PDC Energy (PDCE) Q4 Results - Feb 27

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

PDC Energy (PDCE) Q4 Results - Feb 27

Post by dan_s »

2019 Highlights:

Net cash from operating activities of approximately $858 million, adjusted cash flows from operations, a non-U.S. GAAP metric defined below, of approximately $825 million. < This compares to my 2019 cash flow forecast of $818.6 million.

Oil and gas capital investments of approximately $788 million. < Below guidance.

Approximately $38 million of free cash flow, a non-U.S. GAAP metric defined as net cash flows from operating activities, excluding changes in working capital, less oil and gas capital investments.

Total production of 49.4 million barrels of oil equivalent (“MMBoe”), or approximately 135,000 barrels of oil equivalent (“Boe”) per day, a 23 percent increase compared to 2018.

Oil production of 19.2 million barrels (“MMBbls”), or approximately 52,500 Bbls per day, a 13 percent increase compared to 2018.

Increase in year-end proved reserves of 12 percent to 611 MMBoe, with all-source reserve replacement of 235 percent.

2020 Guidance Highlights:

Oil and gas capital investments expected between $1.0 and $1.1 billion, representing a decrease of approximately 15 percent compared to the combined 2019 capital investments of PDC and SRC Energy Inc. (“SRC”).

Anticipate generating approximately $250 million of free cash flow assuming $52.50 WTI oil and $2 NYMEX natural gas prices.

Total production expected between 205 to 215 MBoe per day, a six percent increase compared to the combined PDC and SRC 2019 production.

Anticipated oil production between 78 and 82 MBbls per day. The Company expects its fourth quarter 2020 oil production to reflect an increase of ten to 15 percent compared to the combined PDC and SRC fourth quarter 2019 volumes.

CEO Commentary

President and CEO Bart Brookman commented, “I’m incredibly proud of our team for not only having achieved significant cost savings and operational efficiencies throughout 2019, but more importantly, doing so in what we deem to be a stellar year from a safety perspective. Further, we were able to deliver on several key strategic initiatives, including divesting our Delaware Basin midstream assets, instituting a stock repurchase plan and announcing a merger with SRC Energy, each of which we expect to deliver significant, long-term shareholder value.”

“As we demonstrated in 2019 through mid-year adjustments to our capital program, PDC is committed to generating free cash flow. Through a continued and deliberate focus on operational execution combined with a peer-leading cost structure, we anticipate generating approximately $650 million of free cash flow through 2021, which enables us to not only complete our $525 million share repurchase program, but also to retire debt and further improve our already top-tier leverage metrics. These attributes position PDC to differentiate itself against not only the E&P sector, but the broader market as well.”
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: PDC Energy (PDCE) Q4 Results - Feb 27

Post by dan_s »

PDC Energy is a "Special Situation" because their merger with SRC Energy (SRCI) closed on January 14, 2020.

PDC has provided some detailed (and I believe conservative) guidance for 2020. However, we won't have a clear picture until they release Q1 results so I'm using a multiple of just 3X operating cash flow to value it. A company with a strong balance sheet and over 200,000 Boepd of production + lots of high quality leasehold should trade at a much higher multiple. If you believe oil prices will get back over $50/bbl, this one has a lot of upside.

Stifel's price target was $52.00 on February 21st.

My forecast/valuation model will be posted to the EPG website this evening.
Dan Steffens
Energy Prospectus Group
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