Centennial Resource Dev (CDEV) Q4 Results - Feb 25

[dan_s]

DENVER, Feb. 25, 2019 (GLOBE NEWSWIRE) -- Centennial Resource Development, Inc. (“Centennial” or the “Company”) (NASDAQ: CDEV) today announced 2018 financial and operational results and 2019 operational plans and targets. Q4 Results were very close to my forecast, but lower production guidance for 2019 will lower my valuation a bit. - Dan.

2018 Financial and Operational Highlights:

Increased daily oil and equivalent production volumes 81% and 92% year-over-year, respectively
Announced solid well results from the Northern and Southern Delaware Basins, including successful delineation tests and Centennial’s best New Mexico well to date
Increased total proved reserves 40% with organic reserve replacement ratio over 400%
Maintained original capital expenditure budget
Delivered unit costs at or below low-end of full year guidance ranges

2019 Financial and Operational Plan:

Currently operating six-rig drilling program, a reduction from 2018
Reduced total capital budget by 15% to $845 million
Expect to grow crude oil production approximately 12% year-over-year
Plan flexible approach to operational activity depending on commodity prices
Maintain focus on balance sheet and strong liquidity
Financial Results

Full year 2018 net income increased 165% to $199.9 million, or $0.75 per diluted share, compared to $75.6 million, or $0.32 per diluted share, in the prior year.

Fourth quarter crude oil production increased 11% to 39,978 barrels of oil per day (“Bbls/d”) compared to the prior quarter. For the full year 2018, average daily oil and total equivalent production volumes increased to 34,737 Bbls/d and 61,082 barrels of oil equivalent per day (“Boe/d”), or 81% and 92% compared to 2017, respectively.

“Centennial had a strong year accomplishing our operational goals. We stayed within our original capex budget, hit our production targets, added takeaway capacity and maintained cost control,” said Mark G. Papa, Chairman and Chief Executive Officer. “Importantly, we ended the year with a strong balance sheet while adding high-quality inventory.”

[dan_s]

CDEV closed at $12.71 today.

I have updated my forecast/valuation model for the company and it will be posted to the EPG website this evening.

I am lowering my valuation by $2.00 to $20.00/share, primarily because of lower production guidance from the company for 2019.
1. My SWAG is that their guidance is extremely conservative.
2. Look for production to be flat for a couple of quarters and then surge in 2H 2019.
3. NONE of their oil is hedged, so CDEV has a lot of upside if oil prices go up. My valuation is based on an average oil price realization of $53.75/bbl in 2019.