Callon Petroleum Company Reports Increased Earnings For Second Quarter, First Six Months of 2008

2008-08-06 15:30:00

Callon Petroleum Company Reports Increased Earnings For Second Quarter, First Six Months of 2008

NATCHEZ, Miss.–(EMWNews)–Callon Petroleum Company (NYSE: CPE) today reported results of

operations for both the three and the six-month periods ended June 30,

2008.

Second Quarter and Six Months 2008 Net Income. For the quarter

ended June 30, 2008, the company reported net income of $5.2 million

which was a 100% increase over the $2.6 million reported for the same

period in 2007. Net income for the second quarter of 2008 included a

one-time charge of $11.9 million, or $0.35 per share net of tax, related

to the early extinguishment of debt associated with the retirement of

the companys $200 million Senior Revolving

Credit Facility. Net income per share was $0.23 and $0.12 for the

quarters ended June 30, 2008 and 2007, respectively. For the six months

ended June 30, 2008, Callon reported net income of $12.8 million, or

$0.58 per share. This compares with net income of $8.4 million, or $0.39

per share during the same period of 2007. All per share amounts are on a

diluted basis.

Second Quarter and Six Months 2008 Operating Results. Operating

results for the three months ended June 30, 2008 include oil and gas

sales of $48.0 million from average production of 37.2 million cubic

feet of natural gas equivalent per day (MMcfe/d). This corresponds to

sales of $43.5 million from average production of 54.1 MMcfe/d during

the comparable 2007 period. The average price received, after the impact

of hedging, per thousand cubic feet of natural gas (Mcf) for the quarter

ended June 30, 2008 increased to $11.67, compared to $8.17 for the

quarter ended June 30, 2007. The average price received, after the

impact of hedging, per barrel of oil (Bbl) in the second quarter of 2008

increased to $99.99, compared to $61.47 during the second quarter of

2007. Oil and gas sales for the first six months of 2008 totaled $93.0

million from average production of 39.6 MMcfe/d. This corresponds to

sales of $89.0 million from average production of 57.2 MMcfe/d during

the same period in 2007. The average price, after the impact of hedging,

received per Mcf in the six-month period of 2008 increased to $10.46,

compared to $8.07 during the first six months of 2007, while the average

price received, after the impact of hedging, per Bbl in the first half

of 2008 increased to $93.27, compared to $58.36 during the same period

in 2007.

Second Quarter and Six Months 2008 Discretionary Cash Flow.

Discretionary cash flow for the three-month period ended June 30, 2008

totaled $30.2 million compared to $24.9 million during the comparable

prior year period. Net cash flow provided by operating activities, as

defined by GAAP, totaled $28.8 million and $37.3 million during the

quarters ended June 30, 2008 and 2007, respectively. Discretionary cash

flow for the first six months of 2008 totaled $59.3 million compared to

$58.4 million during the same period in 2007. Net cash flow provided by

operating activities, as defined by GAAP, totaled $63.9 million and

$70.2 million during the six-month periods ended June 30, 2008 and 2007,

respectively. (See Non-GAAP

Financial Measure that follows and the

accompanying 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 that the non-GAAP

measure of discretionary cash flow is useful as an indicator of an oil

and gas exploration and production companys

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.

Reconciliation of Non-GAAP

Financial Measure:

 

Three Months Ended

 

Six Months Ended

(In thousands)

June 30,

June 30,

2008

 

2007

2008

 

2007

Discretionary cash flow

$

30,245

$

24,886

$

59,288

$

58,392

Net working capital changes and other changes

 

(1,467

)

 

12,401

 

4,621

 

11,764

Net cash flow provided by operating activities

$

28,778

 

$

37,287

$

63,909

$

70,156

Production and Price Information:

 

Three Months

Ended

 

Six Months

Ended

June 30,

June 30,

2008

 

2007

2008

 

2007

Production:

Oil (MBbls)

286

263

575

551

Gas (MMcf)

1,668

3,341

3,759

7,043

Gas equivalent (MMcfe)

3,382

4,920

7,211

10,348

Average daily (MMcfe)

37.2

54.1

39.6

57.2

 

Average prices:

Oil ($/Bbl)(a)

$

99.99

$

61.47

$

93.27

$

58.36

Gas ($/Mcf)

$

11.67

$

8.17

$

10.46

$

8.07

Gas equivalent ($/Mcfe)

$

14.20

$

8.84

$

12.90

$

8.60

 

Additional per Mcfe data:

Sales price

$

14.20

$

8.84

$

12.90

$

8.60

Lease operating expenses

 

1.44

 

 

1.75

 

$

1.39

 

 

1.47

 

Operating margin

$

12.76

 

$

7.09

 

$

11.51

 

$

7.13

 

 

Depletion

$

4.50

$

3.83

$

4.19

$

3.93

General and administrative (net of management fees)

$

0.87

$

0.46

$

0.78

$

0.43

 

(a)Below is a reconciliation of the

average NYMEX price to the average realized sales price per barrel

of oil:

 

Average NYMEX oil price

$

123.98

$

65.00

$

110.94

$

61.63

Basis differentials and quality adjustments

( 4.06

)

( 2.85

)

( 3.95

)

( 4.18

)

Transportation

( 1.34

)

( 1.14

)

( 1.30

)

( 1.14

)

Hedging

 

(18.59

)

 

0.46

 

 

(12.42

)

 

2.05

 

Averaged realized oil price

$

99.99

 

$

61.47

 

$

93.27

 

$

58.36

 

 

Callon Petroleum Company

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

 

 

June 30,

 

December 31,

2008

2007

ASSETS

Current assets:

Cash and cash equivalents

$

42,056

$

53,250

Accounts receivable

41,956

22,073

Deferred tax asset

22,707

Restricted investments

100

Other current assets

 

3,366

 

 

6,592

 

Total current assets

 

110,085

 

 

82,015

 

 

Oil and gas properties, full-cost accounting method:

Evaluated properties

1,272,005

1,349,904

Less accumulated depreciation, depletion and amortization

 

(768,621

)

 

(738,374

)

503,384

611,530

 

Unevaluated properties excluded from amortization

 

54,514

 

 

70,176

 

Total oil and gas properties

 

557,898

 

 

681,706

 

 

Other property and equipment, net

2,130

1,986

Restricted investments

4,704

4,525

Investment in Medusa Spar LLC

12,869

12,673

Other assets, net

 

3,378

 

 

9,577

Callon Petroleum Company
Rodger W. Smith, 800-451-1294

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