Callon Petroleum has reported a net loss of $107.9 million for the second quarter, compared to a net income of $303.25 million for the same period in 2022.
Excluding a one-time $406.9 million non-cash impairment charge related to the sale of Eagle Ford assets, as well as other items, Callon’s adjusted income was $123.1 million, or $1.99 per share, the company said in an earnings release.
The company’s net cash provided by operating activities for the quarter was $279.5 million, compared to $336.1 million for the previous-year quarter, the release said.
“The second quarter highlighted the contributions from several large-scale projects across the Permian Basin combined with improvements in our cash operating structure and efficiencies in our capital spending program”, Callon President and CEO Joe Gatto said. “We enter the second half of 2023 as a Permian-focused company with multiple initiatives to drive further improvements in our capital efficiency and operating margins which are already delivering near-term results. Importantly, we now progress forward with another lever to increase shareholder value through a share repurchase program that will complement further reductions in our debt balances.”
Callon’s second-quarter production averaged 107,000 barrels of oil equivalent per day (boepd)—59 percent oil and 80 percent liquids, in line with its guidance. A total of 32 wells were turned in-line in the quarter.
In July, Callon closed its acquisition of Delaware Basin assets from Percussion Petroleum Operating II LLC and the sale of its Eagle Ford assets to Ridgemar Energy Operating LLC, according to an earlier news release.
Callon paid a total consideration of $249 million in cash and approximately 6.3 million shares of Callon common stock to Percussion for the Delaware Basin assets. Callon received $551 million in cash for the sale of its Eagle Ford assets. Both transactions are subject to customary post-closing adjustments and have an effective date of January 1, Callon said.
Callon said it had finalized plans for integrating the newly acquired Delaware Basin assets into its scaled co-development model and drilling and completion schedules. The company intends to release a drilling rig in the Permian Basin in August and maintain a five-rig drilling program through to yearend.
Callon will resume development activity on the acquired assets in the second half, with drilled but uncompleted wells acquired with the asset package expected to be turned to sales in the fourth quarter, the earnings release said.
In the second quarter, the divested Eagle Ford assets produced 17,000 boepd and the newly acquired Delaware assets produced 14,000 boepd. Callon expects to produce 100,000 to 103,000 boepd, which includes oil volumes of 60,000 to 62,000 barrels per day (bpd). These estimates include the impact of a force majeure event at a large Midland Basin natural gas processing facility in July that lasted for 14 days, the company said.
Given the elevated occurrences of weather-related power and midstream disruptions experienced during June and July, Callon said it has also assumed incremental downtime above previous seasonal levels used for forecasting. These two factors have reduced third-quarter production estimates by approximately 1,500 boepd, the company said. For the fourth quarter, Callon expects to produce 104,000 to 108,000 boepd, which includes oil volumes of 63,000 to 65,000 bpd.
At the end of the second quarter, Callon said it was running seven drilling rigs, five in the Delaware Basin, one in the Midland Basin, and one in the Eagle Ford Basin, which was assumed by the acquiring party after the close of the transaction.
To contact the author, email rteodoro.editor@outlook.com
