Callon Petroleum Reports 3Q05 Results

Callon Petroleum (NYSE: CPE) has results of operations for both the quarter and the nine-month period ended September 30, 2005.

Third Quarter 2005 Net Income. Callon reported net income of $3.7 million, or $0.17 per diluted share, after charges of $3.8 million, or $0.11 per diluted share, for fourth quarter 2005 ineffective derivatives in accordance with SFAS No.133 related to production downtime because of tropical storm/hurricane activity. This compares with net income of $546,000, or $0.01 per diluted share during the same period of last year, which included charges of $532,000, or $0.03 per diluted share, attributable to early extinguishment of debt and $731,000, or $0.04 per diluted share, for ineffective derivatives as a result of Hurricane Ivan's production interruption during the third quarter of 2004.

Third Quarter 2005 Operating Results. Oil and gas sales totaled $31.7 million from production of 41.3 million cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of $25.1 million from production of 50.6 MMcfe/d during the same period in 2004. On August 27, 2005 several of the company's fields were shut-in due to the approach of Hurricane Katrina and subsequently, during the next month, due to the approach of Hurricane Rita. Primarily as a result of downtime caused by those two severe storms to third party transmission lines and downstream facilities which process Callon's crude oil and natural gas, the company had to defer production of approximately 20.3 MMcf/d during the third quarter of 2005. The company had to defer 9 MMcfe/d during the third quarter of 2004 due to Hurricane Ivan. The average price, after the impact of hedging, received per thousand cubic feet of natural gas in the third quarter of 2005 increased to $9.32 compared to $6.11 during the third quarter of 2004, while the average price, after the impact of hedging, received per barrel of oil in the third quarter of 2005 increased to $46.16 compared to $27.83 during the same period a year earlier.

Nine Months 2005 Net Income. For the nine months ended September 30, 2005, the company reported net income of $22.5 million, or $1.09 per diluted share. This compares to a net income of $12.4 million, or $0.74 per share on a diluted basis, for the same period in 2004.

Nine Months 2005 Operating Results. Operating results for the nine-month period ended September 30, 2005 include oil and gas sales of $116.4 million from average production of 59.5 MMcfe/d. This corresponds to sales of $94.7 million from average daily production of 62.2 MMcfe/d during the same period in 2004. The average price, after the impact of hedging, received per thousand cubic feet of natural gas for the nine-month period ended September 30, 2005 increased to $7.65 compared to $6.11 during the first nine months in 2004, while the average price, after the impact of hedging, received per barrel of oil increased to $41.01 compared to $29.63 during the same period a year earlier.

Third Quarter 2005 Discretionary Cash Flow. Discretionary cash flow totaled $20.0 million compared to $13.4 million during the same period of the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $32.5 million and $14.9 million during the three-month periods ended September 30, 2005 and 2004, respectively. (See "Non-GAAP Financial Measure" that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)

Nine Months 2005 Discretionary Cash Flow. Discretionary cash flow totaled $81.9 million compared to $56.9 million during the first nine months of the previous year. Net cash flow provided by operating activities, as defined by GAAP, totaled $86.1 million and $54.7 million during the nine-month periods ended September 30, 2005 and 2004, respectively. (See "Non-GAAP Financial Measure" that follows and the accompanying reconciliation of discretionary cash flow to net cash flow provided by operating activities.)

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