Callon Petroleum Company (NYSE: CPE) today provided an update on its
onshore drilling activity, increase in reserves and management changes.
OPERATIONAL HIGHLIGHTS
- Proved reserves increased to 13.0 million net barrels of oil
equivalent (MMBoe) at September 1, 2010, representing a 34% increase
from December 31, 2009. Reserve additions were primarily driven by
Callon’s successful development drilling activity in the Permian Basin
and Haynesville Shale plays. - Production from the Wolfberry oil play in the Permian Basin is
currently 500 net barrels of oil equivalent per day (Boe/d) up 43%
since year end 2009. The company has added a second rig in the play
and forecasts production to approach a 1,000 net Boe/d exit rate by
year-end. - First production from the George R. Mills Well No. 1H in the
Haynesville Shale commenced on September 3, 2010. The well is
currently producing at a restricted rate of 10-12 million gross cubic
feet of natural gas equivalent per day (MMcfe/d). - Gary Newberry has been promoted to Senior Vice President – Operations,
as Steve Hinchman leaves to become Chief Executive Officer of another
E&P company.
“We have made significant progress in growing onshore production and
converting probable reserves into proved reserves, which is consistent
with our strategic growth plan to reinvest cash flow generated from our
offshore assets into onshore plays offering long-term growth potential
with a balance between oil and natural gas production,” comments Fred
Callon, Chairman and Chief Executive Officer. “Our development drilling
program in the onshore Wolfberry oil play of the Permian Basin has
resulted in a 43% increase in onshore oil production to date. With a
drilling inventory of 125 remaining locations in the Wolfberry oil play,
based on a 40-acre development plan, we have strong visible growth
potential and we are actively pursuing complementary bolt-on
acquisitions to build and solidify our position.” He notes further that
“We successfully drilled and completed our first Haynesville shale well,
which now holds our leasehold position in that play.”
Operations Update
Oil and Natural Gas Reserves. Through its successful activities
in the Wolfberry and Haynesville plays Callon has added 4.4 net MMBoe of
proved reserves, representing a 35% increase since the beginning of
2010. Proved reserves as of September 1, 2010 are as follows:
|
Oil (MMBo) |
Gas (Bcf) |
Oil Equivalent (6:1) (MMBoe) |
|||||||||||||
| PDP | 1.9 | 9.8 | 3.5 | ||||||||||||
| PDNP | 2.3 | 3.1 | 2.8 | ||||||||||||
|
PUD |
3.4 |
19.6 |
6.7 |
||||||||||||
| Total | 7.6 | 32.5 | 13.0 |
Callon’s Wolfberry development activity and consolidation of interest in
its three development areas contributed 2.1 net MMBoe (primarily oil)
and the successful completion of the Haynesville Shale development well
contributed 2.3 net MMBoe (primarily gas). “These additions to our
proved reserves demonstrate the success we are having in our new onshore
developments,” Gary Newberry, Senior Vice President of Operations
explains. “We have made significant progress in diversifying our
portfolio and our team is executing well in our operations and
developments.”
Onshore – Permian Basin (Wolfberry Oil). Results in the company’s
Permian Basin Wolfberry development drilling program are exceeding
expectations. As a result, earlier this month the company added a second
drilling rig in the play. Ten wells have been drilled to date and the
company plans to drill a total of 23 net wells by the end of 2010.
Callon’s net production has increased from 350 net Boe/d to 500 net
Boe/d in September as a result of its development drilling activity. The
company expects to exit the year at nearly 1,000 net Boe/d. In addition,
Callon has increased its interest in the East Bloxom Development Area,
located in Upton County, from an average 47% working interest to 100%
working interest through a number of small acquisitions and a farm-ins.
As a result, Callon controls the activity in three development areas
encompassing 11 sections (6,656 net acres).
Callon currently has an inventory of 330 well locations in the Wolfberry
oil play, 154 of which are 40-acre development locations. As operator
and with no significant drilling obligations, the company can increase
or decrease its pace of development as appropriate.
Callon Petroleum Company
Rodger W. Smith, 800-451-1294
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