Crescent Energy (CRGY) Valuation Update - Feb 2

[dan_s]

On January 31st Crescent Energy Company (NYSE: CRGY) ("Crescent" or the "Company") announced the closing of its acquisition of Central Eagle Ford assets from Ridgemar Energy for upfront consideration of $905 million, consisting of $830 million in cash and 5,454,546 shares of Class A common stock, plus future oil price contingent consideration, subject to customary purchase price adjustments. Crescent plans to provide 2025 guidance reflecting the acquisition along with its fourth quarter and full year 2024 financial and operating results. < The Company also sold 21.5 million shares of Class A common stock in December net proceeds of

The Ridgemar Energy Acquisition adds approximately 20,000 Boepd (~70% oil).
> Crescent Energy's 2024 exit rate should be approximately 255,000 Boepd, with a mix of approximately 39.0% crude oil, 43.5% natural gas and 17.5% NGLs.
> As of today, production should be approximately 275,000 Boepd, with a mix of 40% crude oil, 43% natural gas and 17% NGLs.

"We are pleased to complete this accretive acquisition, which further scales our core Eagle Ford position as we also welcome many talented new members to the Crescent Energy team," said Crescent CEO David Rockecharlie. "This acquisition demonstrates our disciplined approach to creating shareholder value by combining our investing and operational expertise to acquire and efficiently integrate high-quality assets while maintaining a strong financial profile. These assets enhance our oil-weighted production and extend our low-risk inventory, reinforcing our ability to deliver sustained cash flow and returns. We remain focused on executing our strategy of profitable growth and advancing our investment-grade ambitions."

About Crescent Energy Company

Crescent is a differentiated U.S. energy company committed to delivering value for shareholders through a disciplined growth through acquisition strategy and consistent return of capital. Crescent’s portfolio of low-decline, cash-flow oriented assets comprises both mid-cycle unconventional and conventional assets with a long reserve life and deep inventory of high-return development locations in the Eagle Ford and Uinta basins. Crescent’s leadership is an experienced team of investment, financial and industry professionals that combines proven investment and operating expertise. For more than a decade, Crescent and its predecessors have executed on a consistent strategy focused on cash flow, risk management and returns. For additional information, please visit www.crescentenergyco.com.
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CRGY closed at $15.06 on January 31st

I already had the acquisition above included in my 2025 forecast, so my valuation stays at $26/share (just 3.5X annualized operating cash flow per share). My operating cash flow per share forecasts for 2025 and 2026 are slightly higher than the TipRanks' consensus CFPS forecasts.

TipRanks: "In the last 3 months, 8 ranked analysts set 12-month price targets for CRGY. The average price target among the analysts is $18.63.< The 8 price targets range from $14.00 to $23.00, with the most recently updated price target from Raymond James of $23 on 1/23/2025. The oldest price target is $14.00 from Jefferies on November 4. The Jefferies forecast is clearly based on much lower natural gas prices.

[dan_s]

I believe that the timing is good on this one because Crescent Energy is going to report large increases in production for Q4 2024 (based on the midpoint of the Company's guidance) and Q1 2025 because the Ridgemar Energy Acquisition closed a month earlier than expected.

I like CRGY because if its production mix in South Texas. They have plenty of natural gas pipeline access and they can get their gas to the big LNG exporters on the Texas Gulf Coast.