Centennial Resource Development Update - Mar 5

[dan_s]

Note from Stifel received 3-5-2019

Centennial Resource Development, Inc. (CDEV, $9.30, Buy; Target $24.00) - Updating estimates for a new growth trajectory - Derrick Whitfield -
We are updating our model to reflect Centennial's new growth trajectory and recent operational results. Of particular importance, we are lowering our full-year 2019 oil production estimate from 44.9 mbopd to 41.3 mbopd on an $845mm capital budget. We view the company's decision to focus on financial discipline positively as the company retains the operational flexibility to resume growth in a more favorable commodity price environment. Of final importance, we believe the stock correction is overdone based on the spread between the change in cash flow estimates and change in stock price (15% and 5% on 2019 and 2020 cash flow estimates, respectively).
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The Wall Street Gang wants upstream companies to show "financial discipline" and "live within cash flow from operations", but when the company announces a reduced capital program (i.e. - slower growth) the stock sells off. I strongly agree with Derrick, the selloff on the Q4 press release was way overdone. Take advantage of the dip.

The CDEV profile is sitting here wait on my final review. We will send it out on March 6.

[dan_s]

Since CDEV released Q4 results, eight analysts have sent new reports to Reuters. Their valuations range from $10/share (Barclays) to $24.00/share (Stifel).