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Callon (CPE) Expands Notes Offering to Fund Delaware Buyout

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Callon Petroleum Company recently announced the upsizing of a senior notes offering. The principal amount of the senior unsecured notes has been bumped up from $300 million to $400 million. The notes offering, which has been priced recently, will likely conclude on Jun 7.

The notes are being offered to a few private investors. The upstream energy player will likely utilize a part of the proceeds from the offering to finance part of the Delaware Basin asset acquisition from Cimarex Energy Co . The funds are also likely to be used to pay off the loan taken under a senior secured revolving credit account. The balance is expected to be spent on normal corporate activities.

On May 24, Callon signed an accord with Cimarex to purchase the upstream assets for a cash consideration of $570 million. The transaction will probably conclude on or before Sep 10. If the deal fails, net proceeds from the notes offering will be allocated for financing part of the company’s oil and gas exploration and production operations and also for normal corporate work and preferred stock redemption.

Headquartered in Natchez, MS, Callon is a leading oil and natural gas explorer with prime focus on the Permian Basin.

Meanwhile, the stock price chart of the company fails to make a statement. Over the past year, the stock has gained 2%, underperforming the industry’s 12.4% growth.

Callon currently carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

A few better-ranked players in the energy sector are BP plc (BP - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BP managed to beat the Zacks Consensus Estimate in three of the last four quarters.

Occidental Petroleum is expected to record earnings growth of 333.7% in 2018.

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