Callon Petroleum Company Reports Results For Fourth Quarter, Full Year 2008.NATCHEZ, Miss. -- Callon Petroleum Company (NYSE NYSE See: New York Stock Exchange : CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment ) today reported results of operations for both the three and 12-month periods ended December 31, 2008 and proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. as of December 31, 2008. "We faced many challenges in 2008," explains Fred Callon, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "The most significant of those challenges included the suspension of the development at our deepwater Entrada Field, production interruptions from two hurricanes in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east , and a dramatic decline in commodity prices, which resulted in a significant non-cash ceiling test impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . Despite these challenges, we remain confident in our ability to build shareholder value by growing production and reserves in the coming years. We recognize the importance of liquidity in this challenging environment. Beginning in mid-2007 and throughout 2008, we very carefully managed our liquidity position. As a result, despite our challenges and the turmoil in the financial markets, we find ourselves with a strong liquidity position and the financial resources to be opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. during this economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. . We do not have any significant required capital expenditures for 2009, so we have the flexibility to use our cash flow and credit facility to fund producing property acquisitions to help grow the company's reserves and production over the next several years." Fourth Quarter and Full Year 2008 Net Loss. For the year ended December 31, 2008, the company reported a net loss of $438.9 million, or $20.68 per share, primarily due to a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $482.4 million resulting from the impairment of the company's oil and gas properties under full-cost accounting rules. The book value of the company's oil and gas properties exceeded the full-cost ceiling due primarily to lower oil and natural gas prices at year-end 2008 and the announced suspension of operations at Entrada during the fourth quarter of 2008. It should be noted that excluding the non-cash charge related to the impairment of oil and gas properties, the company would have generated before-tax income from operations for 2008 of $40.7 million. Additionally, during the fourth quarter of 2008, Callon recorded a charge of $128.1 million resulting from the establishment of a valuation allowance against its deferred tax asset as required by SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 109 "Accounting for Income Taxes." The 2008 results compare to net income of $15.2 million, or $0.71 per share for 2007. For the quarter ended December 31, 2008, the company reported a net loss of $457.5 million, or $21.19 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net income of $4.5 million, or $0.21 per diluted share reported for the same three-month period of 2007. Fourth Quarter and Full Year 2008 Operating Results. Operating results for the three months ended December 31, 2008 were negatively impacted by both lower commodity prices and Hurricanes Gustav and Ike, which resulted in several of our Gulf of Mexico properties being shut-in during late August 2008. Primarily as a result of damage caused by the two storms to third-party transmission lines and downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). facilities which process Callon's crude oil and natural gas, production of approximately 18.0 million cubic feet of natural gas equivalent per day (MMcfe/d) was deferred during the fourth quarter of 2008. Although facilities were returned to production by mid-December and all of Callon's fields were back on production, the deferral deferral - Waiting for quiet on the Ethernet. had a significant impact on operating results for the fourth quarter. Operating results for the three months ended December 31, 2008 include oil and gas sales of $15.5 million from average production of 20.7 MMcfe/d. This corresponds to sales of $43.9 million from average production of 45.6 MMcfe/d during the comparable 2007 period. The average price received per thousand cubic feet of natural gas (Mcf) in the fourth quarter of 2008, after the impact of hedging, decreased to $7.12 compared to $8.18 during the fourth quarter of 2007. The average price received per barrel of oil (Bbl) in the fourth quarter of 2008, after the impact of hedging, decreased to $55.23, compared to $82.47 during the same period in 2007. Oil and natural gas sales for full year 2008 totaled $141.3 million from average production of 31.4 MMcfe/d. This corresponds to oil and natural gas sales of $170.8 million from average production of 51.3 MMcfe/d during 2007. The average price received per Mcf for full year 2008, after the impact of hedging, increased to $9.99, compared to $8.01 during the full year of 2007. The average price received per Bbl during full year 2008, after the impact of hedging, increased to $88.07, compared to $67.63 during the same period in 2007. Fourth Quarter and Full Year 2008 Discretionary Cash Flow Discretionary cash flow Cash flow that is available after the funding of all positive net present value (NPV) capital investment projects; it is available for paying cash dividends, repurchasing common stock, retiring debt, and so on. . Discretionary cash flow for the three-month period ended December 31, 2008 totaled $3.8 million compared to $25.1 million during the comparable prior year period. Net cash flow used in operating activities, as defined by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , was $31.5 million in the fourth quarter 2008, while net cash flow provided by operating activities was $19.4 million in the fourth quarter of 2007. Discretionary cash flow for full year 2008 totaled $84.9 million compared to $104.6 million in 2007. Net cash flow provided by operating activities, as defined by GAAP, totaled $93.2 million and $109.3 million for the years ended December 31, 2008 and 2007, respectively. (See "Non-GAAP Financial Measure" that follows and the accompanying reconciliation of discretionary cash flow, a non-GAAP measure, to net cash flow provided by operating activities.) 2008 Year-End Reserves. As of December 31, 2008, the company's year-end estimated net proved reserves were 54.8 billion cubic feet of natural gas equivalent (Bcfe). This is a decrease of 208.8 Bcfe from year-end 2007 and is attributable to the sale of a working interest in the Entrada Field (45%), the previously announced suspension of operations at the Entrada Field in November 2008 (47%) and 2008 production and other changes (8%). Non-GAAP Financial Measure. This news release refers to a non-GAAP financial measure as "discretionary cash flow." Callon believes that the non-GAAP measure of discretionary cash flow is useful as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional debt. The company also has included this information because changes in operating assets Operating Assets Another term for working capital. and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Discretionary cash flow should not be considered an alternative to net cash provided by operating activities or net income as defined by GAAP. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Callon Petroleum Company is engaged in the acquisition, development, exploration and operation of oil and gas properties in the Gulf Coast region. The majority of Callon's properties and operations are concentrated in the offshore waters of the Gulf of Mexico. 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 Releases" link on the left side of the homepage. It should be noted that this news release contains projections and other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 are discussed in our filings with the Securities and Exchange Commission, including our Annual Reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , available on our website or the SEC's website at www.sec.gov. |
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