EXHIBIT 99.1
For further information contact
John S. Weatherly, CFO 1-800-451-1294
FOR IMMEDIATE RELEASE
CALLON PETROLEUM COMPANY REPORTS RESULTS
FOR THIRD QUARTER, FIRST NINE MONTHS OF 2003
Natchez, MS (November 11, 2003)--Callon Petroleum Company (NYSE:
CPE/CPE.PrA) today reported its results of operations for both the quarter and
the nine-month period ended September 30, 2003.
Results for the three-month period ended September 30, 2003 include a
net loss of $2.0 million, or $0.17 per diluted share. This compares to a net
loss of $1.3 million, or $0.12 per share on a diluted basis, for the same period
in 2002.
Operating results for the three-month period ended September 30, 2003
include oil and gas sales of $15.1 million from average production of 33 million
cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to
sales of $15.8 million from average daily production of 45 MMcfe/d during the
same period in 2002. During the third quarter of 2003, natural gas represented
approximately 90 percent of the company's total production. The average price
received per thousand cubic feet of natural gas in the third quarter of 2003
increased by 53 percent to $4.97 compared to $3.24 during the third quarter of
2002, while the average price received per barrel of oil in the third quarter of
2003 increased by 9 percent to $26.76 compared to $24.60 during the same period
a year earlier.
For the nine months ended September 30, 2003, the company reported a
net loss of $1.3 million, or $0.17 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 $1.4 million, or $0.18 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. 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 a
cumulative effect of the change in accounting principle.
(MORE)
Operating results for the nine-month period ended September 30, 2003
include oil and gas sales of $54.8 million from average production of 37 million
cubic feet of natural gas equivalent per day (MMcfe/d). This corresponds to
sales of $42.1 million from average daily production of 42 MMcfe/d during the
same period in 2002. The average price received per thousand cubic feet of
natural gas for the nine-month period ended September 30, 2003 increased by 82
percent to $5.43 compared to $2.98 during the first nine months in 2002, while
the average price received per barrel of oil increased by 26 percent to $28.15
compared to $22.29 during the same period a year earlier.
During the third quarter of 2003, Callon Petroleum Company generated
discretionary cash flow of $6.2 million compared to $6.9 million generated
during the same period a year ago. Net cash provided by operating activities, as
defined by generally accepted accounting principles (GAAP), totaled $7.3 million
and $2.6 million during the three months ended September 30, 2003 and 2002,
respectively. For the nine-month period ended September 30, 2003, discretionary
cash flow totaled $26.9 million compared to $17.2 million during the first nine
months of the previous year. Net cash provided by operating activities, as
defined by GAAP, totaled $31.2 million and $4.4 million during the nine months
ended September 30, 2003 and 2002, respectively. (See "NON-GAAP FINANCIAL
MEASURE" that follows and the accompanying financial information for a
reconciliation of discretionary cash flow, a non-GAAP measure, to net cash
provided by operating activities.)
Callon Petroleum Company is engaged in the exploration, development,
acquisition and operation of oil and gas properties primarily in the Gulf Coast
region.
NON-GAAP FINANCIAL MEASURE - This news release refers to a non-GAAP
financial measure as "discretionary cash flow." Callon believes this measure is
a financial indicator of the company's ability to fund capital expenditures and
service debt. Callon also believes this non-GAAP financial measure of cash flow
is useful information to investors because it is widely used by professional
research analysts in the valuation, comparison, rating and investment
recommendations of companies within the oil and gas exploration and production
industry. Many investors use the published research of these analysts in making
their investment decisions. Discretionary cash flow should not be considered an
alternative to net cash provided by operating activities or net income as
defined by GAAP.
(MORE)
CALLON PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Operating revenues:
Oil and gas sales $ 15,082 $ 15,763 $ 54,759 $ 42,121
---------- ---------- ---------- ----------
Total operating revenues 15,082 15,763 54,759 42,121
---------- ---------- ---------- ----------
Operating expenses:
Lease operating expenses 2,659 2,832 8,003 8,201
Depreciation, depletion and amortization 6,416 6,763 20,769 18,840
General and administrative 1,068 1,070 3,704 3,508
Accretion expense 772 -- 2,214 --
Loss on mark-to-market commodity derivative contracts (199) 18 335 788
---------- ---------- ---------- ----------
Total operating expenses 10,716 10,683 35,025 31,337
---------- ---------- ---------- ----------
Income from operations 4,366 5,080 19,734 10,784
---------- ---------- ---------- ----------
Other (income) expenses:
Interest expense 7,554 7,103 22,225 18,736
Other income (70) (23) (226) (845)
Gain on sale of pipeline -- -- -- (2,454)
Gain on sale of Enron derivatives -- -- -- (2,479)
---------- ---------- ---------- ----------
Total other (income) expenses 7,484 7,080 21,999 12,958
---------- ---------- ---------- ----------
Income (loss) before income taxes (3,118) (2,000) (2,265) (2,174)
Income tax expense (benefit) (1,092) (700) (793) (761)
---------- ---------- ---------- ----------
Income (loss) before cumulative effect of change in
accounting principle (2,026) (1,300) (1,472) (1,413)
Cumulative effect of change in accounting principle, net of tax -- -- 181 --
---------- ---------- ---------- ----------
Net income (loss) (2,026) (1,300) (1,291) (1,413)
Preferred stock dividends 320 320 958 958
---------- ---------- ---------- ----------
Net income (loss) available to common shares $ (2,346) $ (1,620) $ (2,249) $ (2,371)
========== ========== ========== ==========
Net income (loss) per common share:
Basic
Net income (loss) available to common before cumulative
effect of change in accounting principle $ (0.17) $ (0.12) $ (0.18) $ (0.18)
Cumulative effect of change in accounting principle, net of tax -- -- 0.01 --
---------- ---------- ---------- ----------
Net income (loss) available to common $ (0.17) $ (0.12) $ (0.17) $ (0.18)
========== ========== ========== ==========
Diluted
Net income (loss) available to common before cumulative
effect of change in accounting principle $ (0.17) $ (0.12) $ ( 0.18) $ (0.18)
Cumulative effect of change in accounting principle, net of tax -- -- 0.01 --
---------- ---------- ---------- ----------
Net income (loss) available to common $ (0.17) $ (0.12) $ (0.17) $ (0.18)
========== ========== ========== ==========
Shares used in computing net income (loss):
Basic 13,679 13,377 13,640 13,342
========== ========== ========== ==========
Diluted 13,679 13,377 13,640 13,342
========== ========== ========== ==========
</Table>
CONSOLIDATED CONDENSED BALANCE SHEETS:
(In thousands)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------ ------------
(UNAUDITED)
Cash and cash equivalents $ 1,295 $ 5,807
Oil and gas properties, net* 416,834 377,661
All other assets 30,903 27,145
------------ ------------
Total assets $ 449,032 $ 410,613
============ ============
Long-term debt including current maturities $ 259,150 $ 249,589
All other liabilities* 50,054 20,064
Stockholders' equity 139,828 140,960
------------ ------------
Total liabilities and stockholders' equity $ 449,032 $ 410,613
============ ============
</Table>
*Impacted by the adoption of SFAS No. 143 on January 1, 2003
<Table>
<Caption>
NET CASH FLOW INFORMATION (UNAUDITED): THREE MONTHS ENDED NINE MONTHS ENDED
(In thousands) SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Reconciliation of non-GAAP financial measure:
Discretionary cash flow $ 6,167 $ 6,860 $ 26,904 $ 17,236
Net working capital changes and other changes 1,317 (2,093) 3,919 (6,152)
Investment in derivative contracts (160) (2,162) 374 (6,650)
------------ ------------ ------------ ------------
Net cash provided by operating activities $ 7,324 $ 2,605 $ 31,197 $ 4,434
============ ============ ============ ============
</Table>
<Table>
<Caption>
PRODUCTION AND PRICE INFORMATION: THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Production:
Oil (MBbls) 49 56 140 170
Gas (MMcf) 2,772 3,768 9,365 10,362
Total Production (MMcfe) 3,068 4,104 10,206 11,382
Average daily (MMcfe) 33.3 44.6 37.4 41.7
Average prices:
Oil ($/Bbl) $ 26.76 $ 24.60 $ 28.15 $ 22.29
Gas ($/Mcf) $ 4.97 $ 3.24 $ 5.43 $ 2.98
Gas equivalent ($/Mcfe) $ 4.92 $ 3.31 $ 5.37 $ 3.05
</Table>
FOURTH QUARTER 2003
GUIDANCE ESTIMATES
(IN THOUSANDS, EXCEPT PER PRODUCTION UNIT AMOUNTS)
<Table>
<Caption>
GUIDANCE FOR
4TH QUARTER 2003
----------------
Estimated production volumes:
Natural gas (Bcf) 2.9 - 3.1
Crude oil (Mbo) 173 - 190
MMcfe/d 44 - 46
Hedges outstanding:
Volume (MMcf) 100
Average ceiling price (per Mcf) $ 7.25
Average floor price (per Mcf) $ 5.25
Lease operating expenses:
Cash $ 4,400 - $ 4,700
Non-cash -- --
------- -------
Total $ 4,400 - $ 4,700
General and administrative expenses:
Cash $ 625 - $ 675
Non-cash 425 - 475
------- -------
Total $ 1,050 - $ 1,150
Interest expense:
Cash $ 6,000 - $ 6,100
Non-cash 1,700 - 1,800
------- -------
Total $ 7,700 - $ 7,900
DD & A - Oil and gas properties $ 8,000 - $ 8,500
Accretion expense $ 725 - $ 775
Accrual income tax rate 35%
Cash income tax rate 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.
#