EXHIBIT 99.2
For further information contact
John S. Weatherly, CFO 1-800-451-1294
FOR IMMEDIATE RELEASE
CALLON PETROLEUM COMPANY REPORTS RESULTS
FOR SECOND QUARTER, FIRST SIX MONTHS OF 2003
Natchez, MS (August 11, 2003)--Callon Petroleum Company (NYSE:
CPE/CPE.PrA) today reported its results of operations for both the quarter and
the six-month period ended June 30, 2003.
Results for the three-month period ended June 30, 2003 include a net
loss of $647,000, or $0.07 per diluted share. This compares to net income of
$2.3 million, or $0.15 per share on a diluted basis, for the same period in
2002.
Operating results for the three-month period ended June 30, 2003
include oil and gas sales of $18.4 million from average production of 38 million
cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to
sales of $15.3 million from average daily production of 43 MMcfe/d during the
same period in 2002. During the second quarter of 2003, natural gas represented
approximately 92 percent of the company's total production. The average price
received per thousand cubic feet of natural gas in the second quarter of 2003
increased by 67 percent to $5.44 compared to $3.25 during the second three
months in 2002, while the average price received per barrel of oil in the second
quarter of 2003 increased by 14 percent to $26.59 compared to $23.41 during the
same period a year earlier.
For the six months ended June 30, 2003, the company reported net income
of $735,000, or $0.00 per diluted share after the cumulative effect of change in
accounting principle related to Statement of Financial Accounting Standards
(SFAS) No. 143 ("Accounting for Asset Retirement Obligations"). This compares to
a net loss of $113,000, or $0.06 per share on a diluted basis, for the same
period in 2002.
On January 1, 2003, the company adopted SFAS No. 143, which required
companies to record the fair value of a liability for legal obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. As a result, the impact of adopting the statement
resulted in a gain of $181,000, net of tax, which was reported in the first
quarter of 2003 as the cumulative effect of the change in accounting principle.
Operating results for the six-month period ended June 30, 2003 include
oil and gas sales of $39.7 million from average production of 39 million cubic
feet of natural gas equivalent per day (MMcfe/d). This corresponds to sales of
$26.4 million from average daily production of 40 MMcfe/d during the same period
in 2002. The average price received per thousand cubic feet of natural gas for
the six-month period ended June 30, 2003 increased by 99 percent to $5.62
compared to $2.83 during the first six months in 2002, while the average price
received per barrel of oil increased by 37 percent to $28.93 compared to $21.16
during the same period a year earlier.
Callon Petroleum Company is engaged in the exploration, development,
acquisition and operation of oil and gas properties primarily in the Gulf Coast
region.
(MORE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Operating revenues:
Oil and gas sales $ 18,409 $ 15,304 $ 39,677 $ 26,358
---------- ---------- ---------- ----------
Total operating revenues 18,409 15,304 39,677 26,358
---------- ---------- ---------- ----------
Operating expenses:
Lease operating expenses 2,512 2,805 5,344 5,369
Depreciation, depletion and amortization 6,951 6,489 14,353 12,077
General and administrative 1,401 1,299 2,636 2,438
Accretion expense 727 -- 1,442 --
Loss on mark-to-market commodity derivative contracts 396 382 534 770
---------- ---------- ---------- ----------
Total operating expenses 11,987 10,975 24,309 20,654
---------- ---------- ---------- ----------
Income from operations 6,422 4,329 15,368 5,704
---------- ---------- ---------- ----------
Other (income) expenses:
Interest expense 7,490 5,913 14,671 11,633
Other income (73) (252) (156) (822)
Gain on sale of pipeline -- (2,454) -- (2,454)
Gain on sale of Enron derivatives -- (2,479) -- (2,479)
---------- ---------- ---------- ----------
Total other (income) expenses 7,417 728 14,515 5,878
---------- ---------- ---------- ----------
Income (loss) before income taxes (995) 3,601 853 (174)
Income tax expense (benefit) (348) 1,260 299 (61)
---------- ---------- ---------- ----------
Income (loss) before cumulative effect of change in
accounting principle (647) 2,341 554 (113)
Cumulative effect of change in accounting principle, net of tax -- -- 181 --
---------- ---------- ---------- ----------
Net income (loss) (647) 2,341 735 (113)
Preferred stock dividends 319 319 638 638
---------- ---------- ---------- ----------
Net income (loss) available to common shares $ (966) $ 2,022 $ 97 $ (751)
========== ========== ========== ==========
Net income (loss) per common share:
Basic
Net income (loss) available to common before cumulative
effect of change in accounting principle $ (0.07) $ 0.15 $ (0.01) $ (0.06)
Cumulative effect of change in accounting principle, net of tax -- -- 0.01 --
---------- ---------- ---------- ----------
Net income (loss) available to common $ (0.07) $ 0.15 $ 0.00 $ (0.06)
========== ========== ========== ==========
Diluted
Net income (loss) available to common before cumulative
effect of change in accounting principle $ (0.07) $ 0.15 $ ( 0.01) $ (0.06)
Cumulative effect of change in accounting principle, net of tax -- -- 0.01 --
---------- ---------- ---------- ----------
Net income (loss) available to common $ (0.07) $ 0.15 $ 0.00 $ (0.06)
========== ========== ========== ==========
Shares used in computing net income (loss):
Basic 13,640 13,334 13,620 13,325
========== ========== ========== ==========
Diluted 13,640 13,744 14,286 13,325
========== ========== ========== ==========
</Table>
CONSOLIDATED CONDENSED BALANCE SHEETS:
(In thousands)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2003 2002
------------ ------------
(UNAUDITED)
Cash and cash equivalents $ 4,927 $ 5,807
Oil and gas properties, net* 411,890 377,661
All other assets 33,270 27,145
------------ ------------
Total assets $ 450,087 $ 410,613
============ ============
Long-term debt excluding current maturities $ 184,874 $ 248,269
All other liabilities* 123,848 21,384
Stockholders' equity 141,365 140,960
------------ ------------
Total liabilities and stockholders' equity $ 450,087 $ 410,613
============ ============
</Table>
*Impacted by the adoption of SFAS No. 143 on January 1, 2003
OTHER FINANCIAL INFORMATION:
(In thousands, except per share amounts)
A reconciliation of net cash provided by operating activities before changes in
operating assets and liabilities, a non-GAAP financial measure, is presented on
the company's website, www.callon.com, and can be found under the heading
"Investor Info," "SEC Regulation G Disclosure."
PRODUCTION AND PRICE INFORMATION:
<Table>
<Caption>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Production:
Oil (MBbls) 46 60 91 114
Gas (MMcf) 3,166 3,565 6,593 6,594
Gas equivalent (MMcfe) 3,441 3,925 7,138 7,278
Average daily (MMcfe) 37.8 43.1 39.4 40.2
Average prices:
Oil ($/Bbl) $ 26.59 $ 23.41 $ 28.93 $ 21.16
Gas ($/Mcf) $ 5.44 $ 3.25 $ 5.62 $ 2.83
Gas equivalent ($/Mcfe) $ 5.35 $ 3.31 $ 5.56 $ 2.90
</Table>
THIRD QUARTER AND FULL YEAR 2003
GUIDANCE ESTIMATES
(IN THOUSANDS, EXCEPT PER PRODUCTION UNIT AMOUNTS)
<Table>
<Caption>
GUIDANCE FOR 3RD GUIDANCE FOR
QUARTER 2003 FULL YEAR 2003
----------------- -----------------
Estimated production volumes:
Natural gas (Bcf) 3.1 - 3.3 13.3 - 13.7
Crude oil (Mbo) 40 430 - 450
MMcfe/d 36 - 38 44 - 45
Hedges outstanding:
Volume (MMcf) 750
Average ceiling price (per Mcf) $4.76
Average floor price (per Mcf) $3.50
Volume (MMcf) 600
Average ceiling price (per Mcf) $5.80
Average floor price (per Mcf) $5.00
Lease operating expenses:
Cash $2,700 - $2,850 $12,400 - $12,900
Non-cash -- --
----------------- -----------------
Total $2,700 - $2,850 $12,400 - $12,900
General and administrative expenses:
Cash $ 825 - $ 875 $3,300 - $3,400
Non-cash 425 - 475 1,800 - 1,900
----------------- -----------------
Total $1,250 - $1,350 $5,100 - $5,300
Interest expense:
Cash $5,900 - $6,200 $23,200 - $23,900
Non-cash 1,600 - 1,700 6,400 - 6,600
----------------- -----------------
Total $7,500 - $7,900 $29,600 - $30,500
DD & A - Oil and gas properties $6,650 - $7,025 $32,000 - $33,000
Accretion expense $725 - $775 $2,900 - $3,000
Accrual income tax rate 35% 35%
Cash income tax rate 0% 0%
</Table>
The preceding guidance estimates contain assumptions that we believe are
reasonable. These estimates are based on information that is available as of the
date of this news release. We are not undertaking any obligation to update these
estimates as conditions change or as additional information becomes available.
This news release contains projections and other forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These projections and statements reflect
the company's current views with respect to future events and financial
performance. No assurances can be given, however, that these events will occur
or that these projections will be achieved and actual results could differ
materially from those projected as a result of certain factors. Some of the
factors which could affect our future results and could cause results to differ
materially from those expressed in our forward-looking statements include:
o general economic conditions;
o volatility of oil and natural gas prices;
o uncertainty of estimates of oil and natural gas reserves;
o impact of competition;
o availability and cost of seismic, drilling and other equipment;
o operating hazards inherent in the exploration for and production of
oil and natural gas;
o difficulties encountered during the exploration for and production of
oil and natural gas;
o difficulties encountered in delivering oil and natural gas to
commercial markets;
o changes in customer demand and producers' supply;
o uncertainty of our ability to attract capital;
o compliance with, or the effect of changes in, the extensive
governmental regulations regarding the oil and natural gas business;
o actions of operators of our oil and gas properties;
o weather conditions; and
o the risk factors discussed in our filings with the Securities and
Exchange Commission, including those in our Annual Report for the year
ended December 31, 2002 on Form 10-K.
The preceding estimates reflect our review of continuing operations
only. These estimates do not take into account any material transactions such as
sales of debt and equity securities, acquisitions or divestitures of assets, and
formations of joint ventures. We continually review these types of transaction
and may engage in one or more of these types of transactions without prior
notice.
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