Civitas Resources (CIVI) Update - Mar 2

[dan_s]

Notes below are from TPH & Co. Equity Research Team (highly respected in Houston)
CIVI Stock Thoughts
Focus on execution moving through the year; remain comfortable with FY’24 outlook despite some transitory moving pieces likely to impact the Q1 print

Sector: Upstream | Ticker: CIVI | Recommendation: Buy | Target: $86 | Close: $76.05 | Market Cap: $7.7B | Analyst: Oliver Huang

Our model remains below consensus heading into the Q1 print on oil volumes, but market seems to be aware of moving pieces with estimates converging towards our numbers over the last few days.
> We are at 151.7mbopd (Street 155.5) and 330.4mboepd (Street 330.1) while seeing a heavier Q1 weighting to capex (working through wells from recent Permian acquisitions given rig drops into YE’23) of $611MM (Street $586MM) which should help drive growth moving through the remainder of the year. < My Q1 forecast is 326,000 Boepd with 155,665 Bopd.
> Our Q1 assumptions include a number of one-offs (January weather, line fill, retrofit to Delaware facility, and TIL timing impacts), but we remain comfortable with the FY’24 outlook sitting within guideposts on oil (TPHe 160.3mbopd vs. Street 161.0 / Guidance 155-165), BOEs (TPHe 339.4mboepd vs. Street 338.4 / Guidance 325-345) and capex (TPHe $1.96B vs. Street $2.00B / Guidance $1.8-$2.1B) which should drive a solid rebound in volumes moving through the remainder of the year.
> Key items we’ll be watching for updates around include: i) the non-core asset sale process, ii) latest on integration of Vencer / Permian ops, and iii) latest around the CO regulatory side.