Callon Petroleum (CPE) Q3 Results - Nov 4
Posted: Thu Nov 04, 2021 3:27 pm
Stifel's take
Callon Petroleum (CPE, $53.19, Buy; Target $102.00)
Delivers a strong quarter as capital efficiencies continue to surprise to the upside - Derrick Whitfield < Super smart energy sector analyst
We view this release as positive. The positives include: i) a solid adjusted EBTIDAX beat (10.5% above consensus) driven by higher than expected realizations and impressive decreases to cash costs (18.0% below Stifel) due to continued efficiencies, ii) a slight total equivalent and oil production beat (0.9% above and 0.7% above consensus, respectively) on lower than expected capex (2.1% below consensus), iii) initial well results from recently completed wells on acquired Delaware acreage that are performing better than management's expectations, and iv) line of sight to substantial FCF generation that will be used to accelerate deleveraging efforts.
If we stretch, the only negative was implied Q421 capex is 4.9% above consensus while Q421 oil is 0.5% below consensus, assuming the mid-point of previously announced guidance. Net-net, strong capital efficiency continues to surprise to the upside and paves the way to substantial FCF generation to accelerate deleveraging efforts.
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CPE is up over 300% YTD and still has a lot of upside for us.
I will update my forecast/valuation model for CPE on Saturday.
Callon Petroleum (CPE, $53.19, Buy; Target $102.00)
Delivers a strong quarter as capital efficiencies continue to surprise to the upside - Derrick Whitfield < Super smart energy sector analyst
We view this release as positive. The positives include: i) a solid adjusted EBTIDAX beat (10.5% above consensus) driven by higher than expected realizations and impressive decreases to cash costs (18.0% below Stifel) due to continued efficiencies, ii) a slight total equivalent and oil production beat (0.9% above and 0.7% above consensus, respectively) on lower than expected capex (2.1% below consensus), iii) initial well results from recently completed wells on acquired Delaware acreage that are performing better than management's expectations, and iv) line of sight to substantial FCF generation that will be used to accelerate deleveraging efforts.
If we stretch, the only negative was implied Q421 capex is 4.9% above consensus while Q421 oil is 0.5% below consensus, assuming the mid-point of previously announced guidance. Net-net, strong capital efficiency continues to surprise to the upside and paves the way to substantial FCF generation to accelerate deleveraging efforts.
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CPE is up over 300% YTD and still has a lot of upside for us.
I will update my forecast/valuation model for CPE on Saturday.