PDC Energy (PDCE) = Growth + income in 2023

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

PDC Energy (PDCE) = Growth + income in 2023

Post by dan_s »

PDCE is one of the Sweet 16 companies that I am considering for a move to our High Yield Income Portfolio.
On December 7th the Company announced that it will be paying "Base + Special Dividends" with the first one ($1.00/share) paid last week. The increased dividend is great news, but their aggressive stock repurchase plan should do even more to increase the per share valuation.
> PDCE is a large company (over 250,000 Boepd of current production) and lots of running room in Colorado's DJ Basin.
> I like the production mix of 33% crude oil, 29% NGLs and 38% natural gas.
> My 2023 forecast is based on estimated production of 260,000 Boepd with realized prices of $78.50/bbl of oil, $28.50/bbl of NGLs and $4.50/mcf of natural gas. "Realized prices" are net of estimated cash settlements on the Company's hedges and regional differentials.
> PDCE should report full year 2022 operating cash flow of $2.5 to $2.6 billion. < Free cash flow of $1.4 to $1.5 billion.
> My forecast for 2023 is operating cash flow of $2.9 to $3.0 billion. < FCF should be over $1.5 billion.

PDCE closed on December 30 at $63.48 < Based on the most recent dividend, annualized yield is 6.3%
> TipRanks: "In the last 3 months, 4 ranked analysts set 12-month price targets for PDCE. The average price target among the analysts is $83.25. The four price targets range from $68 to $103."
> My current valuation is $103/share, which is just 3.5 X annualized operating CFPS for 2022+2023
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DENVER, Dec. 07, 2022 (GLOBE NEWSWIRE) -- PDC Energy, Inc. (“PDC” or the “Company”) (Nasdaq:PDCE) announced today that its Board of Directors declared a special dividend of $0.65 per share in addition to a quarterly cash dividend of $0.35 per share on PDC’s outstanding common stock. The dividends are payable on December 28, 2022, to stockholders of record at the close of business on December 19, 2022.

For the full year of 2022, PDC anticipates returning approximately $1 billion to shareholders through share repurchases, base dividend payments and the special dividend. Inclusive of the combined $1.00 base and special dividend payments in December and the $745 million invested in share repurchases to retire approximately 11 million shares through November 30, 2022, PDC has returned approximately $925 million in 2022 so far. The Company maintains an active share repurchase program and expects to continue to repurchase shares through year-end and into 2023 under its existing board-authorized $1.25 billion share repurchase program.

Scott Meyers, Chief Financial Officer commented, “Our returns framework that we laid out earlier this year is underpinned by a robust inventory of economic, long-lived operations. It has allowed us the flexibility to execute on the Great Western acquisition, increase our base divided, meaningfully reduce debt and ultimately return more than 60 percent of our free cash flow, post base dividend, to shareholders. I am excited about our results this year and our ability to maintain a meaningful capital returns program for years to come.”

About PDC Energy, Inc.

PDC Energy, Inc. is a domestic independent exploration and production company that acquires, explores and develops properties for the production of crude oil, natural gas and NGLs, with operations in the Wattenberg Field in Colorado and Delaware Basin in west Texas. Its operations in the Wattenberg Field are focused in the horizontal Niobrara and Codell plays and its Delaware Basin operations are primarily focused in the horizontal Wolfcamp zones.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: PDC Energy (PDCE) = Growth + income in 2023

Post by dan_s »

Here is what PDC's "Base + Special Dividend" was based on:

Q3 2022 Actual Results:
Production of 249,789
> 80,533 bbls of oil per day sold at a realized price of $70.32/bbl net of cash settlements on hedges
> 73,337 bbls of NGLs per day sold at a $29.75/bbl
> 575,511 mcf of natural gas per day sold at a $4.27/mcf net of cash settlements on their hedges.
Oil & Gas Revenues net of cash settlements on their hedges was $947.8 million for the quarter
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2023 production should be ~260,000 Boepd and the hedge book is in much better shape.
My revenue forecast is $4.2 billion, which compares to TipRanks' forecast of $3.8 billion.
Dan Steffens
Energy Prospectus Group
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