HOUSTON, Oct. 10, 2019 /PRNewswire/ -- Callon Petroleum
Company (NYSE: CPE) today announced that it has filed definitive
proxy materials with the U.S. Securities and Exchange Commission in
connection with the Company's pending all-stock acquisition of
Carrizo Oil & Gas, Inc. (Nasdaq: CRZO). Callon will commence
mailing the joint proxy statement / prospectus to its shareholders
on or about October 11, 2019.
The Callon Special Meeting of Shareholders to vote on the
transaction is scheduled for November 14,
2019, at 9:00 A.M. Central
Time, and will be held in the Advice & Counsel meeting
room of the Hotel ZaZa, 9787 Katy Freeway, Houston, Texas. All shareholders of record of
Callon common stock as of the close of business on October 7, 2019, will be entitled to vote their
shares either in person or by proxy at the shareholder meeting.
Following a comprehensive independent review, with the
assistance of independent financial and legal advisors, the Callon
Board of Directors believes this transaction is in the best
interests of the Company and its shareholders and unanimously
recommends that shareholders vote "FOR" the proposal to approve the
merger agreement, as well as all other proposals set forth in the
proxy materials.
As previously announced on July 15,
2019, the combination of Callon and Carrizo will create a
differentiated oil and gas company with scaled development
operations focused on premier asset bases and supported by
accelerated cash flow and capital efficiency. Highlights of the
transaction include:
- Combines Complementary High-Quality Assets to Create
Self-Funded, High-Margin Oil Growth Company. On a pro forma
basis, Callon will have an approximate 200,000 net acre footprint
in the Permian Basin and Eagle Ford Shale, including over 90,000
net acres in the Delaware Basin,
and approximately 2,500 total gross horizontal drilling locations.
The Company expects that its high-margin Eagle Ford cash flow will
accelerate its value proposition from a deep drilling inventory in
the Permian, enhancing returns while sustainably generating
corporate-wide free cash flow. In addition, the combined company's
balanced asset portfolio provides flexible and increasingly
efficient capital allocation to manage cash conversion cycles and
capital intensity profiles. Together with Carrizo, Callon also
expects to have a leading cost of supply on an "all-in" corporate
basis.
- Immediately Accretive to All Key Financial Metrics.
Callon expects this combination to be immediately accretive to EPS,
CFPS and FCFPS, debt adjusted growth per share and net asset value
per share. The Company also expects $100
million of incremental free cash flow in 2020, and double
that in 2021, at recent strip prices through measured growth and
realization synergies, further supporting Callon's deleveraging
initiatives.
- Drives Substantial Identified Synergies. The combination
is expected to generate synergies of $850
million in net present value, delivering over $2 per share of value to Callon shareholders. The
Company expects to achieve annual run-rate operational synergies of
$65-$85
million driven by Delaware
drilling and completion (D&C) cost savings and improved Permian
production uptime, as well as cash G&A savings of $35-$45 million per
year. Over time, Callon anticipates further synergies to be
realized from optimized capital allocation, the integration of
Delaware infrastructure and water
management, increased hydrocarbon volumes for enhanced optionality
for marketing and transportation and reductions to the company's
cost of capital.
- Reinforces Callon's Financial Strength and Versatility.
The combined company will have a strong balance sheet with no
near-term debt maturities and a 2020 corporate free cash flow
break-even of approximately $50 per
barrel. Importantly, significant free cash flow generation will
drive the combined company's leverage ratio to below 2.0x in 2020
at recent strip pricing, with additional upside from increased
potential for asset monetizations. Specifically, Callon has
established a target of $300-$400 million
of additional monetization proceeds for the combined company by
year-end 2020, primarily from a combination of the following
sources:
-
- Select acreage in the Eagle Ford Shale;
- Non-operated Permian properties and pruning of non-core
Delaware properties; and
- Upfront proceeds from a joint venture or similar structure
involving an expanded set of water infrastructure assets in both
the Permian Basin and Eagle Ford Shale.
Callon's experienced independent Board of Directors has
successfully repositioned the business from a micro-cap offshore
entity to a Permian focused growth company with high-quality assets
and a track record of successful M&A integration. The Callon
Board has an independent standing Strategic Planning Committee that
continually evaluates and considers all alternatives for maximizing
shareholder value. Importantly, this transaction does not preclude
any future alternatives, but rather it strengthens Callon's
optionality relating to future strategic transactions.
Callon today also announced that the Board of Directors of the
combined company will consist of 11 members, including Callon's
eight current Board members and the following individuals from the
Carrizo Board: Frances Aldrich
Sevilla-Sacasa, S.P. Johnson IV and Steven A. Webster. Collectively, the companies
believe the expanded Board is comprised of individuals with the
experience, breadth and perspective to continue guiding the company
to create value for all the company's stakeholders.
Callon shareholders are encouraged to read the definitive proxy
materials, which describe, among other things, the process that led
to the proposed transaction with Carrizo, the reasons for the
Callon Board's confidence in this combination and the
recommendation that shareholders vote "FOR" the merger agreement,
as well as the other proposals set forth on the proxy card. Each
vote is very important, regardless of the number of shares owned.
Your failure to vote your shares of common stock or your
abstention from voting will have the same effect as a vote
"AGAINST" the transaction.
Callon expects that the transaction will close during the fourth
quarter of 2019, subject to approval by both Callon and Carrizo
shareholders and other customary closing conditions.
|
If you have any
questions, need assistance in completing the proxy card or need
additional copies of the proxy materials, please call the firm
assisting Callon with the solicitation of proxies:
|
|
INNISFREE M&A
INCORPORATED
|
|
TOLL-FREE at +1
(888) 750-5834 (From the U.S. or Canada)
|
|
About the Directors
Frances Aldrich
Sevilla-Sacasa
Ms. Aldrich Sevilla-Sacasa has a
distinguished career as an executive in the private banking
industry. Most recently, she served as the Chief Executive Officer
of Banco Itaú International, Miami,
Florida, from 2012 to 2016. Prior to that time, her career
included roles as Interim Dean of the University of Miami School of Business, President
of U.S. Trust, Bank of America Private Wealth Management and
President and Chief Executive Officer of US Trust Company. She
previously served in a variety of roles with Citigroup's private
banking business, including President of Latin America Private
Banking, President of Europe Private Banking and Head of
International Trust Business. Ms. Aldrich
Sevilla-Sacasa currently serves on the Boards of
publicly-traded Camden Property Trust and Delaware Funds, a mutual
fund company. She holds a Bachelor of Arts Degree from the
University of Miami and an M.B.A. from
the Thunderbird School of Global Management.
S.P. Johnson IV
Mr. Johnson is co-founder of Carrizo and has served as its
President and Chief Executive Officer since December 1993. Prior to that, he worked for Shell
Oil Company for 15 years, where his managerial positions included
Operations Superintendent, Manager of Planning and Finance and
Manager of Development Engineering. Mr. Johnson has previously
served as a director of Basic Energy Services, Inc., an oilfield
service provider, and as a director of Pinnacle Gas Resources,
Inc., a coalbed methane exploration and production company. Mr.
Johnson is a Registered Petroleum Engineer and holds a B.S. in
Mechanical Engineering from the University of
Colorado.
Steven A. Webster
Mr. Webster is co-founder of Carrizo and has served as Chairman
of its Board of Directors since June
1997. Mr. Webster serves as Managing Partner of AEC
Partners, a private equity firm focused on investments in energy
business he co-founded the firm in 2016, and Avista Capital
Partners LP, a private equity firm that he co-founded in 2005.
Previously, Mr. Webster served as the Chairman of DLJMB Global
Energy Partners, a specialty group that sourced, executed and
managed DLJMB III's energy related investments; President and Chief
Executive Officer of R&B Falcon Corporation, an offshore
drilling contractor; and Chairman and Chief Executive Officer of
Falcon Drilling Company, which he founded in 1988. Mr. Webster
currently serves on the Board of Directors at Camden Property
Trust, Oceaneering and Era Group. He holds an M.B.A. from
Harvard Business School where he was a
Baker Scholar. He also holds a B.S. in Industrial Management and an
Honorary Doctorate in Management from Purdue
University.
About Callon
Callon is an independent energy company
focused on the acquisition and development of unconventional
onshore oil and natural gas reserves in the Permian Basin in
West Texas. This news release is
posted on Callon's website at www.callon.com, and will be archived
for subsequent review under the "News" link on the top of the
homepage.
No Offer or Solicitation
Communications herein do not
constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval with
respect to the proposed transaction or otherwise, nor shall there
be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
Communication herein do not constitute a notice of redemption with
respect to or an offer to purchase or sell (or the solicitation of
an offer to purchase or sell) any preferred stock of Carrizo Oil
& Gas, Inc.
Additional Information and Where to Find It
In
connection with the proposed transaction, Callon Petroleum Company
("Callon") has filed, and the Securities and Exchange Commission
(the "SEC") has declared effective, a registration statement on
Form S-4 (the "Registration Statement"), which contains a joint
proxy statement of Callon and Carrizo that also constitutes a
prospectus of Callon. This communication is not a substitute for
the joint proxy statement/prospectus or the Registration Statement
or for any other document that Callon or Carrizo may file with the
SEC and/or send to Callon's shareholders and/or Carrizo's
shareholders in connection with the proposed transaction. INVESTORS
AND SECURITY HOLDERS OF CALLON AND CARRIZO ARE URGED TO READ THE
REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS, AS
EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND OTHER
RELEVANT DOCUMENTS FILED BY CALLON AND CARRIZO WITH THE SEC
CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT CALLON, CARRIZO AND THE PROPOSED
TRANSACTION.
Investors will be able to obtain free copies of the Registration
Statement and joint proxy statement/prospectus, as each may be
amended from time to time, and other relevant documents filed by
Callon and Carrizo with the SEC (when they become available)
through the website maintained by the SEC at www.sec.gov. Copies of
documents filed with the SEC by Callon will be available free of
charge from Callon's website at www.callon.com under the
"Investors" tab or by contacting Callon's Investor Relations
Department at (281) 589-5200 or IR@callon.com. Copies of documents
filed with the SEC by Carrizo will be available free of charge from
Carrizo's website at www.carrizo.com under the "Investor Relations"
tab or by contacting Carrizo's Investor Relations Department at
(713) 328-1055 or IR@carrizo.com.
Participants in the Proxy Solicitation
Callon, Carrizo
and their respective directors and certain of their executive
officers and other members of management and employees may be
deemed, under SEC rules, to be participants in the solicitation of
proxies from Callon's shareholders and Carrizo's shareholders in
connection with the proposed transaction. Information regarding the
executive officers and directors of Callon is included in its
definitive proxy statement for its 2019 annual meeting filed with
the SEC on March 27, 2019.
Information regarding the executive officers and directors of
Carrizo is included in its definitive proxy statement for its 2019
annual meeting filed with the SEC on April
2, 2019. Additional information regarding the persons who
may be deemed participants and their direct and indirect interests,
by security holdings or otherwise, will be set forth in the
Registration Statement and joint proxy statement/prospectus and
other materials when they are filed with the SEC in connection with
the proposed transaction. Free copies of these documents may be
obtained as described in the paragraphs above.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this communication
concerning the proposed transaction, including any statements
regarding the expected timetable for completing the proposed
Carrizo transaction, the results, effects, benefits and synergies
of the proposed transaction, future opportunities for the combined
company, future financial performance and condition, guidance and
any other statements regarding Callon's or Carrizo's future
expectations, beliefs, plans, objectives, financial conditions,
assumptions or future events or performance that are not historical
facts are "forward-looking" statements based on assumptions
currently believed to be valid. Forward-looking statements are all
statements other than statements of historical facts. The words
"anticipate," "believe," "ensure," "expect," "if," "intend,"
"estimate," "probable," "project," "forecasts," "predict,"
"outlook," "aim," "will," "could," "should," "would," "potential,"
"may," "might," "anticipate," "likely" "plan," "positioned,"
"strategy," and similar expressions or other words of similar
meaning, and the negatives thereof, are intended to identify
forward-looking statements. The forward-looking statements are
intended to be subject to the safe harbor provided by Section 27A
of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform
Act of 1995. These forward-looking statements involve significant
risks and uncertainties that could cause actual results to differ
materially from those anticipated, including, but not limited to,
failure to obtain the required votes of Callon's shareholders or
Carrizo's shareholders to approve the transaction and related
matters; whether any redemption of Carrizo's preferred stock will
be necessary or will occur prior to the closing of the transaction;
the risk that a condition to closing of the proposed transaction
may not be satisfied, that either party may terminate the merger
agreement or that the closing of the proposed transaction might be
delayed or not occur at all; potential adverse reactions or changes
to business or employee relationships, including those resulting
from the announcement or completion of the transaction; the
diversion of management time on transaction-related issues; the
ultimate timing, outcome and results of integrating the operations
of Callon and Carrizo; the effects of the business combination of
Callon and Carrizo, including the combined company's future
financial condition, results of operations, strategy and plans; the
ability of the combined company to realize anticipated synergies in
the timeframe expected or at all; changes in capital markets and
the ability of the combined company to finance operations in the
manner expected; regulatory approval of the transaction; the
effects of commodity prices; and the risks of oil and gas
activities. Expectations regarding business outlook, including
changes in revenue, pricing, capital expenditures, cash flow
generation, strategies for our operations, oil and natural gas
market conditions, legal, economic and regulatory conditions, and
environmental matters are only forecasts regarding these
matters.
Additional factors that could cause results to differ materially
from those described above can be found in Callon's Annual Report
on Form 10-K for the year ended December 31,
2018 and in its subsequent Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2019,
and the quarter ended June 30, 2019,
each of which is on file with the SEC and available from Callon's
website at www.callon.com under the "Investors" tab, and in other
documents Callon files with the SEC, and in Carrizo's Annual Report
on Form 10-K for the year ended December 31,
2018 and in its subsequent Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2019,
and the quarter ended June 30, 2019,
each of which is on file with the SEC and available from Carrizo's
website at www.carrizo.com under the "Investor Relations" tab, and
in other documents Carrizo files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither Callon nor Carrizo assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Supplemental Non-GAAP Financial Measures
This
communication includes free cash flow, which is a supplemental
non-GAAP financial measure that is used by management and external
users of our financial statements to assess our liquidity. We
define free cash flow as net cash provided by operating activities
before changes in working capital less capital expenditures.
Management believes that free cash flow provides useful information
in assessing the impact of our ability to generate cash flow in
excess of capital requirements and to return cash to shareholders.
Free cash flow should not be considered as an alternative to net
cash provided by operating activities or any other measure of
liquidity in accordance with GAAP. We have not provided a
reconciliation of projected free cash flow to projected net cash
provided by operating activities, the most comparable financial
measure calculated in accordance with GAAP. We are unable to
project net cash provided by operating activities for any future
period because this metric includes the impact of changes in
operating assets and liabilities related to the timing of cash
receipts and disbursements that may not relate to the period in
which the operating activities occurred. We are unable to project
these timing differences with any reasonable degree of accuracy
without unreasonable efforts such as predicting the timing of its
and customers' payments, with accuracy to a specific day, months in
advance.
Contact for Callon
Mark
Brewer
Director of Investor Relations
or
Kate Schilling
Investor Relations
Callon Petroleum Company
ir@callon.com
(281) 589-5200
View original
content:http://www.prnewswire.com/news-releases/callon-announces-filing-of-definitive-proxy-statement-in-connection-with-proposed-merger-with-carrizo-300935092.html
SOURCE Callon Petroleum Company