Callon (CPE) Acquires Delaware Basin Assets From Percussion
Callon Petroleum Company CPE completed the acquisition of Delaware Basin assets of Percussion Petroleum Operating II LLC for $249 million in cash and 6.3 million shares of its common stock.
Under a separate agreement, the company exited Eagle Ford by divesting all its assets to Ridgemar Energy Operating LLC. Callon received $551 million in cash at the closing of its Eagle Ford asset divestment.
With the transaction, Callon solidified its Permian basin focus. The acquisition improves the company’s Delaware inventory depth and lowers its cost structure. The company will have an inventory of more than 1,500 high-quality locations in the Permian Basin.
Callon used the transactions to reduce its debt and start a shareholder return plan. The company authorized a $300-million stock repurchase program for a two-year period. Callon plans to repurchase its first shares under the program in the third quarter of 2023. At closing, Callon’s outstanding debt was reduced by about $300 million, with a current gross debt of less than $2 billion.
The transactions, subject to post-closing adjustments, has an effective date of Jan 1, 2023.
Headquartered in Houston, TX, Callon is solely focused on the exploration and production of oil and gas resources in the Permian Basin. The company boasts an impressive footprint throughout the core of the Permian Basin. The management’s decision to shed non-core assets, while focusing on more profitable ones, is a major positive.
Callon currently carries a Zack Rank #3 (Hold).
Some better-ranked players in the energy space are Seadrill Limited SDRL, Global Partners GLP and Evolution Petroleum Corporation EPM, currently sporting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seadrill is a market-leading international driller with strong exposure in key strategic basins like the U.S. Gulf of Mexico, Brazil and Angola. SDRL reported first-quarter 2023 earnings of 83 cents per share, beating the Zacks Consensus Estimate of earnings of 55 cents per share.
Seadrill has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for SDRL’s 2023 and 2024 earnings is pegged at $2.93 per share and $4.01 per share, respectively.
Global Partners owns, controls or has access to one of the largest terminal networks of refined petroleum products in New England. GLP is valued at $1.04 billion. In the past year, its units have risen 32.9%.
Global Partners has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 60 days. The consensus estimate for GLP’s 2023 and 2024 earnings is pegged at $3.41 per share and $3.44 per share, respectively.
Evolution Petroleum is an independent energy company. EPM reported first-quarter 2023 earnings of 42 cents per share, beating the Zacks Consensus Estimate of earnings of 17 cents per share.
Evolution Petroleum has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 60 days. The consensus estimate for EPM’s 2023 and 2024 earnings is pegged at $1.11 per share and $1.05 per share, respectively.
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Callon Petroleum Company (CPE) : Free Stock Analysis Report
