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How Do Callon Petroleum’s Key Fundamentals Look?

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Part 3
How Do Callon Petroleum’s Key Fundamentals Look? PART 3 OF 7

What Are Callon Petroleum’s Free Cash Flow Trends?

Callon’s cash flows

In 3Q16, Callon Petroleum (CPE) reported CFO (cash flow from operations) of ~$12.3 million, which is ~51% lower than its CFO in 3Q15.

What Are Callon Petroleum’s Free Cash Flow Trends?

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Free cash flow and capex

Callon Petroleum’s 3Q16 FCF (free cash flow), which is its operating cash flow minus its capex, has remained negative over the past nine quarters. CPE’s management noted in the 3Q16 earnings conference call that it expects to be “generating free cash flow of $50 per barrel WTI by mid-2018. In addition, we forecast the outspend in 2017 will be entirely funded by our existing cash balances, assuming an average $47.50 WTI oil price during the year.” Callon Petroleum has a 2016 capex budget of $140 million, which represents a 25% YoY (year-over-year) decline.

Many upstream companies have reduced their 2016 capex in response to lower energy prices (USO) (UNG). Newfield Exploration (NFX), Concho Resources (CXO), and Sanchez Energy (SN) have lowered their 2016 capexes by ~50%, 35%, and 50%, respectively, compared to 2015.

To learn more about Sanchez Energy, check out Must-Read Insight into Sanchez Energy’s Key Fundamentals.

In 3Q16, CPE spent $43.3 million in capital expenditures, which included facilities expenditures of $4.5 million. This figure compares to $21.1 million in 2Q16. CPE expects to spend $250 million–$270 million in 2017 and $320 million–$340 million in 2018.

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