Callon Petroleum Company (CPE) reported its financial results for the third quarter 2014 last month.
Total Revenue Generation: The quarter which ended recently saw the company earn total revenues of $39.7 million. This amount included oil revenues of $36.3 million and natural gas revenues of $3.3 million. Average daily production for the quarter was 5,641 BOE/d compared to average daily production of 5,280 BOE/d in the second quarter of 2014.
Lease Operating Expenses, including work-over expense: LOE for the three months ended September 30, 2014was $12.08 per BOE, compared to LOE of $9.08 per BOE in the second quarter of 2014 and $10.68 per BOE for the nine months ended September 30, 2014. The increase in the third quarter was primarily related to elevated work-over activity in association with the impact of horizontal well completion operations on surrounding producing wells in certain fields.
Depreciation and Amortization: The Company incurred $31.05 per BOE of DD&A for the third quarter 2014. During the quarter, the full cost pool was increased due to the inclusion of the carrying value of our Northern Midland acreage that was previously classified as unevaluated properties. DD&A for the nine months ended September 30, 2014 was $27.76 per BOE.
General and Administrative, net of amounts capitalized: G&A for the three months ended September 30, 2014 was $3.3 million compared to $9.6 million in the second quarter of 2014. The $6.3 million decrease primarily relates to a net decrease of $6.1 million in the mark-to-market valuation of performance-based phantom stock incentive awards period over period.
Interest Expense And Income Loss: Interest expense incurred during the three months ended September 30, 2014 increased to $2.2 million compared to $1.8 million in the second quarter of 2014, primarily due to the increase in the balance of our Second Lien Loan. The Company reported net income available to common shareholders of $10.2 million in the third quarter of 2014 and Adjusted income, a non-GAAP measure, of $2.6 million, or $0.06 per diluted share.
Financial Highlights:
- Net daily production of 5,641 barrels of oil equivalent per day ("BOE/d"), an increase of 30% over the first quarter of 2014, comprised of 82% oil volume
- Average realized price of $76.41 per barrel of oil equivalent ("BOE") produced with an associated operating margin of $60.00 per BOE, both excluding the impact of cash-settled derivatives
- Adjusted EBITDA and discretionary cash flow, non-GAAP financial measures, of $26.9 million and $23.0 million, respectively. Excluding asset retirement obligations related to certain divested offshore properties, discretionary cash flow was $24.8 million.
· Net income available to common shareholders of $0.23 per diluted share and adjusted income available to common shareholders ("Adjusted income"), a non-GAAP financial measure, of $0.06 per diluted share based on total average diluted shares outstanding of 44.2 million shares and an effective tax rate of 37%.
The Company’s third quarter of 2014 included $1.8 million for retained asset retirement obligation expenditures related to Gulf of Mexico properties that were sold in the fourth quarter of 2013. Excluding this expenditure attributable to the sold properties, discretionary cash flow from continuing operations was $24.8 million or $0.56 per diluted share. The company has performed quite decently in term of average productions. The dividend payout has also been quite good. It, nevertheless, needs to be seen how the company ends the final quarter of fiscal 2014. The idea of investing in the CPE stock would not be bad.
