Callon Petroleum (CPE) Update - Nov 5
Posted: Fri Nov 05, 2021 2:05 pm
CPE is currently trading for ~$60.50. I have updated my forecast/valuation model, raising my valuation by $9 to $88/share.
The primary reason for my valuation increase is that I am now giving equal weight to 2021 and 2022 operating cash flow per share ($20.32 in 2021 and $23.68 in 2022).
> Callon has made a lot of progress this year on de-leveraging their balance sheet with solid FCF from operations and proceeds from non-core asset sales.
> My valuation multiple is only 4X annualized operating CFPS. If their 2022 guidance confirms my 2022 model assumptions, a multiple of 5X will be more appropriate, raising my valuation to $110/share. < Which compares to Stifel's 12-month price target of $102 that I posted here two days ago.
> Callon's year-end proved reserve report should be impressive.
> Thanks to the Primexx Acquistion, Q4 production should be up ~17,300 Boepd Q over Q.
For a company of this size (now approaching 120,000 Boepd of production), Callon has a low amount of Wall Street Gang coverage. Their Q3 results have drawn and should continue to draw more analysts' attention.
The primary reason for my valuation increase is that I am now giving equal weight to 2021 and 2022 operating cash flow per share ($20.32 in 2021 and $23.68 in 2022).
> Callon has made a lot of progress this year on de-leveraging their balance sheet with solid FCF from operations and proceeds from non-core asset sales.
> My valuation multiple is only 4X annualized operating CFPS. If their 2022 guidance confirms my 2022 model assumptions, a multiple of 5X will be more appropriate, raising my valuation to $110/share. < Which compares to Stifel's 12-month price target of $102 that I posted here two days ago.
> Callon's year-end proved reserve report should be impressive.
> Thanks to the Primexx Acquistion, Q4 production should be up ~17,300 Boepd Q over Q.
For a company of this size (now approaching 120,000 Boepd of production), Callon has a low amount of Wall Street Gang coverage. Their Q3 results have drawn and should continue to draw more analysts' attention.