NATCHEZ, Miss., Dec. 13, 2016 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today
announced that its wholly owned subsidiary, Callon Petroleum
Operating Company, has entered into a definitive agreement to
acquire certain undeveloped acreage and producing oil and gas
properties for total consideration of $615
million in cash from American Resource Development LLC,
American Resource Development Upstream LLC, and American Resource
Development Midstream LLC (collectively, "Ameredev"). The Company
intends to fund the cash purchase price with the net proceeds of an
equity offering announced concurrently with the announcement of
this acquisition, and with current cash balances or availability
under its revolving credit facility.
Key attributes of the Ameredev acquisition include:
- Approximately 27,552 gross (16,098 net) surface acres, centered
around a contiguous position in Ward
County, Texas, with additional acreage in Pecos and Reeves Counties, Texas;
- Current net production of approximately 1,945 barrels of oil
equivalent per day (71% oil) for the month of October 2016 based on information provided by the
seller, including production from 20 gross operated horizontal
wells currently producing from the Wolfcamp and Bone Spring
formations;
- Estimated delineated base inventory of 481 gross (206 net)
identified horizontal drilling locations targeting the Wolfcamp A
and B zones with an average lateral length of approximately 7,500
feet, including 36% of the inventory comprised of 10,000 foot
laterals;
- Additional potential horizontal drilling locations from both
delineated and emerging prospective zones in the Wolfcamp and Bone
Spring formations;
- Established infrastructure ownership, including five salt water
disposal wells and over 13 miles of gathering lines and gas lift
return lines; and
- An agreement to acquire up to an additional 1,006 net acres in
Ward County, mutually identified
by Callon and Ameredev, if such leasehold acquisitions are
consummated prior to closing of the Ameredev acquisition.
Ameredev currently operates approximately 80% of net surface
acreage and has an average working interest in operated properties
of approximately 82%. On a pro forma basis, assuming the closing of
the acquisition, Callon's aggregate Permian Basin position will
include approximately 55,500 net surface acres concentrated in four
core operating areas within both the Midland and Delaware sub-Basins.
Fred Callon, Chairman and Chief
Executive Officer commented, "Our initial entry into the
Delaware Basin caps a
transformative year for Callon. The Ameredev acquisition is the
result of a patient, concentrated effort to identify the
appropriate de-risked, oily acreage position in the Delaware Basin that provides the opportunity
to leverage our Permian Basin technical expertise while
complementing our deep inventory of high-return well locations and
capital efficient operations in the Midland Basin. The position is
well-suited for long lateral development and offers the potential
for the development of multiple shale and sand intervals in the
core of the Southern Delaware
Basin's over-pressured oil window. We are looking forward to adding
a fourth core operating area to our Permian portfolio and are
currently planning to deploy an operated horizontal drilling rig to
this acreage by mid-2017, in addition to our plans to be running
four horizontal rigs in the Midland Basin by the end of 2017.
Overall, we believe that this position is an excellent fit with our
broader Permian portfolio and organizational capabilities, and,
importantly, accretive to the value proposition for our
shareholders."
The pending acquisition is expected to close on or before
February 13, 2017, subject to the
completion of customary closing conditions.
Investor conference call
Callon will host a conference call on Wednesday, December 14, 2016, to discuss the
Ameredev acquisition.
Please join Callon Petroleum Company via the Internet for a
webcast of the conference call:
Date/Time:
|
Wednesday, December
14, 2016, at 9:00 a.m. Central Time (10:00 a.m. Eastern
Time)
|
Webcast:
|
Live webcast will be
available at www.callon.com in the "Investors" section of the
website
|
Presentation
Slides:
|
Available at
http://ir.callon.com/presentations in the "Investors" section of
the website
|
Alternatively, you may join by telephone using the following
numbers:
Toll Free:
|
1-888-317-6003
|
Canada Toll
Free:
|
1-866-284-3684
|
International:
|
1-412-317-6061
|
Passcode:
|
7720834
|
An archive of the conference call webcast will also be available
at www.callon.com in the "Investors" section of the website.
Credit facility borrowing base redetermination
Effective November 21, 2016, the
borrowing base amount under our revolving credit facility was
increased to $500 million as part of
a regularly scheduled semi-annual redetermination process. The
borrowing base had previously been set at $385 million and Callon has elected to keep total
commitments from the bank group unchanged at this amount. The
Company currently has no borrowings outstanding under the credit
facility.
Incremental hedging activity
Since November 3, 2016, the
Company has entered into the following derivative contracts:
|
|
1st
Half
|
|
2nd
Half
|
|
Full
Year
|
|
|
2017
|
|
2017
|
|
2018
|
Oil contracts –
NYMEX WTI
|
|
|
|
|
|
|
|
|
Deferred premium
put options
|
|
|
|
|
|
|
|
|
Total
volume (barrels in thousands)
|
|
|
498
|
|
|
|
|
|
Weighted
average price per barrel
|
|
|
|
|
|
|
|
|
Floor (long
put)
|
|
$
|
50.00
|
|
|
|
|
|
Option
premium
|
|
$
|
(2.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred premium
put spread options
|
|
|
|
|
|
|
|
|
Total
volume (barrels in thousands)
|
|
|
|
|
|
506
|
|
|
Weighted
average price per barrel
|
|
|
|
|
|
|
|
|
Floor (long
put)
|
|
|
|
|
$
|
50.00
|
|
|
Short put
|
|
|
|
|
$
|
40.00
|
|
|
Option
premium
|
|
|
|
|
$
|
(2.45)
|
|
|
|
|
|
|
|
|
|
|
|
Oil contracts –
Midland differential
|
|
|
|
|
|
|
|
|
Swap
contracts
|
|
|
|
|
|
|
|
|
Total
volume (barrels in thousands)
|
|
|
724
|
|
|
736
|
|
1,095
|
Weighted
average price per barrel
|
|
$
|
(0.52)
|
|
$
|
(0.52)
|
$
|
(1.01)
|
|
|
|
|
|
|
|
|
|
Natural gas
contracts – NYMEX Henry Hub
|
|
|
|
|
|
|
|
|
Two-way collar
contracts
|
|
|
|
|
|
|
|
|
Total
volume (Btu in billions)
|
|
|
724
|
|
|
1,460
|
|
|
Weighted
average price per million Btu
|
|
|
|
|
|
|
|
|
Ceiling (short
call)
|
|
$
|
3.68
|
|
$
|
3.68
|
|
|
Floor (long
put)
|
|
$
|
3.00
|
|
$
|
3.00
|
|
|
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.
About Ameredev
Ameredev is an Austin-based
exploration and production company focused on the acquisition and
development of oil and gas properties in the Permian Basin.
Ameredev was formed in May 2015 with
an equity commitment from EnCap Investments, L.P.
Ameredev's legal counsel for the transaction was Bracewell
LLP.
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, as amended.
Forward-looking statements include all statements regarding the
consummation of the pending acquisition and completion of related
financings and the time frame in which these transactions will
occur, the expected benefits to the Company and its shareholders
from completing the acquisition, estimates of future drilling
locations, the number of drilling rigs deployed, 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. Any
forward-looking statements in this release are based on limited
information currently available to the Company, which is subject to
change, and the Company will not necessarily update the
information.
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:
Eric Williams
Manager, Investor Relations
1-800-451-1294
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/callon-petroleum-company-announces-entry-into-the-core-southern-delaware-basin-300377630.html
SOURCE Callon Petroleum Company