PDC Energy (PDCE) Q1 Results - May 7

[dan_s]

PDC Energy, Inc. (“PDC” or the “Company”) (Nasdaq:PDCE) announced its 2021 first quarter financial and operating results.

2021 First Quarter Highlights:

Net cash from operating activities of approximately $355 million, adjusted cash flows from operations, a non-U.S. GAAP metric defined below, of approximately $300 million < Compares to my forecast of $273.8 million.

Oil and gas capital investments of approximately $125 million.
Approximately $175 million of adjusted free cash flow (“FCF”), a non-U.S. GAAP metric defined below. < "FCF" is Adjusted Cash Flow From Operations - Capex.

Reduced total net debt by approximately $230 million, resulting in an undrawn revolving credit facility, cash balance of approximately $60 million and total liquidity of $1.7 billion as of March 31, 2021.

Returned $22 million of capital to shareholders through the repurchase of approximately 600,000 shares of common stock outstanding.

Total production of 15.7 million barrels of oil equivalent (“MMBoe”) or approximately 175,000 Boe per day and oil production of 4.9 million barrels (“MMBbls”) or nearly 54,000 Bbls per day. < Production was below my forecast of 178,500 Boepd, but higher realized prices more than made up for it.

CEO Commentary

President and Chief Executive Officer Bart Brookman commented, “Once again, our results clearly reflect the company's priorities: sustainable free cash flow, debt reduction and shareholder returns. Since closing the SRC merger in early 2020, PDC has generated nearly $600 million of free cash flow while reducing debt by approximately $500 million. The Company's financial strength, combined with its focus on shareholder returns and operational excellence, make PDC's story particularly compelling."

The Company’s expected total production range of 190,000 to 200,000 Boe per day, anticipated oil production range of 64,000 to 68,000 Bbls per day and projected year-over-year fourth quarter exit rate growth of ten to 15 percent also remain unchanged.

[dan_s]

PDCE is currently trading for $40.08, which compares to First Call's price target of $47.69.

I have updated my forecast for Q1 results and the company's updated guidance.
I am assuming the midpoint of their production guidance for 2021 of 195,000 Boepd, but they have a lot f high quality DUC wells ready to complete this summer to take advantage of higher liquids prices. PDC's realized NGL price increased by 66% from Q4 to Q1 and for the year, I now expect their realized NGL prices to more than double what they were paid in 2020. PDC should produce over 50,000 bpd of NGLs this year.

My valuation increases by $9 to $62, because of higher commodity prices and I am dropping 2020 results from my valuation formula. I am only using a multiple of 4X operating cash flow to value PDCE, which is quite low for a company with such a strong balance sheet and lots of high quality "running room".

My forecast model will be posted to the EPG website this afternoon.