Callon Petroleum Gains More Than 2%; Company Announces Acquisition And Share Offering

Shares of Callon Petroleum Company CPE, an independent oil and gas company engaged in the exploration, development acquisition and production of oil and natural gas properties, gained more than 2 percent early Wednesday morning.

Callon Petroleum reported after Tuesday's market close that it has entered into an agreement to acquire certain assets operated by Big Star Oil and Gas for a total consideration of $220 million in cash and 9.3 million shares of its common stock.

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To finance the transaction, Callon Petroleum announced an offering of 22 million shares of its common stock for a total gross proceed of $187 million. The company noted if the transaction does not finalize, it will use the cash to fund a portion of its exploration and development activities and for general corporate purposes.

Assets

The acquired assets consist of approximately 17,298 gross (14,089 net) surface acres in Texas with five producing horizontal wells with an average 30-day peak production rate of 1,165 barrels of oil equivalent per day.

The acquired assets also consist of an approximate 4.1 million barrel of energy equivalent per day of net proved developed producing reserves.

"These acquisitions are a significant step forward in Callon's continued evolution as a leading operator in the Permian Basin. Our team has proven its ability to consistently deliver capital efficient growth, and we are excited to leverage our capabilities across an expanded footprint in the coming years, including a new core operating area in Howard County. While we expect any near-term increase in operational activity following the acquisitions to be limited in 2016, we anticipate the horizontal development of the Big Star properties to be an important part of an expanded 2017 operational program incorporating a total of two to three horizontal drilling rigs," stated Fred Callon, chairman and CEO.

"Callon has found success in pursuing privately-negotiated transactions in the Midland Basin in recent years and these acquisitions are yet another example. Importantly, the transactions not only deliver high-quality, de-risked asset bases that compete favorably for capital in our combined portfolio, but also present the opportunity to add to our management team with Mr. Bradley Cross, a founding partner of Big Star, who has been offered a senior role in operations with Callon."