08/03/2022 | Press release | Distributed by Public on 08/03/2022 15:10
HOUSTON, Aug. 3 , 2022/PRNewswire/ -- Callon Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today reported results of operations for the three and six months ended June 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.
Second Quarter 2022 and Recent Highlights
"Callon continues to execute on important steps to solidify a foundation for durable free cash flow generation" said Joe Gatto, President and Chief Executive Officer. "In the inflationary environment that we operate in today, and likely for the foreseeable future, operating margins are critical to our cash generation objectives. In our most recent quarter, our operating margins increased to almost $70 per Boe produced, our eighth consecutive quarterly increase, which drove unhedged adjusted EBITDA of over $600 million. When our industry leading margins are combined with demonstrated well productivity gains in the Delaware and drilling and completion efficiencies across the portfolio, we expect to drive more efficient conversion of EBITDA into free cash flow. These cash flow benefits will be further enhanced in the near-term with a steadily decreasing impact of financial hedges and a reduced interest expense burden as debt continues to be reduced."
Callon Operations Update
At June 30, 2022, Callon had 1,377 gross (1,229.3 net) wells producing from established flow units in the Permian and Eagle Ford. Net daily production for the three months ended June 30, 2022 was 100.7 MBoe/d (61% oil and 81% liquids).
Production volumes for the quarter include the impact of the following items:
Operated drilling and completion activity for the three months ended June 30, 2022 are summarized in the table below:
Three Months Ended June 30, 2022 |
||||||||||||
Drilled |
Completed |
Placed on Production |
||||||||||
Region |
Gross |
Net |
Gross |
Net |
Gross |
Net |
||||||
Delaware Basin |
11 |
10.9 |
6 |
5.9 |
11 |
10.1 |
||||||
Midland Basin |
16 |
14.3 |
7 |
6.3 |
7 |
6.0 |
||||||
Eagle Ford Shale |
8 |
7.4 |
15 |
13.0 |
15 |
13.0 |
||||||
Total |
35 |
32.6 |
28 |
25.2 |
33 |
29.1 |
For the three months ended June 30, 2022, Callon drilled 35 gross (32.6 net) wells and placed a combined 33 gross (29.1 net) wells on production. Completions operations for the quarter included 6 gross (5.9 net) wells in the Delaware Basin, 7 gross (6.3 net) wells in the Midland Basin, and 15 gross (13.0 net) wells in the Eagle Ford Shale. Callon placed 11 gross (10.1 net) wells on production in the Delaware Basin, 7 gross (6.0 net) wells in the Midland Basin, and 15 gross (13.0 net) wells in the Eagle Ford Shale. The average lateral length for the wells completed during the second quarter was 8,281 feet. Operated completions during the second quarter consisted of 4 Upper Wolfcamp A wells and 2 Lower Wolfcamp A wells in the Delaware Basin; 2 Lower Spraberry wells, 3 Wolfcamp A wells and 2 Wolfcamp B wells in the Midland Basin; and 15 lower Eagle Ford Shale wells.
Leverage and Liquidity Update
On June 9, 2022, Callon priced $600 million principal amount of 7.50% Senior Notes due 2030 in a private offering. On June 24, 2022, the Company deposited with the trustee the proceeds from the offering of the 7.50% Senior Notes due 2030, along with borrowings under the Credit Facility, to redeem all of its outstanding 6.125% Senior Notes due 2024 and 9.0% Second Lien Notes due 2025. As of June 30, 2022, the drawn balance on the facility was $779.0 million and cash balances were $6.1 million. 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.
Third Quarter Activity Outlook and Guidance
Callon is currently running six rigs, with three rigs in the Delaware Basin, two rigs in the Midland Basin and one rig in the Eagle Ford which the Company will be dropping in the coming days. Callon plans to utilize two to three completion crews for the third quarter, supporting new production across the Midland, Delaware and Eagle Ford positions.
For the third quarter, the Company expects to produce between 102 and 105 MBoe/d (63% oil) with between 38 and 42 gross wells (33 and 36 net) placed on production. In addition, Callon projects an operational capital spending level of between $245 and $255 million on an accrual basis.
For full year 2022, Callon is increasing the bottom end of its production guidance to between 102 and 105 MBoe/d (63% oil) to reflect underlying Permian well performance that is above expectations, and an increase in natural gas and NGL volumes from the Midland Basin gathering contract conversion. The revised guidance is available in the accompanying presentation.
Capital Expenditures
For the three months ended June 30, 2022, Callon incurred $237.8 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 June 30, 2022 |
||||||||
Operational |
Capitalized |
Capitalized |
Total Capital |
|||||
Capital (a) |
Interest |
G&A |
Expenditures |
|||||
(In thousands) |
||||||||
Cash basis (b) |
$181,071 |
$19,958 |
$11,432 |
$212,461 |
||||
Timing adjustments (c) |
65,110 |
4,459 |
- |
69,569 |
||||
Non-cash items |
(8,369) |
1,887 |
(147) |
(6,629) |
||||
Accrual basis |
$237,812 |
$26,304 |
$11,285 |
$275,401 |
(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 July 29, 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) |
3,634,000 |
1,538,500 |
- |
||
Weighted average price per Bbl |
$64.83 |
$81.04 |
$- |
||
Collar Contracts with Short Puts (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 |
|||||
Total volume (Bbls) |
2,392,000 |
2,730,000 |
- |
||
Weighted average price per Bbl |
|||||
Ceiling (short call) |
$70.12 |
$87.15 |
$- |
||
Floor (long put) |
$60.00 |
$71.92 |
$- |
||
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) |
1,196,000 |
- |
- |
||
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) |
6,150,000 |
- |
|
Weighted average price per MMBtu |
$3.62 |
$- |
|
Collar Contracts |
|||
Total volume (MMBtu) |
5,510,000 |
6,640,000 |
|
Weighted average price per MMBtu |
|||
Ceiling (short call) |
$5.96 |
$6.60 |
|
Floor (long put) |
$4.21 |
$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 |
||||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
||||
Total production |
||||||
Oil (MBbls) |
||||||
Permian |
4,290 |
4,469 |
3,232 |
|||
Eagle Ford |
1,299 |
1,377 |
1,870 |
|||
Total oil |
5,589 |
5,846 |
5,102 |
|||
Natural gas (MMcf) |
||||||
Permian |
8,875 |
8,590 |
7,138 |
|||
Eagle Ford |
1,437 |
1,525 |
1,745 |
|||
Total natural gas |
10,312 |
10,115 |
8,883 |
|||
NGLs (MBbls) |
||||||
Permian |
1,622 |
1,455 |
1,216 |
|||
Eagle Ford |
232 |
252 |
299 |
|||
Total NGLs |
1,854 |
1,707 |
1,515 |
|||
Total production (MBoe) |
||||||
Permian |
7,391 |
7,356 |
5,637 |
|||
Eagle Ford |
1,771 |
1,883 |
2,460 |
|||
Total barrels of oil equivalent |
9,162 |
9,239 |
8,097 |
|||
Total daily production (Boe/d) |
||||||
Permian |
81,216 |
81,733 |
61,948 |
|||
Eagle Ford |
19,469 |
20,922 |
27,033 |
|||
Total barrels of oil equivalent |
100,685 |
102,655 |
88,981 |
|||
Oil as % of total daily production |
61 % |
63 % |
63 % |
|||
Average realized sales price (excluding impact of settled derivatives) |
||||||
Oil (per Bbl) |
||||||
Permian |
$110.71 |
$94.52 |
$65.08 |
|||
Eagle Ford |
111.53 |
95.02 |
65.83 |
|||
Total oil |
$110.90 |
$94.64 |
$65.36 |
|||
Natural gas (per Mcf) |
||||||
Permian |
$6.14 |
$4.20 |
$2.68 |
|||
Eagle Ford |
7.27 |
5.18 |
2.82 |
|||
Total natural gas |
$6.29 |
$4.35 |
$2.71 |
|||
NGLs (per Bbl) |
||||||
Permian |
$41.06 |
$40.25 |
$24.71 |
|||
Eagle Ford |
38.53 |
35.93 |
22.00 |
|||
Total NGLs |
$40.74 |
$39.61 |
$24.17 |
|||
Average realized sales price (per Boe) |
||||||
Permian |
$80.64 |
$70.29 |
$46.04 |
|||
Eagle Ford |
92.75 |
78.50 |
54.72 |
|||
Total average realized sales price |
$82.98 |
$71.97 |
$48.68 |
|||
Average realized sales price (including impact of settled derivatives) |
||||||
Oil (per Bbl) |
$82.27 |
$73.78 |
$46.82 |
|||
Natural gas (per Mcf) |
3.91 |
3.59 |
2.25 |
|||
NGLs (per Bbl) |
40.74 |
37.34 |
23.21 |
|||
Total average realized sales price (per Boe) |
$62.84 |
$57.52 |
$36.31 |
|||
Three Months Ended |
||||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
||||
Revenues (in thousands) (a) |
||||||
Oil |
||||||
Permian |
$474,936 |
$422,404 |
$210,340 |
|||
Eagle Ford |
144,876 |
130,845 |
123,102 |
|||
Total oil |
$619,812 |
$553,249 |
$333,442 |
|||
Natural gas |
||||||
Permian |
$54,469 |
$36,069 |
$19,152 |
|||
Eagle Ford |
10,444 |
7,907 |
4,928 |
|||
Total natural gas |
$64,913 |
$43,976 |
$24,080 |
|||
NGLs |
||||||
Permian |
$66,592 |
$58,563 |
$30,047 |
|||
Eagle Ford |
8,938 |
9,055 |
6,578 |
|||
Total NGLs |
$75,530 |
$67,618 |
$36,625 |
|||
Total revenues |
||||||
Permian |
$595,997 |
$517,036 |
$259,539 |
|||
Eagle Ford |
164,258 |
147,807 |
134,608 |
|||
Total revenues |
$760,255 |
$664,843 |
$394,147 |
|||
Additional per Boe data |
||||||
Sales price (b) |
||||||
Permian |
$80.64 |
$70.29 |
$46.04 |
|||
Eagle Ford |
92.75 |
78.50 |
54.72 |
|||
Total sales price |
$82.98 |
$71.97 |
$48.68 |
|||
Lease operating expense |
||||||
Permian |
$7.33 |
$6.85 |
$4.60 |
|||
Eagle Ford |
10.59 |
8.99 |
8.34 |
|||
Total lease operating expense |
$7.96 |
$7.29 |
$5.74 |
|||
Production and ad valorem taxes |
||||||
Permian |
$4.66 |
$3.89 |
$2.53 |
|||
Eagle Ford |
5.89 |
4.82 |
3.12 |
|||
Total production and ad valorem taxes |
$4.90 |
$4.08 |
$2.71 |
|||
Gathering, transportation and processing |
||||||
Permian |
$2.69 |
$2.33 |
$2.75 |
|||
Eagle Ford |
1.93 |
1.92 |
1.84 |
|||
Total gathering, transportation and processing |
$2.54 |
$2.25 |
$2.47 |
|||
Operating margin |
||||||
Permian |
$65.96 |
$57.22 |
$36.16 |
|||
Eagle Ford |
74.34 |
62.77 |
41.42 |
|||
Total operating margin |
$67.58 |
$58.35 |
$37.76 |
|||
Depreciation, depletion and amortization |
$11.94 |
$11.15 |
$10.27 |
|||
General and administrative |
$1.19 |
$1.85 |
$1.37 |
|||
Adjusted G&A |
||||||
Cash component (c) |
$1.54 |
$1.40 |
$0.71 |
|||
Non-cash component |
$0.20 |
$0.14 |
$0.21 |
(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 June 30, 2022, Callon reported revenue of $760.3 million, which excluded revenue from sales of commodities purchased from a third party of $153.4 million. Revenues including the loss from the settlement of derivative contracts ("Adjusted Total Revenue") were $575.7 million, reflecting the impact of a $184.6 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 June 30, 2022, the net loss on commodity derivative contracts includes the following (in thousands):
Three Months Ended June 30, 2022 |
|
Loss on oil derivatives |
$75,910 |
Loss on natural gas derivatives |
5,738 |
Loss on NGL derivatives |
- |
Loss on commodity derivative contracts |
$81,648 |
For the quarter ended June 30, 2022, the cash paid for commodity derivative settlements includes the following (in thousands):
Three Months Ended June 30, 2022 |
|
Cash paid on oil derivatives, net |
($162,334) |
Cash paid on natural gas derivatives, net |
(21,808) |
Cash paid on NGL derivatives, net |
(2,255) |
Cash paid for commodity derivative settlements, net |
($186,397) |
Lease Operating Expenses, including workover ("LOE"). LOE for the three months ended June 30, 2022 was $72.9 million, or $7.96 per Boe, compared to LOE of $67.3 million, or $7.29 per Boe, in the first quarter of 2022. The sequential increase in LOE was primarily due to increases in workover costs as well as certain operating costs such as fuel, power and equipment rentals. The increase in LOE per Boe was due to the increases in operating costs mentioned above as well as the distribution of fixed costs spread over lower production volumes.
Production and Ad Valorem Taxes. Production and ad valorem taxes for the three months ended June 30, 2022 were approximately 5.9% of total revenue excluding revenue from sales of commodities purchased from a third-party and before the impact of derivative settlements, or $4.90 per Boe.
Gathering, Transportation and Processing. Gathering, transportation and processing expense for the three months ended June 30, 2022 was $23.3 million, or $2.54 per Boe, as compared to $20.8 million, or $2.25 per Boe, in the first quarter of 2022. This increase in gathering, transportation and processing expense was primarily due to a new contract entered into during the second quarter of 2022 as well as inflationary cost increases.
Depreciation, Depletion and Amortization ("DD&A"). DD&A for the three months ended June 30, 2022 was $11.94 per Boe compared to $11.15 per Boe in the first quarter of 2022. The increase in DD&A per Boe was primarily attributable to higher capital expenditures during the three months ended June 30, 2022 and increases in future development cost assumptions.
General and Administrative Expense ("G&A"). G&A for the three months ended June 30, 2022 and March 31, 2022 was $10.9 million and $17.1 million, respectively. G&A, excluding non-cash incentive share-based compensation valuation adjustments, ("Adjusted G&A") was $16.0 million for the three months ended June 30, 2022 compared to $14.3 million for the first quarter of 2022. The cash component of Adjusted G&A increased to $14.1 million for the three months ended June 30, 2022 compared to $13.0 million for the first quarter of 2022 primarily as a result of higher compensation costs during the quarter.
The following table reconciles total G&A to Adjusted G&A - cash component and full cash G&A (in thousands):
Three Months Ended |
|||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
|||
Total G&A |
$10,909 |
$17,121 |
$11,065 |
||
Change in the fair value of liability share-based awards (non-cash) |
5,071 |
(2,851) |
(3,555) |
||
Adjusted G&A - total |
15,980 |
14,270 |
7,510 |
||
Equity-settled, share-based compensation (non-cash) |
(1,861) |
(1,315) |
(1,724) |
||
Adjusted G&A - cash component |
$14,119 |
$12,955 |
$5,786 |
||
Capitalized cash G&A |
11,432 |
9,703 |
7,404 |
||
Full cash G&A |
$25,551 |
$22,658 |
$13,190 |
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 $3.0 million and $0.5 million for the three months ended June 30, 2022 and March 31, 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 (loss) to adjusted income, adjusted EBITDA and unhedged adjusted EBITDA:
Three Months Ended |
|||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
|||
(In thousands, except per share data) |
|||||
Net income (loss) |
$348,009 |
$39,737 |
($11,695) |
||
Loss on derivative contracts |
81,648 |
358,300 |
190,463 |
||
Loss on commodity derivative settlements, net |
(184,558) |
(133,476) |
(100,128) |
||
Non-cash (benefit) expense related to share-based awards |
(3,210) |
4,166 |
5,279 |
||
Merger, integration, transaction and other |
1,051 |
(13) |
5,584 |
||
Loss on extinguishment of debt |
42,417 |
- |
- |
||
Tax effect on adjustments above (a) |
13,157 |
(48,085) |
(21,252) |
||
Change in valuation allowance |
(70,704) |
(7,963) |
2,079 |
||
Adjusted income |
$227,810 |
$212,666 |
$70,330 |
||
Net income (loss) per diluted share |
$5.62 |
$0.64 |
($0.25) |
||
Adjusted income per diluted share |
$3.68 |
$3.43 |
$1.49 |
||
Basic weighted average common shares outstanding |
61,679 |
61,487 |
46,267 |
||
Diluted weighted average common shares outstanding (GAAP) |
61,909 |
62,065 |
46,267 |
||
Effect of potentially dilutive instruments |
- |
- |
862 |
||
Adjusted diluted weighted average common shares outstanding |
61,909 |
62,065 |
47,129 |
(a) Calculated using the federal statutory rate of 21%. |
Three Months Ended |
|||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
|||
(In thousands) |
|||||
Net income (loss) |
$348,009 |
$39,737 |
($11,695) |
||
Loss on derivative contracts |
81,648 |
358,300 |
190,463 |
||
Loss on commodity derivative settlements, net |
(184,558) |
(133,476) |
(100,128) |
||
Non-cash (benefit) expense related to share-based awards |
(3,210) |
4,166 |
5,279 |
||
Merger, integration, transaction and other |
1,051 |
(13) |
5,584 |
||
Income tax (benefit) expense |
3,009 |
484 |
(478) |
||
Interest expense, net |
20,691 |
21,558 |
24,634 |
||
Depreciation, depletion and amortization |
109,409 |
102,979 |
83,128 |
||
Loss on extinguishment of debt |
42,417 |
- |
- |
||
Adjusted EBITDA |
$418,466 |
$393,735 |
$196,787 |
||
Add: Loss on commodity derivative settlements, net |
184,558 |
133,476 |
100,128 |
||
Unhedged adjusted EBITDA |
$603,024 |
$527,211 |
$296,915 |
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 |
|||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
|||
(In thousands) |
|||||
Net cash provided by operating activities |
$372,325 |
$281,270 |
$175,603 |
||
Changes in working capital and other |
25,096 |
123,805 |
13,520 |
||
Changes in accrued hedge settlements |
1,839 |
(31,951) |
(14,719) |
||
Loss on commodity derivative settlements, net |
184,558 |
133,476 |
100,128 |
||
Cash interest expense, net |
19,206 |
19,842 |
22,383 |
||
Merger, integration and transaction |
- |
769 |
- |
||
Unhedged adjusted EBITDA |
$603,024 |
$527,211 |
$296,915 |
||
Less: Loss on commodity derivative settlements, net |
184,558 |
133,476 |
100,128 |
||
Adjusted EBITDA |
$418,466 |
$393,735 |
$196,787 |
||
Less: Operational capital expenditures (accrual) |
237,812 |
157,378 |
138,321 |
||
Less: Capitalized cash interest |
24,416 |
23,506 |
21,740 |
||
Less: Cash interest expense, net |
19,206 |
19,842 |
22,383 |
||
Less: Capitalized cash G&A |
11,432 |
9,703 |
7,404 |
||
Adjusted free cash flow |
$125,600 |
$183,306 |
$6,939 |
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 |
|||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
|||
(In thousands) |
|||||
Net cash provided by operating activities |
$372,325 |
$281,270 |
$175,603 |
||
Changes in working capital |
23,342 |
126,997 |
11,709 |
||
Merger, integration and transaction |
- |
769 |
- |
||
Adjusted discretionary cash flow |
$395,667 |
$409,036 |
$187,312 |
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 |
|||||
June 30, 2022 |
March 31, 2022 |
June 30, 2021 |
|||
(In thousands) |
|||||
Operating revenues |
|||||
Oil |
$619,812 |
$553,249 |
$333,442 |
||
Natural gas |
64,913 |
43,976 |
24,080 |
||
NGLs |
75,530 |
67,618 |
36,625 |
||
Total operating revenues |
$760,255 |
$664,843 |
$394,147 |
||
Impact of settled derivatives |
(184,558) |
(133,476) |
(100,128) |
||
Adjusted total revenue |
$575,697 |
$531,367 |
$294,019 |
Net Debt. The following table reconciles the Company's total debt to net debt:
June 30, 2022 |
March 31, |
December 31, 2021 |
September 30, 2021 |
June 30, 2021 |
|||||
(In thousands) |
|||||||||
Total debt |
$2,516,337 |
$2,623,282 |
$2,694,115 |
$2,809,610 |
$2,865,154 |
||||
Unamortized premiums, discount, and deferred loan costs, net |
20,684 |
26,639 |
28,806 |
48,311 |
37,487 |
||||
Adjusted total debt |
$2,537,021 |
$2,649,921 |
$2,722,921 |
$2,857,921 |
$2,902,641 |
||||
Less: Cash and cash equivalents |
6,100 |
4,150 |
9,882 |
3,699 |
3,800 |
||||
Net debt |
$2,530,921 |
$2,645,771 |
$2,713,039 |
$2,854,222 |
$2,898,841 |
Callon Petroleum Company Consolidated Balance Sheets (In thousands, except par and share amounts) (Unaudited) |
||||
June 30, 2022 |
December 31, 2021 |
|||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$6,100 |
$9,882 |
||
Accounts receivable, net |
360,955 |
232,436 |
||
Fair value of derivatives |
- |
22,381 |
||
Other current assets |
37,960 |
30,745 |
||
Total current assets |
405,015 |
295,444 |
||
Oil and natural gas properties, full cost accounting method: |
||||
Evaluated properties, net |
3,573,282 |
3,352,821 |
||
Unevaluated properties |
1,876,531 |
1,812,827 |
||
Total oil and natural gas properties, net |
5,449,813 |
5,165,648 |
||
Other property and equipment, net |
26,332 |
28,128 |
||
Deferred financing costs |
14,961 |
18,125 |
||
Other assets, net |
52,209 |
40,158 |
||
Total assets |
$5,948,330 |
$5,547,503 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Accounts payable and accrued liabilities |
$606,093 |
$569,991 |
||
Fair value of derivatives |
301,362 |
185,977 |
||
Other current liabilities |
134,581 |
116,523 |
||
Total current liabilities |
1,042,036 |
872,491 |
||
Long-term debt |
2,516,337 |
2,694,115 |
||
Asset retirement obligations |
57,427 |
54,458 |
||
Fair value of derivatives |
21,251 |
11,409 |
||
Other long-term liabilities |
51,942 |
49,262 |
||
Total liabilities |
3,688,993 |
3,681,735 |
||
Commitments and contingencies |
||||
Stockholders' equity: |
||||
Common stock, $0.01 par value, 130,000,000 and 78,750,000 shares authorized; 61,715,672 and 61,370,684 shares outstanding, respectively |
617 |
614 |
||
Capital in excess of par value |
4,018,178 |
4,012,358 |
||
Accumulated deficit |
(1,759,458) |
(2,147,204) |
||
Total stockholders' equity |
2,259,337 |
1,865,768 |
||
Total liabilities and stockholders' equity |
$5,948,330 |
$5,547,503 |
Callon Petroleum Company Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) |
|||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
2022 |
2021 |
2022 |
2021 |
||||
Operating Revenues: |
|||||||
Oil |
$619,812 |
$333,442 |
$1,173,061 |
$600,487 |
|||
Natural gas |
64,913 |
24,080 |
108,889 |
48,300 |
|||
Natural gas liquids |
75,530 |
36,625 |
143,148 |
65,982 |
|||
Sales of purchased oil and gas |
153,365 |
46,252 |
265,740 |
85,511 |
|||
Total operating revenues |
913,620 |
440,399 |
1,690,838 |
800,280 |
|||
Operating Expenses: |
|||||||
Lease operating |
72,940 |
46,460 |
140,268 |
86,913 |
|||
Production and ad valorem taxes |
44,873 |
21,958 |
82,551 |
40,397 |
|||
Gathering, transportation and processing |
23,267 |
20,031 |
44,042 |
38,012 |
|||
Cost of purchased oil and gas |
155,397 |
49,249 |
266,668 |
90,166 |
|||
Depreciation, depletion and amortization |
109,409 |
83,128 |
212,388 |
154,115 |
|||
General and administrative |
10,909 |
11,065 |
28,030 |
27,864 |
|||
Merger, integration and transaction |
- |
- |
769 |
- |
|||
Total operating expenses |
416,795 |
231,891 |
774,716 |
437,467 |
|||
Income From Operations |
496,825 |
208,508 |
916,122 |
362,813 |
|||
Other (Income) Expenses: |
|||||||
Interest expense, net of capitalized amounts |
20,691 |
24,634 |
42,249 |
49,050 |
|||
Loss on derivative contracts |
81,648 |
190,463 |
439,948 |
404,986 |
|||
Loss on extinguishment of debt |
42,417 |
- |
42,417 |
- |
|||
Other (income) expense |
1,051 |
5,584 |
269 |
2,278 |
|||
Total other expense |
145,807 |
220,681 |
524,883 |
456,314 |
|||
Income (Loss) Before Income Taxes |
351,018 |
(12,173) |
391,239 |
(93,501) |
|||
Income tax benefit (expense) |
(3,009) |
478 |
(3,493) |
1,399 |
|||
Net Income (Loss) |
$348,009 |
($11,695) |
$387,746 |
($92,102) |
|||
Net Income (Loss) Per Common Share: |
|||||||
Basic |
$5.64 |
($0.25) |
$6.30 |
($2.07) |
|||
Diluted |
$5.62 |
($0.25) |
$6.26 |
($2.07) |
|||
Weighted Average Common Shares Outstanding: |
|||||||
Basic |
61,679 |
46,267 |
61,583 |
44,439 |
|||
Diluted |
61,909 |
46,267 |
61,956 |
44,439 |
Callon Petroleum Company Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
|||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
2022 |
2021 |
2022 |
2021 |
||||
Cash flows from operating activities: |
|||||||
Net income (loss) |
$348,009 |
($11,695) |
$387,746 |
($92,102) |
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|||||||
Depreciation, depletion and amortization |
109,409 |
83,128 |
212,388 |
154,115 |
|||
Amortization of non-cash debt related items, net |
1,485 |
2,252 |
3,201 |
4,508 |
|||
Loss on derivative contracts |
81,648 |
190,463 |
439,948 |
404,986 |
|||
Cash paid for commodity derivative settlements, net |
(186,397) |
(85,409) |
(287,922) |
(127,571) |
|||
Loss on extinguishment of debt |
42,417 |
- |
42,417 |
- |
|||
Non-cash (benefit) expense related to share-based awards |
(3,210) |
5,279 |
956 |
12,887 |
|||
Other, net |
2,306 |
3,294 |
5,200 |
4,511 |
|||
Changes in current assets and liabilities: |
|||||||
Accounts receivable |
(14,072) |
(21,674) |
(130,394) |
(67,357) |
|||
Other current assets |
(3,317) |
(4,567) |
(7,497) |
(7,423) |
|||
Accounts payable and accrued liabilities |
(5,953) |
14,532 |
(18,940) |
26,714 |
|||
Cash received for settlements of contingent consideration arrangements, net |
- |
- |
6,492 |
- |
|||
Net cash provided by operating activities |
372,325 |
175,603 |
653,595 |
313,268 |
|||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(212,461) |
(149,662) |
(413,939) |
(251,003) |
|||
Acquisition of oil and gas properties |
(6,536) |
(1,447) |
(15,945) |
(2,215) |
|||
Proceeds from sales of assets |
106 |
31,611 |
4,590 |
31,611 |
|||
Cash paid for settlement of contingent consideration arrangement |
- |
- |
(19,171) |
- |
|||
Other, net |
5,074 |
625 |
8,709 |
4,220 |
|||
Net cash used in investing activities |
(213,817) |
(118,873) |
(435,756) |
(217,387) |
|||
Cash flows from financing activities: |
|||||||
Borrowings on Credit Facility |
1,051,000 |
433,500 |
1,724,000 |
736,500 |
|||
Payments on Credit Facility |
(984,000) |
(508,500) |
(1,730,000) |
(846,500) |
|||
Issuance of 7.50% Senior Notes due 2030 |
600,000 |
- |
600,000 |
- |
|||
Redemption of 6.125% Senior Notes due 2024 |
(467,287) |
- |
(467,287) |
- |
|||
Redemption of 9.00% Second Lien Senior Secured Notes due 2025 |
(339,507) |
- |
(339,507) |
- |
|||
Cash received for settlement of contingent consideration arrangement |
- |
- |
8,512 |
- |
|||
Payment of deferred financing costs |
(10,542) |
- |
(10,542) |
- |
|||
Other, net |
(6,222) |
(2,280) |
(6,797) |
(2,317) |
|||
Net cash used in financing activities |
(156,558) |
(77,280) |
(221,621) |
(112,317) |
|||
Net change in cash and cash equivalents |
1,950 |
(20,550) |
(3,782) |
(16,436) |
|||
Balance, beginning of period |
4,150 |
24,350 |
9,882 |
20,236 |
|||
Balance, end of period |
$6,100 |
$3,800 |
$6,100 |
$3,800 |
Non-GAAP Financial Measures
This news release refers to non-GAAP financial measures such as "adjusted free cash flow," "adjusted EBITDA," "unhedged adjusted EBITDA," "operating margin," "adjusted income," "adjusted income per diluted share," "adjusted diluted weighted average common shares outstanding," "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, August 4, 2022, to discuss second 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, August 4, 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 the COVID-19 pandemic and various governmental actions taken to mitigate its impact or 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; 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; 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
[email protected]
(281) 589-5200
View original content:https://www.prnewswire.com/news-releases/callon-petroleum-company-announces-second-quarter-2022-results-301599400.html
SOURCE Callon Petroleum Company