On March 16, the New York Stock Exchange (NYSE) notified Callon Petroleum Company (NYSE: CPE) that the oil and gas company has one quantitative measure that is “below criteria” for listing on the NYSE.
“While we are disappointed to be advised of this measure, it in no way affects the company’s financial stability or day-to-day business,” said Fred Callon, chairman and CEO of Callon Petroleum, which is engaged in the acquisition, development, exploration and operation of oil and gas properties primarily in the Gulf Coast region.
Callon Petroleum said it intends to promptly provide the NYSE a plan that demonstrates the company’s strategy to return to full compliance with listing standards within 18 months, which is the grace period offered by the NYSE. The company’s common stock will continue to be traded on the NYSE, subject to the company’s compliance with other NYSE continued listing requirements. Callon Petroleum said its business operations, SEC reporting requirements, credit agreements and other debt obligations are not otherwise affected by the NYSE notification. It said it would publicly report its progress on this matter in due course.
“Callon has good capital liquidity and the flexibility to use its cash flow and credit facility to grow the company’s reserves and production over the next several years,” Callon said. “We have always been in full compliance with the rules and regulations of the exchange during the 11 years of being a listed member. We will present a well thought out plan that I believe the exchange will be satisfied with; we intend to aggressively and successfully work through this short-term issue.”
Specifically, Callon Petroleum recently fell below the minimum $75-million marketing capitalization the NYSE requires of commodity companies. Bob Weatherly, executive vice president and CFO at Callon, said the rapid decline in the company’s stock price is the problem, and that the company was above the minimum as late as last December.
“We faced many challenges in 2008,” said Callon. “The most significant of those challenges included the suspension of the development at our deepwater Entrada Field, production interruptions from two hurricanes in the Gulf of Mexico and a dramatic decline in commodity prices, which resulted in a significant non-cash ceiling test impairment. Despite these challenges, we remain confident in our ability to build shareholder value by growing production and reserves in the coming years.”
Callon Petroleum was founded in 1950, and Weatherly said that experience is paying huge dividends as it navigates the current economic slump that has affected his entire industry.
“Callon has been here for 60 years,” he said. “We’ve seen bad times, and we know how to manage it. When times are good, you don’t go nuts and spend all your money, and when times are bad, you don’t go nuts and hide.”
Weatherly said the company has been conserving cash, and is in great shape with its credit facility. The company is certainly not pleased with the situation it finds itself in, but Callon Petroleum is far from throwing in the towel.
“We’re not taking (the issue with the NYSE) lightly,” Weatherly said. “They want us to come and talk with them, and we will.
“Oil and gas is a commodity, and most commodities are cyclical. We’ll get through it. We’re disappointed, but there is no gloom and doom. I’m confident we’ll rebound from this.”
Contact MBJ staff writer Wally Northway at email@example.com.