Callon has established an operational capital expenditure budget of $430.0 million for 2021 with approximately 80% of spending directed towards drilling, completion and equipment expenditures. The reduction of approximately $60 million from 2020 levels reflects a decrease in the number of drilled wells as well as a full year of achieved capital synergies. Roughly 70% of this development capital will be spent on Permian activity with the remaining balance allocated to the Eagle Ford. Permian development activity will predominantly feature co-development of the Wolfcamp A and B in the Delaware and the Lower Spraberry and Wolfcamp A in the Midland. The Eagle Ford program remains focused solely on the primary target zone, the Lower Eagle Ford Shale, as technical evaluation continues on Austin Chalk potential for future delineation. In total, the Company expects to drill 55 to 65 gross wells and complete 90 to 100 gross wells.

The company's scaled development plan for 2021 will continue to employ their life of field development philosophy and benefit from a balanced capital deployment strategy. Callon entered the year with a robust backlog of drilled uncompleted wells ("DUCs"), after drilling over 90 wells in 2020, which will allow the company to complete approximately 55 wells in the first half of the year. Although at a reduced number from year end 2020, Callon now plan to maintain a meaningful DUC inventory heading into 2022 to provide operational flexibility to execute across a range of development planning scenarios. The capital expenditures associated with this higher DUC inventory contributed to the majority of the approximate $30 million increase relative to the previous 2021 capital estimates, in addition to selective project size increases to improve capital efficiency and resource recovery. These schedule refinements will position Callon for an improved production trajectory in the medium term, adhering to the company's reinvestment rate parameters, to increase free cash flow generation potential.

The 2021 capital plan leverages the structural savings and operational efficiencies achieved during 2020 from shared best practices following the integration of Callon and Carrizo. Callon's ability to reduce the average well cost by more than 35% on a lateral foot basis since 2019 has yielded significant improvements in capital efficiency. Lower capital costs paired with an improved operating cost structure and moderated development program are expected to provide a foundation of durable free cash flow generated by a program that optimizes recoverable value while avoiding over-capitalization of the resource base.

Capital Expenditures

For the year ended December 31, 2020, Callon incurred $488.6 million in operational capital expenditures on an accrual basis as compared to $515.1 million in 2019. For the three months ended December 31, 2020, the Company incurred $87.5 million in operational capital expenditures on an accrual basis, which represented a $49.1 million increase from the third quarter of 2020.