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Callon Petroleum (CPE) Q1 Earnings & Revenues Beat Estimates

Zacks Equity Research

Callon Petroleum Company CPE reported first-quarter 2019 adjusted earnings of 16 cents per share, beating the Zacks Consensus Estimate by a penny. However, the bottom line declined from the year-ago figure of 20 cents.

Operating revenues of $153.1 million beat the Zacks Consensus Estimate of $146 million. Also, the figure surged from $127.4 million in the year-ago quarter.

The better-than-expected results were supported by higher production volumes, partially offset by lower commodity price realizations and increased operating expenses.

Callon Petroleum Company Price, Consensus and EPS Surprise

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

Production Surges

In the quarter, net production volumes averaged nearly 40,311 barrels of oil equivalent per day (Boe/d), reflecting a huge increase from the year-ago period’s 26,567 Boe/d. Of the total production in the first quarter, 79% was oil and the rest comprised natural gas.

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

The average realized price per barrel of oil equivalent was $42.18. The figure was significantly lower than the year-ago quarter’s $53.30 per barrel. Average realized price for oil was $49.37 per barrel compared with $62.28 in the year-ago quarter. Moreover, average realized price for natural gas came in at $2.59 per thousand cubic feet, lower than $3.75 in the prior-year quarter.

Expenses Increase

Total operating expenses in the quarter amounted to $109.8 million, higher than the year-ago level of $66.5 million. General and administrative expenses increased to $11.8 million from $8.8 million in the first quarter of 2019. Depreciation, depletion and amortization expenses jumped to $59.8 million in the quarter from $35.4 million a year ago.

Moreover, lease operating costs per barrel of oil equivalent increased to $6.63 from $5.45 in the year-ago quarter.

Capital Expenditure & Balance Sheet

Capital expenditure in the reported quarter was $155.2 million, higher than the year-ago figure of $116.8 million.

As of Mar 31, 2019, the company’s total cash and cash equivalents amounted to $10.5 million, and debt was $1,319.9 million, with a debt-to-capitalization ratio of 35.2%.

Guidance

For 2019, Callon Petroleum’s production is estimated in the range of 39.5-41.5 thousand barrels of oil equivalent per day, of which 77-78% is expected to be oil.

Operation capital expenditures for 2019 are expected in the range of $500-$525 million.

Net operated horizontal wells to be placed on production in 2019 are expected between 47 and 49, lower than the 2018 level of 54.

The guidance for operational capital expenditure is expected to remain unchanged through the year, while the same for some other metrics might change with the closing of the company’s non-core asset divestments.

Zacks Rank and Stocks to Consider

Currently, Callon Petroleum carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Cactus, Inc. WHD, Hess Corporation HES and Apache Corporation APA, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

Cactus’ earnings growth is projected at 11.8% through 2019.

Hess’ earnings are expected to grow 90.5% through 2019.

Apache beat the Zacks Consensus Estimate in each of the last four quarters, with average positive earnings surprise of 31%.

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