Jagged Peak (JAG) Q2 Results - August 12

Post Reply
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Jagged Peak (JAG) Q2 Results - August 12

Post by dan_s »

My goal is to finish updating all of the Small-Cap Growth Portfolio company forecast/valuation models by August 14. I've finished about half of them. Check the EPG website home page for updates.
--------------------------
Jagged Peak Q2 Results

During the second quarter of 2019, the Company turned online 11 gross operated wells and reported average daily oil production for the quarter of 29.1 MBbls per day, at the upper end of the Company's previously announced guidance range of 27.8 – 29.2 MBbls per day. < Compares to my crude oil production forecast for Q2 of 28,500 barrels per day.

Total equivalent production averaged 38.3 MBoe per day for the second quarter, slightly above the upper end of the Company's previously announced guidance range of 36.6 – 38.0 MBoe per day. < Compares to my Q2 forecast of 37,300 Boepd.
Second quarter production mix was comprised of 76% oil, 13% NGLs, and 11% natural gas, and is essentially unchanged from the prior quarter.

For the second quarter of 2019, the Company reported net income of $41.9 million, or $0.20 per diluted common share. Net income for the second quarter of 2018 was $45.1 million, or $0.21 per diluted common share. Adjusted net income (a non-GAAP measure) for the second quarter of 2019, was $21.3 million, or $0.10 per diluted common share, compared to $43.3 million, or $0.20 per diluted common share for the same period in 2018. Adjusted net income (a non-GAAP measure) eliminates certain non-cash and non-recurring items such as certain equity-based compensation, non-cash mark-to-market gains or losses on derivatives and impairment expense, further adjusted for any associated changes in estimated income tax expense. < Adjusted net income compares to my Q2 forecast of $28.1 million, $0.13 per share.

Adjusted EBITDAX (a non-GAAP measure) for the second quarter of 2019 was $101.7 million, a decrease of $16.9 million from the second quarter of 2018.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Jagged Peak (JAG) Q2 Results - August 12

Post by dan_s »

Since JAG released their Q2 results, three analysts have updated their forecasts and price targets. Their price targets are $10, $13 and $14.

My valuation is only $8.50, which compares to the current share price of $6.55.

Why?
> JAG is a pure play on the Delaware Basin.
> Natural gas and NGL prices in the Delaware Basin are terrible and likely to remain depressed until mid-2020. JAG actually had to pay $0.87/mcf for midstream companies to take their gas in Q2, so they could continue producing the liquids.
> Delaware Basin crude oil also sells at about a $5/bbl discount to Midland Basin oil.
> JAG is an "Aggressive Growth" company that increased their production by an impressive 101.3% in 2018 and they are on-track to increase it another 16% YOY in 2019. The problem is that they are continuing to outspend their cash flow from operations; a big "NO NO" in today's market.

Long-term, JAG could be a great investment at today's share price. However, I think there are better choices so I will be dropping it from our Small-Cap Growth Portfolio.
Dan Steffens
Energy Prospectus Group
Post Reply