Callon Petroleum (CPE) Update - June 14

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Note from John White at Roth Capital on 6/14/2019

Our valuation is based on a net asset value (NAV) analysis which produced $12.26 per share which we rounded lower to $12.00, which is our target price.

CPE: Non-Core Asset Sale Closes; Adjusting Estimates

We are adjusting our estimates for the closing of the previously announced non-core asset sale and the resulting updated guidance. Our estimates move lower and our target price moves slightly lower primarily due to our lower crude oil price deck, partially offset by lower debt levels and lower capex due to an improvement in operations efficiencies.

Due to the asset sale, 2019 production guidance is modestly lower, with a new mid-point of 38,750 BOE per day from a range of 38,000 BOE per day to 39,500 BOE per day from the previous mid-point of 40,500 BOE per day from a range of 39,500 BOR per day to 41,500 BOE per day. The guide on oil cut moves positively slightly higher, from and range of 77% to 78% to a range 78% to 79%. Guidance for all other cash flow items remains unchanged.

Capex guidance for facilities, equipment, seismic and land but excluding capitalized expenses is being reduced by 1% while maintaining a completed well count of 47 to 49 wells. This is due to improvements in operations efficiencies. The previous capex guidance did not include any activity of the assets divested.

Our 2Q 2019 EPS/CFPS/EBITDA estimates decrease from $0.23/$0.53/$124.4 million to $0.22/$0.49/$115.1 million. Our target price moves somewhat lower, from $13.50 to $12.00, primarily due to our lower crude oil price deck, partially offset by lower debt levels and lower capex due to an improvement in operations efficiencies.

Intraday: $6.08 at 12:23pm AM ET, 6/14/19