Why Callon Petroleum Stock Jumped Nearly 14% at the Open Today
Shares of U.S. exploration and production company Callon Petroleum (NYSE: CPE) rose nearly 14% as trading got underway on Oct. 1. The stock started to give back those initial gains almost immediately, however, with the advance down to 8.5% or so by 10 a.m. EDT. The early boost of excitement was driven by an update on the company's finances.
Callon announced that it sold a royalty interest to an entity controlled by private equity investor Kimmeridge Energy for $140 million. In addition, Callon sold Kimmeridge a $300 million note. The proceeds from these transactions were used to reduce the company's borrowing on a credit facility by roughly 33%. That's all very good news for Callon, which ended the second quarter with a troublingly high financial debt-to-equity ratio of 7.3 times.
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