APA buying CPE

[Cliff_N]

From Petroleum Economist on CPE Yahoo Finance Discussion Board:

Petr. Economist
6 hours ago

I think Callon was short changed in the acquisition by Apache. Looking at some of the Callon and Apache numbers I see the following:

· Callon adds 104-106 K BoE/d (= 26%) to the Apache production (416 K BoE/d)),

· Callon adds 492 M BoE (= 55%) to the Apache proven reserves (890 M BoE).

· Callon adds $ 3,861 M (= 89%) to the Apache equity ($ 4,292 M). This is assuming no impairments

Callon receives 70 M shares (= 23%) on top of 381 M Apache shares.

The Callon contributions to production (26%), proven reserves (55%) and equity (89%) outweigh the 23% additional shares.

There are other factors than displayed above which determine the value of a company, but it appears that Callon has been shortchanged in the acquisition and should deserve a higher exchange ratio.

I think APA shareholders will see the value of CPE and that APA and CPE share prices will go up in the next few days.

[aja57]

Thanks for that post, Cliff. The "urgency" of CPE BOD/officers to sell trumps shareholder interest. Same as PXD. Why should anyone be surprised? Boys need their golden parachutes.

[ChuckGeb]

CPE’s stock has gone nowhere in the last three years and I can’t say APA has done well either. Recent research piece by Paul Sankey shows that the larger the company the higher the multiple.in that it is a all stock transaction based on relative price maybe the pie will get much bigger than the value of the two pieces and it is a win win.i think APA has some good things going especially with Surinamethat likely doesn’t begin producing before 2029. This fills a cash flow gap in the interim for them.

[farrell90]

I agree .A simple way to look at the relative value of CPE's acquisition is to compare the PE ratios of the 2 companies.

CPE's PE is 4.16 and APA is 6.6.....A 37% difference

APA should be able to deliver a much higher rate of return; both profit and cash flow on the assets added from CPE.

I used todays PE ratios which are not completely accurate since they have changed from the time of the acquisition.

As a CPE shareholder I am delighted to trade my CPE shares to APA for a better financial return.

Farrell