Imperial Capital Sees Multiple Positive Factors For Callon Petroleum

In a report published Wednesday, Imperial Capital analyst Kim Pacanovsky reiterated an Outperform rating and $9.00 price target on Callon Petroleum Company (NYSE: CPE).

In the report, Imperial Capital noted, "We are maintaining our Outperform rating and our one-year price target of $9 on CPE shares. Our price target is about 46% above the recent share price. As detailed in our research report dated 2/10/15, CPE confirmed in its 3/5/15 earnings call that it will run a two rig drilling program for the remainder of the year, placing 24 net operated wells online in 2015. Although CPE expected to high grade its drilling program to focus operations on the Wolfcamp B to weather the poor commodity pricing environment, we anticipate further high grading with an increasing number of Lower Spraberry wells as initial well results continue to impress. With almost $430mn raised in the capital markets during 2014 to fund the company's acquisition of the Casselman and Bohannon acreage and four rig drilling program, the decision to drop to two rigs along with the recent equity raise has provided CPE with substantial liquidity and in fact, it now boasts one of the strongest liquidity structures in the small cap group. Furthermore, we believe that CPE can become free cash flow neutral in 2016, if the firm maintains a two rig drilling program and continues to realize lower service costs."

Callon Petroleum closed on Tuesday at $6.18.