Callon Petroleum Reports Q3'11; Oil Revenues Increase 75%YOY

Callon Petroleum (NYSE: CPE) reported Q3’11 net income of $8.4 million, or $0.21 per share, compared to Q3’10 net income of $1.6 million, or $0.05 per share. Total Q3’11 revenues were $33.5 million, an increase of 64% from Q3’10. Production during the quarter averaged 5,261 BOEPD, an increase of 23% from Q3’10.

For the nine months ended September 30, 2011, CPE reported net income of $32.4 million, or $0.85 per share, compared to net income of $7.7 million, or $0.26 per share during the same period of 2010. Total revenues for the first nine months of 2011 were $95.8 million, an increase of 46% from the comparable period of 2010. Total nine months production averaged 5,182 BOEPD, an increase of 17% from the first nine months of 2010.

OAG360 Comments:

The company’s continued focus on its oil assets in the Gulf of Mexico and the Permian Basin is beginning to generate tangible results. Callon’s 23% YOY increase in total production was driven primarily from a 29% increase in oil production to 270 BOPD, faster than the 16% increase in natural gas production. In addition, the company’s realized crude oil price has also increased 36% to $98.27 during Q3’11 since Q3’10. All these formulas equate to CPE’s crude oil revenues increasing 75%, or $11.4 million, to $26.5 million during Q3’11.
Strategically, CPE’s offshore GOM assets continue to generate free cash flow for reinvesting into onshore growth opportunities in the Permian Basin. Although Callon has slightly lowered the top range of its expected 2011 production guidance, the company still expects to average between 5,100 BOEPD and 5,400 BOEPD.

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Solid Permian Results Driving Future Catalysts: Since year-end 2010, CPE has increased net daily production from its Permian assets by 135%. Callon’s successful drilling efforts in the Permian have increased the company’s proportion of oil in its production stream to 56% of total production in Q3’11, up from 53% in the same quarter last year. The company’s capital plan calls for investing $107.0 million, with approximately $82.0 million targeted to drilling additional oil wells and associated infrastructure in the onshore Permian Basin. The company plans to drill 36 gross wells in 2011.

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