Third Quarter and Nine Months 2011 Discretionary Cash Flow. Discretionary cash flow for the quarter ended September 30, 2011 totaled $20.0 million compared to $8.1 million during the comparable prior year period. Net cash flow provided by operating activities, as defined by U.S. GAAP, totaled $27.0 million and $8.2 million during the quarters ended September 30, 2011 and 2010, respectively. Discretionary cash flow for the nine months ended September 30, 2011 and 2010 totaled $57.0 million and $29.9 million, respectively. Net cash flow provided by operating activities, as defined by U.S. GAAP, totaled $57.9 million and $82.2 million for the nine-month periods ended September 30, 2011 and 2010, respectively. Cash flows from operations in the first nine months of 2010 included a $44.8 million recoupment of royalties paid to the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”; formerly the Minerals Management Service), and related interest of $7.9 million. Excluding this $52.7 million related to the BOEMRE royalty recoupment, cash flow provided by operating activities was $29.5 million. (See “Non-GAAP Financial Measure” that follows and the accompanying reconciliation of discretionary cash flow, a non-GAAP measure, to net cash flow provided by operating activities.)
Liquidity and Capital Resources. There were no borrowings on the company's revolving credit facility at September 30, 2011. The credit facility has a borrowing base of $45.0 million, which is currently being reviewed consistent with the bi-annual redetermination process. Cash was $48.2 million at September 30, 2011.
Capital expenditures in the first nine months of 2011 were $74.4 million, which included $9.0 million of capitalized interest and general and administrative costs. 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.
“Our onshore development program is moving forward as planned,” Callon concludes, “while at the same time, our offshore properties are continuing to deliver positive results. As we move through the fourth quarter, we’ll continue to exercise a disciplined growth strategy that high-grades projects and determines capital allocation decisions based on their internal rates of return so that we maximize per-share returns for our shareholders.”
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