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

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·3 min read
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Callon Petroleum Company CPE has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days. So far this year, the stock, sporting a Zacks Rank #1 (Strong Buy), has gained 264.7%, outpacing the 90.7% improvement of the composite stocks belonging to the industry.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

What's Favoring the Stock?

The price of West Texas Intermediate crude is trading above $67 per barrel, highlighting a substantial improvement from the negative territory hit last April. The positive trajectory in oil price is a boon for Callon Petroleum’s upstream operations. This is because CPE has a strong presence in Permian, the most prolific basin in the United States. Callon Petroleum recently acquired assets in the Delaware Basin – a sub-basin of broader Permian – from Primexx, thereby securing additional cashflows.

Callon Petroleum is also committed to get rid of non-core assets. So far this year, Callon Petroleum has estimated gross proceeds of $210 million from the divestment of assets that are unlikely to align with the long-term goal of cashflow generations. Since the third quarter of 2020, CPE has generated more than $250 million in organic adjusted free cashflows.

CPE is also focusing on reducing its debt load. Callon Petroleum boasted that since the second quarter of 2020, Callon Petroleum has lowered $690 million of long-term debt load.

On the environmental, social and governance (ESG) front, Callon Petroleum has been undertaking new initiatives to reduce emissions. CPE’s 2020 achievements on the ESG front include reducing greenhouse gas emissions by 28%. The achievements also include cutting methane intensity by 25%. Callon Petroleum is also investing in the electrification program.

Other Stocks to Consider

Other prospective players in the energy space include Whiting Petroleum Corporation WLL,Continental Resources, Inc. CLR and BP plc BP. While Continental Resources carries a Zacks Rank #2 (Buy), Whiting Petroleum and BP sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum is a leading upstream energy company and is the top producer of crude oil in North Dakota. With oil price improving at a healthy pace, Whiting Petroleum expects to continue generating handsome cashflows while maintaining a healthy balance sheet.

Headquartered in Denver, CO, Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days. Looking at the price chart, WLL has gained 154.7% year to date, outpacing the 90.7% rise of the composite stocks belonging to the industry.

Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of Continental Resources are among the best in the industry.

Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2021 in the past 30 days. Considering the price chart, CLR has gained 169.2% so far this year, outpacing the 90.7% improvement of the composite stocks belonging to the industry.

A favorable oil price scenario and increasing daily oil equivalent production volumes are aiding BP’s bottom line. BP added that the target of adding a net production of 900 thousand barrels of oil equivalent per day by 2021 from key new upstream projects has been met.

BP is also leading the energy transition and has set an ambitious goal of becoming a company with net-zero emissions by 2050 or earlier.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BP p.l.c. (BP) : Free Stock Analysis Report

Continental Resources, Inc. (CLR) : Free Stock Analysis Report

Whiting Petroleum Corporation (WLL) : Free Stock Analysis Report

Callon Petroleum Company (CPE) : Free Stock Analysis Report

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