NATCHEZ, Miss., Sept. 4, 2018 /PRNewswire/ -- Callon Petroleum Company (CPE) ("Callon" or the "Company") today announced that its wholly owned subsidiary, Callon Petroleum Operating Company, closed on its previously announced acquisition of oil and natural gas assets in the southern Delaware Basin from Cimarex Energy Co. for total cash consideration of approximately $538.6 million, including customary purchase price adjustments and the deposit paid upon signing, on August 31, 2018. The acquisition includes approximately 28,000 net surface acres primarily adjacent to Callon's Spur operating area in Ward County. In addition to the closing of this acquisition, Callon provided an update to its full year 2018 guidance to reflect the revised full year outlook.
Key highlights include:
Raised the midpoint of annual 2018 production guidance by 1,500 BOE/d as the result of solid year-to-date performance in the Spur area and the impact of production from the acquisition
Reiterated production target of over 40,000 BOE/d for 4Q18
Raised the midpoint of net operated horizontal wells placed on production by 9% due to incremental activity on the acquired properties, realized drilling and completion efficiencies, and a sustained increase in non-operated activities on both legacy and acquired properties
Reduced full year 2018 LOE guidance by 4% as incremental benefits from strategic infrastructure investments are realized
Joe Gatto, President and Chief Executive Officer, commented, "We are excited to get to work on our new combined Spur footprint, and have already started the completion of a previously drilled Lower Wolfcamp A well and commenced drilling of an additional well on the acquired acreage. As previously discussed, this strategic "bolt-on" acquisition is highly contiguous to our legacy footprint and will offer significant advantages from extended lateral lengths and shared infrastructure. Our team has done a great job of preparing for the transition since the transaction announcement in May, and we expect to have a seamless integration into our Spur operations."
Callon Petroleum (CPE) Update - Sept 4
Callon Petroleum (CPE) Update - Sept 4
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Callon Petroleum (CPE) Update - Sept 4
Comments below are from Tudor Pickering Holt. TPH rates CPE a BUY with a $23/share price target.
"The company yesterday announced the closing of the XEC Delaware acquisition and provided updated production / capex guidance for 2018. FY'18 oil production guidance raised +3.5% at the midpoint to 24.5mbpd which splits TPHe 24.8 / Street 24.3 while Q4'18 production target reiterated at >40mboepd vs. TPHe 41.2 / Street 38.7. Total FY'18 capex increased +7% at the midpoint to $625MM (D&C $545MM) which compares to TPHe $590MM / Street $653MM, as the company is adding +4 net wells to the program on the back of incremental activity on the acquired property, efficiency gains, and non-op activity. Operationally, CPE is in the process of completing a Lower WolfCamp A well drilled by the previous operator and has spud its first well on the acquired acreage. We continue to like the name in the medium / longer term given attractive valuation and leverage to the upcoming Permian basis recovery in late 2019, and see limited risk in the interim as the company has flow assurance and is covered on ~35% of Mid-Cush basis in H1'19 at $5.76/bbl."
XEC = Cimarex Energy
In the last 3 months, 7 ranked analysts set 12-month price targets for CPE. The average price target among the analysts is $17.43.
I have updated my forecast/valuation model and my valuation increases by $0.70 to $17.00/share.
If Callon reaches a 2018 exit rate of more than 42,000 Boepd (75% crude oil), then my valuation will go up quite bit. TPH's price target of $23/share is reasonable if Permian Basin oil prices rebound and move back to WTI.
"The company yesterday announced the closing of the XEC Delaware acquisition and provided updated production / capex guidance for 2018. FY'18 oil production guidance raised +3.5% at the midpoint to 24.5mbpd which splits TPHe 24.8 / Street 24.3 while Q4'18 production target reiterated at >40mboepd vs. TPHe 41.2 / Street 38.7. Total FY'18 capex increased +7% at the midpoint to $625MM (D&C $545MM) which compares to TPHe $590MM / Street $653MM, as the company is adding +4 net wells to the program on the back of incremental activity on the acquired property, efficiency gains, and non-op activity. Operationally, CPE is in the process of completing a Lower WolfCamp A well drilled by the previous operator and has spud its first well on the acquired acreage. We continue to like the name in the medium / longer term given attractive valuation and leverage to the upcoming Permian basis recovery in late 2019, and see limited risk in the interim as the company has flow assurance and is covered on ~35% of Mid-Cush basis in H1'19 at $5.76/bbl."
XEC = Cimarex Energy
In the last 3 months, 7 ranked analysts set 12-month price targets for CPE. The average price target among the analysts is $17.43.
I have updated my forecast/valuation model and my valuation increases by $0.70 to $17.00/share.
If Callon reaches a 2018 exit rate of more than 42,000 Boepd (75% crude oil), then my valuation will go up quite bit. TPH's price target of $23/share is reasonable if Permian Basin oil prices rebound and move back to WTI.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group