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Here's Why Callon (CPE) is an Attractive Investment Bet

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·3 min read
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Callon Petroleum Company CPE has witnessed upward estimate revisions for 2022 and 2023 earnings in the past 30 days.

The leading upstream energy firm, with a Zacks Rank #2 (Buy), is likely to record earnings growth of 66.1% in 2022.

Factors Working in Favor

The price of West Texas Intermediate crude, trading at more than $110 per barrel, has improved drastically over the past year. The significant rise in oil price resulted from conflict and geopolitical muscle-flexing between Russia and Ukraine.

Being a leading exploration and production company, Callon Petroleum is well-positioned to capitalize on the rally in crude price. The company has a strong footprint in Permian, the most prolific basin in the United States, brightening its production outlook. Callon Petroleum is planning to allocate more capital in the most prolific basin this year than the last year. Compared with 75% of capital budget allocation for Permian in 2021, the upstream player has decided to increase the proportion to 85% in 2022.

Callon Petroleum is also focused on greenhouse gas emissions and loweringroutine flaring. The new targets of Callon Petroleum also comprise strengthening its financials while deleveraging the balance sheet.

Banking on these developments, the company expects $500 million in free cash generations in 2022, considering oil price at the $75-per-barrel mark.

Callon Petroleum Company Price

Callon Petroleum Company Price
Callon Petroleum Company Price

Callon Petroleum Company price | Callon Petroleum Company Quote

Other Stocks to Consider

Other prospective players in the energy space are Exxon Mobil Corporation XOM, EOG Resources EOG and Chevron Corporation CVX. ExxonMobil and Chevron currently sport a Zacks Rank #1 (Strong Buy), while EOG Resources carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil is banking on key upstream projects centered around the Permian and offshore Guyana resources.

ExxonMobil reported strong fourth-quarter results, owing to improved realized oil and natural gas prices as well as higher refining and chemical margins. In the past 30 days, ExxonMobil has witnessed upward earnings estimate revisions for 2022.

EOG Resources has planned to generate $6.4 billion in free cash flow this year at West Texas Intermediate crude price of $80 per barrel. EOG Resources has also committed to $1.7 billion in regular dividend payments.

With the employment of premium drilling, EOG Resources is reducing its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.

In the Permian basin, Chevron has a strong footprint. The majority of Chevron’s assets in the most prolific basin of the United States have minimal royal payments, thereby securing handsome cash flows in the long run.

In the past 30 days, Chevron has witnessed upward earnings estimate revisions for 2022.


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EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Callon Petroleum Company (CPE) : Free Stock Analysis Report

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