CPE.......short covering?

Post Reply
bobs
Posts: 221
Joined: Mon Apr 26, 2010 2:32 pm

CPE.......short covering?

Post by bobs »

This seems like the only logic for the huge move up.
dan_s
Posts: 35777
Joined: Fri Apr 23, 2010 8:22 am

Re: CPE.......short covering?

Post by dan_s »

Plus the oil price has more than doubled in a month and CPE produces over 65,000 barrels of oil per day.
CPE a large producer with over 100,000 Boepd and potential to produce a lot more. It is not a small upstream company. It is:
> Profitable
> Generates FREE CASH FLOW FROM OPERATIONS today
> Still trading at less than 2X operating cash flow per share, which compares to the Sweet 16 average of ~4X.

The Wall Street Gang viewed Callon's all-stock merger with Carrizo as a bad deal. Rising oil prices will make it a VERY GOOD DEAL. "Paradigm Shifts" like this cause big moves in stock prices.

You are correct that today the SHORTS are getting killed. Take a look at LONE.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 35777
Joined: Fri Apr 23, 2010 8:22 am

Re: CPE.......short covering?

Post by dan_s »

PLUS lots of cash that was sitting in money market accounts earning close to nothing is pouring back into the market and the grossly oversold energy sector funds might be getting a lot of it.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 35777
Joined: Fri Apr 23, 2010 8:22 am

Re: CPE.......short covering?

Post by dan_s »

One last thing which I have seem many times over the last two decades. When a company announces a major acquisition or a merger some of the Wall Street Gang will bad mouth the deal and the "herd" just follows their lead. They claim the company paid to much or the deal makes no strategic sense (without doing any detailed analysis of the assets acquired). This puts the company in the Wall Street "penalty box" for months or even a year until actual results prove the deal was good.
From Day 1 > I thought the Callon + Carrizo merger (two companies that I've followed for many years) made a lot of sense. If not for the Black Swan appearance of SARS-COV-2 showing up to crush oil prices, this company would be off to a great year. In my opinion, it is a "Screaming Buy" up to $3.00/share. If WTI does climb back to $60/bbl, this stock has a shot at $20.00.
Dan Steffens
Energy Prospectus Group
Post Reply