Callon Petroleum (CPE) may report lower levels of earnings due to weakness in oil prices. However, strong production growth combined with decent hedge coverage will provide crucial support to the company’s cash flows in 2019. More importantly, Callon burned cash flows last year but could turn around in the near future even in a weak oil price environment of low-$50s a barrel.
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Oil prices have risen by around 20% this year. The rally has been driven by production cuts from the Organization of Petroleum Exporting Countries and its allies