Callon Petroleum Co. suspended all completion activity in April and will move to one active drilling rig by mid-May. Total operational capital expenditures are currently expected to be $250-325 million over the remaining three quarters of 2020, assuming resumption of completion activities in the year’s second half.
The company has shut-in about 1,500 b/d (gross) through April and expects to reach over 3,000 b/d (gross) during May. June volumes are currently under evaluation. Flowback of a recently completed project in the WildHorse area has been deferred until expected netbacks improve.
The cuts are in addition to those reported in March (OGJ Online, Mar. 18, 2020).
Other plans for 2020 includes reducing rig count from nine to five before the end of the second quarter and reducing frac crew count from five to two upon the completion of currently in-process projects.
Due to uncertain nature of the current commodity markets and the underlying supply and demand landscape, the company did not provide full year guidance for 2020 as part of its first quarter report.
At Mar. 31, 2020, Callon had 1,439 gross (1,268 net) horizontal wells producing from established flow units in the Permian basin and Eagle Ford shale. Net daily production for the first quarter grew 150% to 101,000 boe/d (64% oil), as compared to the same period of 2019.
In the quarter, the company drilled 40 gross (39.4 net) horizontal wells and placed a combined 36 gross (30.8 net) horizontal wells on production. Of the wells placed on production, 61% were in the Eagle Ford shale with the remaining 39% in the Permian basin.
Currently, about 60,000 gross bo/d are covered by term sales agreements with an agreement for an additional 20,000-25,000 bbl currently under negotiation. The company holds 15,000 b/d of firm transport capacity and will add another 10,000 b/d during the third quarter to support movement of oil volumes from the Permian basin to Gulf Coast markets.
Net income for the quarter was $216.6 million. Gathering, transportation, and processing expenses for the quarter were $14.4 million. General and administrative costs were $8.3 million, excluding certain non-cash incentive share-based compensation valuation adjustments.
For the year’s second quarter, the company expects to spend less than $100 million in operational capital with production currently expected to be in excess of 105,000 boe/d, including the impact of planned curtailments through May.
For the quarter, $278 million in spending converted a number of uncompleted wells from year-end 2019 to production. An inventory of about 70 drilled but uncompleted wells are expected at the end of the second quarter.