Callon Petroleum (CPE) Q4 Results - Feb 26

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Callon Petroleum (CPE) Q4 Results - Feb 26

Post by dan_s »

Note that Callon's 4th quarter results include Carrizo after the closing date of December 20.

Fourth Quarter 2019 Highlights

Fourth quarter 2019 production of 46.6 Mboe/d (75% oil), an increase of 14% over fourth quarter 2018 volumes and a sequential increase of 23%

Realized loss available to common stockholders of $23.5 million, or ($0.09) per diluted share, and adjusted net income of $56.8 million or $0.23 per diluted share < Adjusted Net Income compares to my forecast of $45.6 million, $0.20/share.

Generated $137.6 million of cash from operating activities, exceeding cash used in investing activities for operational capital additions of $105.8 million

Sustained strong operating margins of $37.74 per Boe

Built an inventory of drilled, uncompleted wells to support larger scale development in the Delaware Basin

Joe Gatto, President and Chief Executive Officer commented, "2019 was a transformational year and a significant step forward for Callon. We executed multiple strategic initiatives while delivering on our capital development plan with improved efficiency and lower costs. The acquisition of Carrizo has transformed Callon into a more robust entity with the capacity to execute a model of scaled development to drive lower free cash flow break-even costs and sustain growth in a low oil price environment. We generated free cash flow on both a stand-alone and pro forma basis in the fourth quarter, setting the stage for us to deliver free cash flow generation at $50/Bbl in 2020. Our transition to larger projects featuring multi-zone co-development across the the Permian asset base is reflected in our 2020 capital program. Given the capital synergies and overall efficiency we will capture from this development model, our 2020 capital program is more than $100 million below our pro forma 2019 capital spending levels."

He continued, "I am very pleased by the progress that the organization has made in both integrating the combined activity plans ahead of schedule and driving our operational capital synergy targets higher than initially estimated. We now anticipate total year-one synergies from corporate cost and operational capital items to be over $80 million, excluding the impact of improved uptime from a program with less offsetting completion downtime. We remain steadfast in our long-term value focus in our life of field development philosophy, employing resource development concepts and a pace of activity that will keep us on a path to sustainable free cash flow growth from repeatable investments in our high quality asset base."

I have updated my forecast/valuation for CPE and it will be posted to the EPG website this evening. Callon provided detailed line-by-line guidance so it was fairly easy. Stifel's price target was $8.30 prior to the Q4 press release. My valuation is slightly higher.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Callon Petroleum (CPE) Q4 Results - Feb 26

Post by dan_s »

Stifel's take 2/27/2020

Callon Petroleum Company (CPE, $2.23, Buy; Target $8.30)
Expect positive stock reaction on better-than-expected 2020 guide - Derrick Whitfield

We view the release as positive. The positives include: i) a strong Q419 total equivalent and oil production beat, ii) a capital-efficient 2020 guide (oil production 0.8% below consensus, capex 5.3% below consensus) with a FCF break-even below $50/bbl (one year ahead of schedule), iii) impressive DC&E cost improvements (on par with or below Diamondback Energy) and iv) CPE increased 2020 transaction synergies from $70mm to $80mm. The negatives include: i) higher-than-expected Q419 capex (5.9% above consensus) and ii) lower-than-expected Q120 total guidance (6.7% below consensus). We caution investors to note the Q220 total equivalent production of 114.6 mboepd at the midpoint (5.2% above consensus). Net-net, the capital-efficient 2020 guide and operational updates should more than offset weaker-than-expected Q120 guidance.
Dan Steffens
Energy Prospectus Group
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