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What's in Store for Callon Petroleum's (CPE) Q2 Earnings?

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Callon Petroleum Company (CPE - Free Report) is scheduled to report second-quarter 2020 results on Aug 4, after the closing bell.

In the last reported quarter, the exploration and production company’s adjusted earnings of 12 cents per share missed the Zacks Consensus Estimate of 15 cents due to lower natural gas and oil price realizations, coupled with higher operating expenses. This was, however, partially offset by expanded production volumes. The firm beat earnings estimates thrice and missed once in the trailing four quarters, delivering an average positive surprise of 14.3%.

Callon Petroleum Company Price and EPS Surprise

Callon Petroleum Company Price and EPS Surprise

Callon Petroleum Company price-eps-surprise | Callon Petroleum Company Quote

Let’s see how things have shaped up for this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter loss per share of 1 cent has witnessed one upward movement and four downward revisions in the past 30 days. This estimate is indicative of a 104.4% decrease from the year-ago reported figure.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $201.5 million, suggesting an increase of 20.6% from the year-ago reported figure.

Factors to Note

Its focus on exploration and production of oil and gas resources in the Permian Basin is expected to reflect on Callon Petroleum’s second-quarter results. Permian has three major sub basins — Midland Basin, Delaware Basin and Central Basin Platform. Of these, the company has strong footprint in the Midland and Delaware Basins, which are likely to have supported second-quarter production. Moreover, the acquisition of Carrizo — which was closed last December — is expected to have led to a year-over-year surge in production.

The Zacks Consensus Estimate for average daily production volumes is pegged at 104,842 barrels of oil equivalent per day (Boe/d), indicating a significant rise from the year ago period’s 40,516 Boe/d. The same for natural gas output is pegged at 10,622 million cubic feet (MMcf), pointing to a rise from the year-ago quarter’s 5,031 MMcf. Moreover, the Zacks Consensus Estimate for crude oil production volumes is pegged at 6,004 thousand barrels (MBbls), implying an increase from the year-ago period’s 2,848 MBbls.

The Zacks Consensus Estimate for average sales price for oil (before hedging) is pegged at $35.94 per barrel, which indicates a decrease from the year-ago period’s $56.44. Also, the consensus estimate for average natural gas sales price of $1.02 cents per Mcf suggests a decrease from the second-quarter 2019 level of $1.26. These lower commodity price realizations are expected to have offset the gains from higher production. 

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Callon Petroleum this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is -140.00%. This is because the Most Accurate Estimate of a loss of 2 cents is wider than the Zacks Consensus Estimate of a loss of a penny. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Callon Petroleum currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Canadian Natural Resources Limited (CNQ - Free Report) has an Earnings ESP of +6.48% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation (RRC - Free Report) has an Earnings ESP of +2.61% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Aug 3.

Bonanza Creek Energy, Inc. (BCEI - Free Report) has an Earnings ESP of +13.66% and holds a Zacks Rank #1. It is set to report second-quarter results on Aug 6.

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