PDC Energy (PDCE) Update

[dan_s]

I have updated my forecast / valuation model for PDCE based on their production and expense guidance. Big drop in the DD&A rate will make this one earnings positive in 2017.

Before I tell you my updated valuation let me point out that this is a company with 40% year-over-year production growth locked in for 2017 and at least that much more growth in 2018. Q4 2016 production was 69,617 BOE per day and their exit rate on 12/31/2017 should be ~100,000 BOE per day.

Here are the current First Call operating cash flow per share forecasts, before they are updated for increased guidance.
2017 = $9.48 (my forecast says $9.32)
2018 = $14.57 (my forecast says $15.96)
2019 = $21.27

PDCE has a solid base of production in the DJ Basin, but most of their growth will be coming from the Delaware Basin.

My valuation increases by $4.00/share to $116.00, which compares to First Call's price target of $86.00.

Listen to their Q4 conference call and tell me why PDCE should be trading at such a deep discount to the other Permian Basin companies.

[dan_s]

FYI some Wall Street firms do not consider the impact of acquisitions and equity offerings in their forecasts until the deals close. That may explain why the forecasts submitted to Reuters (First Call) are all over the place.