Callon Petroleum (CPE) Update - Feb 10

[dan_s]

CPE has moved above my valuation of $21.00 on heavy trading volume. This is not a reason to sell it.

Why:
> My valuation is likely to go a lot higher after they release Q4 2020 results.
> The oil prices used in all of my forecast/valuation models will be going up. For Q1 and Q2 2021 I have been using $45 and $50 for WTI.
> The multiple of operating cash flow used to value CPE is 1.25 X annualized operating cash flow per share for 2020 to 2022. If Callon's guidance for 2021 confirms my production assumptions for this year and they promise to fund all capex with operating cash flow, then the multiple used to value the stock should double.

What's happening today is a short covering rally fueled by the short realizing the oil prices are going a lot higher and Callon's debt is no longer the problem it was when WTI was under $40/bbl.

[llm_cfp]

Cpe is on the reddit list to squeeze

[dan_s]

Does that mean they are advising their readers to short CPE?

If so, I would advise against it. If WTI averages $52.50/bbl in 2021, Callon should generate over $16 of operating cash flow per share and a price target of at least 3X CFPS is reasonable.

[llm_cfp]

No they are advising to buy and hold and squeeze the price up like gme

[dan_s]

It has worked.