CDEV Update - Jan 16

[dan_s]

Centennial Resource Development (NASDAQ:CDEV) was downgraded by Barclays PLC (analyst William
S. Thompson) from an "overweight" rating to an "underweight" rating. They now have a $14.00 price target on the
stock, down previously from $22.00. 3.7% upside from the current price of $13.50.

My valuation is $24

[mkarpoff]

why the big discrepancy, do you think?

[dan_s]

They are probably using a much lower oil price.

[mkarpoff]

...and yet they have a higher price for Parsley than you do, so that seems a bit incongruous.

[dan_s]

I can go to almost any company on Reuters and see analysts' forecasts/valuations that are extremely different. Forecasts are only as good as the assumptions used in the model.

None of Centennial's oil is hedged, so Barclays may be putting a big discount on it because of the commodity price risk. They aren't as bullish on oil price as some other Wall Street firms are.

Now download my forecast for CDEV to Excel. Go through it line-by-line and tell me specifically what you think is wrong with my assumptions. If you take just 30 minutes to do this, I think you will see that my assumptions are rather conservative for this one.

Regarding Parsley: I think it does have a lot more upside for us than my current valuation.