HOUSTON, Sept. 26, 2019 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) today posted Investor Materials to
the Company's website in connection with its pending all-stock
acquisition of Carrizo Oil & Gas, Inc. (Nasdaq: CRZO). The
Investor Materials detail the benefits of the combined company,
which will enable Callon to accelerate its free cash flow, capital
efficiency and deleveraging goals through an optimized model of
large-scale development.
The Investor Materials are now available on the Investor
Relations section of Callon's website, as well as www.sec.gov. The
Investor Materials can also be downloaded here:
https://ir.callon.com/presentations
"The strategic and financial benefits of Callon's combination
with Carrizo are compelling," said Joe
Gatto, President and Chief Executive Officer of Callon. "We
are creating a differentiated oil and gas company with scaled
development operations focused on premier asset bases and supported
by accelerated cash flow and capital efficiency. Additionally, the
pro forma company's leading cash margins will enable us to navigate
commodity price volatility and allow for reliable, continuous
development of the combined portfolio. Together, we will be
well-positioned to accelerate our strategy and deliver significant
value to our shareholders."
Benefits of the combination highlighted in the Investor
Materials include:
- Creates a self-funded, high-margin oil growth company with a
leading cost of supply on an "all-in" corporate basis
- In addition to a strong foundation in the Permian Basin with
almost two decades of delineated inventory, adds a well-established
and repeatable free cash flow generating business in the Eagle Ford
Shale
- Immediately accretive to all key per share financial
metrics
- Delivers significant, tangible synergies that unlock value for
the combined shareholder base
- Strong balance sheet and acceleration of deleveraging to <
2.0x in 2020
As previously announced on July 15,
2019, Callon will acquire Carrizo in an all-stock
transaction. Upon approval, Callon shareholders will own
approximately 54% of the combined company, and Carrizo shareholders
will own approximately 46%, on a fully diluted basis. The all-stock
transaction is intended to be tax-free to Carrizo shareholders.
Importantly, the Callon Board evaluated and considered several
alternatives for maximizing shareholder value over the past two
years before entering into the Carrizo transaction. Moreover, the
Board firmly believes that the pro forma company will have improved
optionality to maximize shareholder value in the context of future
industry consolidation.
Subsequent Events
As part of the integration planning process, Callon has refined
its views regarding the scope of asset monetizations post-closing.
As a stand-alone company, Callon has realized cash proceeds of over
$280 million from acreage
divestitures and trades in 2019 and used those proceeds for debt
reduction and redemption of higher cost preferred shares. Callon
has established a target of $300 -
$400 million of additional
monetization proceeds for the combined company by year-end 2020,
primarily from a combination of the following sources:
- Select acreage in the Eagle Ford Shale
- Non-operated Permian properties and pruning of non-core
Delaware properties
- Upfront proceeds from a joint venture or similar structure
involving an expanded set of water infrastructure assets in both
the Permian Basin and Eagle Ford Shale
Callon has also added to its stand-alone hedge portfolio since
its last earnings release. The current portfolio, set forth below,
provides for downside protection on Nymex WTI and ICE Brent
benchmark pricing for approximately 2.2 million barrels of oil
volumes in fourth quarter of 2019 and 7.1 million barrels for the
calendar year 2020. In addition, hedges were added for oil volumes
that will be priced on the Magellan East Houston pricing point
beginning in 2020 (~1.4 MMBbls @ +$2.40/Bbl).
Oil Benchmark
Hedges
|
4Q19
|
FY
2020
|
WTI NYMEX (Bbls,
$/Bbl)
|
|
|
Swaps
|
|
|
Total
Volumes
|
276,000
|
1,098,000
|
Total Daily
Volumes
|
3,000
|
3,000
|
Avg. Swap
|
$60.17
|
$56.17
|
Three-way
Collars
|
|
|
Total
Volumes
|
1,196,000
|
5,124,000
|
Total Daily
Volumes
|
13,000
|
14,000
|
Avg. Long
Put
|
$56.54
|
$55.45
|
Two-way
Collars
|
|
|
Total
Volumes
|
276,000
|
-
|
Total Daily
Volumes
|
3,000
|
-
|
Avg. Floor
|
$55.00
|
-
|
Put
Options
|
|
|
Total
Volumes
|
230,000
|
-
|
Total Daily
Volumes
|
2,500
|
-
|
Avg. Put
Price
|
$65.00
|
-
|
Put
Spreads
|
|
|
Total
Volumes
|
230,000
|
-
|
Total Daily
Volumes
|
2,500
|
-
|
Avg. Long Put
Price
|
$65.00
|
-
|
|
|
|
Total Volume Hedged
(Bbl)
|
2,208,000
|
6,222,000
|
|
|
|
ICE BRENT (Bbls,
$/Bbl)
|
|
|
Three-way
Collars
|
|
|
Total
Volumes
|
-
|
837,500
|
Total Daily
Volumes
|
-
|
2,288
|
Avg. Long Put
Price
|
-
|
$58.24
|
|
|
|
Total Volume Hedged
(Bbl)
|
|
837,500
|
|
|
|
Oil Benchmark
Hedge Total
|
2,208,000
|
7,059,500
|
About Callon
Callon is an independent energy company
focused on the acquisition and development of unconventional
onshore oil and natural gas reserves in the Permian Basin in
West Texas. This news release is
posted on Callon's website at www.callon.com, and will be archived
for subsequent review under the "News" link on the top of the
homepage.
No Offer or Solicitation
Communications herein do not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the proposed transaction or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. Communication herein do
not constitute a notice of redemption with respect to or an offer
to purchase or sell (or the solicitation of an offer to purchase or
sell) any preferred stock of Carrizo Oil & Gas, Inc.
Additional Information and Where to Find It
In connection with the proposed transaction, Callon Petroleum
Company ("Callon") has filed with the Securities and Exchange
Commission (the "SEC") a registration statement on Form S-4 (the
"Registration Statement"), which contains a preliminary joint proxy
statement of Callon and Carrizo that also constitutes a preliminary
prospectus of Callon. The information in the preliminary joint
proxy statement/prospectus is not complete and may be changed.
After the Registration Statement is declared effective by the SEC,
Callon and Carrizo intend to mail a definitive proxy
statement/prospectus to shareholders of Callon and shareholders of
Carrizo. This communication is not a substitute for the joint proxy
statement/prospectus or the Registration Statement or for any other
document that Callon or Carrizo may file with the SEC and send to
Callon's shareholders and/or Carrizo's shareholders in connection
with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF
CALLON AND CARRIZO ARE URGED TO READ THE REGISTRATION STATEMENT AND
JOINT PROXY STATEMENT/PROSPECTUS, AS EACH MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED
BY CALLON AND CARRIZO WITH THE SEC CAREFULLY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
CALLON, CARRIZO AND THE PROPOSED TRANSACTION.
Investors will be able to obtain free copies of the Registration
Statement and joint proxy statement/prospectus, as each may be
amended from time to time, and other relevant documents filed by
Callon and Carrizo with the SEC (when they become available)
through the website maintained by the SEC at www.sec.gov. Copies of
documents filed with the SEC by Callon will be available free of
charge from Callon's website at www.callon.com under the
"Investors" tab or by contacting Callon's Investor Relations
Department at (281) 589-5200 or IR@callon.com. Copies of documents
filed with the SEC by Carrizo will be available free of charge from
Carrizo's website at www.carrizo.com under the "Investor Relations"
tab or by contacting Carrizo's Investor Relations Department at
(713) 328-1055 or IR@carrizo.com.
Participants in the Proxy Solicitation
Callon, Carrizo and their respective directors and certain of
their executive officers and other members of management and
employees may be deemed, under SEC rules, to be participants in the
solicitation of proxies from Callon's shareholders and Carrizo's
shareholders in connection with the proposed transaction.
Information regarding the executive officers and directors of
Callon is included in its definitive proxy statement for its 2019
annual meeting filed with the SEC on March
27, 2019. Information regarding the executive officers and
directors of Carrizo is included in its definitive proxy statement
for its 2019 annual meeting filed with the SEC on April 2, 2019. Additional information regarding
the persons who may be deemed participants and their direct and
indirect interests, by security holdings or otherwise, will be set
forth in the Registration Statement and joint proxy
statement/prospectus and other materials when they are filed with
the SEC in connection with the proposed transaction. Free copies of
these documents may be obtained as described in the paragraphs
above.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this communication concerning the proposed
transaction, including any statements regarding the expected
timetable for completing the proposed Carrizo transaction, the
results, effects, benefits and synergies of the proposed
transaction, future opportunities for the combined company, future
financial performance and condition, guidance and any other
statements regarding Callon's or Carrizo's future expectations,
beliefs, plans, objectives, financial conditions, assumptions or
future events or performance that are not historical facts are
"forward-looking" statements based on assumptions currently
believed to be valid. Forward-looking statements are all statements
other than statements of historical facts. The words "anticipate,"
"believe," "ensure," "expect," "if," "intend," "estimate,"
"probable," "project," "forecasts," "predict," "outlook," "aim,"
"will," "could," "should," "would," "potential," "may," "might,"
"anticipate," "likely" "plan," "positioned," "strategy," and
similar expressions or other words of similar meaning, and the
negatives thereof, are intended to identify forward-looking
statements. The forward-looking statements are intended to be
subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934 and the Private Securities Litigation Reform Act of
1995.
These forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those anticipated, including, but not limited to, failure to
obtain the required votes of Callon's shareholders or Carrizo's
shareholders to approve the transaction and related matters;
whether any redemption of Carrizo's preferred stock will be
necessary or will occur prior to the closing of the transaction;
the risk that a condition to closing of the proposed transaction
may not be satisfied, that either party may terminate the merger
agreement or that the closing of the proposed transaction might be
delayed or not occur at all; potential adverse reactions or changes
to business or employee relationships, including those resulting
from the announcement or completion of the transaction; the
diversion of management time on transaction-related issues; the
ultimate timing, outcome and results of integrating the operations
of Callon and Carrizo; the effects of the business combination of
Callon and Carrizo, including the combined company's future
financial condition, results of operations, strategy and plans; the
ability of the combined company to realize anticipated synergies in
the timeframe expected or at all; changes in capital markets and
the ability of the combined company to finance operations in the
manner expected; regulatory approval of the transaction; the
effects of commodity prices; and the risks of oil and gas
activities. Expectations regarding business outlook, including
changes in revenue, pricing, capital expenditures, cash flow
generation, strategies for our operations, oil and natural gas
market conditions, legal, economic and regulatory conditions, and
environmental matters are only forecasts regarding these
matters.
Additional factors that could cause results to differ materially
from those described above can be found in Callon's Annual Report
on Form 10-K for the year ended December 31,
2018 and in its subsequent Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2019,
and the quarter ended June 30, 2019,
each of which is on file with the SEC and available from Callon's
website at www.callon.com under the "Investors" tab, and in other
documents Callon files with the SEC, and in Carrizo's Annual Report
on Form 10-K for the year ended December 31,
2018 and in its subsequent Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2019,
and the quarter ended June 30, 2019,
each of which is on file with the SEC and available from Carrizo's
website at www.carrizo.com under the "Investor Relations" tab, and
in other documents Carrizo files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither Callon nor Carrizo assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Supplemental Non-GAAP Financial Measures
This communication includes free cash flow, which is a
supplemental non-GAAP financial measure that is used by management
and external users of our financial statements to assess our
liquidity. We define free cash flow as net cash provided by
operating activities before changes in working capital less capital
expenditures. Management believes that free cash flow provides
useful information in assessing the impact of our ability to
generate cash flow in excess of capital requirements and to return
cash to shareholders. Free cash flow should not be considered as an
alternative to net cash provided by operating activities or any
other measure of liquidity in accordance with GAAP.
Contact for Callon
Mark
Brewer
Director of Investor Relations
or
Kate Schilling
Investor Relations
Callon Petroleum Company
ir@callon.com
(281) 589-5200
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SOURCE Callon Petroleum Company