Two non-gassers that will get a nice revenue boost from NGLs

[dan_s]

PDC Energy (PDCE) is primarily a DJ Basin Company with a smaller core area of operations on the Permian Basin. The share price is up more than 130% YTD, but I think it has a lot more upside for us. I really like their production mix. PDC's Q2 production was 191,458 Boepd, 30.9% crude oil, 41.5% natural gas and 27.6% NGLs. Approximately 40% of their 2H 2021 natural gas and 100% of their NGLs are unhedged. Unhedged natural gas volumes increase to ~85% after December, 2021.

Pioneer Natural Resources (PXD) is the second largest company in the Sweet 16 behind EOG. It is a pure play on the Permian Basin and its “variable dividends” should be going much higher in 2022. PXD is now on a pace to generate over $3.2 Billion of free cash flow this year and over $6 Billion in 2022 if they maintain their D&C budget at the current pace. 3rd quarter will be the first full quarter since PXD closed the acquisition of DoublePoint Energy on 5/4/2021. It should have them on a path to an exit rate of 720,000 Boepd and makes my 2022 production forecast of 740,000 Boepd look fairly conservative. PXD does produce 155,000 to 160,000 bpd of unhedged NGLs and my model assumes a blended price of $35/bbl in Q4, which may be up to $10/bbl too low.