PDC Energy (PDCE) Q3 Results - August 8

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

PDC Energy (PDCE) Q3 Results - August 8

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In my opinion, PDC Energy is one of the most under-valued companies in the Sweet 16.

DENVER, Nov. 06, 2019 (GLOBE NEWSWIRE) -- PDC Energy, Inc. ("PDC", "Company", “we” or “us”) (PDCE) today reported its 2019 third quarter financial and operating results.

Third Quarter 2019 Highlights:

Net cash from operating activities of $234 million, adjusted cash flow from operations, a non-U.S. GAAP financial measure defined below, of approximately $202 million, and oil and gas capital investments of $164 million. < Compares to my Q3 forecast of $208.5 million cash flow from operations.

Approximately $39 million of free cash flow, a non-U.S. GAAP measure defined as net cash from operating activities, adjusted for changes in working capital, less oil and gas capital investments.

Total production of 12.7 million barrels of oil equivalent (“MMBoe”), or approximately 138,000 Boe per day, a 26 percent increase from the third quarter of 2018. < Compares to my Q3 production forecast of 138,300 Boepd.

Lease operating expenses (“LOE”) of $2.87 per Boe, a 12 percent improvement from the third quarter of 2018.

Average Delaware Basin drilling, completion and facility costs of approximately $1,150 per lateral foot, a 37 percent improvement compared to average full-year 2018 costs of $1,835 per lateral foot.

In October, the Company’s borrowing base under its revolving credit facility was reaffirmed at $1.6 billion with an elected commitment level of $1.3 billion. Contingent upon closing the acquisition of SRC Energy, Inc. (“SRC”), the Company’s borrowing base has been approved at $2.1 billion with an elected commitment level of up to $1.9 billion.

CEO Commentary

President and Chief Executive Officer, Bart Brookman commented, “The third quarter marked a true inflection point for PDC as we delivered on our stated goal of generating free cash flow despite a challenging commodity price back drop. Additionally, we announced a transformative merger with SRC that we expect will deliver long-term value through enhanced scale, resilient assets, an incredibly strong balance sheet and the ability and commitment to generate sustainable free cash flow. For the remainder of 2019 and all of 2020, PDC is focused on the successful integration of SRC, generating meaningful levels of free cash flow, paying down debt and continuing to opportunistically return capital to shareholders.”
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In my opinion, the merger with SRC will create a strong mid-cap with over 200,000 Boepd of production and many years of high-quality drilling inventory. The only thing I can think of that justifies the current share price for PDCE is the perceived "geopolitical risk" of being primarily a Colorado company. The state may be run by "wackos" but Weld County is super supportive of the oil & gas industry.
Dan Steffens
Energy Prospectus Group
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