HOUSTON, Nov. 14, 2019 /PRNewswire/ -- Callon Petroleum
Company (NYSE: CPE) and Carrizo Oil & Gas, Inc. (NASDAQ: CRZO)
today announced an amendment to the existing terms of their
agreement for Callon to acquire Carrizo in an all-stock
transaction.
Under the amended terms, Carrizo shareholders will receive 1.75
shares of Callon common stock for each share of Carrizo common
stock they own. With the amended exchange ratio, Callon
shareholders will own approximately 58% of the combined company and
Carrizo shareholders will own approximately 42% on a fully diluted
basis. Based on the closing prices of Callon and Carrizo common
shares on the pre-announcement date of July
12, 2019, the amended exchange ratio represents a premium of
6.7% to Carrizo shareholders.
Joe Gatto, President and Chief
Executive Officer of Callon, said, "Since announcing the
transaction, we have had extensive and valued dialogue with our
shareholders, who have expressed support for the industrial logic
and strategic merits of this transaction. In recognition of
evolving investor expectations for a successful combination in the
current environment, we have agreed to revised terms with Carrizo
that enable value-creation opportunities for both shareholder
bases."
Mr. Gatto continued, "Our strategy remains unaltered: we are
creating a leading oil and gas company with a larger cash flow base
to employ more efficient scaled development of our pro-forma
Permian Basin position of over 100,000 net acres. With
increased size and scale driving achievable synergies, the combined
company will benefit from a leading cost of supply on an 'all-in'
corporate basis and be well positioned to deliver durable
free cash flow generation through commodity price volatility.
The combination accelerates Callon's stated strategy to increase
returns, generate free cash flow, reduce leverage, and maintain a
long-term focus while also enhancing optionality in the evolving
industry landscape. We will continue to work closely with Carrizo
to successfully complete the transaction and deliver to our
shareholders the significant benefits we believe this combination
provides."
S.P. "Chip" Johnson, IV, President and Chief Executive Officer
of Carrizo, commented, "We continue to be very excited to join
forces with Callon and believe, in light of today's market
environment, the revised terms offer compelling near- and long-term
value for Carrizo shareholders. We believe that a combination with
Callon creates the most value for our shareholders. Under the
revised terms of the merger, Carrizo shareholders will have
meaningful participation in the upside of a strong company that
reflects current investor priorities, and benefits from the
enhanced operational efficiencies needed to be a low-cost producer
in today's dynamic pricing environment. We look forward to closing
the transaction and realizing our potential as a combined
company."
Additional Details about the Transaction
The Boards of Directors of both Callon and Carrizo have
unanimously reaffirmed their support for the transaction as
modified by the amendment to the merger agreement. In
addition, each of the Carrizo directors remains committed to vote
his or her shares in favor of the transaction.
The amendment to the merger agreement adjusts the Carrizo
termination fee to $20 million in
certain circumstances, including in some instances in which a
competing transaction for Carrizo has been proposed. The amendment
also eliminates Carrizo's obligation to reimburse Callon's expenses
if Carrizo's shareholders do not approve the transaction and
increases the amount of Carrizo's expenses that Callon would
reimburse by $2.5 million if
Callon's shareholders do not approve the transaction.
Callon and Carrizo intend to file supplemental proxy materials
with the Securities and Exchange Commission in the coming days. The
companies continue to expect to close the transaction during the
fourth quarter of 2019, subject to the approval of shareholders of
both companies.
Callon Special Meeting of Shareholders
In addition to the amendment to the merger agreement, Callon
announced that its Board of Directors has approved the following
revisions to the proposals before the Special Meeting of
Shareholders:
- Lowered the authorized share request in the charter amendment
proposal to 525 million shares from 750 million shares. With
approval of this proposal, Callon will have the lowest ratio of
authorized shares relative to outstanding shares among its peer
group1 upon the closing of the merger while maintaining
appropriate flexibility in its capital structure.
- To remove any potential for confusion or uncertainty with our
shareholders, we have eliminated the double-trigger compensation
that would be payable to Callon executive officers in the event of
a merger-related termination of employment. As a result, the
non-binding advisory vote on executive compensation will be removed
from the proxy ballot for the Special Meeting of Shareholders.
Callon also announced its intention to convene and immediately
adjourn the Special Meeting of Shareholders on November 14, 2019, to continue soliciting proxies
from Callon shareholders. Callon intends to reconvene the Special
Meeting on December 13, 2019, and
readjourn until December 20, 2019, at
9:00 a.m. CT.
The Callon Board reiterates its belief that approving the
Carrizo transaction is in the best interests of all Callon
shareholders and urges all shareholders to vote FOR the proposals
set forth in the proxy materials.
Carrizo Special Meeting of Shareholders
Carrizo announced that it will convene and immediately adjourn
its Special Meeting of Shareholders on November 14, 2019, to allow Carrizo shareholders
time to consider the revised terms of the merger and to allow
Carrizo to solicit new proxies from Carrizo shareholders. Carrizo
intends to reconvene its Special Meeting on December 20, 2019, at 9:00
a.m. CT.
The Carrizo Board recommends that Carrizo's common shareholders
vote FOR the merger agreement as well as all other proposals set
forth in the proxy materials.
Callon Proxy Information
If you have any questions, need assistance in completing the
proxy card, or need additional copies of the proxy materials,
please call the firm assisting Callon with the solicitation of
proxies:
INNISFREE M&A INCORPORATED
TOLL-FREE at +1 (888) 750-5834 (From the U.S. or Canada)
Carrizo Proxy Information
If you have any questions, need assistance in completing the
proxy card, or need additional copies of the proxy materials,
please call the firm assisting Carrizo with the solicitation of
proxies:
MACKENZIE PARTNERS, INC.
TOLL-FREE at (800) 322-2885
About Callon
Callon is an independent energy company focused on the
acquisition and development of unconventional onshore oil and
natural gas reserves in the Permian Basin in West Texas. This news release is posted on
Callon's website at www.callon.com, and will be archived for
subsequent review under the "News" link on the top of the
homepage.
About Carrizo
Carrizo Oil & Gas, Inc. is a Houston-based energy
company actively engaged in the exploration, development, and
production of oil and gas from resource plays located in the
United States. Our current
operations are principally focused on proven, producing oil and gas
plays in the Eagle Ford Shale in South Texas and the
Permian Basin in West Texas.
No Offer or Solicitation
Communications herein do not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the proposed transaction or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. Communications herein do
not constitute a notice of redemption with respect to or an offer
to purchase or sell (or the solicitation of an offer to purchase or
sell) any preferred stock of Carrizo Oil & Gas, Inc.
Additional Information and Where to Find It
In connection with the proposed transaction, Callon has filed,
and the Securities and Exchange Commission (the "SEC") has declared
effective, a registration statement on Form S-4 (the "Registration
Statement"), which contains a joint proxy statement of Callon and
Carrizo that also constitutes a prospectus of Callon. This
communication is not a substitute for the joint proxy
statement/prospectus or the Registration Statement or for any other
document that Callon or Carrizo may file with the SEC and/or send
to Callon's shareholders and/or Carrizo's shareholders in
connection with the proposed transaction. INVESTORS AND SECURITY
HOLDERS OF CALLON AND CARRIZO ARE URGED TO READ THE REGISTRATION
STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS, AS EACH MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT
DOCUMENTS FILED BY CALLON AND CARRIZO WITH THE SEC CAREFULLY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT CALLON, CARRIZO AND THE PROPOSED TRANSACTION.
Investors will be able to obtain free copies of the Registration
Statement and joint proxy statement/prospectus, as each may be
amended from time to time, and other relevant documents filed by
Callon and Carrizo with the SEC (when they become available)
through the website maintained by the SEC at www.sec.gov. Copies of
documents filed with the SEC by Callon will be available free of
charge from Callon's website at www.callon.com under the
"Investors" tab or by contacting Callon's Investor Relations
Department at (281) 589-5200 or IR@callon.com. Copies of documents
filed with the SEC by Carrizo will be available free of charge from
Carrizo's website at www.carrizo.com under the "Investor Relations"
tab or by contacting Carrizo's Investor Relations Department at
(713) 328-1055 or IR@carrizo.com.
Participants in the Proxy Solicitation
Callon, Carrizo and their respective directors and certain of
their executive officers and other members of management and
employees may be deemed, under SEC rules, to be participants in the
solicitation of proxies from Callon's shareholders and Carrizo's
shareholders in connection with the proposed transaction.
Information regarding the executive officers and directors of
Callon is included in its definitive proxy statement for its 2019
annual meeting filed with the SEC on March
27, 2019. Information regarding the executive officers and
directors of Carrizo is included in its definitive proxy statement
for its 2019 annual meeting filed with the SEC on April 2, 2019. Additional information regarding
the persons who may be deemed participants and their direct and
indirect interests, by security holdings or otherwise, will be set
forth in the Registration Statement and joint proxy
statement/prospectus and other materials when they are filed with
the SEC in connection with the proposed transaction. Free copies of
these documents may be obtained as described in the paragraphs
above.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this communication concerning the proposed
transaction, including any statements regarding the expected
timetable for reconvening shareholder meetings and completing
the proposed transaction, the results, effects, benefits and
synergies of the proposed transaction, future opportunities for the
combined company, future financial performance and condition,
guidance and any other statements regarding Callon's or Carrizo's
future expectations, beliefs, plans, objectives, financial
conditions, assumptions or future events or performance that are
not historical facts are "forward-looking" statements based on
assumptions currently believed to be valid. Forward-looking
statements are all statements other than statements of historical
facts. The words "anticipate," "believe," "ensure," "expect," "if,"
"intend," "estimate," "probable," "project," "forecasts,"
"predict," "outlook," "aim," "will," "could," "should," "would,"
"potential," "may," "might," "anticipate," "likely" "plan,"
"positioned," "strategy," and similar expressions or other words of
similar meaning, and the negatives thereof, are intended to
identify forward-looking statements. The forward-looking statements
are intended to be subject to the safe harbor provided by Section
27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform
Act of 1995. These forward-looking statements involve significant
risks and uncertainties that could cause actual results to differ
materially from those anticipated, including, but not limited to,
failure to obtain the required votes of Callon's shareholders or
Carrizo's shareholders to approve the transaction and related
matters; whether any redemption of Carrizo's preferred stock will
be necessary or will occur prior to the closing of the transaction;
the risk that a condition to closing of the proposed transaction
may not be satisfied, that either party may terminate the merger
agreement or that the closing of the proposed transaction might be
delayed or not occur at all; potential adverse reactions or changes
to business or employee relationships, including those resulting
from the announcement of the revised transaction or completion of
the transaction; the diversion of management time on
transaction-related issues; the ultimate timing, outcome and
results of integrating the operations of Callon and Carrizo; the
effects of the business combination of Callon and Carrizo,
including the combined company's future financial condition,
results of operations, strategy and plans; the ability of the
combined company to realize anticipated synergies in the timeframe
expected or at all; changes in capital markets and the ability of
the combined company to finance operations in the manner expected;
regulatory approval of the transaction; the effects of commodity
prices; and the risks of oil and gas activities. Expectations
regarding business outlook, including changes in revenue, pricing,
capital expenditures, cash flow generation, strategies for our
operations, oil and natural gas market conditions, legal, economic
and regulatory conditions, and environmental matters are only
forecasts regarding these matters.
Additional factors that could cause results to differ materially
from those described above can be found in Callon's Annual Report
on Form 10-K for the year ended December 31,
2018 and in its subsequent Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2019,
the quarter ended June 30, 2019, and
the quarter ended September 30, 2019,
each of which is on file with the SEC and available from Callon's
website at www.callon.com under the "Investors" tab, and in other
documents Callon files with the SEC, and in Carrizo's Annual Report
on Form 10-K for the year ended December 31,
2018 and in its subsequent Quarterly Reports on Form 10-Q
for the quarter ended March 31, 2019,
the quarter ended June 30, 2019, and
the quarter ended September 30, 2019,
each of which is on file with the SEC and available from Carrizo's
website at www.carrizo.com under the "Investor Relations" tab, and
in other documents Carrizo files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither Callon nor Carrizo assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Contact for Callon
Mark
Brewer
Director of Investor Relations
or
Kate Schilling
Investor Relations
Callon Petroleum Company
ir@callon.com
(281) 589-5200
Contact for Carrizo
Jeffrey P.
Hayden, CFA
Vice President - Financial Planning and Analysis
(713) 328-1044
or
Kim Pinyopusarerk
Manager - Investor Relations
(713) 358-6430
1 Relative to the companies in Callon's 2019 annual
meeting proxy peer group.
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SOURCE Callon Petroleum Company
