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What's in Store for Callon Petroleum's (CPE) Q3 Earnings?

Zacks Equity Research
·5 min read

Callon Petroleum Company CPE is scheduled to report third-quarter 2020 results on Nov 2, after the closing bell.

In the last reported quarter, the exploration and production company came up with adjusted earnings of 10 cents per share against the Zacks Consensus Estimate of a loss of 2 cents due to higher oil and gas production volumes, as well as decreased lease operating expenses. However, the positives were partially offset by lower natural gas and oil price realizations. The firm beat earnings estimates thrice and missed once in the trailing four quarters, delivering an average surprise of 44.8%.

Callon Petroleum Company Price and EPS Surprise

Callon Petroleum Company Price and EPS Surprise
Callon Petroleum Company Price and EPS Surprise

Callon Petroleum Company price-eps-surprise | Callon Petroleum Company Quote

Let’s see how things have shaped up for this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings per share of 27 cents has witnessed one upward movement and six downward revisions in the past 30 days. This estimate is indicative of an 85.8% decrease from the year-ago reported figure.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $248.7 million, suggesting an increase of 60.1% from the year-ago reported figure.

Factors to Note

Callon Petroleum’s focus on exploration and production of oil and gas resources in the Permian Basin is expected to reflect on third-quarter results. Permian has three major sub basins — Midland Basin, Delaware Basin and Central Basin Platform. Of these, the company has strong footprint in the Midland and Delaware Basins, which are likely to have supported third-quarter production. Moreover, the acquisition of Carrizo — which was closed last December — is expected to have led to a year-over-year surge in production.

The Zacks Consensus Estimate for average daily production volumes is pegged at 98,903 barrels of oil equivalent per day (Boe/d), indicating a significant rise from the year ago period’s 37,837 Boe/d. The same for natural gas output is pegged at 9,801 million cubic feet (MMcf), pointing to a rise from the year-ago quarter’s 4,538 MMcf. Moreover, the Zacks Consensus Estimate for crude oil production volumes is pegged at 5,779 thousand barrels (MBbls), implying an increase from the year-ago period’s 2,725 MBbls.

The Zacks Consensus Estimate for average sales price for oil (before hedging) is pegged at $37.55 per barrel, which indicates a decrease from the year-ago period’s $54.39. Also, the consensus estimate for average natural gas sales price of $1.22 cents per Mcf suggests a decrease from the third-quarter 2019 level of $1.58. These lower commodity price realizations are expected to have offset the gains from higher production volumes. 

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Callon Petroleum this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is 0.00%. This is because the Most Accurate Estimate of earnings of 27 cents per share is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Callon Petroleum currently carries a Zacks Rank #4 (Sell).

Energy Stocks With Favorable Combination

Here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. EOG has an Earnings ESP of +29.17% and is a Zacks #3 Ranked player. The company is scheduled to release third-quarter results on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream, LP DCP has an Earnings ESP of +4.77% and a Zacks Rank of #1. It is scheduled to report third-quarter results on Nov 4.

Sunoco LP SUN has an Earnings ESP of +8.68% and holds a Zacks Rank #1. It is set to report third-quarter results on Nov 4.

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Sunoco LP (SUN) : Free Stock Analysis Report
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