ACQUIRING CARRIZO CREATES VALUE AND ENHANCES OPTIONALITY FOR SHAREHOLDERS October 22, 2019
ACQUIRING CARRIZO CREATES SIGNIFICANT VALUE NOW WHILE ENHANCING OPTIONALITY FOR THE FUTURE TRANSACTION PROGRESSES CALLON TOWARDS ITS STATED STRATEGIC FINANCIAL OBJECTIVES Creates a self-funding, high-margin oil growth company…
STRONGER COMBINED COMPANY 2x Core Delaware Basin Footprint 17 Years Permian Inventory Scale 105 Mboed Production (2Q19) 1.2B Q2 2019 Annualized EBITDA 100MM Incremental Free Cash Flow in 2020…
COMPELLING VALUE PROPOSITION FOR CALLON SHAREHOLDERS I.1 Self-funded, high-margin oil growth company with enhanced portfolio 2 II. Better positioned for a changing industry landscape and commodity price volatility 3 III.…
SELF-FUNDED, HIGH-MARGIN OIL GROWTH COMPANY WITH 1 ENHANCED PORTFOLIO MORE ATTRACTIVE COMBINED ASSET BASE WITH FREE CASH FLOW TO DEVELOP DEEP PERMIAN INVENTORY Accelerated value realization from deep drilling inventory in the…
THE E&P INDUSTRY IS TRANSITIONING TO 2 MANUFACTURING MODE TODAYS OBJECTIVES INCLUDE CAPITAL EFFICIENCY, SELF-FUNDED GROWTH, CORPORATE-LEVEL RETURNS AND RETURN OF CAPITAL RECENT HISTORY - SHALE REVOLUTION TODAYS ENVIRONMENT -…
2 BETTER POSITIONED FOR THE CHANGING INDUSTRY LANDSCAPE CALLON IS GAINING SIZE AND SCALE TO ENHANCE OPERATING EFFICIENCIES AND IMPROVE FREE CASH FLOW PRO FORMA CALLON SELECTED OBSERVATIONS POSITIONING Increased size and scale better…
SHAREHOLDERS WILL BENEFIT FROM 3 SIGNIFICANT AND ACHIEVABLE SYNERGIES NPV OF 2 PER CALLON SHARE REPRESENTS 50% OF CALLONS CURRENT SHARE PRICE 10 YR TOTAL (OPERATIONAL AND ANNUAL RUN RATE OPERATIONAL SYNERGIES (2021+) (MM) CAPITAL)…
WELL POSITIONED TO CAPTURE THE OPERATIONAL BENEFITS OF 3 THE MERGER CALLON HAS A TRACK RECORD OF IMPROVING OPERATIONAL EFFICIENCIES BENEFITS OF SCALE AND CAPITAL EFFICIENCY DELAWARE D&C COST SAVINGS (1) Industry leaders are…
3 ENHANCED LARGE SCALE DEVELOPMENT MODEL OPERATIONAL SYNERGIES CAPTURE CLEAR STRUCTURAL BENEFITS FROM SCALE Progression to larger pad development has produced lower LARGER, MULTI-WELL PROJECTS PRESERVE FUTURE well costs over time…
MOST RESEARCH ANALYSTS AGREE WITH THE SYNERGIES AND 3 INDUSTRIAL LOGIC MOST RESEARCH ANALYSTS BELIEVE IN THE MERITS AND UPSIDE OF THE TRANSACTION We see significant upside to the stated synergies and also The proposed CRZO…
IMMEDIATELY ACCRETIVE TO ALL KEY PER SHARE FINANCIAL 4 METRICS ATTRACTIVE ACCRETION IN YEAR ONE WITH SIGNIFICANTLY IMPROVED UPSIDE AND OPTIONALITY Accretive to Accretive to +23% 2020E EBITDA Per Share +20% 2020E Cash Flow Per…
STOCK-FOR-STOCK TRANSACTION MAINTAINS 4 CALLONS STRONG BALANCE SHEET DELEVERAGING CASH FLOW PROFILE WITH TARGET LEVERAGE OF LESS THAN 2.0X BY YEAR-END 2020E Pro Forma Year End Net Debt / EBITDA (without asset sales) 1 billion of…
5 COMPELLING VALUE RELATIVE TO OUR CONTRIBUTION OUR SHAREHOLDERS ARE RECEIVING OWNERSHIP IN EXCESS OF OUR PRODUCTION AND CASH FLOW CONTRIBUTION Callon is contributing a lower Callon Carrizo percentage of production and cash…
PREMIUM AND MULTIPLES ARE IN-LINE WITH OR BETTER THAN 5 RECENT TRANSACTIONS COMPELLING VALUE RELATIVE TO COMPARABLE TRANSACTIONS Implied Premium to Implied Premium to 60-Day Buyer Seller Announcement Date EV / NTM EBITDA…
5 CALLON HAS TRADED IN-LINE WITH PEERS SINCE ANNOUNCEMENT CALLON AND PEERS HAVE BEEN IMPACTED BY SECTOR-WIDE INVESTOR SENTIMENT Share Price Performance Since Undisturbed Date (July 12, 2019) Relative Performance Relative Performance…
6 CALLON HAS A TRACK RECORD OF SUCCESSFUL PORTFOLIO OPTIMIZATION CALLON HAS MADE SEVERAL SUCCESSFUL VALUE ENHANCING ACQUISITIONS AND DIVESTED NON-CORE ASSETS April 2016 September 2016 December 2016 May 2018 Acquisition April 2019…
6 CALLON IS A PREMIER OPERATOR OF UPSTREAM ASSETS CALLON HAS DEMONSTRATED ABILITY TO ACHIEVE SIGNIFICANT WELL COST SAVINGS AND PRODUCTIVITY IMPROVEMENT THROUGH LARGER PROJECT DEVELOPMENT HIGHER CUMULATIVE OIL PRODUCTION LOWER COST…
7 WELL-QUALIFIED BOARD OF INDEPENDENT DIRECTORS THE COMBINED BOARD HAS THE RIGHT M&A, INTEGRATION AND APPROPRIATE INDUSTRY EXPERTISE Matthew R. Bob 5 of 7 independent directors have overseen transformative M&A transactions, including…
THE COMBINATION WAS THE RESULT OF AN EXTENSIVE 7 REVIEW BY AN INDEPENDENT AND QUALIFIED BOARD A COMBINATION WITH CARRIZO DOES NOT PRECLUDE ANY FUTURE ALTERNATIVES; RATHER IT BETTER POSITIONS CALLONS FUTURE STRATEGIC OPPORTUNITIES…
MOST RESEARCH ANALYSTS VIEW THIS AS THE BEST PATH 7 FOR VALUE CREATION THE COMBINATION WITH CARRIZO STRENGHTENS THE COMPANY TODAY AND ENHANCES FUTURE OPTIONALITY Lower leverage and stronger free cash flow generation was in a world…
RESEARCH ANALYSTS OVERWHELMINGLY SUPPORT THIS DEAL 85% OF RESEARCH ANALYSTS MAINTAIN A BUY RECOMMENDATION FOR CALLON AND HAVE EXPRESSED SUPPORT FOR THE COMBINATION EXPRESSED BROKER REPORT DATE COMMENTARY SUPPORT1 Notably, based on…
CONCLUSION: ACQUIRING CARRIZO CREATES SIGNIFICANT VALUE NOW WHILE ENHANCING OPTIONALITY FOR THE FUTURE TRANSACTION PROGRESSES CALLON TOWARDS ITS STATED STRATEGIC FINANCIAL OBJECTIVES Creates a self-funding, high-margin oil growth…
Appendix
PRO FORMA CALLON IS MORE COMPELLING THAN STANDALONE CALLON Based on broker consensus estimates as of 7/12/19 Standalone Pro forma Delta 2020E EBITDAX margin ( / boe) 35.92 33.55 -2.37 Gross operated locations 25% IRR1 1,100 2,000…
VALUATIONS HAVE RESET AND PURE-PLAYS NO LONGER TRADE AT A PREMIUM HISTORICAL EV / NTM EBITDA MULTIPLES 14.0 x SMID-Cap Permian Pure-Plays Large-Cap Independents Universe 12.0 x 10.0 x 8.0 x 6.0 x 5.3x 5.1x 4.5x…
THE OIL-WEIGHTED SMALL CAP E&PS ARE A LOGICAL PEER GROUP FOR CALLON Share Price Performance Since 7/12/2019 Proxy Callon Oil-Weighted Bloomberg Market Cap Net Debt / Through Company Name Peers S-4 Peers Small Cap Peers (mm) EBITDA Oil…
CALLON HAS TRADED IN-LINE WITH PEERS SINCE ANNOUNCEMENT RELATIVE PERFORMANCE = CALLON STOCK PRICE PERFORMANCE MINUS THE PERFORMANCE OF THE INDEX Share Price Performance Since 7/12/2019 Market Cap Net Debt / 1-Day 5-Day Through 2019…
MOST XOP CONSTITUENTS ARE NOT LOGICAL PEERS XOP Callon S-4 Peers Callon Proxy Peers Oil-Weighted Small Cap E&P Peers Bloomberg Peers Chevron Corporation Majors Exxon Mobil Corporation Hess Corporation ConocoPhillips Noble Energy…
CALLON DELIVERS BEST IN CLASS OPERATONAL RESULTS 6 MONTH CUMULATIVE BOE / 1,000 DRILLING & COMPLETION COST / 1,000 CALLON AND OFFSET OPERATORS (2018+) (2018+) DELAWARE BASIN DELAWARE BASIN DELAWARE BASIN Peer Avg: 1,212/1k…
CALLONS HIGHLY QUALIFIED AND INDEPENDENT BOARD CURRENT CALLON BOARD L. Richard Matthew R. Barbara J. Michael L. Flury Joseph C. Larry D. Anthony J. James M. Name Bob Faulkenberry Finch (Chairman) Gatto, Jr. McVay Nocchiero Trimble…
CALLON MANAGEMENT INCENTIVES ALIGNED WITH SHAREHOLDERS All transaction-related compensation programs for Callon management are double trigger Special Severance Program for CRZO Transaction Broad-based benefit for all Callon…
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