Callon Petroleum Co. said April 16 it now plans to propose a reverse stock split after was notified by the New York Stock Exchange (NYSE) notified of noncompliance with continued listing standards.

The Houston-based shale producer said it received formal notice from the NYSE on April 10 that its stock’s average trading price over a 30-day period was below the required $1 per share. Callon now has a six-month grace period to pull up the stock price.

In addition to dealing with the current economic and operating environment, Callon is still digesting its multibillion-dollar acquisition of Carrizo Oil & Gas, which boosted its footprint in the Permian Basin as well as added a position in the Eagle Ford Shale. The all-stock transaction, valued at $2.7 billion when including the assumption of $1.96 billion of net debt and preferred stock, closed in December. 

“While we weren’t the biggest fans of the [Carrizo] transaction, the deal has proven to be both a blessing and a curse as the Eagle Ford provides shorter-cycle opportunities to reallocate capital away from the Delaware, but the resulting debt wall may prove difficult to manage in this commodity price environment,” analysts with Tudor, Pickering, Holt & Co. (TPH) wrote in a research note in March.

According to TPH, Callon has $650 million bonds maturing in 2023. Beyond this, the company has $600 million due 2024, $250 million due 2025 and $400 million due 2026 along with about $1.3 billion drawn on the revolver maturing year-end 2024.

Following the unprecedented collapse in oil prices last month, Callon announced plans on March 17 to reduce its capex for 2020 by more than 25% with plans to spend between $700 million to $725 million.

On April 16, the company said it has since taken additional steps to further reduce planned spending for the year. These include voluntary reductions in compensation by all of Callon’s directors and officers.

In a statement in the company release, Joe Gatto, Callon’s president and CEO, commented: “During a very turbulent first quarter, our team has remained focused and has quickly pivoted our program to allow for greater flexibility while ramping down activity to match the needs of this commodity environment. ... Management and the board’s top priority is emerging from this volatile period with a robust business that is prepared to take advantage of an improving economic environment.”

Callon intends to put forth a proposal for a reverse stock split in connection with its annual meeting of shareholders.

Onshore