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Callon Petroleum Company (CPE)

NYSE - Nasdaq Real-time price. Currency in USD
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43.06+2.38 (+5.85%)
At close: 04:00PM EDT
44.60 +1.54 (+3.58%)
Pre-market: 06:52AM EDT
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  • H
    Hi
    SPR below the 500 million barrels mark for the first time since 1986.

    "I did that"

    -JB
  • S
    Sabi
    On Jun 08, Argus Research raised its target price on CPE from 77 to $82. On Jun 22 (just 14 days later), Argus lowered CPE's target to $50. So what happened in that 2 wk stretch that so inspired an Argus analyst to completely 180 on Callon? And was the downgrade reasoned?

    Only 4 things happened during the month of June, so let’s begin with the 2 items that didn't matter. Kimmerage sold 6.5m shares, but that was on June 1st (a wk before the Argus $88 upgrade). And then Blackstone filed a 13D announcing its newly acquired covered calls (tied to about 1/4 of its CPE position). Which again means nothing-to-see-there.

    So that leaves just 2 other items (the economy and CPE's new Note). The oil mkt hasn't changed all that much (it's still playing catch-up - and most prob will through year-end). And even if we do see a recession, there's a very good chance that oil will remain above $85/bbl (which means CPE's still money). That leaves the Note that CPE issued. It wasn't a great deal (you can read my previous posts on that) and it means that Callon still needs to reign-in its spending. But there was also an upside, that CPE's balance sheet finally had the muscle to float unsecured and strictly asset based.

    So if nothing much happened, why then did Argus flip flop its CPE target (to the extreme) and in a matter of just 2 wks? Analysts usually begin their careers in small caps (esp the ones that don't have much visibility), and when things turn rocky, it's easy to get lost (and even spooked) by all the mkt clatter - at least that's one explanation.

    Argus clearly made a mistake here, because otherwise it would never have so dramatically changed directions. I hope that investors realize they can submit complaints against Argus for this type of irresponsibility (it's also class-actionable). Kinda ticks me off, cause so many retail investors really rely on these analyses. So, for targets to change so radically from one week to the next shows little respect for the investors who most rely on them. Analysts (esp for better known companies) have inside access that retail investors simply do not. So, they become the eyes and ears for the market - and that demands some accountability.
  • M
    Meigs
    Predictions for close? A repeat of Friday or an increase to a new base? Thumbs up for increase to a new base. Thumbs down for a repeat of Friday.
  • M
    Mark
    Nigeria Says OPEC+ Has Little Spare Oil Production Capacity
    • ‘Even Saudi Arabia’ is running out of room to produce more
    • Sad that Nigeria didn’t fulfill quota: Minister Timipre Sylva

    The OPEC+ alliance of oil producers is running out of capacity to pump more crude, including its biggest member Saudi Arabia, according to Nigeria’s petroleum minister.

    “Some people believe the prices to be a little bit on the high side and expect us to pump a little bit more but at this moment there is really little additional capacity,” said Nigeria’s Minister of State for Petroleum Resources Timipre Sylva in a briefing with reporters Friday. “Even Saudi Arabia, Russia, of course Russia, is out of the market now

    Bloomberg June 25, 2022, 2:07 AM GMT+10

    $TGA $LPI
  • P
    Petroleum Economist
    I do not know which market forces are driving down the Callon share price over the last two weeks by 25-30%. The same applies to virtually every other oil and gas company in the US. Therefore, there is no reason to look for a specific reason in the fundamentals of Callon. Callon was and is a very attractive oil and gas investment which deserves a two to threefold higher share price.
    ,
    REASON FOR DECLINE OF CALLON SHARE PRICE
    The decline of 25-30% over the last two weeks looks very artificial. Share price variations of different companies over the day are all very similar and almost synchronized to the minute. Such similarity is statistically impossible.
    If the decline is caused by hedge funds wanting to reduce their short losses during Q2, then I hope it is over by 1st July and that thereafter we can return to normal business.
    There are no economic reasons for the Callon share price to decline.

    RESERVES REPLACEMENT RATIO (RRR)
    Reserves wise Callon performed excellent in 2021. Callon not only managed to replace but also to expand its proved reserves in 2021. This gives a good feeling for production in the years to come.

    In 2021 Callon added 45,536 K BoE to its reserves, which combined with its 2021 annual production of 38,894 K BoE yields a RRR on the total production of 1.31. Any RRR number above 1.0 is good and a 1.31 is excellent. The oil RRR was a bit lower (1.04) and the natural gas RRR (1.35) was a bit higher than the average, indicating that Callon slowly is becoming a bit gassier company.

    YEARS OF PRODUCTION AT CURRENT LEVELS
    With proved reserves at the end of 2021 of 488,621 K BoE Callon, can maintain its 2021 production levels for a period of 13 years. A period of 13 years is exceptional and is way higher than the industry average of 7-9 years. Callon does not need acquisitions to grow its production.

    CONCLUSIONS
    Reserves replacement and potential for production growth for Callon are excellent. No acquisitions are required

    Like every other company Callon has its strengths and its weaknesses. However, the strengths (high free cash flow, excellent dividends ($ 7.50-9.00) and high dividend yield (12-16%) in 2023, solid Reserves Replacement Ratio (RRR) and potential for growth far outweigh the weaknesses of the current mediocre solvability (to be restored by 2023) and the poorly performing oil hedge positions in 2021-2022 (albeit most likely partially caused by conditions from lenders). However, no reason to make a similar mistake for 2023.

    Callon remains economically the best investment opportunity in the US oil and gas industry.

    Proviso: I am not unbiased. Based on above I am still holding about 12% of my investments in Callon.
  • H
    Harry Ballz
    Which Gladiator is it today?
  • G
    Gladiator
    Shorts making a ton. I always ride CPE to $63 then go short. Works every time. CEO Gatto loves shorts. And shorts love Gatto. Best CEO of 2022. CPE most predictable stock on the market.
  • S
    Sabi
    Callon's 1/2 billion bbls in proven reserves makes it an extremely valuable company. However, oil companies aren't allowed to include their reserves in their balance sheets. Although there are ways to account for those reserves, most of them are expense side, which tends to negatively impact financials. This is probably one reason why oil usually commands lower PE ratios (and it doesn't help that book valuations therefore make little sense. Add to that, the boom-and-bust cycle (and that the industry has been the absolute worst performer over past 10 years) and it's no wonder why wall street has been so cautious these past few months.

    But what if inflation finds its balance without the Fed having to exact such extreme measures? What if the global economy doesn't end up declining as precipitously as some have been forecasting? Friday's rally was exactly about those very questions. It also means that oil and gas might not take as big a hit as some had been prognosticating. In this case, Callon, which has been investing a lot more than other small oil companies, might find itself in a very comfortable position (able to capitalize on its vast holdings and even buy new properties). Yes, Callon's mgt team takes home over 2x comparables, but they also take much bigger risks - so who knows, maybe they're actually worth it.
  • H
    Harry Ballz
    The G-7 will be placing a price cap on Russian oil only, not the entire oil market as some have said here.
  • J
    Jerry
    "Pioneer CEO: Oil will likely stay above $100/bbl for 5-plus years"

    pxd ceo and cvx ceo are the best 2 in O&G filed imo. even he is wong, say oil avg 80 in the next 5 years, cpe will be worth much more than today...

    https://www.ogj.com/general-interest/companies/article/14278628/pioneer-ceo-oil-should-stay-above-100bbl-for-5plus-years
  • J
    Jerry
    guys, under the cashflow section.. if u expand it, they have an expenditure called " purchase of PPE" , could someone tell me what the PPE is? or. how can they spend 500mil on personal protective equipment in the past 12 months...
  • G
    Grateful
    $PFHC conversation
    There's a lot of talk about re-fracking old wells. It seems like that will be great for PFHC.
    $RIG $BORR $CPE
  • B
    Brian122712
    So EIA data is going to be delayed again this week. Seems like the Bidumb admin is behind this keeping the data from being released to lower oil prices as long as possible knowing as soon as the reports are released oil will go back over $120. Its smelling like a conspiracy
  • D
    Drew C.
    CPE now at its low for 2022, despite WTI oil being $105.56/barrel.
  • J
    John
    Per Rueters liz Hampton yesterday regarding refracking, many shale oil producers are returning to old wells to produce at a fraction of the cost of new wells... ok I think we all knew that but here's the punchline "Brandon is calling on producers to spend more profits on production" but producers are reluctant to invest more because Greedy investors pressure the firms to focus on returns... Now Brandon is blaming investors
  • H
    Harry Ballz
    Gladiator, what happened to all your posts? Did Yahoo TOS lock up your account so you had to start over with a new one?
  • M
    Mickey
    $CDEV conversation
    EIA report not being released due to system issue on a week like this? Highly sus..
    $LPI $CPE
  • G
    GeoThug
    Activity In Tropics Emerges As Next Big Hurricane Could Send Gas Prices To "Apocalyptic" Levels

    Sorry, Team Brandon, you can try to bribe the Saudis, but you can't bribe a hurricane..........
  • D
    DD
    appears that the flow is going back to energy sector.
  • G
    Grateful
    If CPE had the same PE as XOM it would be $125 a share right now.