Callon Petroleum (CPE) Q1 Results - May 4

[dan_s]

HOUSTON, May 4, 2022 /PRNewswire/ -- Callon Petroleum Company (NYSE: CPE) ("Callon" or the "Company") today reported results of operations for the three months ended March 31, 2022.

Presentation slides accompanying this earnings release are available on the Company's website at www.callon.com located on the "Presentations" page within the Investors section of the site.

First Quarter 2022 and Recent Highlights

Delivered production of approximately 102.7 MBoe/d (63% oil) in the first quarter of 2022 < Beat my production forecast of 101,500 Boepd (63% oil).

Placed two co-development projects on production in the Delaware South area with performance exceeding expectations

Increased drilled, uncompleted well count to 42 wells at quarter end

Generated net cash provided by operating activities of $281.3 million and adjusted free cash flow of $183.3 million

Reported net income of $39.7 million, or $0.64 per diluted share, adjusted EBITDA of $393.7 million, and adjusted income of $212.7 million, or $3.43 per diluted share < Adjusted Net Income compares to my forecast of $201.6 million.

Reduced lease operating expense and gathering, processing & transportation expense on a sequential basis by $6.2 million and $1.3 million, respectively

Achieved an operating margin of $58.35 per Boe, including oil price realizations of over 100% of WTI benchmark

Reduced trailing twelve-month net debt-to-adjusted EBITDA to 1.97x, calculated pursuant to our credit facility, driven by strong operating margins and absolute debt reduction during the quarter

"Callon delivered another outstanding quarter as our results reflected both strong Permian well performance and increased overall capital and operating efficiency," said Joe Gatto, President and Chief Executive Officer. "We took several steps this quarter to help set the stage for future production growth and sustained free cash flow generation, including the build-out of a DUC inventory on our newly acquired Delaware South acreage to accommodate a more efficient scaled development model going forward. Our initial projects in this area implementing our scaled development model and completion designs are performing above expectations, and future activity in Delaware South will be an important contributor to our targeted 10% oil production growth by the fourth quarter of this year.

"We are pleased with the rapid transformation of our balance sheet that has been the product of disciplined capital allocation and leading cash margins. Our leverage ratio was below 2.0x at the end of the first quarter and we expect that metric to approach 1.0x by year-end 2022 providing improved optionality for capital allocation, including a program of capital returns that accompany further debt reduction and re-investment in a deep inventory of low-breakeven projects," concluded Mr. Gatto.
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Everything looks good. They still have work to do on the balance sheet, but FCF should be north of $800 million. My pre-release valuation of CPE was $108/share and I see nothing here to reduce that. I will update my model and valuation tomorrow.