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Callon Petroleum (CPE) Strengthens Focus on Debt Reduction
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Callon Petroleum Company has provided strong free cash flow generation plan during its presentation at the J.P. Morgan 2021 Energy, Power and Renewables Conference. The company’s disciplined approach is expected to help it deliver strong margins, with improvement in drilling and completion activities.
Callon Petroleum’s assets are located in oil-rich Delaware and Midland Basin as well as Eagle Ford Shale. It has a total of around 180,000 net acres in these three major regions, which is likely to enable the company generate massive cash flows in the coming days. Over the next three years, it anticipates to generate cumulative adjusted free cash flow in the range of $500-$800 million, assuming oil price level at the $50 per barrel level. The WTI crude benchmark is currently hovering above $70 per barrel, creating huge upside potential for the company.
Importantly, apart from boosting organic free cash flow generation, the company is using other opportunities to deleverage the balance sheet. It intends to monetize its assets to reduce debt burden. With increased commodity prices, the company can generate more value from non-core assets. As of Mar 31, 2021, its total cash and cash equivalents amounted to only $24.4 million, while long-term debt totaled $2,937.2 million. It had a total debt to capitalization of 79.3%, significantly higher than the industry average of 39.6%. Hence, the company’s immense focus on debt reduction is a major positive.
Its ESG initiatives are also commendable. It is getting rid of diesel generators from oilfields through electrification, which will reduce emission from the production process. Moreover, it is enhancing its gas gathering options to reduce flaring risk. It intends to eliminate total routine gas flaring by 2025. Peers like Centennial Resource Development, Inc. , ConocoPhillips (COP - Free Report) and EOG Resources, Inc. (EOG - Free Report) have similar targets. By 2025, Callon Petroleum expects to reduce GHG emissions intensity by 40-50% from pro-forma 2019 levels.
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Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
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Callon Petroleum (CPE) Strengthens Focus on Debt Reduction
Callon Petroleum Company has provided strong free cash flow generation plan during its presentation at the J.P. Morgan 2021 Energy, Power and Renewables Conference. The company’s disciplined approach is expected to help it deliver strong margins, with improvement in drilling and completion activities.
Callon Petroleum’s assets are located in oil-rich Delaware and Midland Basin as well as Eagle Ford Shale. It has a total of around 180,000 net acres in these three major regions, which is likely to enable the company generate massive cash flows in the coming days. Over the next three years, it anticipates to generate cumulative adjusted free cash flow in the range of $500-$800 million, assuming oil price level at the $50 per barrel level. The WTI crude benchmark is currently hovering above $70 per barrel, creating huge upside potential for the company.
Importantly, apart from boosting organic free cash flow generation, the company is using other opportunities to deleverage the balance sheet. It intends to monetize its assets to reduce debt burden. With increased commodity prices, the company can generate more value from non-core assets. As of Mar 31, 2021, its total cash and cash equivalents amounted to only $24.4 million, while long-term debt totaled $2,937.2 million. It had a total debt to capitalization of 79.3%, significantly higher than the industry average of 39.6%. Hence, the company’s immense focus on debt reduction is a major positive.
Its ESG initiatives are also commendable. It is getting rid of diesel generators from oilfields through electrification, which will reduce emission from the production process. Moreover, it is enhancing its gas gathering options to reduce flaring risk. It intends to eliminate total routine gas flaring by 2025. Peers like Centennial Resource Development, Inc. , ConocoPhillips (COP - Free Report) and EOG Resources, Inc. (EOG - Free Report) have similar targets. By 2025, Callon Petroleum expects to reduce GHG emissions intensity by 40-50% from pro-forma 2019 levels.
Price Performance & Zacks Rank
The stock has gained 63.6% in the past three months compared with 30.7% rise of the industry it belongs to. Currently, it has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>