Callon's Q4 Result

[dan_s]

On 2/27/2018, CPE reported actual 4Q 2017 adjusted EPS/EBITDA of $0.15/$88.9 million beating the consensus estimates of $0.14//$77.8 million. The outperformance was primarily due to higher than expected revenues and lower than expected lease operating expense and lower than expected production taxes.

Actual 4Q 2017 production of 26,511 BOE per day had been previously released, as well as capital expenditures for 2018 in the range of $500 million to $540 million and CPE’s guidance of 2018 production growth of approximately 30% to 40%.

During 4Q 2017, over 50% of the wells placed on production were from the WildHorse area with an average completed lateral length of approximately 7,300 feet. This area is projected to comprise in excess of 30% of total gross drilling activity in 2018. Completed lateral lengths are projected to average over 8,000 feet and the majority of activity will continue to focus predominantly on the development of the Wolfcamp A.

In the Monarch area, CPE placed six wells on production during 4Q 2017. Activity in this area continues to focus on the Lower Spraberry. The three-well Kendra pad, with average completed lateral lengths of approximately 10,350, has produced over 236,000 BOE (87% oil) over the first 90 days online. CPE also commenced production of its first multi-well pad that utilized recycled flow back water volumes and plans to increase recycling activity in Monarch with upcoming wells. Other 2018 activity plans for Monarch will feature two separate "mega-pad" concepts incorporating simultaneous development of two contiguous three well pads.
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I am traveling today. I will update my forecast/valuation model on Friday.

[dan_s]

Callon's cash flow from operations came in about $9 million higher than my forecast because their realized oil and gas prices (including cash settlements on hedges) were higher than my forecast. Plus, LOE was $2 million lower.

Most upstream companies down today because of lower oil prices.