Energy Prospectus

Second Quarter 2023 Highlights

Generated 7% sequential growth in total daily production volumes and 5% sequential growth in daily oil volumes (107 MBoe/d and 63 MBbls/d, respectively)
Capital expenditures at the low end of guidance at $285.1 million
Reduced lease operating expense on a per unit basis by 6% sequentially
3rd Bone Spring Shale well in Ward County is outperforming expectations, expanding the development area for this formation within the Company's Delaware Basin footprint
Net loss of $107.9 million, or $1.74 per share (all share amounts are stated on a diluted basis), adjusted EBITDAX of $332.3 million, and adjusted income of $123.1 million or $1.99 per share
Net cash provided by operating activities was $279.5 million and adjusted free cash flow was $12.3 million

Try to ignore "Report Net Income", which is a worthless stat thanks to the GAAP accounting rules for hedges. Adjusted Net Income is what should be compared to my forecasts and those of First Call.

Operating cash flow, free cash flow and production volumes are the most important stats.

The fact that CPE is recording a $407 million impairment charge related to sale of eagle ford assets is demonstrative that reported book value of carried assets may not be scrutinized and conservatively reported as one would hope. A lot of judgment exercised in the process and not necessarily good judgment. Thus the case that why a company may trade at less than book value per share would appear to be validated to some extent here.

Good points

Funny we are told to ignore hedge losses when they are negative but we gleefully include them when they are favorable.

Cash settlements are all that counts. The mark-to-mark adjustments violate the matching principle of accounting, which leads to very misleading quarterly results. When I was working for Hess, I was in on meetings with the SEC in the late 1990s and they totally overreacted to the Enron collapse. All of us from industry told them that the mark-to-market requirement would cause misleading results, but they did not seem to care.