CPE stock is soaring today after Callon Petroleum (NYSE:CPE) posted its fourth-quarter and full-year earnings, which beat analysts’ expectations and showed a surge in oil production.
Robust Quarter
The Houston-based oil producer reported adjusted Q4 earnings of 23 cents per share, beating the Zacks Consensus Estimate of 16 cents. Operating revenue of US$196.1 million surpassed analyst estimates of US$180 million and increased from US$161.9 million posted in the same period a year earlier. The robust earnings, which are also the first to include operations from Callon Petroleum’s takeover of Carrizo Oil & Gas, were driven by a surge in oil and gas production volumes and higher crude price realizations. CPE stock is up 8.6% today.
Net production volumes for the quarter averaged 46,641 barrels of oil equivalent per day (Boepd), which was up from the previous year’s figure of 41,087 Boepd. The rise in production volume was mostly driven by the company’s large-scale development project in the Delaware Basin. Oil production in the quarter came in at 3,234 thousand barrels (MBbls), again beating 2018’s figure of 3,076 MBbls, while natural gas production rose to 5,530 MMcf from 4,225 in fourth-quarter 2018. CPE shares are currently trading for $2.21.
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CPE Stock Reaping Benefits of Carrizo Takeover
“2019 was a transformational year and a significant step forward for Callon. We executed multiple strategic initiatives while delivering on our capital development plan with improved efficiency and lower costs. The acquisition of Carrizo has transformed Callon into a more robust entity with the capacity to execute a model of scaled development to drive lower free cash flow break-even costs and sustain growth in a low oil price environment,” said Callon CEO Joe Gatto.
While the Carrizo takeover is clearly reaping benefits today, the prolonged deal caused a great deal of volatility in CPE stock, which is down over 70% in the last year. Several activist shareholders considered the deal overvalued, particularly given the fact that it would end Callon’s status as a Permian pure-play. Eventually, refined terms were agreed after months of deliberation, and the deal was completed on December 30, setting Callon Petroleum up for a strong year ahead.
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