Callon Petroleum's (CPE) Q4 Earnings & Sales Miss, Up Y/Y

Callon Petroleum Company CPE posted fourth-quarter 2018 adjusted earnings of 17 cents per share, missing the Zacks Consensus Estimate by 5 cents. The weaker-than-expected earnings can be attributed to increased expenses. However, the bottom line improved from the year-ago figure of 15 cents.

Operating revenues of $161.9 million missed the Zacks Consensus Estimate of $164.5 million due to lower commodity price realizations. However, the figure surged from $118.2 million in the year-ago quarter, on the back of higher production.

Production Rises

In the quarter, net production volumes averaged almost 41.1 thousand barrels of oil equivalent per day (MBoe/d), reflecting an increase of 55% from the year-ago period. Of the total production in the fourth quarter, 81% 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 $42.83. The figure was lower than the year-ago quarter’s $48.47 per barrel. Average realized price for oil was $48.89 per barrel compared with $53.79 in the year-ago quarter. Moreover, average realized price for natural gas came in at $2.72 per thousand cubic feet, lower than $4.67 in the prior-year quarter.

Expenses Increase

Total operating expenses in the quarter amounted to $103.6 million, higher than the year-ago level of $64.2 million. General and administrative expenses marginally increased to $8.5 million from $8.2 million in the fourth quarter of 2017. Depreciation, depletion and amortization expenses jumped to $59.5 million in the quarter from $36.5 million in the year-ago period.

Moreover, lease operating costs per barrel of oil equivalent increased to $6.47 from $4.84 in the year-ago quarter.

Capital Expenditure & Balance Sheet

Capital expenditure in the reported quarter was $155.8 million, higher than the year-ago quarter’s $152.6 million.

As of Dec 31, 2018, the company had total cash and cash equivalents of $16.1 million, as well as debt of $1,189.5 million, with a debt-to-capitalization ratio of 32.7%.

Guidance

For 2019, the company’s production is estimated in the range of 39.5-41.5 MBoe/d, 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.

Zacks Rank and Stocks to Consider

Currently, Callon Petroleum carries a Zacks Rank #5 (Strong Sell). Investors interested in the energy sector can opt for some better-ranked stocks as given below:

Austin, TX-based Jones Energy, Inc. JONE is an exploration and production company. For 2019, its bottom line, which has witnessed one upside revision over the past 60 days, is expected to grow 19% year over year. The company currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Madrid, Spain-based Repsol, S.A. REPYY is an integrated energy company. Its bottom line for 2019 is expected to increase 13.7% year over year. The company delivered average positive earnings surprise of 9% in the trailing four quarters. The stock currently has a Zacks Rank #2.

Enbridge Inc. ENB is a Calgary, Canada-based energy infrastructure provider. The company delivered average positive earnings surprise of 33.2% in the trailing four quarters. It currently has a Zacks Rank #2.

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