PDC Energy (PDCE) Update - Mar 5

[dan_s]

I will be posting my forecast/valuation model for PDC Energy to the EPG website today. My valuation has increased to $103/share.

At today's oil, gas and NGL prices, the Great Western Acquistion will be extremely accretive to operating cash flow. The deal is expected to close in Q2 2022.

Comments from PDC (based on an oil price of $75/bbl):
"In 2022, PDC projects to generate approximately $1.3 billion of after-tax FCF with more than $800 million of total shareholder returns. Anticipated 2022 capital investments between $900 million and $1.0 billion are expected to generate total production between 225,000 and 240,000 Boe per day and between 74,000 and 81,000 Bbls of oil per day. Post-close, the Company plans to operate three Wattenberg rigs, one Delaware rig and one and a half Wattenberg completion crews, resulting in anticipated second half daily total production and daily oil production of approximately 250,000 to 260,000 Boe and 82,000 to 87,000 Bbls, respectively.
The Company currently estimates pro forma cumulative 2022-2023 FCF of approximately $2.7 billion – equating to approximately 50 percent of the Company’s current market cap. Under the Company’s enhanced return of capital framework, and assuming a $0.25 per share quarterly dividend in the first quarter of 2022 and $0.35 per share thereafter, cumulative shareholder returns in 2022 and 2023 are expected to exceed $1.7 billion."