Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CALLON PETROLEUM CO | |
Entity Central Index Key | 928,022 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 227,567,936 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 509,146 | $ 27,995 |
Accounts receivable | 111,964 | 114,320 |
Fair value of derivatives | 11,569 | 406 |
Other current assets | 7,689 | 2,139 |
Total current assets | 640,368 | 144,860 |
Oil and natural gas properties, full cost accounting method: | ||
Evaluated properties | 3,814,242 | 3,429,570 |
Less accumulated depreciation, depletion, amortization and impairment | (2,158,225) | (2,084,095) |
Net evaluated oil and natural gas properties | 1,656,017 | 1,345,475 |
Unevaluated properties | 1,144,138 | 1,168,016 |
Total oil and natural gas properties | 2,800,155 | 2,513,491 |
Other property and equipment, net | 21,514 | 20,361 |
Restricted investments | 3,393 | 3,372 |
Deferred tax asset | 26 | 52 |
Deferred financing costs | 5,749 | 4,863 |
Fair value of derivatives | 2,299 | 0 |
Acquisition deposit | 28,500 | 900 |
Other assets, net | 5,322 | 5,397 |
Total assets | 3,507,326 | 2,693,296 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 193,981 | 162,878 |
Accrued interest | 11,351 | 9,235 |
Cash-settleable restricted stock unit awards | 1,781 | 4,621 |
Asset retirement obligations | 2,284 | 1,295 |
Fair value of derivatives | 35,948 | 27,744 |
Total current liabilities | 245,345 | 205,773 |
Senior secured revolving credit facility | 0 | 25,000 |
Asset retirement obligations | 7,782 | 4,725 |
Cash-settleable restricted stock unit awards | 1,900 | 3,490 |
Deferred tax liability | 2,431 | 1,457 |
Fair value of derivatives | 11,136 | 1,284 |
Other long-term liabilities | 665 | 405 |
Total liabilities | 1,257,718 | 837,330 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, series A cumulative, $0.01 par value and $50.00 liquidation preference, 2,500,000 shares authorized; 1,458,948 shares outstanding | 15 | 15 |
Common stock, $0.01 par value, 300,000,000 shares authorized; 227,507,031 and 201,836,172 shares outstanding, respectively | 2,275 | 2,018 |
Capital in excess of par value | 2,472,155 | 2,181,359 |
Accumulated deficit | (224,837) | (327,426) |
Total stockholders’ equity | 2,249,608 | 1,855,966 |
Total liabilities and stockholders’ equity | 3,507,326 | 2,693,296 |
6.125% senior unsecured notes due 2024 | ||
Current liabilities: | ||
Senior unsecured notes, net of unamortized deferred financing costs | 595,552 | 595,196 |
6.375% senior unsecured notes due 2026 | ||
Current liabilities: | ||
Senior unsecured notes, net of unamortized deferred financing costs | $ 392,907 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Stockholders’ equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares outstanding (in shares) | 227,507,031 | 201,836,172 |
6.125% senior unsecured notes due 2024 | ||
Debt instrument, interest rate, stated (as a percent) | 6.125% | |
6.375% senior unsecured notes due 2026 | ||
Debt instrument, interest rate, stated (as a percent) | 6.375% | |
Series A Preferred Stock | ||
Stockholders’ equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, liquidation preference (in dollars per share) | $ 50 | $ 50 |
Preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Preferred stock, shares outstanding (in shares) | 1,458,948 | 1,458,948 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Operating revenues: | ||||
Total operating revenues | $ 137,075 | $ 82,283 | $ 264,515 | $ 163,647 |
Operating expenses: | ||||
Lease operating expenses | 13,141 | 12,145 | 26,179 | 25,084 |
Production taxes | 7,539 | 4,820 | 16,002 | 10,723 |
Depreciation, depletion and amortization | 38,733 | 26,213 | 74,151 | 50,646 |
General and administrative | 8,289 | 6,430 | 17,057 | 11,636 |
Settled share-based awards | 0 | 6,351 | 0 | 6,351 |
Accretion expense | 206 | 208 | 424 | 392 |
Acquisition expense | 1,767 | 2,373 | 2,315 | 2,822 |
Total operating expenses | 69,675 | 58,540 | 136,128 | 107,654 |
Income from operations | 67,400 | 23,743 | 128,387 | 55,993 |
Other (income) expenses: | ||||
Interest expense, net of capitalized amounts | 594 | 589 | 1,053 | 1,254 |
(Gain) loss on derivative contracts | 16,554 | (10,494) | 21,036 | (25,797) |
Other income | (703) | (64) | (914) | (772) |
Total other (income) expense | 16,445 | (9,969) | 21,175 | (25,315) |
Income before income taxes | 50,955 | 33,712 | 107,212 | 81,308 |
Income tax expense | 481 | 322 | 976 | 789 |
Net income | 50,474 | 33,390 | 106,236 | 80,519 |
Preferred stock dividends | (1,824) | (1,824) | (3,647) | (3,647) |
Income available to common stockholders | $ 48,650 | $ 31,566 | $ 102,589 | $ 76,872 |
Income per common share: | ||||
Basic (in dollars per share) | $ 0.23 | $ 0.16 | $ 0.50 | $ 0.38 |
Diluted (in dollars per share) | $ 0.23 | $ 0.16 | $ 0.50 | $ 0.38 |
Shares used in computing income per common share: | ||||
Basic (in shares) | 210,698 | 201,386 | 206,309 | 201,220 |
Diluted (in shares) | 211,465 | 201,905 | 207,027 | 201,823 |
Oil sales | ||||
Operating revenues: | ||||
Total operating revenues | $ 122,613 | $ 72,885 | $ 237,898 | $ 144,893 |
Natural gas sales | ||||
Operating revenues: | ||||
Total operating revenues | $ 14,462 | $ 9,398 | $ 26,617 | $ 18,754 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 106,236 | $ 80,519 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation, depletion and amortization | 75,453 | 51,697 |
Accretion expense | 424 | 392 |
Amortization of non-cash debt related items | 1,041 | 1,254 |
Deferred income tax expense | 976 | 789 |
Net (gain) loss on derivatives, net of settlements | 4,594 | (28,555) |
Gain (Loss) on Disposition of Property Plant Equipment | 22 | 62 |
Non-cash expense related to equity share-based awards | 2,758 | 5,795 |
Change in the fair value of liability share-based awards | 549 | 1,691 |
Payments to settle asset retirement obligations | (573) | (1,581) |
Changes in current assets and liabilities: | ||
Accounts receivable | 2,380 | (7,810) |
Other current assets | (5,550) | (298) |
Current liabilities | 17,061 | 5,680 |
Other long-term liabilities | 287 | 120 |
Other assets, net | (689) | (770) |
Payments to settle vested liability share-based awards | (4,990) | (13,173) |
Net cash provided by operating activities | 199,979 | 95,812 |
Cash flows from investing activities: | ||
Capital expenditures | (298,370) | (146,090) |
Acquisitions | (45,392) | (706,489) |
Acquisition deposit | (27,600) | 46,138 |
Proceeds from sale of assets | 3,077 | 0 |
Net cash used in investing activities | (368,285) | (806,441) |
Cash flows from financing activities: | ||
Borrowings on senior secured revolving credit facility | 165,000 | 0 |
Payments on senior secured revolving credit facility | (190,000) | 0 |
Issuance of common stock | 288,357 | 0 |
Premium on the issuance of 6.125% senior unsecured notes due 2024 | 0 | 8,250 |
Payment of preferred stock dividends | (3,647) | (3,647) |
Payment of deferred financing costs | (8,664) | (6,765) |
Tax withholdings related to restricted stock units | (1,589) | (1,053) |
Net cash provided by financing activities | 649,457 | 196,785 |
Net change in cash and cash equivalents | 481,151 | (513,844) |
Balance, beginning of period | 27,995 | 652,993 |
Balance, end of period | 509,146 | 139,149 |
6.125% senior unsecured notes due 2024 | ||
Cash flows from financing activities: | ||
Issuance of senior unsecured notes | 0 | 200,000 |
6.375% senior unsecured notes due 2026 | ||
Cash flows from financing activities: | ||
Issuance of senior unsecured notes | $ 400,000 | $ 0 |
Consolidated Statements of Cas6
Consolidated Statements of Cash Flows (Parenthetical) | Jun. 30, 2018 | May 19, 2017 |
6.125% senior unsecured notes due 2024 | ||
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% |
6.375% senior unsecured notes due 2026 | ||
Debt instrument, interest rate, stated (as a percent) | 6.375% |
Description of Business and Bas
Description of Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Description of business Callon Petroleum Company is an independent oil and natural gas company established in 1950. The Company was incorporated under the laws of the state of Delaware in 1994 and succeeded to the business of a publicly traded limited partnership, a joint venture with a consortium of European investors and an independent energy company. As used herein, the “Company,” “Callon,” “we,” “us,” and “our” refer to Callon Petroleum Company and its predecessors and subsidiaries unless the context requires otherwise. Callon is focused on the acquisition, development, exploration and exploitation of unconventional onshore, oil and natural gas reserves in the Permian Basin. The Company’s operations to date have been predominantly focused on the horizontal development of several prospective intervals, including multiple levels of the Wolfcamp formation and the Lower Spraberry shales. Callon has assembled a multi-year inventory of potential horizontal well locations and intends to add to this inventory through delineation drilling of emerging zones on its existing acreage and acquisition of additional locations through working interest acquisitions, leasing programs, acreage purchases, joint ventures and asset swaps. Basis of presentation Unless otherwise indicated, all dollar amounts included within the Footnotes to the Financial Statements are presented in thousands, except for per share and per unit data. The interim consolidated financial statements of the Company have been prepared in accordance with (1) GAAP, (2) the SEC’s instructions to Quarterly Report on Form 10-Q and (3) Rule 10-01 of Regulation S-X, and include the accounts of Callon Petroleum Company, and its subsidiary, Callon Petroleum Operating Company (“CPOC”). CPOC also has subsidiaries, namely Callon Offshore Production, Inc. and Mississippi Marketing, Inc. These interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ended December 31, 2018 . In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, including normal recurring adjustments and all intercompany account and transaction eliminations, necessary to present fairly the Company’s financial position, the results of its operations and its cash flows for the periods indicated. Certain prior year amounts may have been reclassified to conform to current year presentation. Accounting Standards Updates (“ASUs”) Recently Adopted ASUs - Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The standard requires an entity to recognize revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 replaced most of the existing revenue recognition requirements in GAAP. The standard can be applied using either the full retrospective approach or a modified retrospective approach at the date of adoption. Throughout 2015 and 2016, the FASB issued several updates to the revenue recognition guidance in Accounting Standards Codification Topic 606 (“ASC 606”). In August 2015, the FASB issued ASU No. 2015-14, deferring the effective date of ASU 2014-09 by one year. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing . This update clarifies two principles of ASC 606: identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients . This update applies only to the following areas from ASC 606: assessing the collectability criterion and accounting for contracts that do not meet the criteria for step 1, presentation of sales taxes and other similar taxes collected from customers, non-cash consideration, contract modification at transition, completed contracts at transition and technical correction. The Company adopted the new standard on January 1, 2018 using the modified retrospective method at the date of adoption and it did not have a material impact on its consolidated financial statements. See Note 2 for additional information on Revenue Recognition. Recently adopted ASUs - Other In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The objective of the standard is to reduce the existing diversity in practice of several cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payment made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The guidance in ASU 2016-15 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein. Early adoption is permitted and is to be applied on retrospective basis. The Company adopted this update on January 1, 2018 and it did not have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations-Clarifying the Definition of a Business (“ASU 2017-01”). The guidance in ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance provides a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance in ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods therein. The Company adopted this update effective January 1, 2018. The adoption of this update did not have a material impact on its consolidated financial statements. Recently issued ASUs - Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards Codification (“ASU 2016-02”). In January 2018, the FASB issued ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). Together these related amendments to GAAP represent ASC Topic 842, Leases (“ASC Topic 842”). ASC Topic 842 requires lessees to recognize lease assets and liabilities (with terms in excess of 12 months) on the balance sheet, disclose key quantitative and qualitative information about leasing arrangements, and permits an entity not to evaluate existing or expired land easements that were not previously assessed under Topic 840. Public entities are required to apply ASC Topic 842 for annual and interim reporting periods beginning after December 15, 2018 with early adoption permitted. The Company expects the adoption of ASC Topic 842 to primarily impact the asset and liability balances on the balance sheet and will continue to evaluate the effect it will have on its consolidated financial statements and related disclosures. As permitted by ASC Topic 842, the Company does not expect to adjust comparative-period financial statements. Recently issued ASUs - Other In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The standard is intended to simplify several aspects of the accounting for nonemployee share-based payment transactions for acquiring goods and services from nonemployees, including the timing and measurement of nonemployee awards. The guidance in ASU 2018-06 is effective for public entities for annual reporting periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Revenue from contracts with customers Oil sales Under the Company’s oil sales contracts it sells oil production at the point of delivery and collects an agreed upon index price, net of pricing differentials. The Company recognizes revenue when control transfers to the purchaser at the point of delivery at the net price received. Natural gas sales Under the Company’s natural gas sales processing contracts, it delivers natural gas to a midstream processing entity. The midstream processing entity gathers and processes the natural gas and remits proceeds to the Company for the resulting sale of natural gas. The revenue received from the sale of NGLs is included in the natural gas sales. Under these processing agreements, when control of the natural gas changes at the point of delivery, the treatment of gathering and treating fees are recorded net of revenues. Gathering and treating fees have historically been recorded as an expense in lease operating expense in the statement of operations. The Company has modified the presentation of revenues and expenses to include these fees net of revenues. For the three and six months ended June 30, 2018 , $1,952 and $3,204 of gathering and treating fees were recognized and recorded as a reduction to natural gas revenues in the consolidated statement of operations, respectively. For the three and six months ended June 30, 2017 , $761 and $1,484 of gathering and treating fees were recognized and recorded as part of lease operating expense in the consolidated statement of operations, respectively. Production imbalances Previously, the Company elected to utilize the entitlements method to account for natural gas production imbalances, which is no longer applicable. In conjunction with the Company’s adoption of the new revenue recognition accounting standards, there was no material impact to the financial statements due to this change in accounting for its production imbalances. Transaction price allocated to remaining performance obligations For the Company’s product sales that have a contract term greater than one year, it has utilized the practical expedient in Accounting Standards Codification 606-10-50-14, which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these sales contracts, each unit of product generally represents a separate performance obligation; therefore future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. Prior period performance obligations The Company records revenue in the month production is delivered to the purchaser. However, settlement statements for sales may not be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. The Company has existing internal controls for its revenue estimation process and related accruals, and any identified differences between its revenue estimates and actual revenue received historically have not been significant. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Acquisitions were accounted for under the acquisition method of accounting, which involves determining the fair value of the assets acquired and liabilities assumed under the income approach. 2018 Acquisitions On May 23, 2018 , the Company entered into a definitive purchase and sale agreement with Cimarex Energy Company for the acquisition of approximately 47,538 gross ( 28,657 net) acres in the Spur operating area, located in the Delaware Basin, for an aggregate cash purchase price of $570,000 , subject to customary purchase price adjustments (the “Cimarex Acquisition”). In connection with the execution of the purchase and sale agreement, the Company paid a deposit in the amount of $28,500 , which was recorded as Acquisition deposit on the balance sheet as of June 30, 2018. The Company issued debt and equity to fund, in part, the Cimarex Acquisition. See Notes 5 and 10 for additional information regarding the Company’s debt obligations and equity offerings. The Company plans to file separate financial statements and pro forma financial information, as required by SEC rules, in a Current Report on Form 8-K within the prescribed 75 day period following consummation of the Cimarex Acquisition. During the first quarter of 2018 , the Company completed acquisitions of additional working interests and acreage in the Company’s existing core operating areas of Monarch and Wildhorse, located in the Permian Basin, for an aggregate total purchase price of approximately $35,900 excluding customary purchase price adjustments. 2017 Acquisitions On February 13, 2017 , the Company completed the acquisition of 29,175 gross ( 16,688 net) acres in the Delaware Basin, primarily located in Ward and Pecos Counties, Texas from American Resource Development, LLC, for total cash consideration of $646,559 excluding customary purchase price adjustments (the “Ameredev Transaction”). The Company funded the cash purchase price with the net proceeds of an equity offering (see Note 10 for additional information regarding the equity offering). The Company obtained an 82% average working interest ( 75% average net revenue interest) in the properties acquired in the Ameredev Transaction. In December 2016, in connection with the execution of the purchase and sale agreement for the Ameredev Transaction, the Company paid a deposit in the amount of $46,138 to a third party escrow agent, which was recorded as Acquisition deposit on the balance sheet as of December 31, 2016. The following table summarizes the estimated acquisition date fair values of the acquisition: Evaluated oil and natural gas properties $ 137,368 Unevaluated oil and natural gas properties 509,359 Asset retirement obligations (168 ) Net assets acquired $ 646,559 On June 5, 2017 , the Company completed the acquisition of 7,031 gross ( 2,488 net) acres in the Delaware Basin, located near the acreage acquired in the Ameredev Transaction discussed above, for total cash consideration of $52,500 excluding customary purchase price adjustments. The Company funded the cash purchase price with its available cash and proceeds from the issuance of an additional $200,000 of its 6.125% senior notes due 2024 (see Note 5 for additional information regarding the Company’s debt obligations). Unaudited pro forma financial statements The following unaudited summary pro forma financial information for the periods presented is for illustrative purposes only and does not purport to represent what the Company’s results of operations would have been if the Ameredev Transaction had occurred as presented, or to project the Company’s results of operations for any future periods: Three Months Ended Six Months Ended June 30, 2017 (a) June 30, 2017 (a) Revenues $ 82,283 $ 166,699 Income from operations 23,743 58,650 Income available to common stockholders 31,566 79,529 Net income per common share: Basic $ 0.16 $ 0.40 Diluted $ 0.16 $ 0.40 (a) The pro forma financial information was prepared assuming the Ameredev Transaction occurred as of January 1, 2016. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable, including revenue, lease operating expenses, production taxes, depreciation, depletion and amortization expense, accretion expense, interest expense and capitalized interest. The properties associated with the Ameredev Transaction have been commingled with the Company’s existing properties and it is impractical to provide the stand-alone operational results related to these properties. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: (share amounts in thousands) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income $ 50,474 $ 33,390 $ 106,236 $ 80,519 Preferred stock dividends (1,824 ) (1,824 ) (3,647 ) (3,647 ) Income available to common stockholders $ 48,650 $ 31,566 $ 102,589 $ 76,872 Weighted average shares outstanding 210,698 201,386 206,309 201,220 Dilutive impact of restricted stock 767 519 718 603 Weighted average shares outstanding for diluted income per share 211,465 201,905 207,027 201,823 Basic income per share $ 0.23 $ 0.16 $ 0.50 $ 0.38 Diluted income per share $ 0.23 $ 0.16 $ 0.50 $ 0.38 Restricted stock (a) — 22 — 22 (a) Shares excluded from the diluted earnings per share calculation because their effect would be anti-dilutive. |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The Company’s borrowings consisted of the following at: June 30, 2018 December 31, 2017 Principal components: Senior secured revolving credit facility $ — $ 25,000 6.125% senior unsecured notes due 2024 600,000 600,000 6.375% senior unsecured notes due 2026 400,000 — Total principal outstanding 1,000,000 625,000 Premium on 6.125% senior unsecured notes due 2024, net of accumulated amortization 7,031 7,594 Unamortized deferred financing costs (18,572 ) (12,398 ) Total carrying value of borrowings $ 988,459 $ 620,196 Senior secured revolving credit facility (the “Credit Facility”) On May 25, 2017, the Company entered into the Sixth Amended and Restated Credit Agreement to the Credit Facility with a maturity date of May 25, 2022 . JPMorgan Chase Bank, N.A. is Administrative Agent, and participants include 17 institutional lenders. The total notional amount available under the Credit Facility is $2,000,000 . Amounts borrowed under the Credit Facility may not exceed the borrowing base, which is generally reviewed on a semi-annual basis. The Credit Facility is secured by first preferred mortgages covering the Company’s major producing properties. Effective April 5, 2018, the Company entered into the first amendment to the Sixth Amended and Restated Credit Agreement to the Credit Facility, which (1) increased the borrowing base to $825,000 , (2) increased the elected commitment amount to $650,000 , (3) decreased the applicable margins for interest rates, based on utilization, to a range of 1.25% to 2.25% , and (4) extended the maturity date to May 25, 2023 . As of June 30, 2018 , the Credit Facility’s borrowing base remained at $825,000 with an elected commitment amount of $650,000 . As of June 30, 2018 , there was no principal and $1,250 in letters of credit outstanding under the Credit Facility. For the quarter ended June 30, 2018 , the Credit Facility had a weighted-average interest rate of 3.97% , calculated as the LIBOR plus a tiered rate ranging from 1.25% to 2.25% , which is determined based on utilization of the facility. In addition, the Credit Facility carried a commitment fee of 0.375% per annum, payable quarterly, on the unused portion of the borrowing base. 6.375% senior unsecured notes due 2026 (“ 6.375% Senior Notes”) On June 7, 2018 , the Company issued $400,000 aggregate principal amount of 6.375% Senior Notes with a maturity date of July 1, 2026 and interest payable semi-annually beginning on January 1, 2019. The net proceeds of the offering, after deducting initial purchasers’ discounts and estimated offering expenses, were approximately $394,000 . The 6.375% Senior Notes are guaranteed on a senior unsecured basis by the Company’s wholly-owned subsidiary, Callon Petroleum Operating Company, and may be guaranteed by certain future subsidiaries. The subsidiary guarantor is 100% owned, all of the guarantees are full and unconditional and joint and several, the parent company has no independent assets or operations and any subsidiaries of the parent company other than the subsidiary guarantor are minor. The Company may redeem the 6.375% Senior Notes in accordance with the following terms: (1) prior to July 1, 2021 , a redemption of up to 35% of the principal in an amount not greater than the net proceeds from certain equity offerings, and within 180 days of the closing date of such equity offerings, at a redemption price of 106.375% of principal, plus accrued and unpaid interest, if any, to the date of the redemption, if at least 65% of the principal will remain outstanding after such redemption; (2) prior to July 1, 2021 , a redemption of all or part of the principal at a price of 100% of principal of the amount redeemed, plus an applicable make-whole premium and accrued and unpaid interest, if any, to the date of the redemption; and (3) a redemption, in whole or in part, at a redemption price, plus accrued and unpaid interest, if any, to the date of the redemption, (i) of 103.188% of principal if the redemption occurs on or after July 1, 2021, but before July 1, 2022 , and (ii) of 102.125% of principal if the redemption occurs on or after July 1, 2022 , but before July 1, 2023 , and (iii) of 101.063% of principal if the redemption occurs on or after July 1, 2023 , but before July 1, 2024 , and (iv) of 100% of principal if the redemption occurs on or after July 1, 2024 . Following a change of control, each holder of the 6.375% Senior Notes may require the Company to repurchase all or a portion of the 6.375% Senior Notes at a price of 101% of principal of the amount repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. 6.125% senior unsecured notes due 2024 (“6.125% Senior Notes”) On October 3, 2016, the Company issued $400,000 aggregate principal amount of 6.125% Senior Notes with a maturity date of October 1, 2024 and interest payable semi-annually beginning on April 1, 2017 . The net proceeds of the offering, after deducting initial purchasers’ discounts and estimated offering expenses, were approximately $391,270 . The 6.125% Senior Notes are guaranteed on a senior unsecured basis by the Company’s wholly-owned subsidiary, Callon Petroleum Operating Company, and may be guaranteed by certain future subsidiaries. The subsidiary guarantor is 100% owned, all of the guarantees are full and unconditional and joint and several, the parent company has no independent assets or operations and any subsidiaries of the parent company other than the subsidiary guarantor are minor. On May 19, 2017 , the Company issued an additional $200,000 aggregate principal amount of its 6.125% Senior Notes which with the existing $400,000 aggregate principal amount of 6.125% Senior Notes are treated as a single class of notes under the indenture. The net proceeds of the offering, including a premium issue price of 104.125% and after deducting initial purchasers’ discounts and estimated offering expenses, were approximately $206,139 . The Company used the proceeds, in part, to fund an acquisition completed on June 5, 2017 (discussed further in Note 3 ) and for general corporate purposes. The Company may redeem the 6.125% Senior Notes in accordance with the following terms: (1) prior to October 1, 2019, a redemption of up to 35% of the principal in an amount not greater than the net proceeds from certain equity offerings, and within 180 days of the closing date of such equity offerings, at a redemption price of 106.125% of principal, plus accrued and unpaid interest, if any, to the date of the redemption, if at least 65% of the principal will remain outstanding after such redemption; (2) prior to October 1, 2019, a redemption of all or part of the principal at a price of 100% of principal of the amount redeemed, plus an applicable make-whole premium and accrued and unpaid interest, if any, to the date of the redemption; and (3) a redemption, in whole or in part, at a redemption price, plus accrued and unpaid interest, if any, to the date of the redemption, (i) of 104.594% of principal if the redemption occurs on or after October 1, 2019, but before October 1, 2020, and (ii) of 103.063% of principal if the redemption occurs on or after October 1, 2020, but before October 1, 2021, and (iii) of 101.531% of principal if the redemption occurs on or after October 1, 2021, but before October 1, 2022, and (iv) of 100% of principal if the redemption occurs on or after October 1, 2022. Following a change of control, each holder of the 6.125% Senior Notes may require the Company to repurchase all or a portion of the 6.125% Senior Notes at a price of 101% of principal of the amount repurchased, plus accrued and unpaid interest, if any, to the date of repurchase. Restrictive covenants The Company’s Credit Facility and the indentures governing its 6.125% and 6.375% Senior Notes contain various covenants including restrictions on additional indebtedness, payment of cash dividends and maintenance of certain financial ratios. The Company was in compliance with these covenants at June 30, 2018 . |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Objectives and strategies for using derivative instruments The Company is exposed to fluctuations in oil and natural gas prices received for its production. Consequently, the Company believes it is prudent to manage the variability in cash flows on a portion of its oil and natural gas production. The Company utilizes a mix of collars, swaps, put and call options and similar derivative financial instruments to manage fluctuations in cash flows resulting from changes in commodity prices. The Company does not use these instruments for speculative or trading purposes. Counterparty risk and offsetting The use of derivative instruments exposes the Company to the risk that a counterparty will be unable to meet its commitments. While the Company monitors counterparty creditworthiness on an ongoing basis, it cannot predict sudden changes in counterparties’ creditworthiness. In addition, even if such changes are not sudden, the Company may be limited in its ability to mitigate an increase in counterparty credit risk. Should one of these counterparties not perform, the Company may not realize the benefit of some of its derivative instruments under lower commodity prices while continuing to be obligated under higher commodity price contracts subject to any right of offset under the agreements. Counterparty credit risk is considered when determining the fair value of a derivative instrument; see Note 7 for additional information regarding fair value. The Company executes commodity derivative contracts under master agreements with netting provisions that provide for offsetting assets against liabilities. In general, if a party to a derivative transaction incurs an event of default, as defined in the applicable agreement, the other party will have the right to demand the posting of collateral, demand a cash payment transfer or terminate the arrangement. Financial statement presentation and settlements Settlements of the Company’s derivative instruments are based on the difference between the contract price or prices specified in the derivative instrument and a benchmark price, such as the NYMEX price. To determine the fair value of the Company’s derivative instruments, the Company utilizes present value methods that include assumptions about commodity prices based on those observed in underlying markets. See Note 7 for additional information regarding fair value. Derivatives not designated as hedging instruments The Company records its derivative contracts at fair value in the consolidated balance sheets and records changes in fair value as a gain or loss on derivative contracts in the consolidated statements of operations. Cash settlements are also recorded as a gain or loss on derivative contracts in the consolidated statements of operations. The following table reflects the fair value of the Company’s derivative instruments for the periods presented: Balance Sheet Presentation Asset Fair Value Liability Fair Value Net Derivative Fair Value Commodity Classification Line Description 6/30/2018 12/31/2017 6/30/2018 12/31/2017 6/30/2018 12/31/2017 Natural gas Current Fair value of derivatives $ 391 $ 406 $ (35 ) $ — $ 356 $ 406 Natural gas Non-current Fair value of derivatives — — (302 ) — (302 ) — Oil Current Fair value of derivatives 11,178 — (35,913 ) (27,744 ) (24,735 ) (27,744 ) Oil Non-current Fair value of derivatives 2,299 — (10,834 ) (1,284 ) (8,535 ) (1,284 ) Totals $ 13,868 $ 406 $ (47,084 ) $ (29,028 ) $ (33,216 ) $ (28,622 ) As previously discussed, the Company’s derivative contracts are subject to master netting arrangements. The Company’s policy is to present the fair value of derivative contracts on a net basis in the consolidated balance sheet. The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated: June 30, 2018 Presented without As Presented with Effects of Netting Effects of Netting Effects of Netting Current assets: Fair value of derivatives $ 33,530 $ (21,961 ) $ 11,569 Long-term assets: Fair value of derivatives 7,536 (5,237 ) 2,299 Current liabilities: Fair value of derivatives $ (57,909 ) $ 21,961 $ (35,948 ) Long-term liabilities: Fair value of derivatives (16,373 ) 5,237 (11,136 ) December 31, 2017 Presented without As Presented with Effects of Netting Effects of Netting Effects of Netting Current assets: Fair value of derivatives $ 406 $ — $ 406 Current liabilities: Fair value of derivatives $ (27,744 ) $ — $ (27,744 ) Long-term liabilities: Fair value of derivatives (1,284 ) — (1,284 ) For the periods indicated, the Company recorded the following related to its derivatives in the consolidated statement of operations as gain or loss on derivative contracts: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Oil derivatives Net loss on settlements $ (8,131 ) $ (315 ) $ (17,049 ) $ (2,840 ) Net gain (loss) on fair value adjustments (8,311 ) 10,128 (4,243 ) 27,394 Total gain (loss) on oil derivatives $ (16,442 ) $ 9,813 $ (21,292 ) $ 24,554 Natural gas derivatives Net gain on settlements $ 151 $ 48 $ 607 $ 82 Net gain (loss) on fair value adjustments (263 ) 633 (351 ) 1,161 Total gain (loss) on natural gas derivatives $ (112 ) $ 681 $ 256 $ 1,243 Total gain (loss) on oil & natural gas derivatives $ (16,554 ) $ 10,494 $ (21,036 ) $ 25,797 Derivative positions Listed in the tables below are the outstanding oil and natural gas derivative contracts as of June 30, 2018 : For the Remainder For the Full Year For the Full Year Oil contracts (WTI) of 2018 of 2019 of 2020 Swap contracts Total volume (Bbls) 1,104,000 — — Weighted average price per Bbl $ 52.07 $ — $ — Collar contracts (two-way collars) Total volume (Bbls) 184,000 — — Weighted average price per Bbl Ceiling (short call) $ 60.50 $ — $ — Floor (long put) $ 50.00 $ — $ — Collar contracts combined with short puts (three-way collars) Total volume (Bbls) 1,748,000 3,469,000 — Weighted average price per Bbl Ceiling (short call option) $ 60.86 $ 63.71 $ — Floor (long put option) $ 48.95 $ 53.95 $ — Short put option $ 39.21 $ 43.95 $ — Puts Total volume (Bbls) 552,000 1,825,000 — Weighted average price per Bbl $ 65.00 $ 65.00 $ — Oil contracts (Midland basis differential) Swap contracts Total volume (Bbls) 2,208,000 4,380,000 3,660,000 Weighted average price per Bbl $ (4.26 ) $ (4.77 ) $ (1.47 ) Natural gas contracts (Henry Hub) Swap contracts Total volume (MMBtu) 2,760,000 — — Weighted average price per MMBtu $ 2.91 $ — $ — Collar contracts (two-way collars) Total volume (MMBtu) 1,104,000 2,372,500 — Weighted average price per MMBtu Ceiling (short call) $ 3.19 $ 2.95 $ — Floor (long put) $ 2.75 $ 2.65 $ — Natural gas contracts (Waha basis differential) Swap contracts Total volume (MMBtu) 1,104,000 2,190,000 2,196,000 Weighted average price per MMBtu $ (1.14 ) $ (1.14 ) $ (1.14 ) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value hierarchy included in GAAP gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable, and these valuations have the lowest priority. Fair value of financial instruments Cash, cash equivalents, and restricted investments. The carrying amounts for these instruments approximated fair value due to the short-term nature or maturity of the instruments. Debt. The carrying amount of the Company’s floating-rate debt approximated fair value because the interest rates were variable and reflective of market rates. June 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Credit Facility (a) $ — $ — $ 25,000 $ — 6.125% Senior Notes (b) 595,552 607,500 595,196 618,000 6.375% Senior Notes (b) 392,907 400,000 — — Total $ 988,459 $ 1,007,500 $ 620,196 $ 618,000 (a) Floating-rate debt. (b) The fair value was based upon Level 2 inputs. See Note 5 for additional information about the Company’s 6.125% and 6.375% Senior Notes. Assets and liabilities measured at fair value on a recurring basis Certain assets and liabilities are reported at fair value on a recurring basis in the consolidated balance sheet. The following methods and assumptions were used to estimate fair value: Commodity derivative instruments. The fair value of commodity derivative instruments is derived using an income approach valuation model that utilizes market-corroborated inputs that are observable over the term of the derivative contract. The Company’s fair value calculations also incorporate an estimate of the counterparties’ default risk for derivative assets and an estimate of the Company’s default risk for derivative liabilities. The Company believes that the majority of the inputs used to calculate the commodity derivative instruments fall within Level 2 of the fair value hierarchy based on the wide availability of quoted market prices for similar commodity derivative contracts. See Note 6 for additional information regarding the Company’s derivative instruments. The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis: June 30, 2018 Classification Level 1 Level 2 Level 3 Total Assets Derivative financial instruments Fair value of derivatives $ — $ 13,868 $ — $ 13,868 Liabilities Derivative financial instruments Fair value of derivatives — (47,084 ) — (47,084 ) Total net liabilities $ — $ (33,216 ) $ — $ (33,216 ) December 31, 2017 Classification Level 1 Level 2 Level 3 Total Assets Derivative financial instruments Fair value of derivatives $ — $ 406 $ — $ 406 Liabilities Derivative financial instruments Fair value of derivatives — (29,028 ) — (29,028 ) Total net liabilities $ — $ (28,622 ) $ — $ (28,622 ) Assets and liabilities measured at fair value on a nonrecurring basis Acquisitions. The Company determines the fair value of the assets acquired and liabilities assumed using the income approach based on expected discounted future cash flows from estimated reserve quantities, costs to produce and develop reserves, and oil and natural gas forward prices. The future net revenues are discounted using a weighted average cost of capital. The discounted future net revenues of proved undeveloped and probable reserves are reduced by an additional reserve adjustment factor to compensate for the inherent risk of estimating the value of unevaluated properties. The fair value measurements were based on Level 2 and Level 3 inputs. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company provides for income taxes at the statutory rate of 21% . The statutory rate is adjusted for permanent differences expected to be realized, which primarily relate to non-deductible executive compensation expenses, restricted stock windfalls and shortfalls, and state income taxes. As a result of the write-down of oil and natural gas properties in the latter part of 2015 and the first half of 2016, the Company incurred a cumulative three year loss. Because of the impact the cumulative loss has on the determination of the recoverability of deferred tax assets through future earnings, the Company assessed the ability to realize its deferred tax assets based on the future reversals of existing deferred tax liabilities. Accordingly, the Company established a full valuation allowance for the net U.S. federal deferred tax asset in 2015. In subsequent periods where the Company has recorded pre-tax income, it has reversed a portion of the U.S. federal valuation allowance, net of discrete items, to the extent necessary to offset U.S. federal income tax expense on pre-tax income recorded for the period. Income tax expense recorded in this period relates to deferred State of Texas gross margin tax. The valuation allowance was $38,604 as of June 30, 2018 . |
Asset Retirement Obligations
Asset Retirement Obligations | 6 Months Ended |
Jun. 30, 2018 | |
Asset Retirement Obligation [Abstract] | |
Asset Retirement Obligations | Asset Retirement Obligations The table below summarizes the activity for the Company’s asset retirement obligations: Six Months Ended June 30, 2018 Asset retirement obligations at January 1, 2018 $ 6,020 Accretion expense 424 Liabilities incurred 99 Liabilities settled (207 ) Sales (611 ) Revisions to estimate (a) 4,341 Asset retirement obligations at end of period 10,066 Less: Current asset retirement obligations (2,284 ) Long-term asset retirement obligations at June 30, 2018 $ 7,782 (a) Revisions to estimated ARO obligations can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. Certain of the Company’s operating agreements require that assets be restricted for abandonment obligations. Amounts recorded in the consolidated balance sheet at June 30, 2018 as long-term restricted investments were $3,393 . These assets, which primarily include short-term U.S. Government securities, are held in abandonment trusts dedicated to pay future abandonment costs for several of the Company’s oil and natural gas properties. |
Equity Transactions
Equity Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Equity Transactions | Equity Transactions 10% Series A Cumulative Preferred Stock (“Preferred Stock”) Holders of the Company’s Preferred Stock are entitled to receive, when, as and if declared by the Company’s Board of Directors, out of funds legally available for the payment of dividends, cumulative cash dividends at a rate of 10.0% per annum of the $50.00 liquidation preference per share (equivalent to $5.00 per annum per share). Dividends are payable quarterly in arrears on the last day of each March, June, September and December when, as and if declared by the Company’s Board of Directors. Preferred Stock dividends were $1,824 and $3,647 for the three and six months ended June 30, 2018 and 2017 , respectively. The Preferred Stock has no stated maturity and is not subject to any sinking fund or other mandatory redemption. The Company may, at its option, redeem the Preferred Stock, in whole or in part, at any time on or after May 30, 2018, by paying $50.00 per share, plus any accrued and unpaid dividends to the redemption date. Following a change of control in which the Company or the acquirer no longer have a class of common securities listed on a national exchange, the Company will have the option to redeem the Preferred Stock, in whole but not in part, for $50.00 per share in cash plus accrued and unpaid dividends (whether or not declared) to the redemption date. If the Company does not exercise its option to redeem the Preferred Stock upon such change of control, the holders of the Preferred Stock have the option to convert the Preferred Stock into a number of shares of the Company’s common stock based on the value of the common stock on the date of the change of control as determined under the certificate of designations for the Preferred Stock. If the change of control occurred on June 30, 2018 , and the Company did not exercise its right to redeem the Preferred Stock, using the closing price of $10.74 as the value of a share of common stock, each share of Preferred Stock would be convertible into approximately 4.7 shares of common stock. If the Company exercises its redemption rights relating to shares of Preferred Stock, the holders of Preferred Stock will not have the conversion right described above. Common stock On May 30, 2018 , the Company completed an underwritten public offering of 25,300,000 shares of its common stock for total estimated net proceeds (after the underwriter’s discounts and estimated offering costs) of approximately $288,389 . The Company plans to use proceeds from the offering to partially fund the Cimarex Acquisition, described in Note 3 . On December 19, 2016 , the Company completed an underwritten public offering of 40,000,000 shares of its common stock for total estimated net proceeds (after the underwriter’s discounts and estimated offering expenses) of approximately $634,934 . Proceeds from the offering were used to substantially fund the Ameredev Transaction, described in Note 3 . |
Other
Other | 6 Months Ended |
Jun. 30, 2018 | |
Other [Abstract] | |
Other | Other Operating leases As of June 30, 2018 the Company had contracts for five horizontal drilling rigs. The contract terms, as amended effective as of July 9, 2018, will end on various dates between July 2019 and February 2021. All of the drilling rig contracts provide for early termination, with penalties calculated at a reduced daily rate. In the event that Callon terminated all five drilling contracts as of August 6, 2018 , the Company would owe a maximum of $31,342 over the remaining terms of the respective contracts, offset by any revenues earned for replacement work subsequently secured by the contractor. Management does not currently anticipate the early termination of any drilling rig contracts. Other commitments In March 2018, the Company entered into a contract for dedicated fracturing and pump down perforating crews, which was effective on April 16, 2018. The term of the agreement is for two years from the effective date. Subsequent Event Callon Petroleum Operating Company executed a firm transportation agreement for dedicated capacity on a new pipeline system that will connect with a regional gathering system which currently transports oil volumes under long-term agreements from our properties in Howard, Ward, Reagan and Upton counties to multiple marketing points in the Permian Basin. Subject to completion of the new pipeline system, which will have delivery points in several locations along the Gulf Coast, we will have a long-term 15,000 Bbls per day commitment. Satisfaction of the volume commitments includes volumes produced by us and other third-party working, royalty, and overriding royalty interest owners whose volumes we market on their behalf. |
Description of Business and B18
Description of Business and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Unless otherwise indicated, all dollar amounts included within the Footnotes to the Financial Statements are presented in thousands, except for per share and per unit data. The interim consolidated financial statements of the Company have been prepared in accordance with (1) GAAP, (2) the SEC’s instructions to Quarterly Report on Form 10-Q and (3) Rule 10-01 of Regulation S-X, and include the accounts of Callon Petroleum Company, and its subsidiary, Callon Petroleum Operating Company (“CPOC”). CPOC also has subsidiaries, namely Callon Offshore Production, Inc. and Mississippi Marketing, Inc. These interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ended December 31, 2018 . In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, including normal recurring adjustments and all intercompany account and transaction eliminations, necessary to present fairly the Company’s financial position, the results of its operations and its cash flows for the periods indicated. Certain prior year amounts may have been reclassified to conform to current year presentation. |
Accounting Standards Updates (ASUs) | Recently Adopted ASUs - Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The standard requires an entity to recognize revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 replaced most of the existing revenue recognition requirements in GAAP. The standard can be applied using either the full retrospective approach or a modified retrospective approach at the date of adoption. Throughout 2015 and 2016, the FASB issued several updates to the revenue recognition guidance in Accounting Standards Codification Topic 606 (“ASC 606”). In August 2015, the FASB issued ASU No. 2015-14, deferring the effective date of ASU 2014-09 by one year. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . Under this update, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing . This update clarifies two principles of ASC 606: identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients . This update applies only to the following areas from ASC 606: assessing the collectability criterion and accounting for contracts that do not meet the criteria for step 1, presentation of sales taxes and other similar taxes collected from customers, non-cash consideration, contract modification at transition, completed contracts at transition and technical correction. The Company adopted the new standard on January 1, 2018 using the modified retrospective method at the date of adoption and it did not have a material impact on its consolidated financial statements. See Note 2 for additional information on Revenue Recognition. Recently adopted ASUs - Other In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The objective of the standard is to reduce the existing diversity in practice of several cash flow issues, including debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payment made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The guidance in ASU 2016-15 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein. Early adoption is permitted and is to be applied on retrospective basis. The Company adopted this update on January 1, 2018 and it did not have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations-Clarifying the Definition of a Business (“ASU 2017-01”). The guidance in ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The guidance provides a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance in ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods therein. The Company adopted this update effective January 1, 2018. The adoption of this update did not have a material impact on its consolidated financial statements. Recently issued ASUs - Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Amendments to the FASB Accounting Standards Codification (“ASU 2016-02”). In January 2018, the FASB issued ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 (“ASU 2018-01”). In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). Together these related amendments to GAAP represent ASC Topic 842, Leases (“ASC Topic 842”). ASC Topic 842 requires lessees to recognize lease assets and liabilities (with terms in excess of 12 months) on the balance sheet, disclose key quantitative and qualitative information about leasing arrangements, and permits an entity not to evaluate existing or expired land easements that were not previously assessed under Topic 840. Public entities are required to apply ASC Topic 842 for annual and interim reporting periods beginning after December 15, 2018 with early adoption permitted. The Company expects the adoption of ASC Topic 842 to primarily impact the asset and liability balances on the balance sheet and will continue to evaluate the effect it will have on its consolidated financial statements and related disclosures. As permitted by ASC Topic 842, the Company does not expect to adjust comparative-period financial statements. Recently issued ASUs - Other In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). The standard is intended to simplify several aspects of the accounting for nonemployee share-based payment transactions for acquiring goods and services from nonemployees, including the timing and measurement of nonemployee awards. The guidance in ASU 2018-06 is effective for public entities for annual reporting periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the impact of its pending adoption of this guidance on its consolidated financial statements. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Fair Value of Net Assets Acquired | The following table summarizes the estimated acquisition date fair values of the acquisition: Evaluated oil and natural gas properties $ 137,368 Unevaluated oil and natural gas properties 509,359 Asset retirement obligations (168 ) Net assets acquired $ 646,559 |
Unaudited Summary Pro Forma Financial Information | The following unaudited summary pro forma financial information for the periods presented is for illustrative purposes only and does not purport to represent what the Company’s results of operations would have been if the Ameredev Transaction had occurred as presented, or to project the Company’s results of operations for any future periods: Three Months Ended Six Months Ended June 30, 2017 (a) June 30, 2017 (a) Revenues $ 82,283 $ 166,699 Income from operations 23,743 58,650 Income available to common stockholders 31,566 79,529 Net income per common share: Basic $ 0.16 $ 0.40 Diluted $ 0.16 $ 0.40 (a) The pro forma financial information was prepared assuming the Ameredev Transaction occurred as of January 1, 2016. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: (share amounts in thousands) Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Net income $ 50,474 $ 33,390 $ 106,236 $ 80,519 Preferred stock dividends (1,824 ) (1,824 ) (3,647 ) (3,647 ) Income available to common stockholders $ 48,650 $ 31,566 $ 102,589 $ 76,872 Weighted average shares outstanding 210,698 201,386 206,309 201,220 Dilutive impact of restricted stock 767 519 718 603 Weighted average shares outstanding for diluted income per share 211,465 201,905 207,027 201,823 Basic income per share $ 0.23 $ 0.16 $ 0.50 $ 0.38 Diluted income per share $ 0.23 $ 0.16 $ 0.50 $ 0.38 Restricted stock (a) — 22 — 22 (a) Shares excluded from the diluted earnings per share calculation because their effect would be anti-dilutive. |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Borrowings | The Company’s borrowings consisted of the following at: June 30, 2018 December 31, 2017 Principal components: Senior secured revolving credit facility $ — $ 25,000 6.125% senior unsecured notes due 2024 600,000 600,000 6.375% senior unsecured notes due 2026 400,000 — Total principal outstanding 1,000,000 625,000 Premium on 6.125% senior unsecured notes due 2024, net of accumulated amortization 7,031 7,594 Unamortized deferred financing costs (18,572 ) (12,398 ) Total carrying value of borrowings $ 988,459 $ 620,196 |
Derivative Instruments and He22
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair Value of Derivative Instruments | The following table reflects the fair value of the Company’s derivative instruments for the periods presented: Balance Sheet Presentation Asset Fair Value Liability Fair Value Net Derivative Fair Value Commodity Classification Line Description 6/30/2018 12/31/2017 6/30/2018 12/31/2017 6/30/2018 12/31/2017 Natural gas Current Fair value of derivatives $ 391 $ 406 $ (35 ) $ — $ 356 $ 406 Natural gas Non-current Fair value of derivatives — — (302 ) — (302 ) — Oil Current Fair value of derivatives 11,178 — (35,913 ) (27,744 ) (24,735 ) (27,744 ) Oil Non-current Fair value of derivatives 2,299 — (10,834 ) (1,284 ) (8,535 ) (1,284 ) Totals $ 13,868 $ 406 $ (47,084 ) $ (29,028 ) $ (33,216 ) $ (28,622 ) |
Schedule of Offsetting Assets | The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated: June 30, 2018 Presented without As Presented with Effects of Netting Effects of Netting Effects of Netting Current assets: Fair value of derivatives $ 33,530 $ (21,961 ) $ 11,569 Long-term assets: Fair value of derivatives 7,536 (5,237 ) 2,299 Current liabilities: Fair value of derivatives $ (57,909 ) $ 21,961 $ (35,948 ) Long-term liabilities: Fair value of derivatives (16,373 ) 5,237 (11,136 ) December 31, 2017 Presented without As Presented with Effects of Netting Effects of Netting Effects of Netting Current assets: Fair value of derivatives $ 406 $ — $ 406 Current liabilities: Fair value of derivatives $ (27,744 ) $ — $ (27,744 ) Long-term liabilities: Fair value of derivatives (1,284 ) — (1,284 ) |
Schedule of Offsetting Liabilities | The following presents the impact of this presentation to the Company’s recognized assets and liabilities for the periods indicated: June 30, 2018 Presented without As Presented with Effects of Netting Effects of Netting Effects of Netting Current assets: Fair value of derivatives $ 33,530 $ (21,961 ) $ 11,569 Long-term assets: Fair value of derivatives 7,536 (5,237 ) 2,299 Current liabilities: Fair value of derivatives $ (57,909 ) $ 21,961 $ (35,948 ) Long-term liabilities: Fair value of derivatives (16,373 ) 5,237 (11,136 ) December 31, 2017 Presented without As Presented with Effects of Netting Effects of Netting Effects of Netting Current assets: Fair value of derivatives $ 406 $ — $ 406 Current liabilities: Fair value of derivatives $ (27,744 ) $ — $ (27,744 ) Long-term liabilities: Fair value of derivatives (1,284 ) — (1,284 ) |
Schedule of Gain or Loss on Derivative Contracts | For the periods indicated, the Company recorded the following related to its derivatives in the consolidated statement of operations as gain or loss on derivative contracts: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Oil derivatives Net loss on settlements $ (8,131 ) $ (315 ) $ (17,049 ) $ (2,840 ) Net gain (loss) on fair value adjustments (8,311 ) 10,128 (4,243 ) 27,394 Total gain (loss) on oil derivatives $ (16,442 ) $ 9,813 $ (21,292 ) $ 24,554 Natural gas derivatives Net gain on settlements $ 151 $ 48 $ 607 $ 82 Net gain (loss) on fair value adjustments (263 ) 633 (351 ) 1,161 Total gain (loss) on natural gas derivatives $ (112 ) $ 681 $ 256 $ 1,243 Total gain (loss) on oil & natural gas derivatives $ (16,554 ) $ 10,494 $ (21,036 ) $ 25,797 |
Schedule of Outstanding Oil and Natural Gas Derivative Contracts | Listed in the tables below are the outstanding oil and natural gas derivative contracts as of June 30, 2018 : For the Remainder For the Full Year For the Full Year Oil contracts (WTI) of 2018 of 2019 of 2020 Swap contracts Total volume (Bbls) 1,104,000 — — Weighted average price per Bbl $ 52.07 $ — $ — Collar contracts (two-way collars) Total volume (Bbls) 184,000 — — Weighted average price per Bbl Ceiling (short call) $ 60.50 $ — $ — Floor (long put) $ 50.00 $ — $ — Collar contracts combined with short puts (three-way collars) Total volume (Bbls) 1,748,000 3,469,000 — Weighted average price per Bbl Ceiling (short call option) $ 60.86 $ 63.71 $ — Floor (long put option) $ 48.95 $ 53.95 $ — Short put option $ 39.21 $ 43.95 $ — Puts Total volume (Bbls) 552,000 1,825,000 — Weighted average price per Bbl $ 65.00 $ 65.00 $ — Oil contracts (Midland basis differential) Swap contracts Total volume (Bbls) 2,208,000 4,380,000 3,660,000 Weighted average price per Bbl $ (4.26 ) $ (4.77 ) $ (1.47 ) Natural gas contracts (Henry Hub) Swap contracts Total volume (MMBtu) 2,760,000 — — Weighted average price per MMBtu $ 2.91 $ — $ — Collar contracts (two-way collars) Total volume (MMBtu) 1,104,000 2,372,500 — Weighted average price per MMBtu Ceiling (short call) $ 3.19 $ 2.95 $ — Floor (long put) $ 2.75 $ 2.65 $ — Natural gas contracts (Waha basis differential) Swap contracts Total volume (MMBtu) 1,104,000 2,190,000 2,196,000 Weighted average price per MMBtu $ (1.14 ) $ (1.14 ) $ (1.14 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Instruments at Carrying and Fair Value | The carrying amount of the Company’s floating-rate debt approximated fair value because the interest rates were variable and reflective of market rates. June 30, 2018 December 31, 2017 Carrying Value Fair Value Carrying Value Fair Value Credit Facility (a) $ — $ — $ 25,000 $ — 6.125% Senior Notes (b) 595,552 607,500 595,196 618,000 6.375% Senior Notes (b) 392,907 400,000 — — Total $ 988,459 $ 1,007,500 $ 620,196 $ 618,000 (a) Floating-rate debt. (b) The fair value was based upon Level 2 inputs. See Note 5 for additional information about the Company’s 6.125% and 6.375% Senior Notes. |
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis: June 30, 2018 Classification Level 1 Level 2 Level 3 Total Assets Derivative financial instruments Fair value of derivatives $ — $ 13,868 $ — $ 13,868 Liabilities Derivative financial instruments Fair value of derivatives — (47,084 ) — (47,084 ) Total net liabilities $ — $ (33,216 ) $ — $ (33,216 ) December 31, 2017 Classification Level 1 Level 2 Level 3 Total Assets Derivative financial instruments Fair value of derivatives $ — $ 406 $ — $ 406 Liabilities Derivative financial instruments Fair value of derivatives — (29,028 ) — (29,028 ) Total net liabilities $ — $ (28,622 ) $ — $ (28,622 ) |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Asset Retirement Obligation [Abstract] | |
Summary of Activity of Asset Retirement Obligations | The table below summarizes the activity for the Company’s asset retirement obligations: Six Months Ended June 30, 2018 Asset retirement obligations at January 1, 2018 $ 6,020 Accretion expense 424 Liabilities incurred 99 Liabilities settled (207 ) Sales (611 ) Revisions to estimate (a) 4,341 Asset retirement obligations at end of period 10,066 Less: Current asset retirement obligations (2,284 ) Long-term asset retirement obligations at June 30, 2018 $ 7,782 (a) Revisions to estimated ARO obligations can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Minimum | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Performance obligation | 30 days | 30 days | ||
Maximum | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Performance obligation | 90 days | 90 days | ||
Natural Gas, Gathering and Treating Fees | Natural Gas Revenue | Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cost of goods and services sold | $ 1,952 | $ 761 | $ 3,204 | |
Natural Gas, Gathering and Treating Fees | Lease Operating Expense | Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cost of goods and services sold | $ 1,484 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) | May 23, 2018USD ($)a | Jun. 05, 2017USD ($)a | Feb. 13, 2017USD ($)a | Mar. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | May 19, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | ||||||||
Acquisition deposit | $ 28,500,000 | $ 900,000 | ||||||
6.125% senior unsecured notes due 2024 | ||||||||
Business Acquisition [Line Items] | ||||||||
Debt instrument aggregate principal amount | $ 200,000,000 | |||||||
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% | ||||||
Cimarex Energy Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Gas and oil area, developed and undeveloped, gross (in acres) | a | 47,538 | |||||||
Gas and oil area, developed and undeveloped, net (in acres) | a | 28,657 | |||||||
Consideration transferred | $ 570,000,000 | |||||||
Acquisition deposit | $ 28,500,000 | |||||||
Monarch and Wildhorse | ||||||||
Business Acquisition [Line Items] | ||||||||
Consideration transferred | $ 35,900,000 | |||||||
Delaware Basin | ||||||||
Business Acquisition [Line Items] | ||||||||
Gas and oil area, developed and undeveloped, gross (in acres) | a | 7,031 | 29,175 | ||||||
Gas and oil area, developed and undeveloped, net (in acres) | a | 2,488 | 16,688 | ||||||
Consideration transferred | $ 52,500,000 | $ 646,559,000 | ||||||
Working interest (as a percent) | 82.00% | |||||||
Net revenue interest (as a percent) | 75.00% | |||||||
Acquisition deposit | $ 46,138,000 |
Acquisitions (Fair Value of Net
Acquisitions (Fair Value of Net Assets Acquired ) (Details) - Delaware Basin $ in Thousands | Feb. 13, 2017USD ($) |
Business Acquisition [Line Items] | |
Asset retirement obligations | $ (168) |
Net assets acquired | 646,559 |
Evaluated oil and natural gas properties | |
Business Acquisition [Line Items] | |
Oil and natural gas properties | 137,368 |
Unevaluated oil and natural gas properties | |
Business Acquisition [Line Items] | |
Oil and natural gas properties | $ 509,359 |
Acquisitions (Unaudited Pro For
Acquisitions (Unaudited Pro Forma Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017 | Jun. 30, 2017 | |
Business Combinations [Abstract] | ||
Revenues | $ 82,283 | $ 166,699 |
Income from operations | 23,743 | 58,650 |
Income available to common stockholders | $ 31,566 | $ 79,529 |
Net income per common share: | ||
Basic (in dollars per share) | $ 0.16 | $ 0.40 |
Diluted (in dollars per share) | $ 0.16 | $ 0.40 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share, Basic and Diluted | ||||
Net income | $ 50,474 | $ 33,390 | $ 106,236 | $ 80,519 |
Preferred stock dividends | (1,824) | (1,824) | (3,647) | (3,647) |
Income available to common stockholders | $ 48,650 | $ 31,566 | $ 102,589 | $ 76,872 |
Weighted average shares outstanding (in shares) | 210,698 | 201,386 | 206,309 | 201,220 |
Dilutive impact of restricted stock (in shares) | 767 | 519 | 718 | 603 |
Weighted average shares outstanding for diluted income per share (in shares) | 211,465 | 201,905 | 207,027 | 201,823 |
Basic income per share (in dollars per share) | $ 0.23 | $ 0.16 | $ 0.50 | $ 0.38 |
Diluted income per share (in dollars per share) | $ 0.23 | $ 0.16 | $ 0.50 | $ 0.38 |
Restricted Stock | ||||
Earnings Per Share, Basic and Diluted | ||||
Excluded from the diluted EPS calculation because their effect would be anti-dilutive (in shares) | 0 | 22 | 0 | 22 |
Borrowings (Schedule of Borrowi
Borrowings (Schedule of Borrowings) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | May 19, 2017 |
Principal components: | |||
Total principal outstanding | $ 1,000,000 | $ 625,000 | |
Premium on senior unsecured notes, net of accumulated amortization | 7,031 | 7,594 | |
Unamortized deferred financing costs | (18,572) | (12,398) | |
Total carrying value of borrowings | 988,459 | 620,196 | |
Senior secured revolving credit facility | |||
Principal components: | |||
Total principal outstanding | 0 | 25,000 | |
6.125% senior unsecured notes due 2024 | |||
Principal components: | |||
Total principal outstanding | $ 600,000 | 600,000 | |
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% | |
6.375% senior unsecured notes due 2026 | |||
Principal components: | |||
Total principal outstanding | $ 400,000 | $ 0 | |
Debt instrument, interest rate, stated (as a percent) | 6.375% |
Borrowings (Credit Facility) (N
Borrowings (Credit Facility) (Narrative) (Details) | Apr. 05, 2018USD ($) | May 25, 2017USD ($)lender | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Line of Credit Facility [Line Items] | ||||
Balance outstanding on credit facility | $ 0 | $ 25,000,000 | ||
Senior secured revolving credit facility | Secured debt | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument maturity date | May 25, 2022 | |||
Institutional lenders | lender | 17 | |||
Maximum borrowing capacity | $ 2,000,000,000 | |||
Increase limit | $ 825,000,000 | 825,000,000 | ||
Credit facility borrowing base | $ 650,000,000 | 650,000,000 | ||
Balance outstanding on credit facility | 0 | |||
Letters of credit outstanding | $ 1,250,000 | |||
Interest rate at period end (as a percent) | 3.97% | |||
Unused capacity, commitment fee (as a percent) | 0.375% | |||
Senior secured revolving credit facility | Secured debt | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument interest rate (as a percent) | 1.25% | 1.25% | ||
Senior secured revolving credit facility | Secured debt | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument interest rate (as a percent) | 2.25% | 2.25% |
Borrowings Borrowings (6.375% S
Borrowings Borrowings (6.375% Senior Notes) (Details) - 6.375% senior unsecured notes due 2026 - USD ($) | Jun. 07, 2018 | Jun. 30, 2018 |
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated (as a percent) | 6.375% | |
Unsecured debt | ||
Debt Instrument [Line Items] | ||
Debt instrument aggregate principal amount | $ 400,000,000 | |
Debt instrument, interest rate, stated (as a percent) | 6.375% | 6.375% |
Net proceeds from issuance of senior unsecured notes | $ 394,000,000 | |
Unsecured debt | Change Of Control | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption price percent (as a percent) | 101.00% | |
Unsecured debt | Prior to July 1, 2021, a Redemption of up to 35% of the Principal | ||
Debt Instrument [Line Items] | ||
Number of days to closing date of equity offerings | 180 days | |
Debt instrument redemption price percent (as a percent) | 106.375% | |
Unsecured debt | Prior to July 1, 2021, a Redemption of up to 35% of the Principal | Maximum | ||
Debt Instrument [Line Items] | ||
Redemption principal amount percentage (as a percent) | 35.00% | |
Unsecured debt | Prior to July 1, 2021, a Redemption of up to 35% of the Principal | Minimum | ||
Debt Instrument [Line Items] | ||
Redemption principal remaining amount percentage (as a percent) | 65.00% | |
Unsecured debt | Prior to July 1, 2021, a Redemption of All or Part of the Principal | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption price percent (as a percent) | 100.00% | |
Unsecured debt | On or After July 1, 2021, but Before July 1, 2022 | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption price percent (as a percent) | 103.188% | |
Unsecured debt | On or After July 1, 2022, but Before July 1, 2023 | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption price percent (as a percent) | 102.125% | |
Unsecured debt | On or After July 1, 2023, but Before July 1, 2024 | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption price percent (as a percent) | 101.063% | |
Unsecured debt | On or After July 1, 2024 | ||
Debt Instrument [Line Items] | ||
Debt instrument redemption price percent (as a percent) | 100.00% |
Borrowings (6.125% Senior Notes
Borrowings (6.125% Senior Notes) (Narrative) (Details) - USD ($) | May 19, 2017 | Oct. 03, 2016 | Jun. 30, 2018 |
Unsecured debt | Callon Petroleum Operating Company | |||
Debt Instrument, Redemption [Line Items] | |||
Percentage of ownership in wholly-owned subsidiary (as a percent) | 100.00% | ||
6.125% senior unsecured notes due 2024 | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument aggregate principal amount | $ 200,000,000 | ||
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% | |
6.125% senior unsecured notes due 2024 | Unsecured debt | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument aggregate principal amount | $ 200,000,000 | $ 400,000,000 | |
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% | 6.125% |
Debt instrument maturity date | Oct. 1, 2024 | ||
Debt instrument repayment beginning date | Apr. 1, 2017 | ||
Net proceeds from issuance of senior unsecured notes | $ 391,270,000 | ||
Debt instrument redemption price percent (as a percent) | 104.125% | ||
Proceeds from issuance of debt | $ 206,139,000 | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | Change Of Control | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 101.00% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | Prior to October 1, 2019, a Redemption of up to 35% of the Principal | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 106.125% | ||
Number of days to closing date of equity offerings | 180 days | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | Prior to October 1, 2019, a Redemption of All or Part of the Principal | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 100.00% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | On or After October 1, 2019, but Before October 1, 2020 | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 104.594% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | On or After October 1, 2020, but Before October 1, 2021 | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 103.063% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | On or After October 1, 2021, but Before October 1, 2022 | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 101.531% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | On or After October 1, 2022 | |||
Debt Instrument, Redemption [Line Items] | |||
Debt instrument redemption price percent (as a percent) | 100.00% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | Maximum | Prior to October 1, 2019, a Redemption of up to 35% of the Principal | |||
Debt Instrument, Redemption [Line Items] | |||
Redemption principal amount percentage (as a percent) | 35.00% | ||
6.125% senior unsecured notes due 2024 | Unsecured debt | Minimum | Prior to October 1, 2019, a Redemption of up to 35% of the Principal | |||
Debt Instrument, Redemption [Line Items] | |||
Redemption principal remaining amount percentage (as a percent) | 65.00% |
Derivative Instruments and He34
Derivative Instruments and Hedging Activities (Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | $ 2,299 | $ 0 |
Not Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 13,868 | 406 |
Liability Fair Value | (47,084) | (29,028) |
Net Derivative Fair Value | (33,216) | (28,622) |
Not Designated as Hedging Instrument | Current assets: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 11,569 | 406 |
Not Designated as Hedging Instrument | Current liabilities: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Liability Fair Value | (35,948) | (27,744) |
Not Designated as Hedging Instrument | Long-term assets: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 2,299 | |
Not Designated as Hedging Instrument | Long-term liabilities: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Liability Fair Value | (11,136) | (1,284) |
Not Designated as Hedging Instrument | Natural gas | Current assets: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 391 | 406 |
Not Designated as Hedging Instrument | Natural gas | Current liabilities: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Liability Fair Value | (35) | 0 |
Not Designated as Hedging Instrument | Natural gas | Current | ||
Derivatives, Fair Value [Line Items] | ||
Net Derivative Fair Value | 356 | 406 |
Not Designated as Hedging Instrument | Natural gas | Long-term assets: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 0 | 0 |
Not Designated as Hedging Instrument | Natural gas | Long-term liabilities: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Liability Fair Value | (302) | 0 |
Not Designated as Hedging Instrument | Natural gas | Non-current | ||
Derivatives, Fair Value [Line Items] | ||
Net Derivative Fair Value | (302) | 0 |
Not Designated as Hedging Instrument | Oil | Current assets: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 11,178 | 0 |
Not Designated as Hedging Instrument | Oil | Current liabilities: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Liability Fair Value | (35,913) | (27,744) |
Not Designated as Hedging Instrument | Oil | Current | ||
Derivatives, Fair Value [Line Items] | ||
Net Derivative Fair Value | (24,735) | (27,744) |
Not Designated as Hedging Instrument | Oil | Long-term assets: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Asset Fair Value | 2,299 | 0 |
Not Designated as Hedging Instrument | Oil | Long-term liabilities: Fair value of derivatives | ||
Derivatives, Fair Value [Line Items] | ||
Liability Fair Value | (10,834) | (1,284) |
Not Designated as Hedging Instrument | Oil | Non-current | ||
Derivatives, Fair Value [Line Items] | ||
Net Derivative Fair Value | $ (8,535) | $ (1,284) |
Derivative Instruments and He35
Derivative Instruments and Hedging Activities (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Offsetting Assets and Liabilities [Line Items] | ||
Derivative asset | $ 2,299 | $ 0 |
Not Designated as Hedging Instrument | ||
Offsetting Assets and Liabilities [Line Items] | ||
Derivative asset | 13,868 | 406 |
Derivative liability | (47,084) | (29,028) |
Not Designated as Hedging Instrument | Current assets: Fair value of derivatives | ||
Offsetting Assets and Liabilities [Line Items] | ||
Derivative asset, fair value, gross asset | 33,530 | 406 |
Derivative asset, fair value, gross liability | (21,961) | 0 |
Derivative asset | 11,569 | 406 |
Not Designated as Hedging Instrument | Long-term assets: Fair value of derivatives | ||
Offsetting Assets and Liabilities [Line Items] | ||
Derivative asset, fair value, gross asset | 7,536 | |
Derivative asset, fair value, gross liability | (5,237) | |
Derivative asset | 2,299 | |
Not Designated as Hedging Instrument | Current liabilities: Fair value of derivatives | ||
Offsetting Assets and Liabilities [Line Items] | ||
Derivative liability, fair value, gross liability | (57,909) | (27,744) |
Derivative liability, fair value, gross asset | 21,961 | 0 |
Derivative liability | (35,948) | (27,744) |
Not Designated as Hedging Instrument | Long-term liabilities: Fair value of derivatives | ||
Offsetting Assets and Liabilities [Line Items] | ||
Derivative liability, fair value, gross liability | (16,373) | (1,284) |
Derivative liability, fair value, gross asset | 5,237 | 0 |
Derivative liability | $ (11,136) | $ (1,284) |
Derivative Instruments and He36
Derivative Instruments and Hedging Activities (Schedule of Gain or Loss on Derivative Contracts) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net gain (loss) on fair value adjustments | $ (4,594) | $ 28,555 | ||
Total gain (loss) on oil & natural gas derivatives | $ (16,554) | $ 10,494 | (21,036) | 25,797 |
Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total gain (loss) on oil & natural gas derivatives | (16,554) | 10,494 | (21,036) | 25,797 |
Not Designated as Hedging Instrument | Oil | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net loss on settlements | (8,131) | (315) | (17,049) | (2,840) |
Net gain (loss) on fair value adjustments | (8,311) | 10,128 | (4,243) | 27,394 |
Total gain (loss) on oil & natural gas derivatives | (16,442) | 9,813 | (21,292) | 24,554 |
Not Designated as Hedging Instrument | Natural gas | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net loss on settlements | 151 | 48 | 607 | 82 |
Net gain (loss) on fair value adjustments | (263) | 633 | (351) | 1,161 |
Total gain (loss) on oil & natural gas derivatives | $ (112) | $ 681 | $ 256 | $ 1,243 |
Derivative Instruments and He37
Derivative Instruments and Hedging Activities (Schedule of Outstanding Oil and Natural Gas Derivative Contracts) (Details) - Forecast - Not Designated as Hedging Instrument | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2018MMBTU$ / MMBTUbbl | Dec. 31, 2020MMBTU$ / MMBTUbbl | Dec. 31, 2019MMBTU$ / MMBTUbbl | |
Oil | Put option | |||
Derivative [Line Items] | |||
Total volume (Bbls) | bbl | 552,000,000 | 0 | 1,825,000,000 |
Average swap price (in dollars per share) | 65 | 0 | 65 |
Oil | Swap contracts | |||
Derivative [Line Items] | |||
Total volume (Bbls) | bbl | 1,104,000,000 | 0 | 0 |
Average swap price (in dollars per share) | 52.07 | 0 | 0 |
Oil | Collar contracts (two-way collars) | |||
Derivative [Line Items] | |||
Total volume (Bbls) | bbl | 184,000,000 | 0 | 0 |
Oil | Collar contracts (two-way collars) | Short | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 60.50 | 0 | 0 |
Oil | Collar contracts (two-way collars) | Long | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 50 | 0 | 0 |
Oil | Collar contracts combined with short puts (three-way collars) | |||
Derivative [Line Items] | |||
Total volume (Bbls) | bbl | 1,748,000,000 | 0 | 3,469,000,000 |
Oil | Collar contracts combined with short puts (three-way collars) | Call option | Short | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 60.86 | 0 | 63.71 |
Oil | Collar contracts combined with short puts (three-way collars) | Put option | Short | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 39.21 | 0 | 43.95 |
Oil | Collar contracts combined with short puts (three-way collars) | Put option | Long | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 48.95 | 0 | 53.95 |
Oil | Oil contracts (Midland basis differential) | |||
Derivative [Line Items] | |||
Total volume (Bbls) | bbl | 2,208,000,000 | 3,660,000,000 | 4,380,000,000 |
Oil | Oil contracts (Midland basis differential) | Short | |||
Derivative [Line Items] | |||
Average swap price (in dollars per share) | 4.26 | 1.47 | 4.77 |
Natural gas | Swap contracts | |||
Derivative [Line Items] | |||
Average swap price (in dollars per share) | 2.91 | 0 | 0 |
Total volume (MMBtu) | MMBTU | 2,760,000,000 | 0 | 0 |
Natural gas | Collar contracts (two-way collars) | |||
Derivative [Line Items] | |||
Total volume (MMBtu) | MMBTU | 1,104,000,000 | 0 | 2,372,500,000 |
Natural gas | Collar contracts (two-way collars) | Short | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 3.19 | 0 | 2.95 |
Natural gas | Collar contracts (two-way collars) | Long | |||
Derivative [Line Items] | |||
Strike price (in dollars per share) | 2.75 | 0 | 2.65 |
Natural gas | Waha basis differential | Swap contracts | |||
Derivative [Line Items] | |||
Total volume (MMBtu) | MMBTU | 1,104,000,000 | 2,196,000,000 | 2,190,000,000 |
Natural gas | Waha basis differential | Swap contracts | Short | |||
Derivative [Line Items] | |||
Average swap price (in dollars per share) | 1.14 | 1.14 | 1.14 |
Fair Value Measurements (Summar
Fair Value Measurements (Summary of Financial Instruments at Carrying and Fair Value) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jun. 07, 2018 | Dec. 31, 2017 | May 19, 2017 | Oct. 03, 2016 |
6.125% senior unsecured notes due 2024 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% | |||
6.125% senior unsecured notes due 2024 | Unsecured debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Debt instrument, interest rate, stated (as a percent) | 6.125% | 6.125% | 6.125% | ||
6.375% senior unsecured notes due 2026 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Debt instrument, interest rate, stated (as a percent) | 6.375% | ||||
6.375% senior unsecured notes due 2026 | Unsecured debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Debt instrument, interest rate, stated (as a percent) | 6.375% | 6.375% | |||
Carrying Value | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Credit Facility | $ 0 | $ 25,000 | |||
Total | 988,459 | 620,196 | |||
Carrying Value | 6.125% senior unsecured notes due 2024 | Unsecured debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes | 595,552 | 595,196 | |||
Carrying Value | 6.375% senior unsecured notes due 2026 | Unsecured debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes | 392,907 | 0 | |||
Fair Value | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Credit Facility | 0 | 0 | |||
Total | 1,007,500 | 618,000 | |||
Fair Value | 6.125% senior unsecured notes due 2024 | Unsecured debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes | 607,500 | 618,000 | |||
Fair Value | 6.375% senior unsecured notes due 2026 | Unsecured debt | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes | $ 400,000 | $ 0 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value of Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Derivative financial instruments | $ 2,299 | $ 0 |
Recurring Basis | ||
Assets | ||
Derivative financial instruments | 13,868 | 406 |
Liabilities | ||
Derivative financial instruments | (47,084) | (29,028) |
Net Derivative Fair Value | (33,216) | (28,622) |
Recurring Basis | Level 1 | ||
Assets | ||
Derivative financial instruments | 0 | 0 |
Liabilities | ||
Derivative financial instruments | 0 | 0 |
Net Derivative Fair Value | 0 | 0 |
Recurring Basis | Level 2 | ||
Assets | ||
Derivative financial instruments | 13,868 | 406 |
Liabilities | ||
Derivative financial instruments | (47,084) | (29,028) |
Net Derivative Fair Value | (33,216) | (28,622) |
Recurring Basis | Level 3 | ||
Assets | ||
Derivative financial instruments | 0 | 0 |
Liabilities | ||
Derivative financial instruments | 0 | 0 |
Net Derivative Fair Value | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Cummulative loss incurred, period | 3 years |
Deferred tax assets, valuation allowance | $ 38,604 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||||
Asset retirement obligations at January 1, 2018 | $ 6,020 | ||||
Accretion expense | $ 206 | $ 208 | 424 | $ 392 | |
Liabilities incurred | 99 | ||||
Liabilities settled | (207) | ||||
Sales | (611) | ||||
Revisions to estimate | 4,341 | ||||
Asset retirement obligations at end of period | 10,066 | 10,066 | |||
Less: Current asset retirement obligations | (2,284) | (2,284) | $ (1,295) | ||
Long-term asset retirement obligations at June 30, 2018 | 7,782 | 7,782 | 4,725 | ||
Restricted Investments | |||||
Restricted investments | $ 3,393 | $ 3,393 | $ 3,372 |
Equity Transactions (Details)
Equity Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands | May 30, 2018 | Dec. 19, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Class of Stock [Line Items] | |||||||
Preferred stock dividend | $ 1,824 | $ 1,824 | $ 3,647 | $ 3,647 | |||
Issuance of common stock | $ 288,357 | $ 0 | |||||
Series A Preferred Stock | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock cumulative cash dividends rate | 10.00% | ||||||
Preferred stock, liquidation preference (in dollars per share) | $ 50 | $ 50 | $ 50 | ||||
Preferred stock, dividend rate (in dollars per share) | 5 | ||||||
Common Stock | |||||||
Class of Stock [Line Items] | |||||||
Value of a share of common stock (in dollars per share) | $ 10.74 | $ 10.74 | |||||
Conversion ratio of preferred stock to common stock | 4.7 | ||||||
Shares of common stock issued in public offering (in shares) | 25,300,000 | 40,000,000 | |||||
Issuance of common stock | $ 288,389 | $ 634,934 |
Other (Details)
Other (Details) $ in Thousands | Aug. 06, 2018bbl / d | May 02, 2018USD ($) | Mar. 31, 2018 | Jun. 30, 2018contract |
Subsequent Event [Line Items] | ||||
Dedicated fracturing and pump down perforating crews, agreement period | 2 years | |||
Operating Leases And Other Property Plant And Equipment [Line Items] | ||||
Potential loss on contract termination | $ | $ 31,342 | |||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Delivery commitments per day | bbl / d | 15,000 | |||
Horizontal Drilling Rig | ||||
Operating Leases And Other Property Plant And Equipment [Line Items] | ||||
Number of contracts | contract | 5 |