First Quarter 2011 Operating Results. Operating results for the three months ended March 31, 2011 include oil and gas sales of $25.4 million from average production of approximately 4,713 barrels of oil equivalent per day (Boe/d), which was within the company’s published guidance range of 4,700 to 5,000 Boe/d. For the same period of 2010, sales were $23.4 million from average production of 4,636 Boe/d. For the quarter ended March 31, 2011, the average price received per barrel of oil (Bbl), after the impact of hedging, increased 25% to $93.78, compared to $74.78 during the same period of 2010. Partially offsetting the increases in oil prices, during the first quarter of 2011, the average price received per thousand cubic feet of natural gas (Mcf), after the impact of hedging, decreased 14% to $4.95 from $5.76 for the same period of 2010.
“In the first quarter, we successfully continued our accelerated drilling program in the Permian Basin,” Fred Callon, Chairman and CEO of Callon Petroleum points out, “and we are pleased with our fracture stimulation agreement with Halliburton which has secured access to completion services and improve our operational efficiency and execution. Importantly, our existing leasehold position provides us a significant drilling inventory providing long-term growth potential.”
Callon adds that “From a financial perspective, our successful equity offering provided us with additional capital, which we used to strengthen our balance sheet by reducing debt 22% and increasing future profitability by lowering our annual cash interest expense. The balance of the proceeds along with our strong operating cash flow will be used to continue the development of our highly prospective Wolfberry oil play in the Permian Basin. With an increased borrowing base, new capital and cash flow from operations, we have the liquidity to fund our onshore growth plan and take advantage of potential acquisitions that fit our strategic plan to increase our long-term visible growth potential by continuing our expansion into onshore oil plays.”