Callon Petroleum Co. (NYSE: CPE) has closed its acquisition of 6,230 gross (3,862 net) surface acres and associated production located in Midland, Andrews, Martin, and Ector counties, Texas.
Including estimated purchase price adjustments, total net consideration paid for the acquisition was $205 million. The properties have historically been developed with vertical wells, although horizontal activity has recently been progressed. Two horizontal Wolfcamp B wells have been drilled since June with one, the Casselman 8-1H, currently flowing back and another, the Bohannon 24-2H, in the process of completion. In addition, the Casselman 40-4H, a horizontal Lower Spraberry well, is in the process of drilling.
In conjunction with the acquisition, the company has completed an equity offering for $129 million in gross proceeds and a new term loan for $300 million in gross proceeds. Pro forma for the completion of the acquisition and closing of the financings, the company estimates its total liquidity position to be $242 million as of Sept. 30, including availability under an amended borrowing base level of $250 million.
The new term loan, which replaced the company's previous $125 million term loan facility, is secured by a second lien on assets, pledged under the company's revolving credit facility and bears interest on Eurodollar advances at a rate of LIBOR plus 7.50% per annum. The maturity date of the term loan facility is October 8, 2021, and is pre-payable at a declining premium, beginning at 102% after one year. Additional information regarding the new term loan will be filed on a Form 8-K with the Securities and Exchange Commission.