Callon Petroleum (CPE) Update - May 4

[dan_s]

Back at my desk today, updating the Sweet 16 forecast/valuation models for companies that have released Q1 results.

The forecast models for AR, RRC and PE have already been updated and posted to the EPG website.
Note that I am now assuming WTI oil price of $65/bbl for all future periods, adjusted for regional differences and each company's hedges. For natural gas, I am now assuming $2.75/mcf for HH gas in 2018 and $2.50/mcf in 2019. For NGL's the future prices are more of a SWAG based on each company's mix.

Callon Petroleum

I am increasing my valuation for CPE to $18.00/share, which compares to First Call's price target of $16.69. I checked and none of the forecasts submitted to Reuters for inclusion in the FC price target have been updated since the company released Q1 results.

Callon's production was up slightly from Q4 to Q1 (26,567 Boepd), but production growth should accelerate going forward to an exit rate of ~36,000 Boepd (77% crude oil).

Note that Callon does not break out natural gas from NGL's, so their realized gas price ($3.89/mcfe in Q1) may seem a bit high to you.

The forecast model for CPE should be up on the EPG website later today.