Callon Petroleum (CPE)

[tr8dervic]

Q2/06 sneak peak:

Q2 was guided for oil to stay flat and gas to increase quite a bit. Total 70 to 75 mcfe/d.

Full Q2 estimated 500k bbls oil and 3.6 bcf gas.

Oil is now up to 180k bbls hedged with a $60 Nymex floor (and small swap, 45k, at 55). A note about NYMEX hedges. They are based on WTI prices and a 60 dollar floor effectively gives CPE a floor of 50 to 52 on their blends of oil.

Gas we lose our 900 mmcf hedged at 9.67 but pick up a new hedge of 2.1 bcf with a 8.00 floor.

If we keep q1 pricing for oil and use 7.00 mcf for unhedged gas we get:

500k bbls @ 53 = 26.5 mil
2.1 bcf gas @ 8 = 16.8 mil
1.5 bcf gas @ 7 = 10.5 mil

Total oil/gas sales = 54.8 mil
Operating expenses about 26.4 mil

Operating income approx 28.4 mil

Interest expense 4.2 mil

Pretax 24.2 mil
tax at 35% 8.5

Income before Medusa spar 15.7
Medusa spar net of tax .5

Net income 16.2 mil

Basic = .83 per share
Diluted = .76 per share

Note: this is considerably above analyst estimates of .37 to .61 with average of .50 (yahoo) to .52 (Zacks)

http://www.zacks.com/research/report.php?type=estimates&t=CPE