,428 | |||
Eagle Ford | 1,545 | 1,299 | 2,447 | |||
Total oil | 6,112 | 5,589 | 5,875 | |||
Natural gas (MMcf) | ||||||
Permian | 9,041 | 8,875 | 7,153 | |||
Eagle Ford | 1,616 | 1,437 | 2,242 | |||
Total natural gas | 10,657 | 10,312 | 9,395 | |||
NGLs (MBbls) | ||||||
Permian | 1,702 | 1,622 | 1,315 | |||
Eagle Ford | 283 | 232 | 417 | |||
Total NGLs | 1,985 | 1,854 | 1,732 | |||
Total production (MBoe) | ||||||
Permian | 7,776 | 7,391 | 5,936 | |||
Eagle Ford | 2,097 | 1,771 | 3,237 | |||
Total barrels of oil equivalent | 9,873 | 9,162 | 9,173 | |||
Total daily production (Boe/d) | ||||||
Permian | 84,517 | 81,216 | 64,517 | |||
Eagle Ford | 22,799 | 19,469 | 35,186 | |||
Total barrels of oil equivalent | 107,316 | 100,685 | 99,703 | |||
Oil as % of total daily production | 62 % | 61 % | 64 % | |||
Average realized sales price (excluding impact of settled derivatives) | ||||||
Oil (per Bbl) | ||||||
Permian | $94.19 | $110.71 | $69.60 | |||
Eagle Ford | 94.31 | 111.53 | 69.76 | |||
Total oil | $94.22 | $110.90 | $69.67 | |||
Natural gas (per Mcf) | ||||||
Permian | $7.53 | $6.14 | $3.78 | |||
Eagle Ford | 8.01 | 7.27 | 4.22 | |||
Total natural gas | $7.60 | $6.29 | $3.89 | |||
NGLs (per Bbl) | ||||||
Permian | $34.12 | $41.06 | $34.41 | |||
Eagle Ford | 33.49 | 38.53 | 30.81 | |||
Total NGLs | $34.03 | $40.74 | $33.54 | |||
Average realized sales price (per Boe) | ||||||
Permian | $71.54 | $80.64 | $52.37 | |||
Eagle Ford | 80.18 | 92.75 | 59.63 | |||
Total average realized sales price | $73.37 | $82.98 | $54.93 | |||
Average realized sales price (including impact of settled derivatives) | ||||||
Oil (per Bbl) | $81.82 | $82.27 | $54.00 | |||
Natural gas (per Mcf) | 4.86 | 3.91 | 2.21 | |||
NGLs (per Bbl) | 34.03 | 40.74 | 31.71 | |||
Total average realized sales price (per Boe) | $62.74 | $62.84 | $42.84 | |||
Three Months Ended | ||||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | ||||
Revenues (in thousands) (a) | ||||||
Oil | ||||||
Permian | $430,145 | $474,936 | $238,582 | |||
Eagle Ford | 145,707 | 144,876 | 170,711 | |||
Total oil | $575,852 | $619,812 | $409,293 | |||
Natural gas | ||||||
Permian | $68,075 | $54,469 | $27,065 | |||
Eagle Ford | 12,943 | 10,444 | 9,454 | |||
Total natural gas | $81,018 | $64,913 | $36,519 | |||
NGLs | ||||||
Permian | $58,069 | $66,592 | $45,249 | |||
Eagle Ford | 9,479 | 8,938 | 12,848 | |||
Total NGLs | $67,548 | $75,530 | $58,097 | |||
Total revenues | ||||||
Permian | $556,289 | $595,997 | $310,896 | |||
Eagle Ford | 168,129 | 164,258 | 193,013 | |||
Total revenues | $724,418 | $760,255 | $503,909 | |||
Additional per Boe data | ||||||
Sales price (b) | ||||||
Permian | $71.54 | $80.64 | $52.37 | |||
Eagle Ford | 80.18 | 92.75 | 59.63 | |||
Total sales price | $73.37 | $82.98 | $54.93 | |||
Lease operating expense | ||||||
Permian | $7.55 | $7.33 | $4.19 | |||
Eagle Ford | 8.31 | 10.59 | 5.51 | |||
Total lease operating expense | $7.71 | $7.96 | $4.66 | |||
Production and ad valorem taxes | ||||||
Permian | $4.27 | $4.66 | $2.80 | |||
Eagle Ford | 4.79 | 5.89 | 2.89 | |||
Total production and ad valorem taxes | $4.38 | $4.90 | $2.84 | |||
Gathering, transportation and processing | ||||||
Permian | $3.06 | $2.69 | $2.70 | |||
Eagle Ford | 1.80 | 1.93 | 1.49 | |||
Total gathering, transportation and processing | $2.79 | $2.54 | $2.28 | |||
Operating margin | ||||||
Permian | $56.66 | $65.96 | $42.68 | |||
Eagle Ford | 65.28 | 74.34 | 49.74 | |||
Total operating margin | $58.49 | $67.58 | $45.16 | |||
Depreciation, depletion and amortization | $12.44 | $11.94 | $9.80 | |||
General and administrative | $1.42 | $1.19 | $1.04 | |||
Adjusted G&A | ||||||
Cash component (c) | $1.41 | $1.54 | $1.13 | |||
Non-cash component | $0.17 | $0.20 | $0.17 |
(a) | Excludes sales of oil and gas purchased from third parties. |
(b) | Excludes the impact of settled derivatives. |
(c) | Excludes the change in fair value and amortization of share-based incentive awards. |
Revenue. For the quarter ended September 30, 2022, Callon reported revenue of $724.4 million, which excluded revenue from sales of commodities purchased from a third party of $111.5 million. Revenues including the loss from the settlement of derivative contracts ("Adjusted Total Revenue") were $619.4 million, reflecting the impact of a $105.0 million loss from the settlement of derivative contracts. Average daily production and average realized prices, including and excluding the effects of hedging, are detailed above.
Commodity Derivatives. For the quarter ended September 30, 2022, the net gain on commodity derivative contracts includes the following (in thousands):
Three Months Ended September 30, 2022 | |
Gain on oil derivatives | ($157,731) |
Loss on natural gas derivatives | 22,881 |
Gain on commodity derivative contracts | ($134,850) |
For the quarter ended September 30, 2022, the cash paid for commodity derivative settlements includes the following (in thousands):
Three Months Ended September 30, 2022 | |
Cash paid on oil derivatives, net | ($117,024) |
Cash paid on natural gas derivatives, net | (28,572) |
Cash paid for commodity derivative settlements, net | ($145,596) |
Lease Operating Expenses, including workover ("LOE"). LOE for the three months ended September 30, 2022 was $76.1 million, or $7.71 per Boe, compared to LOE of $72.9 million, or $7.96 per Boe, in the second quarter of 2022. The sequential increase in LOE was primarily due to increases in certain operating costs such as fuel, power and repairs and maintenance. The decrease in LOE per Boe was primarily due to the distribution of fixed costs spread over higher production volumes.
Production and Ad Valorem Taxes. Production and ad valorem taxes for the three months ended September 30, 2022 were approximately 6.0% of total revenue excluding revenue from sales of commodities purchased from a third-party and before the impact of derivative settlements, or $4.38 per Boe.
Gathering, Transportation and Processing. Gathering, transportation and processing expense for the three months ended September 30, 2022 was $27.6 million, or $2.79 per Boe, as compared to $23.3 million, or $2.54 per Boe, in the second quarter of 2022. This increase in gathering, transportation and processing expense was primarily due to the 7% increase in production volumes between the two periods as well as inflationary costs increases, including tariff increases linked to the Consumer Price Index.
Depreciation, Depletion and Amortization ("DD&A"). DD&A for the three months ended September 30, 2022 was $12.44 per Boe compared to $11.94 per Boe in the second quarter of 2022. The increase in DD&A per Boe was primarily attributable to higher capital expenditures during the three months ended September 30, 2022.
General and Administrative Expense ("G&A"). G&A for the three months ended September 30, 2022 and June 30, 2022 was $14.0 million and $10.9 million, respectively. G&A, excluding non-cash incentive share-based compensation valuation adjustments, ("Adjusted G&A") was $15.6 million for the three months ended September 30, 2022 compared to $16.0 million for the second quarter of 2022. The cash component of Adjusted G&A decreased to $13.9 million for the three months ended September 30, 2022 compared to $14.1 million for the second quarter of 2022.
The following table reconciles G&A to Adjusted G&A - cash component and full cash G&A (in thousands):
Three Months Ended | |||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | |||
G&A | $14,022 | $10,909 | $9,503 | ||
Change in the fair value of liability share-based awards (non-cash) | 1,618 | 5,071 | 2,492 | ||
Adjusted G&A – total | 15,640 | 15,980 | 11,995 | ||
Equity-settled, share-based compensation (non-cash) | (1,717) | (1,861) | (1,589) | ||
Adjusted G&A – cash component | $13,923 | $14,119 | $10,406 | ||
Capitalized cash G&A | 11,053 | 11,432 | 9,034 | ||
Full cash G&A | $24,976 | $25,551 | $19,440 |
Income Tax. Callon provides for income taxes at the statutory rate of 21% adjusted for permanent differences expected to be realized. We recorded income tax expense of $3.5 million and $3.0 million for the three months ended September 30, 2022 and June 30, 2022, respectively. Since the second quarter of 2020, we have concluded that it is more likely than not that the net deferred tax assets will not be realized and have recorded a full valuation allowance against our deferred tax assets. As long as we continue to conclude that the valuation allowance is necessary, we will not have significant deferred tax expense or benefit.
Adjusted Income, Adjusted EBITDA and Unhedged Adjusted EBITDA. The following tables reconcile the Company's net income to adjusted income, adjusted EBITDA and unhedged adjusted EBITDA:
Three Months Ended | Nine Months | ||||||
September 30, | June 30, | September 30, | September 30, | ||||
(In thousands, except per share data) | |||||||
Net income | $549,603 | $348,009 | $171,902 | $937,349 | |||
(Gain) loss on derivative contracts | (134,850) | 81,648 | 107,169 | 305,098 | |||
Loss on commodity derivative settlements, net | (105,006) | (184,558) | (110,960) | (423,040) | |||
Non-cash (benefit) expense related to share-based awards | 99 | (3,210) | (903) | 1,055 | |||
Merger, integration, transaction and other | 2,861 | 1,051 | 7,323 | 3,899 | |||
(Gain) loss on extinguishment of debt | — | 42,417 | (2,420) | 42,417 | |||
Tax effect on adjustments above (a) | 49,748 | 13,157 | (44) | 14,820 | |||
Change in valuation allowance | (112,640) | (70,704) | (34,190) | (191,307) | |||
Adjusted income | $249,815 | $227,810 | $137,877 | $690,291 | |||
Net income per diluted share | $8.88 | $5.62 | $3.65 | $15.14 | |||
Adjusted income per diluted share | $4.04 | $3.68 | $2.93 | $11.15 | |||
Basic weighted average common shares outstanding | 61,703 | 61,679 | 46,290 | 61,624 | |||
Diluted weighted average common shares outstanding (GAAP) | 61,870 | 61,909 | 47,096 | 61,927 |
(a) | Calculated using the federal statutory rate of 21%. |
Three Months Ended | Nine Months | ||||||
September 30, | June 30, | September 30, | September 30, | ||||
(In thousands) | |||||||
Net income | $549,603 | $348,009 | $171,902 | $937,349 | |||
(Gain) loss on derivative contracts | (134,850) | 81,648 | 107,169 | 305,098 | |||
Loss on commodity derivative settlements, net | (105,006) | (184,558) | (110,960) | (423,040) | |||
Non-cash (benefit) expense related to share-based awards | 99 | (3,210) | (903) | 1,055 | |||
Merger, integration, transaction and other | 2,861 | 1,051 | 7,323 | 3,899 | |||
Income tax (benefit) expense | 3,515 | 3,009 | 2,416 | 7,008 | |||
Interest expense, net | 19,468 | 20,691 | 27,736 | 61,717 | |||
Depreciation, depletion and amortization | 122,833 | 109,409 | 89,890 | 335,221 | |||
(Gain) loss on extinguishment of debt | — | 42,417 | (2,420) | 42,417 | |||
Adjusted EBITDA | $458,523 | $418,466 | $292,153 | $1,270,724 | |||
Add: Loss on commodity derivative settlements, net | 105,006 | 184,558 | 110,960 | 423,040 | |||
Unhedged adjusted EBITDA | $563,529 | $603,024 | $403,113 | $1,693,764 |
Adjusted Free Cash Flow. The following table reconciles the Company's net cash provided by operating activities to unhedged adjusted EBITDA, adjusted EBITDA and adjusted free cash flow:
Three Months Ended | Nine Months | ||||||
September 30, | June 30, | September 30, | September 30, | ||||
(In thousands) | |||||||
Net cash provided by operating activities | $475,275 | $372,325 | $294,565 | $1,128,870 | |||
Changes in working capital and other | (75,748) | 25,096 | (30,355) | 73,153 | |||
Changes in accrued hedge settlements | 40,590 | 1,839 | (153) | 10,478 | |||
Loss on commodity derivative settlements, net | 105,006 | 184,558 | 110,960 | 423,040 | |||
Cash interest expense, net | 18,406 | 19,206 | 25,078 | 57,454 | |||
Merger, integration and transaction | — | — | 3,018 | 769 | |||
Unhedged adjusted EBITDA | $563,529 | $603,024 | $403,113 | $1,693,764 | |||
Less: Loss on commodity derivative settlements, net | 105,006 | 184,558 | 110,960 | 423,040 | |||
Adjusted EBITDA | $458,523 | $418,466 | $292,153 | $1,270,724 | |||
Less: Operational capital expenditures (accrual) | 254,662 | 237,812 | 114,964 | 649,852 | |||
Less: Capitalized cash interest | 25,964 | 24,416 | 23,590 | 73,886 | |||
Less: Cash interest expense, net | 18,406 | 19,206 | 25,078 | 57,454 | |||
Less: Capitalized cash G&A | 11,053 | 11,432 | 9,034 | 32,188 | |||
Adjusted free cash flow | $148,438 | $125,600 | $119,487 | $457,344 |
Adjusted Discretionary Cash Flow. The following table reconciles the Company's net cash provided by operating activities to adjusted discretionary cash flow:
Three Months Ended | |||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | |||
(In thousands) | |||||
Net cash provided by operating activities | $475,275 | $372,325 | $294,565 | ||
Changes in working capital | (76,994) | 23,342 | (30,581) | ||
Merger, integration and transaction | — | — | 3,018 | ||
Adjusted discretionary cash flow | $398,281 | $395,667 | $267,002 |
Adjusted Total Revenue. Adjusted total revenue is reconciled to total operating revenues, which excludes revenue from sales of commodities purchased from a third party, in the following table:
Three Months Ended | |||||
September 30, 2022 | June 30, 2022 | September 30, 2021 | |||
(In thousands) | |||||
Operating revenues | |||||
Oil | $575,852 | $619,812 | $409,293 | ||
Natural gas | 81,018 | 64,913 | 36,519 | ||
NGLs | 67,548 | 75,530 | 58,097 | ||
Total operating revenues | $724,418 | $760,255 | $503,909 | ||
Impact of settled derivatives | (105,006) | (184,558) | (110,960) | ||
Adjusted total revenue | $619,412 | $575,697 | $392,949 |
Net Debt. The following table reconciles the Company's total debt to net debt:
September 30, | June 30, | March 31, | December 31, | September 30, | |||||
(In thousands) | |||||||||
Total debt | $2,373,358 | $2,516,337 | $2,623,282 | $2,694,115 | $2,809,610 | ||||
Unamortized premiums, discount, and | 20,663 | 20,684 | 26,639 | 28,806 | 48,311 | ||||
Adjusted total debt | $2,394,021 | $2,537,021 | $2,649,921 | $2,722,921 | $2,857,921 | ||||
Less: Cash and cash equivalents | 4,350 | 6,100 | 4,150 | 9,882 | 3,699 | ||||
Net debt | $2,389,671 | $2,530,921 | $2,645,771 | $2,713,039 | $2,854,222 |
Callon Petroleum Company | ||||
Consolidated Balance Sheets | ||||
(In thousands, except par and share amounts) | ||||
(Unaudited) | ||||
September 30, 2022 | December 31, 2021 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $4,350 | $9,882 | ||
Accounts receivable, net | 285,591 | 232,436 | ||
Fair value of derivatives | 14,744 | 22,381 | ||
Other current assets | 46,243 | 30,745 | ||
Total current assets | 350,928 | 295,444 | ||
Oil and natural gas properties, full cost accounting method: | ||||
Evaluated properties, net | 3,789,530 | 3,352,821 | ||
Unevaluated properties | 1,847,912 | 1,812,827 | ||
Total oil and natural gas properties, net | 5,637,442 | 5,165,648 | ||
Other property and equipment, net | 26,071 | 28,128 | ||
Deferred financing costs | 13,504 | 18,125 | ||
Other assets, net | 71,994 | 40,158 | ||
Total assets | $6,099,939 | $5,547,503 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable and accrued liabilities | $594,279 | $569,991 | ||
Fair value of derivatives | 48,697 | 185,977 | ||
Other current liabilities | 151,021 | 116,523 | ||
Total current liabilities | 793,997 | 872,491 | ||
Long-term debt | 2,373,358 | 2,694,115 | ||
Asset retirement obligations | 59,583 | 54,458 | ||
Fair value of derivatives | 9,604 | 11,409 | ||
Other long-term liabilities | 54,395 | 49,262 | ||
Total liabilities | 3,290,937 | 3,681,735 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Common stock, $0.01 par value, 130,000,000 and 78,750,000 shares authorized; | 616 | 614 | ||
Capital in excess of par value | 4,018,241 | 4,012,358 | ||
Accumulated deficit | (1,209,855) | (2,147,204) | ||
Total stockholders' equity | 2,809,002 | 1,865,768 | ||
Total liabilities and stockholders' equity | $6,099,939 | $5,547,503 |
Callon Petroleum Company | |||||||
Consolidated Statements of Operations | |||||||
(In thousands, except per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Operating Revenues: | |||||||
Oil | $575,852 | $409,293 | $1,748,913 | $1,009,780 | |||
Natural gas | 81,018 | 36,519 | 189,907 | 84,819 | |||
Natural gas liquids | 67,548 | 58,097 | 210,696 | 124,079 | |||
Sales of purchased oil and gas | 111,459 | 48,653 | 377,199 | 134,164 | |||
Total operating revenues | 835,877 | 552,562 | 2,526,715 | 1,352,842 | |||
Operating Expenses: | |||||||
Lease operating | 76,121 | 42,706 | 216,389 | 129,619 | |||
Production and ad valorem taxes | 43,290 | 26,070 | 125,841 | 66,467 | |||
Gathering, transportation and processing | 27,575 | 20,875 | 71,617 | 58,887 | |||
Cost of purchased oil and gas | 111,439 | 49,392 | 378,107 | 139,558 | |||
Depreciation, depletion and amortization | 122,833 | 89,890 | 335,221 | 244,005 | |||
General and administrative | 14,022 | 9,503 | 42,052 | 37,367 | |||
Merger, integration and transaction | — | 3,018 | 769 | 3,018 | |||
Total operating expenses | 395,280 | 241,454 | 1,169,996 | 678,921 | |||
Income From Operations | 440,597 | 311,108 | 1,356,719 | 673,921 | |||
Other (Income) Expenses: | |||||||
Interest expense, net of capitalized amounts | 19,468 | 27,736 | 61,717 | 76,786 | |||
(Gain) loss on derivative contracts | (134,850) | 107,169 | 305,098 | 512,155 | |||
(Gain) loss on extinguishment of debt | — | (2,420) | 42,417 | (2,420) | |||
Other (income) expense | 2,861 | 4,305 | 3,130 | 6,583 | |||
Total other (income) expense | (112,521) | 136,790 | 412,362 | 593,104 | |||
Income Before Income Taxes | 553,118 | 174,318 | 944,357 | 80,817 | |||
Income tax expense | (3,515) | (2,416) | (7,008) | (1,017) | |||
Net Income | $549,603 | $171,902 | $937,349 | $79,800 | |||
Net Income Per Common Share: | |||||||
Basic | $8.91 | $3.71 | $15.21 | $1.77 | |||
Diluted | $8.88 | $3.65 | $15.14 | $1.69 | |||
Weighted Average Common Shares Outstanding: | |||||||
Basic | 61,703 | 46,290 | 61,624 | 45,063 | |||
Diluted | 61,870 | 47,096 | 61,927 | 47,119 |
Callon Petroleum Company | |||||||
Consolidated Statements of Cash Flows | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended September 30, | Nine Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Cash flows from operating activities: | |||||||
Net income | $549,603 | $171,902 | $937,349 | $79,800 | |||
Adjustments to reconcile net income to net cash provided by operating | |||||||
Depreciation, depletion and amortization | 122,833 | 89,890 | 335,221 | 244,005 | |||
Amortization of non-cash debt related items, net | 1,062 | 2,658 | 4,263 | 7,166 | |||
Deferred income tax expense | 1,626 | — | 1,626 | — | |||
(Gain) loss on derivative contracts | (134,850) | 107,169 | 305,098 | 512,155 | |||
Cash paid for commodity derivative settlements, net | (145,596) | (110,807) | (433,518) | (238,378) | |||
(Gain) loss on extinguishment of debt | — | (2,420) | 42,417 | (2,420) | |||
Non-cash (benefit) expense related to share-based awards | 99 | (903) | 1,055 | 11,984 | |||
Other, net | 3,504 | 6,495 | 8,704 | 11,006 | |||
Changes in current assets and liabilities: | |||||||
Accounts receivable | 71,479 | (15,870) | (58,915) | (83,227) | |||
Other current assets | (4,732) | (1,278) | (12,229) | (8,701) | |||
Accounts payable and accrued liabilities | 10,247 | 47,729 | (8,693) | 74,443 | |||
Cash received for settlements of contingent consideration arrangements, net | — | — | 6,492 | — | |||
Net cash provided by operating activities | 475,275 | 294,565 | 1,128,870 | 607,833 | |||
Cash flows from investing activities: | |||||||
Capital expenditures | (340,286) | (176,549) | (754,225) | (427,552) | |||
Acquisition of oil and gas properties | (2,169) | (65,021) | (18,114) | (67,236) | |||
Proceeds from sales of assets | 4,723 | 3,804 | 9,313 | 35,415 | |||
Cash paid for settlement of contingent consideration arrangement | — | — | (19,171) | — | |||
Other, net | 4,788 | (14) | 13,497 | 4,206 | |||
Net cash used in investing activities | (332,944) | (237,780) | (768,700) | (455,167) | |||
Cash flows from financing activities: | |||||||
Borrowings on Prior Credit Facility | 811,000 | 500,000 | 2,535,000 | 1,236,500 | |||
Payments on Prior Credit Facility | (954,000) | (652,000) | (2,684,000) | (1,498,500) | |||
Issuance of 7.50% Senior Notes due 2030 | — | — | 600,000 | — | |||
Redemption of 6.125% Senior Notes due 2024 | — | — | (467,287) | — | |||
Redemption of 9.00% Second Lien Senior Secured Notes due 2025 | — | — | (339,507) | — | |||
Redemption of 6.25% Senior Notes | — | (542,755) | — | (542,755) | |||
Issuance of 8.00% Senior Notes due 2028 | — | 650,000 | — | 650,000 | |||
Cash received for settlement of contingent consideration arrangement | — | — | 8,512 | — | |||
Payment of deferred financing costs | (1,081) | (12,131) | (11,623) | (12,168) | |||
Other, net | — | — | (6,797) | (2,280) | |||
Net cash used in financing activities | (144,081) | (56,886) | (365,702) | (169,203) | |||
Net change in cash and cash equivalents | (1,750) | (101) | (5,532) | (16,537) | |||
Balance, beginning of period | 6,100 | 3,800 | 9,882 | 20,236 | |||
Balance, end of period | $4,350 | $3,699 | $4,350 | $3,699 |
Non-GAAP Financial Measures
This news release refers to non-GAAP financial measures such as "adjusted free cash flow," "adjusted EBITDA," "unhedged adjusted EBITDA," "adjusted income," "adjusted income per diluted share," "adjusted discretionary cash flow," "adjusted total revenue," "adjusted G&A," "full cash G&A," and "net debt." These measures, detailed below, are provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP (including the notes), included in our filings with the U.S. Securities and Exchange Commission (the "SEC") and posted on our website.
Earnings Call Information
The Company will host a conference call on Thursday, November 3, 2022, to discuss third quarter 2022 financial and operating results, outlook and guidance for the remainder of 2022, and current corporate strategy and initiatives.
Please join Callon Petroleum Company via the Internet for a webcast of the conference call:
Date/Time: | Thursday, November 3, 2022, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) |
Webcast: | Select "News and Events" under the "Investors" section of the Company's website: www.callon.com. |
An archive of the conference call webcast will also be available at www.callon.com under the "Investors" section of the website.
About Callon Petroleum Company
Callon Petroleum Company is an independent oil and natural gas company focused on the acquisition, exploration and development of high-quality assets in the leading oil plays of South and West Texas.
Cautionary Statement Regarding Forward-Looking Information
This news release contains 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. Forward-looking statements include all statements regarding wells anticipated to be drilled and placed on production; future levels of development activity and associated production, capital expenditures and cash flow expectations; the Company's production and expenditure guidance; estimated reserve quantities and the present value thereof; future debt levels and leverage; and the implementation of the Company's business plans and strategy, as well as statements including the words "believe," "expect," "plans," "may," "will," "should," "could," and words of similar meaning. These statements reflect the Company's current views with respect to future events and financial performance based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. 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. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. 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 the volatility of oil and natural gas prices; changes in the supply of and demand for oil and natural gas, including as a result of actions by, or disputes among members of OPEC and other oil and natural gas producing countries with respect to production levels or other matters related to the price of oil; general economic conditions or the COVID-19 pandemic and various governmental actions taken to mitigate its impact; our ability to drill and complete wells; operational, regulatory and environment risks; the cost and availability of equipment and labor; our ability to finance our development activities at expected costs or at expected times or at all; rising interest rates and inflation; our inability to realize the benefits of recent transactions; currently unknown risks and liabilities relating to the newly acquired assets and operations; adverse actions by third parties involved with the transactions; risks that are not yet known or material to us; and other risks more fully discussed in our filings with the SEC, including our most recent Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q, available on our website or the SEC's website at www.sec.gov. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
Contact Information
Kevin Smith
Director of Investor Relations
Callon Petroleum Company
ir@callon.com
(281) 589-5200
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SOURCE Callon Petroleum Company