The oil and natural gas exploration and development game is nothing short of a roll of the dice from a company point of view. One can use all the technology in the world to find it and get it out of the ground but end up with a market price barely worth the effort. On the other end of the spectrum, one may get the product out of the ground as market conditions become exceedingly favorable. This is just the nature of the exploration process for a commodity. Presently, oil and natural gas are in favor. A company that can find and exploit these commodities cost effectively is one to take a look at.
Callon Petroleum Inc., an oil and natural gas exploration and development company, works to discover, develop and exploit natural gas and oil deposits primarily in the Gulf Coast states of the United States. The company also operates off-shore in the same general region.
As of the start 2009, the company estimates that it has proven reserves of 54 billion equivalent cubic feet of natural gas and 6 million barrels of oil. Perhaps the company’s largest asset, however, is its lease acreage that totals an approximate 193,000 acres in known production areas. It is this aspect of the company that offers a certain amount of interest for the investor. The company has established a base and estimated revenue stream of $24 million for the first quarter, but appears to be looking further ahead as it acquires additional leases. It has also developed an international investor base that seems agreeable to the company’s development strategy.
Although the company has its share of issues regarding the closure of a failed drill site, it has managed to increase third quarter 2009 production by 6%. As production is the company’s revenue source, dependent upon price for natural gas and oil, this bodes well. As it appears that a cold winter and a rising price for oil will continue for the relatively long-term, the company seems to be well positioned to capitalize. It has a solid investment backing, potential drilling and exploration opportunities and an energy market that looks to be on the upswing. If Callon Petroleum Co. can keep its development progress moving, it should be a solid opportunity to investigate.
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