Penny Stocks to Watch – Callon Petroleum (NYSE:CPE)

Callon Petroleum Company has been an independent oil and gas company since 1950.  The firm has concentrated on building reserves and production both onshore and offshore in order to maximize its capital and development costs.  Callon acquired a 70% working interest in a 577-acre unit in the heart of the Haynesville Shale play in Bossier Parish, Louisiana in September 2009. They currently develop properties in the Haynesville Shale in northern Louisiana as well as the Permian Basin in West Texas and offshore in the U.S. Gulf of Mexico.

Since 1950, Callon Petroleum Company has operated onshore and offshore mainly in the Gulf Coast region. They have increased their total net proved reserves to an estimated 13.6 million barrels of oil equivalent (MMboe). Most of that growth constitutes approximately 60% crude oil. The company developed onshore proved reserves to 50% of total proved reserves in 2010, up from only 16% at year-end 2009 and zero at the end of 2008.

They have increased onshore oil production from the Permian Basin an average of 1,200 Boe per day which is an increase of over 118% over the previous year-end production in 2010. They have also reduced the amount of total outstanding debt to $107 million. This represents a decrease of 62% from a face amount of $281 million at year-end 2008. In February 2011 Callon Petroleum Company raised $73.3 million in net proceeds from common stock offering.

Their overall strategy is to keep their operations diversified in order to maintain stable production in a shifting market. They control their cash flow by leveraging long-lived offshore producing fields for reinvesting into the company’s multi-year onshore drilling program. This allows them to target low risk, high-impact plays when the time is appropriate.

Callon Petroleum Company shares have traded in a range of $3.02 to $9.36 in the last 52 weeks. The 50-day moving average is $4.73 and the 200-day moving average is $6.02. CPE is estimated to earn 76 cents per share in 2011 and 71 cents in 2012. The company recently reported better than expected earnings and guidance which sent the stock up to nearly $6.

Callon Petroleum Company (NYSE:CPE) Year High: $9.36   Year Low: $3.02