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Callon (CPE) Stock Dips 16% Despite Reporting Q1 Earnings Beat

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Callon Petroleum Company’s (CPE - Free Report) shares have declined more than 16% despite reporting strong earnings for the first quarter of 2022.

The downward stock movement can be attributed to a huge debt burden and the year-over-year increase in lease operating expenses.

Q1 Results

Callon reported first-quarter adjusted earnings of $3.43 per share, beating the Zacks Consensus Estimate of $3.28. The bottom line significantly rose from earnings of $1.49 per share a year ago.

Operating revenues of $777.2 million beat the Zacks Consensus Estimate of $578 million. The top line also increased from the year-ago quarter’s $359.9 million.

The strong quarterly results were backed by increased production volumes and higher commodity price realizations.

Callon Petroleum Company Price, Consensus and EPS Surprise

 

Callon Petroleum Company Price, Consensus and EPS Surprise

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

Production

In the first quarter, Callon’s net production volumes averaged 102,655 barrels of oil equivalent per day (Boe/d), up from the year-ago period’s 80,957 Boe/d. Production volumes increased in the Permian Basin, while the same in Eagle Ford declined from the year-ago quarter. Of the total first-quarter production, 63% was oil.

Callon’s oil production for the quarter was 5,846 thousand barrels (MBbls), up from the year-ago level of 4,681 MBbls. Natural gas production increased to 10,115 million cubic feet (MMcf) from 7,835 MMcf in first-quarter 2021. Also, natural gas liquids (NGLs) production for the quarter under review was recorded at 1,707 MBbls, up from the year-ago figure of 1,299 MBbls.

Price Realizations (Without Impacts of Cash-Settled Derivatives)

The average realized price per barrel of oil equivalent was $71.97. The figure increased from the year-ago quarter’s $44.01 a barrel. The average realized price for oil was $94.64 per barrel compared with $57.05 a year ago. Meanwhile, the average realized price for natural gas was $4.35 per thousand cubic feet, up from $3.09 in the prior-year quarter. The average realized price per barrel for NGLs was $39.61, higher than the year-ago level of $22.60.

Total Expenses

Callon’s total operating expenses of $357.9 million increased from the year-ago level of $205.6 million.

Total lease operating costs increased to $67.3 million from the year-ago level of $40.5 million. Also, the company’s per-unit lease operating expenses increased to $7.29 per Boe for the reported quarter from $5.55 a year ago.

Capital Expenditure & Balance Sheet

Capital expenditure for the reported quarter was $201.5 million. Callon generated an adjusted free cash flow of $183.3 million, up from $24.2 million a year ago.

As of Mar 31, 2022, the company’s total cash and cash equivalents amounted to $4.2 million, declining from $9.9 million at the fourth-quarter end. Long-term debt totaled $2,623.3 million, down from $2,694.1 million in the previous quarter. It had a total debt to capitalization of 57.8%.

Outlook

For 2022, Callon reiterated its total production guidance at 101-105 thousand barrels of oil equivalent per day (MBoe/d). Of the total, 64% will likely be crude oil.

The company projects the operational capital budget for the year at $725 million, of which 85% will be allocated to the Permian Basin.

For the second quarter, the company expects to produce 100-102 MBoe/d, of which 64% will likely be oil. Callon projects an operational capital spending of $225-$240 million on an accrual basis. Moreover, it expects to generate an adjusted free cash flow of more than $150 million in the second quarter.

Zacks Rank

Callon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Releases

Continental Resources, Inc.  reported first-quarter 2022 adjusted earnings of $2.65 per share, beating the Zacks Consensus Estimate of $2.41. The strong quarterly earnings can be attributed to higher oil-equivalent production volumes and commodity price realizations.

Continental’s board of directors announced a quarterly dividend payment of 28 cents per share, a 21.7% increase from 23 cents paid out in the previous quarter. The amount will be paid out on May 23, 2022, to stockholders of record as of May 9, 2022.

Occidental Petroleum Corporation (OXY - Free Report) reported first-quarter 2022 earnings of $2.12 per share, beating the Zacks Consensus Estimate of $1.97 by 7.6%. Earnings improved year over year due to an increase in operating efficiencies and commodity prices.

As of Mar 31, 2022, OXY had long-term debt (net of current portion) of $25,865 million compared with $29,431 million in the prior quarter. The decrease in the debt level was due to the effective management of debt since the acquisition of Anadarko. Occidental generated $3.3 billion in free cash flow in the first quarter and repaid debts worth $3.3 billion, further strengthening the balance sheet.

RPC Inc. (RES - Free Report) reported adjusted earnings of 7 cents per share for the first quarter, in line with the Zacks Consensus Estimate. The in-line quarterly earnings were backed by higher activity levels in all the service lines and improved pricing.

As of Mar 31, RPC had cash and cash equivalents of $73.2 million, down sequentially from $82.4 million. Nonetheless, the company managed to maintain a debt-free balance sheet.


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