An updated profile for Callon Petroleum has been posted under the Small-Caps tab on the EPG website.
My current valuation of their common stock has increased to $20.00, which compares to First Call's price target of $18.73.
Callon Petroleum (CPE)
Callon Petroleum (CPE)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: Callon Petroleum (CPE)
Well positioned and managed. Firm should do well
Re: Callon Petroleum (CPE)
Nice acquisition announced today in Delaware basin. Things are really hopping again.
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: Callon Petroleum (CPE)
What is the stock offering priced at?
I see they announced the pricing to pay for the acquisition but could not find the details
I see they announced the pricing to pay for the acquisition but could not find the details
Re: Callon Petroleum (CPE)
Callon Petroleum Prices Upsized Offering of 40 Mln Shares; Acquires Oil, Gas Properties For $615 Mln
MIDNIGHT TRADER 5:30 AM ET 12/14/2016
06:30 AM EST, 12/14/2016 (MT Newswires) -- Callon Petroleum Company(CPE) said late Tuesday it has priced an upsized public offering of 40 million shares for total estimated gross proceeds of $656 million to help fund the acquisition of undeveloped acreage and producing oil and gas properties from American Resource Development for $615 million in cash.
The underwriters will have an option to purchase up to an additional 6 million shares of common stock from the company.
The acquisition includes approximately 27,552 gross surface acres, centered around a contiguous position in Ward County, Texas, with additional acreage in Pecos and Reeves Counties, Texas. The current net production of approximately 1,945 barrels of oil equivalent per day (71% oil) for the month of October 2016 based on information provided by the seller, including production from 20 gross operated.
Ameredev currently operates approximately 80% of net surface acreage and has an average working interest in operated properties of approximately 82%.
On a pro forma basis, assuming the closing of the acquisition, Callon's aggregate Permian Basin position will include approximately 55,500 net surface acres concentrated in four core operating areas within both the Midland and Delaware sub-Basins.
Callon said that if the Ameredev acquisition is not consummated, the company intends to use the net proceeds to fund a portion of its exploration and development activities and for general corporate purposes, which may include leasehold interest and property acquisitions, repayment of indebtedness and working capital.
Shares were down 4% in the pre-market session.
MIDNIGHT TRADER 5:30 AM ET 12/14/2016
06:30 AM EST, 12/14/2016 (MT Newswires) -- Callon Petroleum Company(CPE) said late Tuesday it has priced an upsized public offering of 40 million shares for total estimated gross proceeds of $656 million to help fund the acquisition of undeveloped acreage and producing oil and gas properties from American Resource Development for $615 million in cash.
The underwriters will have an option to purchase up to an additional 6 million shares of common stock from the company.
The acquisition includes approximately 27,552 gross surface acres, centered around a contiguous position in Ward County, Texas, with additional acreage in Pecos and Reeves Counties, Texas. The current net production of approximately 1,945 barrels of oil equivalent per day (71% oil) for the month of October 2016 based on information provided by the seller, including production from 20 gross operated.
Ameredev currently operates approximately 80% of net surface acreage and has an average working interest in operated properties of approximately 82%.
On a pro forma basis, assuming the closing of the acquisition, Callon's aggregate Permian Basin position will include approximately 55,500 net surface acres concentrated in four core operating areas within both the Midland and Delaware sub-Basins.
Callon said that if the Ameredev acquisition is not consummated, the company intends to use the net proceeds to fund a portion of its exploration and development activities and for general corporate purposes, which may include leasehold interest and property acquisitions, repayment of indebtedness and working capital.
Shares were down 4% in the pre-market session.
Re: Callon Petroleum (CPE)
New Delaware Basin acreage holds base inventory of 206 net wells and is producing 1.9 MBOEPD; 36% of drilling locations targeting 10,000 foot Wolfcamp laterals
Callon Petroleum Company (ticker: CPE) announced late Tuesday that the company will add 27,552 gross (16,098 net) acres in the Delaware Basin to its assets following the close of a $615 million acquisition from American Resource Development and its subsidiaries (Ameredev).
The acquisition includes 1.9 MBOEPD of flowing production (71% oil), a base inventory of 481 gross (206 net) horizontal drilling locations in the Wolfcamp A and B, and ownership in midstream assets including five salt water disposal wells and over 13 miles of gathering lines and gas lift return lines, Callon said in its press release.
The agreement also includes the potential for Callon to acquire an additional 1,006 net acres in Ward County, if such leasehold acquisitions are consummated prior to closing of the acquisition.
Ameredev currently operates approximately 80% of net surface acreage and has an average working interest in operated properties of approximately 82%. On a pro forma basis, assuming the closing of the acquisition, Callon’s aggregate Permian Basin position will include approximately 55,500 net surface acres concentrated in four core operating areas within both the Midland and Delaware sub-Basins.
“The position is well-suited for long lateral development and offers the potential for the development of multiple shale and sand intervals in the core of the Southern Delaware Basin’s over-pressured oil window,” said Callon Petroleum Chairman and CEO Fred Callon. The company believes drilling locations in the Wolfcamp A and B will average 7,500 lateral feet, with 36% of the inventory comprised of 10,000 foot laterals.
“We are looking forward to adding a fourth core operating area to our Permian portfolio and are currently planning to deploy an operated horizontal drilling rig to this acreage by mid-2017, in addition to our plans to be running four horizontal rigs in the Midland Basin by the end of 2017,” Callon continued, indicating that the company would deploy a fourth rig roughly three months earlier than previously anticipated.
Almost 90% of new inventory expected to generate 25%+ IRRs at $50 oil
With the acquisition adding roughly 480 delineated locations in the Wolfcamp A and B, Callon now has a delineated inventory of almost 1,600 locations, of which almost 90% are expected to generate 25%+ IRRs at $50 oil, a note from Johnson Rice & Company said Wednesday. Callon estimates that moving forward with its current drilling program, and holding its activity at five rigs after 2017, it now holds more than 20 years of delineated drilling inventory.
Backing out the flowing production and existing infrastructure, valued at $40,000 per flowing BOE and $18 million, respectively, the acreage cost an estimated $32,500 per acre, which is in-line with recent Delaware transactions. Applying the acreage cost to the delineated inventory suggests about $2.5 million of land cost per drilling location.
Given the deeper and over-pressured nature of the acreage, Callon Petroleum anticipates well costs of $7.1 million, higher than the roughly $5 million well cost on the company’s Midland acreage. The cost will be offset by higher EURs, however, with Callon projecting 1.6 MMBOE in the Lower Wolfcamp A, 1.0 MMBOE in the Upper Wolfcamp A and 0.9 MMBOE in the Wolfcamp B assuming 8 locations in each of the Wolfcamp A benches, and 6 locations in the Wolfcamp B.
Acquisition financed with $754.4 million equity offering
In conjunction with yesterday’s press release about the Ameredev acquisition, Callon also announced a common stock offering to fund the deal. The company’s initial offering was for 34 million shares of its common stock with the option to underwriters to purchase an additional 5.1 million shares, which the company quickly upsized to 40 million shares with an option for an additional 6 million shares. At a price of $16.40 per share, the offering with shoe would generate about $754.4 million gross to Callon.
In both the initial offering and the upsized offering, the company said that the proceeds from the deal would be used to fund the Ameredev acquisition, and the balance would be used for corporate purposes. If the deal does not close, Callon said it will use the net proceeds of the offering to fund a portion of its exploration and development activities and for general corporate purposes, which may include leasehold interest and property acquisition, repayment of debt and working capital.
Callon Petroleum Company (ticker: CPE) announced late Tuesday that the company will add 27,552 gross (16,098 net) acres in the Delaware Basin to its assets following the close of a $615 million acquisition from American Resource Development and its subsidiaries (Ameredev).
The acquisition includes 1.9 MBOEPD of flowing production (71% oil), a base inventory of 481 gross (206 net) horizontal drilling locations in the Wolfcamp A and B, and ownership in midstream assets including five salt water disposal wells and over 13 miles of gathering lines and gas lift return lines, Callon said in its press release.
The agreement also includes the potential for Callon to acquire an additional 1,006 net acres in Ward County, if such leasehold acquisitions are consummated prior to closing of the acquisition.
Ameredev currently operates approximately 80% of net surface acreage and has an average working interest in operated properties of approximately 82%. On a pro forma basis, assuming the closing of the acquisition, Callon’s aggregate Permian Basin position will include approximately 55,500 net surface acres concentrated in four core operating areas within both the Midland and Delaware sub-Basins.
“The position is well-suited for long lateral development and offers the potential for the development of multiple shale and sand intervals in the core of the Southern Delaware Basin’s over-pressured oil window,” said Callon Petroleum Chairman and CEO Fred Callon. The company believes drilling locations in the Wolfcamp A and B will average 7,500 lateral feet, with 36% of the inventory comprised of 10,000 foot laterals.
“We are looking forward to adding a fourth core operating area to our Permian portfolio and are currently planning to deploy an operated horizontal drilling rig to this acreage by mid-2017, in addition to our plans to be running four horizontal rigs in the Midland Basin by the end of 2017,” Callon continued, indicating that the company would deploy a fourth rig roughly three months earlier than previously anticipated.
Almost 90% of new inventory expected to generate 25%+ IRRs at $50 oil
With the acquisition adding roughly 480 delineated locations in the Wolfcamp A and B, Callon now has a delineated inventory of almost 1,600 locations, of which almost 90% are expected to generate 25%+ IRRs at $50 oil, a note from Johnson Rice & Company said Wednesday. Callon estimates that moving forward with its current drilling program, and holding its activity at five rigs after 2017, it now holds more than 20 years of delineated drilling inventory.
Backing out the flowing production and existing infrastructure, valued at $40,000 per flowing BOE and $18 million, respectively, the acreage cost an estimated $32,500 per acre, which is in-line with recent Delaware transactions. Applying the acreage cost to the delineated inventory suggests about $2.5 million of land cost per drilling location.
Given the deeper and over-pressured nature of the acreage, Callon Petroleum anticipates well costs of $7.1 million, higher than the roughly $5 million well cost on the company’s Midland acreage. The cost will be offset by higher EURs, however, with Callon projecting 1.6 MMBOE in the Lower Wolfcamp A, 1.0 MMBOE in the Upper Wolfcamp A and 0.9 MMBOE in the Wolfcamp B assuming 8 locations in each of the Wolfcamp A benches, and 6 locations in the Wolfcamp B.
Acquisition financed with $754.4 million equity offering
In conjunction with yesterday’s press release about the Ameredev acquisition, Callon also announced a common stock offering to fund the deal. The company’s initial offering was for 34 million shares of its common stock with the option to underwriters to purchase an additional 5.1 million shares, which the company quickly upsized to 40 million shares with an option for an additional 6 million shares. At a price of $16.40 per share, the offering with shoe would generate about $754.4 million gross to Callon.
In both the initial offering and the upsized offering, the company said that the proceeds from the deal would be used to fund the Ameredev acquisition, and the balance would be used for corporate purposes. If the deal does not close, Callon said it will use the net proceeds of the offering to fund a portion of its exploration and development activities and for general corporate purposes, which may include leasehold interest and property acquisition, repayment of debt and working capital.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Callon Petroleum (CPE)
New RBC research note just out...
December 15, 2016
Callon Petroleum Company
Delaware Deal Puts A Bow On Transformational 2016
Our view: Right-sized $615 mm acquisition establishes an optimal initial foothold in Delaware Basin; more than reasonable purchase price allows for ample value creation through the drillbit; equity deal keeps balance sheet strong; raising price target to $21 Key points: Checking off the Delaware from the holiday wish list. CPE agreed to purchase 27,552 gross (16,098 net) acres from Ameredev for $615 mm. The deal was funded by an issuance of 40 mm shares of common stock (25% of shares outstanding) for gross proceeds of $656 mm (6% discount to 12/13/16 close). The acreage is a contiguous position in Ward County (12,100 net acres) with solid offsetting results and additional acreage in Pecos/Reeves Counties (4,000 net acres). The purchased properties have current net production of 1,945 boe/d (71% oil) from 20 gross operated hz wells in the Wolfcamp and Bone Spring formations. This deal marks CPE's 3rd major transaction this year, pushing core acreage up 223% (56,249 net acres) and extending inventory life to 20+ years (5-rig pace). Finding the right-sized deal at the right price with ample opportunities to unlock additional value. We estimate the Ameredev transaction equates to ~$39,000/undeveloped acre in Ward County (PDP adjusted with lower valuation assigned to ~4,000 acres in Pecos), a slight discount to recent comparable Delaware transactions. Importantly, CPE was able to establish a new core area, which extends its runway for top-tier production growth into 2019 & beyond and in our view should help close the valuation gap (~2.0-3.0 turn EBITDAX multiple discount) to its Permian peers. We believe CPE's inventory assumption of 481 gross locations should prove conservative given that it ascribes no downspacing credit and limited multi-bench potential (no Bone Springs, WC C or Pecos County credit) despite successful early results from offset operators. Delaware catalysts already in queue. CPE has long studied the Delaware and its technical team has significant basin experience, moderating some execution risk in our view. CPE disclosed there are 2 wells in process (1 WC A/ 1 WC B) to be completed using a more robust frac design (2,000+ lbs/ ft, shorter stages, nanosurfactant) which will serve as CPE's base design in the play. We would expect results in 1Q17. CPE plans to bring an operated rig to the area in 3Q17, and will focus on drilling 2-3 well pads targeting the Upper and Lower Wolfcamp "A". Finally, CPE appears to have line of sight on additional bolt-on acreage opportunities in Ward. Acquisition was accretive to our NAV. Consequently, we are raising our PT by $2 to $21 (15% discount to $25 NAV). We see upside potential in the delineation of lesser drilled zones (Bone Springs, Wolfcamp "C") along with additional downspacing and improved results from enhanced completions.
December 15, 2016
Callon Petroleum Company
Delaware Deal Puts A Bow On Transformational 2016
Our view: Right-sized $615 mm acquisition establishes an optimal initial foothold in Delaware Basin; more than reasonable purchase price allows for ample value creation through the drillbit; equity deal keeps balance sheet strong; raising price target to $21 Key points: Checking off the Delaware from the holiday wish list. CPE agreed to purchase 27,552 gross (16,098 net) acres from Ameredev for $615 mm. The deal was funded by an issuance of 40 mm shares of common stock (25% of shares outstanding) for gross proceeds of $656 mm (6% discount to 12/13/16 close). The acreage is a contiguous position in Ward County (12,100 net acres) with solid offsetting results and additional acreage in Pecos/Reeves Counties (4,000 net acres). The purchased properties have current net production of 1,945 boe/d (71% oil) from 20 gross operated hz wells in the Wolfcamp and Bone Spring formations. This deal marks CPE's 3rd major transaction this year, pushing core acreage up 223% (56,249 net acres) and extending inventory life to 20+ years (5-rig pace). Finding the right-sized deal at the right price with ample opportunities to unlock additional value. We estimate the Ameredev transaction equates to ~$39,000/undeveloped acre in Ward County (PDP adjusted with lower valuation assigned to ~4,000 acres in Pecos), a slight discount to recent comparable Delaware transactions. Importantly, CPE was able to establish a new core area, which extends its runway for top-tier production growth into 2019 & beyond and in our view should help close the valuation gap (~2.0-3.0 turn EBITDAX multiple discount) to its Permian peers. We believe CPE's inventory assumption of 481 gross locations should prove conservative given that it ascribes no downspacing credit and limited multi-bench potential (no Bone Springs, WC C or Pecos County credit) despite successful early results from offset operators. Delaware catalysts already in queue. CPE has long studied the Delaware and its technical team has significant basin experience, moderating some execution risk in our view. CPE disclosed there are 2 wells in process (1 WC A/ 1 WC B) to be completed using a more robust frac design (2,000+ lbs/ ft, shorter stages, nanosurfactant) which will serve as CPE's base design in the play. We would expect results in 1Q17. CPE plans to bring an operated rig to the area in 3Q17, and will focus on drilling 2-3 well pads targeting the Upper and Lower Wolfcamp "A". Finally, CPE appears to have line of sight on additional bolt-on acreage opportunities in Ward. Acquisition was accretive to our NAV. Consequently, we are raising our PT by $2 to $21 (15% discount to $25 NAV). We see upside potential in the delineation of lesser drilled zones (Bone Springs, Wolfcamp "C") along with additional downspacing and improved results from enhanced completions.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group