Goodrich Petroleum (GDP) Update - Sept 22

[dan_s]

GDP is trading at $21.35. First Call's price target is $23.58. My valuation increases by $3 to $38.

GDP is about as close to a "pure gasser" as you can get. ~98% of their production is dry natural gas. They have a lot more unhedged natural gas after December, so their Q1 2022 results could be stunning. If their net realized ngas price is $4.50/Mcfe in Q1 they should come close to $4.50 operating cash flow per share for the quarter. That will be more than their operating cash flow was for the entire year of 2020.

My updated forecast/valuation model for GDP has been posted to the EPG website. Download it and take a hard look at the RED BOX. It will tell you why I think this puppy has a lot of upside for us.

[Fraser921]

I wish they would roll the dice for one quarter and not hedge anything.
I would like it more when they pay off the
2nd lien debt

[dan_s]

All of the gassers can and should use collars to hedge gas for 2022. They can set floors higher than this year's Swap prices and set ceiling over $6.

Just remember that the hedges are tied and settled against indexes or NYMEX futures contracts, so they can sell their physical gas at much higher spot market prices and keep at profit. The large-caps have better marketing leverage.