Goodrich Petroleum (GDP) Q3 Results - Nov 12

Goodrich Petroleum (GDP) Q3 Results - Nov 12

Postby dan_s » Fri Nov 12, 2021 11:46 am

GDP was trading at $21.30 at the time of this post.
I have updated my forecast/valuation model for Q3 results. Q3 production was slightly lower than my forecast, but they are still on track to reach my 2021 exit production forecast of 195,000 mcfepd and 19.6% YOY production growth.

Goodrich is a pure play on the Haynesville Shale play. If you attended our webinar yesterday, you should know that Haynesville wells payout in a few months at today's gas price and have fantastic economic returns at today's natural gas price. 99% of GDP's production is dry gas that sells at close to HH prices.

My valuation of GDP increases by $5 to $45/share, primarily because I am now giving equal weight to 2021 and 2022 operating cash flow per share ($8.30 in 2021 and $14.20 in 2022). I am only using a valuation multiple of 4X operating CFPS, which is low for a company with no near-term debt problems that is now generating a lot of free cash flow from operations.

TipRanks operating CFPS forecast for 2021, which is based on two analyst's reports dated prior to the company's Q3 results came out, is $13.73 per share. A reasonable 12-month price target is 6X operating CFPS.

GDP's preliminary production guidance for 2022 is 225,000 mcfepd. My 2022 forecast models now assume that HH gas will average $4.25/MMBtu in 2022. Net of cash settlements on their hedges, GDP should enjoy gas prices of approximately $3.80/mcf next year, which compares to their realized gas price of $2.85/mcf in 2021. Oil price has no impact on my valuation since only 1% of their production is oil.

My updated forecast/valuation model has been posted to the EPG website.
Dan Steffens
Energy Prospectus Group
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Re: Goodrich Petroleum (GDP) Q3 Results - Nov 12

Postby CreativeEquity » Fri Nov 12, 2021 1:15 pm

Oil production remains flat while gas companies are growing output rapidly. Are there any service companies focused exclusively on gas ?
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Re: Goodrich Petroleum (GDP) Q3 Results - Nov 12

Postby dan_s » Fri Nov 12, 2021 1:31 pm

Some of the midstream companies in our High Yield Income Portfolio will benefit from higher production of gas and NGLs.
Look at AM, ENLC, OKE
Dan Steffens
Energy Prospectus Group
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Re: Goodrich Petroleum (GDP) Q3 Results - Nov 12

Postby CreativeEquity » Fri Nov 12, 2021 1:40 pm

Great, and the presentation by Keith yesterday was outstanding, thanks !
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