PDC Energy (PDCE) Q1 Results - May 8

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PDC Energy Announces 2020 First Quarter Results and Provides Projected 2020 Guidance

2020 First Quarter Highlights:

In May, the Company’s semi-annual redetermination resulted in a borrowing base of $1.7 billion under its revolving credit facility with elected commitments remaining at $1.7 billion, resulting in total liquidity, as of April 30, 2020, of approximately $1.0 billion. < VERY GOOD NEWS.

Net cash from operating activities of approximately $266 million and adjusted cash flows from operations, a non-U.S. GAAP metric defined below, of approximately $210 million. Both figures include approximately $20 million of general and administrative expense (“G&A”) related to SRC deal costs. < Compares to my Q1 forecast of operating cash flow of $231.5 million.

Oil and gas capital investments of approximately $260 million.

Approximately $50 million of free cash flow deficit, a non-U.S. GAAP metric defined below as net cash flows from operating activities, before changes in working capital, less oil and gas capital investments. Free cash flow deficit for the quarter includes approximately $20 million of SRC deal costs.

Total production of 16.8 million barrels of oil equivalent (“MMBoe”) or approximately 185,000 Boe per day and oil production of 5.9 million barrels (“MMBbls”) or nearly 65,000 Bbls per day. < Compares to my Q1 forecast of 195,000 Boepd with 75,000 BOPD.

Full-Year 2020 Guidance Highlights:

Anticipated oil and gas capital investments between $500 and $600 million, representing a decrease of approximately 50 percent compared to PDC’s initial guidance provided in February 2020.

Anticipate generating more than $125 million of free cash flow, a non-U.S. GAAP metric defined as net cash flows from operating activities, before changes in working capital, less oil and gas capital investments. < Agrees with my full year 2020 forecast.

Anticipated total production of 170,000 to 180,000 Boe per day with expected oil production averaging between 60,000 and 65,000 Bbls per day.

Approximately $135 million to $140 million of G&A, including cash and non-cash stock-based compensation, but excluding SRC deal costs.

CEO Commentary

President and Chief Executive Officer Bart Brookman commented, “At PDC, we have a long-proven track record of prioritizing our financial strength through the conservative management of our balance sheet and the utilization of a systematic hedging program. This has proven time and again to be a prudent strategy, with the 2015 price correction serving as our most recent example. Today, the industry finds itself in unchartered waters due to a global pandemic and subsequent demand destruction forcing operators to make extremely difficult decisions. However, at PDC, the quality of our assets and our willingness to quickly and decisively alter our operating plan has once again positioned us to succeed in a time of extreme duress on the industry.”

“The coming months will likely prove to be a dynamic time at PDC as we navigate our way through an incredibly fluid situation. Rest assured that our ability to generate free cash flow, with a commitment to maintaining low leverage metrics and preserving our balance sheet are expected to serve as true differentiating factors.”