Civitas Resources (CIVI) Q2 Results - Aug 6

[dan_s]

CIVI is a recent addition to our High Yield Income Portfolio. It's next quarterly dividend to be paid in September will be $1.74/share for annualized yield of 9.2% based on the Aug 4 closing price of $75.61.

DENVER, August 02, 2023--(BUSINESS WIRE)--Civitas Resources, Inc. (NYSE: CIVI) (the "Company" or "Civitas") today announced its second quarter 2023 financial and operating results. In addition, the Company also announced the closing of its transformative acquisitions in the Permian Basin for aggregate consideration of approximately $4.7 billion. The deals diversify the Company’s asset portfolio through scalable operations and a deep inventory of quality drilling locations in the top three oil basins in the U.S.

Second Quarter 2023 Highlights

Average daily sales volumes of 173.5 thousand barrels of oil equivalent per day ("MBoe/d") and 84.4 thousand barrels of oil per day < Beat my Q2 production forecast of 161,600 Boepd and 72,500 BOPD. FYI I always try to be conservative on my initial forecast model for new additions to our model portfolios.

Total capital expenditures of $226.8 million

GAAP net income of $139.3 million and Adjusted EBITDAX of $454.3 million

Net cash provided by operating activities of $337.2 million and free cash flow of $189.2 million

Approximately 312,800 shares of outstanding common stock repurchased under the Company's stock repurchase program for a total of $20.2 million (average repurchase price of $64.55 per share).

Fixed-plus-variable dividend, to be paid in September, of $1.74 per share

Total liquidity was $3.7 billion as of June 30, 2023, which consisted of $2.7 billion of cash plus funds available under the Company's credit facility.
Liquidity as of June 30, 2023 does not take into account the acquisitions.

"This is a great day for Civitas, an organization with scale, portfolio diversity, and durability," said Civitas CEO Chris Doyle. "We continue to perform exceptionally well and have strengthened our company with the addition of top-tier assets in the heart of the Permian Basin. Our diversified portfolio of oil assets will provide us with capital allocation flexibility and a greater ability to direct investments to our highest return opportunities. Our focus today is on effectively integrating our Permian assets into Civitas and delivering on our plan to profitably grow our business, while reducing debt and returning significant cash to shareholders." < The Company's flexibility to shift their drilling program to more oil prone areas is one of the keys to my valuation.

Shareholder Return Update

During the second quarter of 2023, the Company repurchased approximately 312,800 shares of outstanding common stock under its stock repurchase program for a total of $20.2 million, representing an average repurchase price of $64.55 during the quarter. Approximately $480 million remains under the Company's $500 million share buyback authorization, which expires at year-end 2024.

The Company's board of directors approved a dividend of $1.74 per share, payable on September 29, 2023 to shareholders of record as of September 15, 2023. The total reflects the combination of a quarterly base dividend of $0.50 per share and a quarterly variable dividend of $1.24 per share. Additional details regarding the calculation of the variable dividend can be found in the Company's new investor presentation located on its website.

My updated valuation is $104.