Callon Petroleum (CPE) Update - March 19

[dan_s]

I just finished my review of the Callon profile update. It will be posted to the EPG website late today.

My valuation remains at $57/share, but there is upside to that number since my valuation is based on fairly conservative commodity prices and I believe that Callon will complete a dozen more wells this summer if oil prices stay over $60/bbl. As Callon keeps paying down their debt, more analysts will raise their price targets.

Callon's low share count leads to big moves in the share price. For a company of this size, 40 million shares of common stock is quite small.

[dan_s]

In the email we sent out this morning there is a typo. The first bullet point should say to ignore the large "reported" loss by Callon in 2020, which was caused by non-cash impairment charges of $2,547.2 million and non-cash mark-to-market losses on their hedges of $126.6 million.

Based on my forecast model, Callon should generate Adjusted Net Income of $316 million in 2021, $7.90/share. First Call's EPS estimate for 2021 is $5.58.