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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.
