Callon Petroleum (CPE) Valuation Update - May 6

[dan_s]

I have updated my forecast/valuation model for CPE based on their Q1 actual results and their proforma guidance for 2023 assuming the transactions announced on May 3 close in July.

CPE closed at $33.15 on May 5.

My undated valuation is reduced by $3 to $77/share, primarily due to the higher number of outstanding shares for 2023 and 2024. My valuation is based on 3.75 X annualized operating cash flow per share, which in my opinion is a conservative multiple for a company with this much running room in the Permian Basin (~1,500 high value development drilling locations).

Before you invest in CPE, I recommend that you carefully review the most recent slide presentations on their website.

Callon was the 2nd most profitable company in the Sweet 16 in 2022 (Vital Energy was #1) with net income per share of $19.63 and operating cash flow of $25.61. < TipRanks' current forecast for 2023 is $10.98 EPS and $21.78 CFPS (slightly higher than my forecast).

TipRanks: "In the last 3 months, 8 ranked analysts set 12-month price targets for CPE. The average price target among the analysts is $51.86." < Only two analysts have updated their price targets since the Company announced the significant transactions on May 3.

My updated forecast model will be posted to the EPG website this afternoon.

[dan_s]

Callon has switched from the Full Cost to the Successful Efforts method of accounting. This will lower reported net income, but have no impact on operating cash flow. It has no impact on how I value the company.

[Fraser921]

Callon deal and impact to VTLE valuation

https://open.substack.com/pub/bisoninterests/p/another-big-permian-oil-deal?utm_campaign=post&utm_medium=web