Callon Exceeds Operational Expectations in 1Q
Callon Petroleum reported net income of $3.9 million, or $0.13 per diluted share, for the quarter ended March 31, 2010, which exceeds analysts' consensus estimate of $0.09 per diluted share, and compares to $2.4 million or $0.11 per diluted share for the same quarter in 2009.
Highlights of meaningful events thus far in 2010 include:
- Completed the redemption of the remaining $16.1 million of our 9.75% Senior Notes due December 2010 on April 30, 2010, resulting in approximately $889,000 of cash interest cost savings in 2010.
- Deconsolidated our special purpose subsidiary, Callon Entrada Company, on January 1, 2010, resulting in an approximate $85 million reduction in current liabilities and a corresponding $85 million increase to shareholders' equity.
- Received $44.8 million in January 2010 from the Minerals Management Service (MMS) in a recoupment of royalties paid on our Medusa Field; an additional $7.9 million of interest is due to the company and we have been advised by the MMS that it has been processed for payment.
- Commenced Permian Basin Wolfberry development program.
- Completed an amended $100 million credit agreement with Regions Bank in January 2010 with an initial borrowing base of $20 million; no borrowings are currently outstanding.
- Added experienced key staff to implement and enhance our operational and financial objectives related to our new onshore strategy.
- On April 23, 2010, regained full compliance with the New York Stock Exchange’s continued listing standards five months ahead of the plan.
First Quarter 2010 Operating Results
Operating results for the three months ended March 31, 2010 include oil and gas sales of $23.4 million from average production of 27.8 million cubic feet of natural gas equivalent per day (MMcfe/d), which was within the company’s published guidance range of 27 MMcfe/d to 29 MMcfe/d. For the same period of 2009, sales were $24.8 million from average production of 33.6 MMcfe/d. For the quarter ended March 31, 2010, the average price received per barrel of oil (Bbl), after the impact of hedging, increased 23% to $74.78, compared to $60.59 during the same period of 2009. Partially offsetting the increases in oil prices, during the first quarter of 2010, the average price received per thousand cubic feet of natural gas (Mcf), after the impact of hedging, decreased 6% to $5.76 from $6.13 for the same period of 2009.
First Quarter 2010 Discretionary Cash Flow
Discretionary cash flow for the three-month period ended March 31, 2010 totaled $11.3 million compared to $14.2 million during the comparable prior year period. As defined by U.S. generally accepted accounting principles (GAAP), net cash flow provided by operating activities totaled $55.7 million during the quarter ended March 31, 2010 and net cash flow provided by operating activities totaled $2.2 million during the quarter ended March 31, 2009.
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