NATCHEZ, Miss., Sept. 2, 2014 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today
announced it has entered into definitive agreements with private
entities to acquire certain undeveloped acreage and oil and gas
producing properties located in Midland, Andrews, Martin and Ector Counties, Texas for an approximate aggregate price of
$212.6 million in cash, subject to
customary purchase price adjustments with an effective date of
May 1, 2014. The Company has posted
an overview presentation of the acquisition on its website at
www.callon.com, and will host a conference call to discuss the
transaction at 1:00 p.m. Central Time
on September 2, 2014 as detailed
below.
Key attributes of the acquired fields include:
- 6,230 gross (3,862 net) surface acres, 95% of which
are located in Midland and
Andrews Counties, in close
proximity to the Company's existing Carpe
Diem and Pecan Acres fields in Midland County
- 188 gross (117 net) potential horizontal drilling locations
targeting the Wolfcamp B, Lower Spraberry and Middle Spraberry
zones which are currently producing in offsetting fields
- 252 gross (156 net) additional potential horizontal drilling
locations targeting four other prospective zones, including the
Wolfcamp A, Wolfcamp D (Cline), Clearfork and Jo Mill
- 1,465 Boe/d (68% oil) estimated average net daily production
during the second quarter of 2014
- 4.0 million Boe of net proved developed producing reserves as
of June 30, 2014 based on
internal Callon estimates (no proved undeveloped reserves have been
estimated given legacy vertical development and the Company's
intent to develop the field with horizontal wells)
- 100% of targeted horizontal zones held by production
Callon will assume operatorship of the properties after closing
of the transaction, and own an estimated 62% working interest
(46.5% net revenue interest). One horizontal Wolfcamp B well has
been drilled on the properties to date and two additional
horizontal wells targeting this zone are in various stages of
drilling and completion. In addition, a Lower Spraberry well has
been permitted, and is currently scheduled to be drilled in
the fourth quarter.
Pro forma for the pending acquisition (and including a separate
pending acquisition of 577 net acres in Reagan County), Callon would have the
following operating metrics:
- 6,745 Boe/d (80% oil) estimated average net daily production
during the second quarter of 2014
- 18,062 net surface acres located in the Southern and
Central portions of the
Midland Basin, an increase of 27%
over the Company's comparable position prior to the
acquisition
- 100,092 net effective acres, targeting up to seven zones for
multi-level development depending on the field location
- 37 producing horizontal wells and 274 producing vertical wells
as of August 26, 2014
- 1,097 gross potential horizontal drilling locations (772 net)
as of June 30, 2014, an increase of
67% over the Company's identified inventory prior to the
acquisition
"The acquisition of these properties represents another
significant step in the execution of our strategic plan in the
Midland Basin. The horizontal
development of these fields will be immediately integrated into our
recently announced capital plan to accelerate our drilling
activity, and will also benefit from the knowledge base we have
built from operations on our adjacent acreage," stated Fred Callon, Chairman and CEO. "The fields are
located in the core of the industry's multiple zone development
activity, and will add substantially to our existing inventory of
potential well locations. As a result, we believe that this new
development unit will be a catalyst for incremental increases in
our drilling activity in the near future."
The pending acquisition is expected to close in early
October 2014, and is subject to the
completion of customary due diligence and closing conditions. In
connection with the acquisition, the Company has secured a
commitment for a term loan facility in an amount up to $275 million and an amended revolving credit
facility with an initial borrowing base of $250 million. The availability of the debt
financing package is expected to occur concurrently with the
closing of the acquisition, and will be subject to the satisfaction
of various customary closing conditions, including execution and
delivery of definitive documentation.
Conference Call Information
Please join Callon Petroleum Company via the Internet for a
webcast of the conference call:
Date/Time: September 2,
2014, at 1:00 p.m. Central
Time (2:00 p.m. Eastern
Time)
Webcast: Live webcast will be
available at www.callon.com in the "Investors" section of the
website.
Alternatively, you may join by telephone:
Toll free call-in
number:
1-877-870-4263
International call-in number: 1-412-317-0790
An archive of the conference call webcast will also be available
at www.callon.com in the "Investors" section of the website.
About Callon Petroleum Company
Callon is an independent energy company focused on the
acquisition, development, exploration, and operation of oil and gas
properties in the Permian Basin in West
Texas.
Cautionary Statement Regarding Forward Looking
Statements
This news release contains "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. Forward-looking
statements include all statements regarding the consummation of the
pending acquisition and completion of related financing, reserve
quantities, estimates of future drilling locations, the
implementation of the Company's business plans and strategy, as
well as statements including the words "believe," "expect," "plans"
and words of similar meaning. These 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 the Company's
ability to realize the anticipated benefits of the pending
acquisition, the forfeiture of our deposit under the acquisition
agreement, the volatility of oil and gas prices, ability to drill
and complete wells, operational, regulatory and environment risks,
our ability to finance our activities and other risks more fully
discussed in our filings with the Securities and Exchange
Commission, including our Annual Reports on Form 10-K, available on
our website or the SEC's website at www.sec.gov.
This news release is posted on the Company's website at
www.callon.com and will be archived there for subsequent review. It
can be accessed from the "News" link on the top of the
homepage.
For further information contact:
Joe Gatto
Chief Financial Officer, Senior Vice President and Treasurer
1-800-451-1294
SOURCE Callon Petroleum Company