Callon Petroleum (CPE)

[dan_s]

I will be adding Callow Petroleum to the Sweet 16. Year-over-year production growth of 50% to 60% for both 2017 and 2018. Four core areas in the Permian Basin with lots of running room in all four.

CPE is trading at a much lower multiple of operating cash flow per share compared to the other Permian Basin companies.

Canaccord Genuity valuation is $22.00/share
Credit Suisse valuation is $20.00/share

[davidc257]

Which company did it replace?

[dan_s]

I'm going to take a hard look at CRZO, ESTE, LPI, MTDR and SN this week. They all deserve consideration for the Sweet 16. After I decide which ones deserve "promotion", I will then decide which ones get moved back.

SM Energy (SM), because of asset sales, will have declining production for a few quarters. So, it will be moved down to the Small-Cap Growth Portfolio. I expect it to report a sharp increase in production from Q3 to Q4 this year.

Noble Energy (NBL) also expects production to decline from Q4 to Q1 before rising into year-end.

After SM and NBL it is hard to justify moving any of the other companies out. You may think Gulfport Energy (GPOR) deserves to be "demoted" but it is going to report stunning production growth this year (over 40%). GPOR is grossly oversold.

EOG is closest to my valuation, but it is a "Core of the Core Holding", so it stays in.