Carrizo Oil & Gas — Q3 2019 Earnings Presentation
22 slides from Carrizo Oil & Gas's earnings presentation, Nov 4, 2019
Slide 1: Filed by Callon Petroleum Company Pursuant to Rule 425
Filed by: Callon Petroleum Company Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to 14a‐12 under the Securities Exchange Act of 1934 Subject Company: Carrizo Oil & Gas, Inc. Commission File No.: 000‐29187‐87 Set forth below is a copy of the earnings presentation rel
Slide 2: 3rd Quarter 2019 Earnings
3rd QUARTER 2019 EARNINGS November 5th, 2019
Slide 3: Important Disclosures
IMPORTANT DISCLOSURES 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
Slide 4: Important Disclosures (Continued)
IMPORTANT DISCLOSURES (CONTINUED) 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
Slide 5: Callon Corporate Strategy: Evolution from Core Assets to Sustainable Operating Business Model
CALLON CORPORATE STRATEGY THE EVOLUTION FROM CORE ASSETS TO A SUSTAINABLE OPERATING BUSINESS MODEL Core Permian Evolving to Full Field Sustainable Growth Footprint Established Development and FCF Generation 2014 - 2018 2019 2020 + ▪ Increased Permian position from ▪ Harvest asset value through ▪ Sus
Slide 6: Delivering Superior Results and Capital Efficiency
DELIVERING SUPERIOR RESULTS AND CAPITAL EFFICIENCY YoY FINANCIAL ACHIEVEMENTS OPERATIONAL HIGHLIGHTS 180 DAILY PRODUCTION PER $6.00 LEASE OPERATING ▪ Increased capital efficiency with transition to larger pad (1) EXPENSE ($/Boe) (1) SHARE (Boepd/MM) development $5.84 170 ▪ Improved uptime, reduced L
Slide 7: Unlocking Value Through Scaled Development
UNLOCKING VALUE THROUGH SCALED DEVELOPMENT DELAWARE: EARLY TIME RAG RUN PERFORMANCE DELAWARE: OPTIMIZED LARGE PAD FLOWBACK 600 35 8 Average Project of wells) Size(# 90 Day Average Well Production: ~ 1,000 Boepd (~80% Oil) 500 Mboe 400 30 4 300 200 Average 30 Day Size Day 30Choke Average 100 25 0 6 W
Slide 8: Risk Management Complements Strong Fundamental Margins
RISK MANAGEMENT COMPLEMENTS STRONG FUNDAMENTAL MARGINS HEDGE PROGRAM SECURES CASH RETURN MARKETING DIVERSIFIES PRICE EXPOSURE 30,000 NYMEX 45 2Q21: ~ 40 mb/d gross CPE Floor Permian volumes linked to 40 25,000 $58.56 NYMEX NYMEX MEH/International Pricing Floor Floor $55.63 $2.49 35 20,000 30 15,000
Slide 9: Consistent Focus on Financial Objectives Achieved by Merger with Carrizo
CONSISTENT FOCUS ON FINANCIAL OBJECTIVES ACHIEVED BY MERGER WITH CARRIZO? INCREASE CASH • Ongoing compensation alignment with shareholder interests RETURN ON • Retain best-in-class margins INVESTED • Reduce capital intensity of business CAPITAL (1) • Consistent measured growth in development moderat
Slide 10: Premier Operator with Strong Integration Track Record
PREMIER OPERATOR WITH STRONG INTEGRATION TRACK RECORD PREMIER SOUTHERN DELAWARE OPERATOR (1) IMPROVED PERFORMANCE FROM 2018 WARD ACQUISITION 20,000 15 18,000 Boe 16,000 14 14,000 12,000 13 10,000 8,000 6,000 12 (20:1 Conversion) (20:1 Cumulative Bo Cumulative 4,000 2,000 Average 6 Month Cumulative M
Slide 11: CRZO Acquisition: Stronger Combined Company
CRZO ACQUISITION: STRONGER COMBINED COMPANY 2x Core Delaware Basin Footprint >17 Years Permian Inventory >105 Mboed Production (2Q19) (1) DELAWARE >$1.2B Q2 2019 Annualized EBITDA - ~$100MM Incremental Free Cash Flow in 2020 (2) PERMIAN PERMIAN Target Leverage by Year-End 2020 2020E Capital Allocati
Slide 12: Significant and Achievable Synergies to Benefit Stakeholders
SIGNIFICANT AND ACHIEVABLE SYNERGIES TO BENEFIT STAKEHOLDERS NPV OF $2 PER CALLON SHARE REPRESENTS ~50% OF CALLON’S CURRENT SHARE PRICE 10 YR TOTAL (OPERATIONAL AND ANNUAL RUN RATE OPERATIONAL SYNERGIES (2021+) ($MM) CAPITAL) NPV OF SYNERGIES ($MM) Corporate Cash Delaware Drilling Improved Permian U
Slide 13: Scaled Development Unlocks Value for Combined Company
SCALED DEVELOPMENT UNLOCKS VALUE FOR COMBINED COMPANY $900 Scale development is a capital issue, not an acreage issue Operational CapEx ($mm) ● Standalone, neither Callon nor Carrizo could afford the capital program $600 Midpoint of 2019 Guidance that would unlock value from a scaled, consistent dev
Slide 14: Management Focused on Financial Strength
MANAGEMENT FOCUSED ON FINANCIAL STRENGTH KEY CORPORATE PRINCIPLES Generate Prudent Financial Reduce Leverage to Maintain Strong Preserve Top-Tier Sustainable Free and Physical Risk < 2.0x Liquidity Position Operating Margins Cash Flow Growth Management HIGHLIGHTS PRO FORMA CORPORATE FREE CASH FLOW B
Slide 15: Executing Our Strategy
EXECUTING OUR STRATEGY • Driving capital efficiency gains through sustained high levels of well productivity coupled with emerging capital cost reductions from scaled development SUPERIOR • Beat consensus estimates for EBITDA/Boe by an average of 5% over the last EXECUTION nine quarters vs. peers av
Slide 16: Appendix
APPENDIX chp
Slide 17: Carrizo Acquisition Is Credit Enhancing
CARRIZO ACQUISITION IS CREDIT ENHANCING SCALE AND FREE CASH FLOW ENHANCING TRANSACTION IS A CREDIT POSITIVE FROM RATINGS PERSPECTIVE POSITIVE COMMENTARY FROM CREDIT AGENCIES CURRENT NET DEBT / 2019E EBITDA “The CreditWatch positive placement reflects our expectation that the acquisition of Carrizo w
Slide 18: Leading Southern Delaware Well Performance
LEADING SOUTHERN DELAWARE WELL PERFORMANCE (1) SOUTHERN DELAWARE WCA WELLS ACROSS PEERS WCA RESULTS BY OPERATOR (2017+) (2) 100% 90% 80% 70% 60% 50% 40% 30% 20% CPE Well Count and Production Distribution Plot P(x) Plot Distribution Production and Count Well 10% CRZO 0% Average 6 Month Cumulative Pro
Slide 19: Hedge Portfolio (WTI NYMEX)
HEDGE PORTFOLIO (1) 4Q19 1Q20 2Q20 3Q20 4Q20 FY 2020 FY 2021 WTI NYMEX (Bbls, $/Bbl) Swaps & Swaps with Puts Total Volumes 276,000 546,000 546,000 552,000 552,000 2,196,000 - Total Daily Volumes 3,000 6,000 6,000 6,000 6,000 6,000 - Avg. Sw ap $60.17 $56.06 $56.06 $56.06 $56.06 $56.06 - Avg. Short P
Slide 20: Hedge Portfolio (Midland-Cushing, Magellan East Houston, Henry Hub)
HEDGE PORTFOLIO (1) 4Q19 1Q20 2Q20 3Q20 4Q20 FY 2020 FY 2021 MIDLAND-CUSHING DIFFERENTIAL (Bbls/$/Bbl) Swaps Total Volumes 2,176,000 1,092,000 1,092,000 1,196,000 1,196,000 4,576,000 1,095,000 Total Daily Volumes 23,652 12,000 12,000 13,000 13,000 12,503 3,000 Avg. Sw ap Price ($2.50) ($1.73) ($1.73
Slide 21: Quarterly Cash Flow Statement
QUARTERLY CASH FLOW STATEMENT 3Q18 4Q18 1Q19 2Q19 3Q19 Cash flows from operating activities: Net income (loss) $ 37,931 $ 156,194 $ (19,543) $ 55,180 $ 55,834 Adjustments to reconcile net income to cash provided by operating activities: Depreciation, depletion and amortization 48,977 60,301 60,672 6
Slide 22: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION (1) Adjusted EBITDA Reconciliation 3Q18 4Q18 1Q19 2Q19 3Q19 Net income (loss) $ 37,931 $ 156,194 $ (19,543) $ 55,180 $ 55,834 (Gain) loss on derivatives, net of settlements 25,100 (105,512) 66,970 (15,193) (20,798) Non-cash stock-based compensation expense 2,587 770 3,402 904