HOUSTON, Oct. 23, 2019 /PRNewswire/ -- Callon
Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today
issued the following statement regarding its previously announced
pending all-stock acquisition of Carrizo Oil & Gas, Inc.
(NASDAQ: CRZO) ("Carrizo").
Yesterday, Callon filed an
investor presentation highlighting the benefits of the Carrizo
transaction. The presentation is available on the Investor
Relations section of the Company's website at
https://ir.callon.com/ as well as on https://www.sec.gov/.
As the presentation makes clear,
Callon is led by an experienced Board of Directors and management
team with a track record of successful value-enhancing
acquisitions, significant cost savings, and productivity
improvements. The Carrizo acquisition is compelling and we expect
it will also deliver substantial value to
shareholders. Far from
precluding any future alternatives for Callon, this transaction
improves strategic optionality and creates a stronger and more
attractive company for investors as well as prospective buyers or
merger partners.
By contrast with a letter and
presentation which Paulson & Co. Inc. ("Paulson") issued the
same day, and which contain a number of objectively false and
misleading statements about the merger, our investor presentation
and proxy statement lay out the salient facts clearly and in detail
- including that:
- Callon management incentives are aligned with
shareholders and there is no transaction "success fee" –
Paulson falsely claims that Callon executives are entitled to a
"success fee" in connection with the Carrizo transaction. To the
contrary, and as we have stated clearly in the proxy statement and
other materials, any potential benefits are payable ONLY if the
executive is terminated in connection with the transaction and are
pursuant to a broad-based severance program for all employees.
- The transaction is immediately accretive to free cash flow
per share – Paulson erroneously claims that the transaction is
highly dilutive to free cash flow per share. This is fundamentally
incorrect and misleading as Paulson's purported conclusion is
derived from inconsistent methodologies: Paulson's calculation of
Callon's stand-alone free cash flow EXCLUDES capitalized G&A
and interest while their pro forma free cash flow figure INCLUDES
capitalized G&A and interest. To the contrary, Callon
reiterates that the combined company is projected to generate
highly accretive free cash flow per share for Callon shareholders,
including over $300
million1 of free cash flow in 2020-2021 at recent
strip pricing.
- Research analysts overwhelmingly support the transaction
– In a section entitled "Sell Side Research," Paulson selected
dated and misleading quotes from research analysts while
conveniently failing to acknowledge the fact that the vast majority
of analysts have expressed support for the combination and maintain
a buy recommendation for Callon – including a majority of the
analysts quoted. Independent third parties agree that Callon will
be a stronger company, including Callon being placed on positive
credit watch by S&P after announcement of the transaction.
Additional facts about the transaction are included in an
investor presentation and the definitive proxy statement in
connection with the transaction, both of which are available on the
Investor Relations section of the Company's website
at https://ir.callon.com/ as well as
on https://www.sec.gov/.
The Callon Board unanimously recommends shareholders vote
"FOR" the Carrizo merger agreement as well as all other proposals
set forth in the proxy materials at the upcoming Special
Meeting. The Special Meeting will be held on November 14, 2019, at 9:00
A.M. Central Time 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.
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)
JP Morgan and Goldman Sachs & Co. LLC are serving as
financial advisors to Callon and Kirkland & Ellis LLP is
serving legal advisor to Callon.
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) 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
(inclusive of operational capital expenditures, seismic, leasehold
and other expenditures, as well as capitalized general and
administrative expense and capitalized interest expense).
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 an alternative to net cash
provided by operating activities or any other GAAP measures. We
have not provided a reconciliation of projected free cash flow to
projected net cash provided by operating activities and capital
expenditures used in net cash provided by investing activities, the
most comparable financial measures calculated in accordance with
GAAP. We are unable to project net cash provided by operating
activities for any future period because such 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 our and our 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
1 Free cash flow calculation is inclusive of interest
expense, dividends, capitalized G&A, capitalized interest,
contingency payments and transaction expenses.
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SOURCE Callon Petroleum Company