Callon Petroleum — Merger or Acquisition (February 2024)
22 slides from Callon Petroleum's merger presentation, Feb 27, 2024
Slide 1: A Top-Tier Permian Operator
A Top-Tier Permian Operator February 2024
Slide 2: Notice to Investors
Notice to Investors This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,”
Slide 3: Disclaimer
Disclaimer No Offer or Solicitation This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which
Slide 4: Summary
Summary ⎻ Over the past three years, APA has delivered high returns and strong oil volume growth, achieving top-tier well results and best-in-class productivity improvements in both the Midland and Delaware Basins ⎻ Performance driven by differential development planning / execution and substantial
Slide 5: APA's Top-Tier Permian Performance
APA’s Top-Tier Permian Performance APA CORPORATION 5
Slide 6: APA has Returned to Strong Permian Oil Growth
APA has Returned to Strong Permian Oil Growth Midland / Delaware Oil Production, Mbo/d (APA Standalone) APA’s Permian Progression 80 ⎻ APA emerged from the 2015 / 2016 72 67 70 65 downturn in a rapid testing / learning mode; 60 54 54 in 2020 that was interrupted by Covid- 53 ~20% growth 50 50 45 fro
Slide 7: APA is a Leader in Midland Basin Well Productivity
Midland Basin Performance APA is a Leader in Midland Basin Well Productivity Midland Basin Oil Productivity (Source: Enverus) APA outperforming 2023 group avg. by 37% 2023 Avg: 50 MBO per 1,000’ APA CORPORATION 7 Source: Enverus. 360 Month EUR (MBO / 1,000’)
Slide 8: APA's Delaware Performance has Improved Significantly
Delaware Basin Performance APA’s Delaware Performance has Improved Significantly on both an Absolute and Relative Basis Delaware Basin Oil Productivity (Source: Enverus) APA outperforming 2023 group avg. by 19% 2023 Avg: 69 MBO per 1,000’ APA CORPORATION 8 Source: Enverus. 360 Month EUR (MBO / 1,000
Slide 9: APA Making Impressive Drilling Progress
APA Making Impressive Drilling Progress Average Feet Drilled per Day Realizing drilling efficiencies while significantly increasing lateral length: (1) Midland Basin Delaware Basin ⎻ Rotary steerable systems materially improving drilling pace ⎻ Drilling both 2- & 3-mile laterals with one-run curve /
Slide 10: APA's Approach to Unconventional Development
APA’s Approach to Unconventional Development APA CORPORATION 10
Slide 11: APA's Approach to Unconventional Development: Proprietary Workflow
APA’s Approach to Unconventional Development Proprietary APA Workflow ‾ Neural network runs hundreds of customized development Outcome scenarios for each drilling spacing unit (DSU) Prediction & 3 ‾ Identifies the best development scenarios to optimize the Optimization balance between capital effici
Slide 12: Leading Edge Data Integration
Leading Edge Data Integration Two Step Process: Physics-Based Modeling / Machine Learning and Advanced Frac Modeling Step 1: Physics-Based Modeling & Machine Learning Workflow ⎻ APA has an extensive data catalog from past and new developments to enable leading edge integration Physics ⎻ APA integrat
Slide 13: Outcome Prediction and Optimization
Outcome Prediction and Optimization APA Workflow Used to Optimize Development Hypothetical DSU Optimization Output Different hypothetical Optimal spacing ⎻ Primary Objective: Identify optimal combination of & frac design frac sizes wells per section and frac size Wells per Section ⎻ Trained neural n
Slide 14: APA's Midland County Wolfcamp B Case Study
APA’s Midland County Wolfcamp B Case Study Optimized Development of Wolfcamp B in the Wildfire Field Demonstrates APA’s Proprietary Workflow Midland County Wolfcamp B Performance APA Wildfire vs. All Other Operators, CUM MBO per 1,000’ APA Wildfire: 2018-20 20 APA Wildfire: 2021-23 APA Wildfire Fiel
Slide 15: APA's Glasscock County Wolfcamp D Case Study
APA’s Glasscock County Wolfcamp D Case Study Deploying APA Workflows; Top-Tier Performance in a Zone Previously Unfamiliar to APA Outside the Proven Fairway G Gllassco asscock ck C Cou ountry nty W Wolf olfcamp D Perf camp D Performance ormance APA vs. All Other Operators, CUM MBO per Well 250 APA (
Slide 16: Callon Acquisition Substantial Value Creation Opportunity
Callon Acquisition Substantial Value Creation Opportunity APA CORPORATION 16
Slide 17: Strategic Rationale for Texas Delaware Expansion
Strategic Rationale for Texas Delaware Expansion Combined TX Delaware Position Acquisition of Callon is Complementary to APA Assets & Strategy ⎻ APA has a long history operating in the Texas Delaware ⎻ Position bolstered with bolt-on acquisition in 2022 ⎻ APA’s Delaware well productivity has improve
Slide 18: Pro Forma Permian Footprint
Pro Forma Permian Footprint APA & Callon Pro Forma Permian Acreage The combination of APA’s Midland-focused footprint, with Callon’s Delaware-focused footprint results in a balanced acreage position across two of the world’s most prolific oil-producing basins Net Permian Unconventional Acres (000’s)
Slide 19: Balance and Scale in the Permian
Balance and Scale in the Permian (1) (1) APA Standalone APA Pro Forma Callon Net Prod. Active Net Prod. Active % Oil % Oil (MBOE/D) Rigs (MBOE/D) Rigs Midland 93 47% 3 118 50% 4 (2) Delaware 49 44% 3 124 51% 7 Mid. / Del. Total 142 46% 6 242 51% 11 Other U.S. 84 22% -- 85 22% -- (2) Total U.S. 226 3
Slide 20: APA / CPE Synergy Assumptions Screen Conservative
APA / CPE Synergy Assumptions Screen Conservative APA will Aggressively Pursue All Sources of Synergy G&A Synergies: Operational Synergies: (% of the Target’s Cash G&A) (% of the Target’s LOE + D&C Capital) 13% 73% 54% 4% APA - Callon Other Other P Public ublic E -Publi &P T cra Ens &P a M& ctions A
Slide 21: Realizing Operating Cost Synergies
Realizing Operating Cost Synergies LOE ($/BOE) Workovers / Uptime / Lift Optimization (1) (2) (2) APA TX Delaware vs. CPE Permian Midland / Delaware Unplanned Downtime (%) Midland / Delaware Workover Expense ($/BOE) $10 10% $1.00 $8 $0.75 $6 5% $0.50 $4 $0.25 $2 0% $0.00 $0 Callon APA Callon APA Cal
Slide 22: APA + CPE: Sell Side Analysts See Significant Potential
APA + CPE: Sell Side Analysts See Significant Potential ⎻ Jefferies: “We believe the market is over-discounting APA’s capacity to add value to Callon’s acreage that has been historically overcapitalized.” ⎻ J.P. Morgan: “The ultimate success of this transaction could reflect ‘self help’ and APA’s ab
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