Callon Petroleum (CPE) Update - Nov 19

[dan_s]

Note from John White at Roth Capital 11-19-2018

Our valuation is based on a net asset value (NAV) analysis which produced $16.65 per share which we rounded lower to $16.50, which is our target price.

We have adjusted our 4Q 2018 oil and gas prices as follows: WTI crude oil: from $69.00/bbl to $65.00/bbl, Henry Hub natural gas: from $3.00/MMBtu to $3.38/MMBtu. Our 4Q 2018 production estimate increases slightly to 40,146 BOE per day versus our previous 38,206 BOE per day, in line with recent guidance. Our updated 4Q 2018 EPS/CFPS/EBITDA of $0.27/$0.52/$122.5 million are in line with our previous of $0.27/$0.54/$118 million. < Compares to my Q4 estimates of $0.23 EPS and $0.53 CFPS.

We have also adjusted our 2019 oil and gas price estimates, as follows: WTI crude oil lower, from $70.50/bbl to $62.50/bbl and Henry Hub natural gas slightly higher, from $2.95/MMBtu to $3.00/MMBtu.

Despite our lower 2019 oil and gas price deck, our target price of $16.50 remains unchanged due to CPE’s low operating cost structure and our outlook for continuing production increases.