Houston-based Callon Petroleum Co., whose fortunes are tied to the Permian Basin, has reduced its production outlook for the year after selling a chunk of assets in West Texas.
The independent completed selling some assets in the southern Midland sub-basin to Sequitur Permian LLC for $245 million net. The sale did not include potential contingent payments of up to $60 million based on West Texas Intermediate average annual pricing over a three-year period.
"We remain on a clear path to attain the various objectives we have outlined for investors,” CEO Joe Gatto said. “This transaction is a meaningful step forward on our deleveraging goals, which will also be advanced by our cash flow generation in coming quarters."
During the first quarter the operator brought its largest project to date online in the Midland, while also delineating its acreage and reducing drilling/completion costs.
Callon has updated its full-year guidance to account for the impact of the divestiture and a previously announced acreage trade involving producing properties in Midland County. It also reduced operational capital spending estimates to reflect realized efficiencies and cost reductions.
Updated full-year production guidance, still around 78% oil-weighted, has been reduced to 38,000-39,5000 boe/d from 39,500-41,500 boe/d. Estimates for operational capital expenditures in 2019 have been reduced to $495-520 million from $500-525 million to reflect realized efficiencies and cost reductions.
Callon still expects to bring online 47-49 net operated horizontal wells this year.