Callon Petroleum Shelf Offering

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dave_n
Posts: 92
Joined: Thu Aug 09, 2018 4:08 pm

Callon Petroleum Shelf Offering

Post by dave_n »

Dan,

I was looking through Sweet 16 filings this morning. Noticed that CPE filed a shelf registration. They aren't issuing new shares, but allowing capacity to expand authorizations on existing equities. See excerpt below of "Use of Proceeds" and link to filing.

USE OF PROCEEDS

Unless otherwise set forth in the applicable prospectus supplement or free writing prospectus, we intend to use the net proceeds from any sales of securities by us under this prospectus and any accompanying prospectus supplement for general corporate purposes, which may include, among other things:


• capital expenditures;

• the repayment of indebtedness;

• working capital; and

to make strategic acquisitions.

Any specific allocation of the net proceeds of an offering of securities to a specific purpose will be determined at the time of the offering and will be described in an accompanying prospectus supplement or free writing prospectus. The precise amount and timing of the application of these proceeds will depend upon our funding requirements and the availability and cost of other funds.

https://www.sec.gov/Archives/edgar/data ... ds3asr.htm
dave_n
Posts: 92
Joined: Thu Aug 09, 2018 4:08 pm

Re: Callon Petroleum Shelf Offering

Post by dave_n »

Expanding existing Preferred Stock offering to raise cash for a buyout sounds like a fantastic use of funds!
mkarpoff
Posts: 809
Joined: Fri May 30, 2014 4:27 pm

Re: Callon Petroleum Shelf Offering

Post by mkarpoff »

...or to call the preferred maybe?
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Callon Petroleum Shelf Offering

Post by dan_s »

HOUSTON, April 8, 2019 /PRNewswire/ -- Callon Petroleum Company (NYSE: CPE) ("Callon" or "we") today announced it has entered into a definitive agreement regarding the sale of certain non-core assets in the Midland Basin for initial cash proceeds of $260 million, subject to customary purchase price adjustments. The agreement also provides for potential incremental cash payments of up to $60 million based upon future commodity prices with upside participation starting at the $60/Bbl West Texas Intermediate level.

Joe Gatto, President and Chief Executive Officer commented, "We are delivering on our commitment to drive enhanced capital efficiency by monetizing lower margin, non-core properties that have not competed for capital on a sustained basis. The proceeds from this divestiture will accelerate our debt reduction initiatives and also provide the opportunity to retire our preferred stock, reducing our cash financing costs. In addition, the transaction streamlines our business with a resulting focus on three core operating areas. We are actively optimizing our operations, which we believe will reduce capital intensity and increase returns on capital for our shareholders."

The divestiture encompasses our Ranger operating area in the southern Midland Basin which includes approximately 9,850 net Wolfcamp acres (66% working interest), over 80 currently producing horizontal wells that have been drilled since 2012 and 70 net, delineated locations that exceed our internal threshold of an IRR of greater than 25% at strip pricing. Daily production from these assets averaged approximately 4,000 Boe/d (52% oil) in February 2019. Our capital plans for the year are unchanged as there was no planned activity in the Ranger area for 2019. Updated full year guidance will be provided upon closing of the sale.

In addition to the pending divestiture, we completed a strategic trade during the first quarter of 2019 that expanded our contiguous position in northwest Howard County through the addition of two incremental long-lateral DSUs in exchange for low working interest properties in Midland County. The trade resulted in a net increase of approximately 167 net acres to Callon's Midland Basin leasehold position and generated $14 million in cash proceeds to Callon. Our resulting asset base is now well-positioned for the efficient, large pad development model that we are increasingly deploying across our portfolio.
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I have updated my forecast/valuation model for Callon to include the impact of this sale. You can view it from the EPG website.
Dan Steffens
Energy Prospectus Group
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