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Why Is Callon (CPE) Up 10.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Callon Petroleum (CPE - Free Report) . Shares have added about 10.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Callon due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Callon Q2 Earnings Miss Estimates, Revenues Beat

Callon reported second-quarter adjusted earnings of $3.68 per share, missing the Zacks Consensus Estimate of $4. However, the bottom line surged from the earnings of $1.49 per share reported a year ago.

Operating revenues of $913.6 million beat the Zacks Consensus Estimate of $687 million. The top line increased from the year-ago quarter’s $440.4 million.

Lower-than-expected quarterly earnings were driven by higher lease operating expenses. The negatives were partially offset by higher production and commodity price realizations.

Production

In the second quarter, CPE’s net production volumes averaged 100,685 barrels of oil equivalent per day (Boe/d), up from the year-ago period’s 88,981 Boe/d. Production volumes increased in the Permian Basin, while the same in Eagle Ford declined from the year-ago quarter. Of the total second-quarter production, 61% was oil.

Callon’s oil production for the quarter was 5,589 thousand barrels (MBbls), up from the year-ago level of 5,102 MBbls. Natural gas production increased to 10,312 million cubic feet (MMcf) from 8,883 MMcf in the second quarter of 2021. Also, natural gas liquids (NGLs) production for the quarter under review was recorded at 1,854 MBbls, up from the year-ago figure of 1,515 MBbls.

Price Realizations (Without the Impacts of Cash-Settled Derivatives)

The average realized price per barrel of oil equivalent was $82.98. The figure increased from the year-ago quarter’s $48.68 a barrel. The average realized price for oil was $110.90 per barrel compared with $65.36 a year ago. Meanwhile, the average realized price for natural gas was $6.29 per thousand cubic feet, up from $2.71 in the prior-year quarter. The average realized price per barrel for NGLs was $40.74, higher than the year-ago level of $24.17.

Total Expenses

Callon’s total operating expenses of $416.8 million increased from the year-ago level of $231.9 million.

Total lease operating costs increased to $72.9 million from the year-ago level of $46.5 million. Also, the company’s per-unit lease operating expenses increased to $7.96 per barrel of oil equivalent (Boe) for the reported quarter from $5.74 a year ago.

Capital Expenditure & Balance Sheet

The capital expenditure for the reported quarter was $212.5 million. Callon generated adjusted free cash flow of $125.6 million, up from $6.9 million a year ago.

As of Jun 30, 2022, the company’s total cash and cash equivalents amounted to $6.1 million, increasing from $4.2 million at the first-quarter end. The long-term debt totaled $2,516.3 million, down from $2,623.3 million in the previous quarter. It had a total debt to capitalization of 52.7%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Callon has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Callon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Callon belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Gulfport Energy (GPOR - Free Report) , has gained 11.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.

Gulfport reported revenues of $465.33 million in the last reported quarter, representing a year-over-year change of


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