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Callon Petroleum (CPE) Q2 Earnings In Line, Output Surges

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Callon Petroleum Company (CPE - Free Report) reported second-quarter 2018 adjusted earnings of 23 cents per share, in line with the Zacks Consensus Estimate. Moreover, the bottom line improved from the year-ago quarter’s 16 cents.

Operating revenues of $137.1 million beat the Zacks Consensus Estimate of $133 million and also surged from $82.3 million in the year-ago quarter.

Higher oil-equivalent production and increased realized oil price backed the second-quarter results.

Callon Petroleum Company Price, Consensus and EPS Surprise


Callon Petroleum Company Price, Consensus and EPS Surprise | Callon Petroleum Company Quote


Net production volumes averaged almost 29 thousand barrels of oil equivalent per day (MBoe/d) in the quarter compared with 22.2 MBoe/d in the year-ago period. Of the total production in the second quarter, 76% was oil and the rest natural gas. However, portion of oil in the production mix was lower than 79% in second-quarter 2017.

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

The average realized price received per barrel of oil equivalent was $52.02. The figure was much higher than the year-ago quarter’s $40.71 per barrel. Average realized price for oil was $61.46 per barrel compared with $45.67 in the year-ago period. Moreover, average realized price for natural gas came in at $3.77 per thousand cubic feet (Mcf), higher than second-quarter 2017’s $3.69 per Mcf.


Total operating expenses in the quarter came in at $69.7 million, higher than the year-ago quarter’s $58.5 million. General and administrative expenses increased to $8.3 million from $6.4 million in the second quarter of 2017.

However, lease operating costs per barrel of oil equivalent declined to $4.99 from $5.56 in the year-ago period.

Capital Expenditure & Balance Sheet

Capital expenditure in the reported quarter was $187 million, higher than the year-ago period’s $79.9 million.

As of Jun 30, 2018, the company had total cash and cash equivalents of $509.1 million, and debt of $988.5 million, with a debt-to-capitalization ratio of 30.5%.

Acquisition & Transportation Agreement

In the second quarter, the company agreed to acquire around 28,657 net surface acres worth $570 million in the Delaware Basin, which is expected to conclude in the third quarter.

The company also secured a transportation agreement for 15,000 barrels of oil per day to the Gulf coast, with corresponding sales agreements.


For the full year of 2018, the company expects its production in the range of 29.5-32 MBoe/d, of which 77% is expected to be oil. Through July, the company’s production was expected to reach 31.1 MBoed/d level, with 78% oil in the production mix.

Operation capital expenditures for 2018 are expected in the range of $500-$540 million, of which $283 million were used in the first half of the year.

The company is expected to provide an updated guidance that will include the impact of the Delaware Basin acquisition.

Zacks Rank & Key Picks

Currently, Natchez, MS-based Callon Petroleum has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) , ConocoPhillips (COP - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 35.3% year over year, while its bottom line is expected to increase more than 182%.

Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 14.1% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 27.6%.

Houston, TX-based Cheniere Energy mainly focuses on liquefied natural gas-related businesses. The company’s top line for 2018 is anticipated to improve 25.9% year over year, while its bottom line is expected to increase more than 225%.

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