Civitas Resources (CIVI) Update - July 17

[dan_s]

CIVI is a recent addition to our High Yield Income Portfolio. It is also an Aggressive Growth company that is in the process of closing two BIG DEALS which I call the "Permian Basin Acquisitions". They will add approximately 100,000 Boepd (54% oil) and a lot of high-quality running room when the deals close early in August. Q4 2023 production should be approximately 265,000 Boepd.

The Company's Core Areas are the DJ Basin and the Permian Basin. Post Closing production mix s/b ~ 48% oil, 28% natural gas and 24% NGLs.

The Base + Variable dividends should total close to $8.85 in 2023 for annualized yield of ~12.7% based on the current share price.

I am increasing my valuation by $6 to $96/share. < Just 3.5 X annualized operating cash flow per share based on my forecast model.

TipRanks: "In the last 3 months, 3 ranked analysts set 12-month price targets for CIVI. The average price target among the analysts is $86.00. Neal Dingmann at Truist Financial raised his price target to $97. All three 5-Star analysts rate CIVI a BUY."

My Forecasts:
2023: $10.17 EPS and $24.39 operating CFPS
2024: $17.72 EPS and $35.04 operating CFPS

TipRanks' Forecasts:
2023: $10.01 EPS and $24.32 operating CFPS
2024: $13.62 EPS and $29.95 operating CFPS

After the deals close in August, I expect Civitas to update their guidance. If it matches my forecast assumptions, a higher valuation multiple should be justified.