Callon Petroleum (CPE) Update - Jan 6

[dan_s]

I have updated my forecast/valuation model for CPE. It will be posted to the EPG website this afternoon.

CPE is trading for $3.10 this morning. First Call's price target is $7.21.

Callon closed the all-stock merger with Carrizo on December 20, 2019. Since I have been following both companies for over five years, I have a HIGH degree of confidence in my Pro Forma forecast model for "New Callon". Mergers of this size cause Wall Street analysts to be extremely conservative with their forecasts and price targets. Q1 2020 will be the first full quarter post-merger.

I'm expecting Callon's year-end reserve report to show a net asset value (NAV) based solely on proven reserves (P1) of $8.00 to $10.00 per share. Since it was an all-stock merger, the balance sheet is in good shape.

> ~60% of 2020 oil production is hedged at more than $55/bbl WTI and their Eagle Ford oil sells into the LLS market at a premium to WTI.
> At closing, Callon's production was approximately 107,000 Boepd. Q1 2020 production should be ~114,000 Boepd (~70% crude oil).