Civitas Resources (CIVI) Q3 Results - Nov 7
Posted: Thu Nov 07, 2024 7:16 pm
Financial Highlights:
> Reported Net Income of $295.8 million with Adjusted Net Income of $195.8 million < Beat my forecast of $166.1 million Net Income.
> Operating Cash Flow of $835.0 million < Beat my forecast of $763.0 million.
> Adjusted Free Cash Flow of $366.3 million
> Production of 348,100 Boepd included oil of 159,000 barrels of oil per day.< Beat my forecast of 345,000 Boepd, but oil volumes were below my forecast of 162,150 bopd, .
Additional Highlights
> Return of capital totaled $227 million, including $149 million in dividends (second quarter dividend paid in September) and $78 million in share repurchases. Rather than declaring a third quarter variable dividend, the Company has allocated 100% of its third quarter variable return of capital to share repurchases.
> Reduced total debt (inclusive of deferred Vencer acquisition payment) with cash payments of $88 million. Financial liquidity at the end of the third quarter totaled more than $1.4 billion, comprised of cash on hand and available borrowing capacity under the Company's credit facility.
> Fourth quarter oil volumes are anticipated to increase 3% from the third quarter, with October 2024 oil production averaging 165 MBbl/d. < This is good news.
> Average two-mile Midland Basin Wolfcamp A/B well costs (drilling, completion and equipment) have been reduced to $740 per lateral foot, a 13% decrease from the beginning of the year.
> Commenced production on 16 Wolfcamp D wells in the Midland Basin year-to-date, with higher than anticipated productivity. These results expand the economic competitiveness of the Wolfcamp D across Civitas' acreage position.
> Year-to-date, the Company has added more than 75 gross locations in the Delaware and Midland Basins through multiple "ground game" transactions. In addition, via several land trades and acreage swaps, Civitas has significantly extended lateral footage on near-term core developments in the Permian Basin.
> Four-mile laterals in the DJ Basin are performing above expectation, with the Blue 4AH well producing a state-record 165 thousand barrels of oil in its initial 90 days.
> Received approval by Colorado’s Energy and Carbon Management Commission of the Lowry Ranch Comprehensive Area Plan within the Watkins development area of the DJ Basin.
Management Quote
“We’ve accomplished great things in 2024, including rapidly integrating new assets, delivering sustainable capital efficiency gains, proving up new zones for future development, and capturing additional inventory that expands our runway of high-return opportunities,” said President and CEO Chris Doyle. “Our Board's recent action to further prioritize the balance sheet and share repurchases was well-timed, and we have been aggressively repurchasing our stock, while also reducing debt. As we look to 2025, we are focused on generating significant free cash flow, reducing leverage, and returning capital to shareholders. Our high-quality assets, with positions of scale in the lowest-cost oil basins in the U.S, strong capital discipline, and top-tier execution, position us well to create value in 2025 and beyond.” < I know some of you don't like the reduced dividend, but buying back stock and reducing debt should increase per share valuation. For a company of this size, Civitas does have a low number of shares outstanding.
> Reported Net Income of $295.8 million with Adjusted Net Income of $195.8 million < Beat my forecast of $166.1 million Net Income.
> Operating Cash Flow of $835.0 million < Beat my forecast of $763.0 million.
> Adjusted Free Cash Flow of $366.3 million
> Production of 348,100 Boepd included oil of 159,000 barrels of oil per day.< Beat my forecast of 345,000 Boepd, but oil volumes were below my forecast of 162,150 bopd, .
Additional Highlights
> Return of capital totaled $227 million, including $149 million in dividends (second quarter dividend paid in September) and $78 million in share repurchases. Rather than declaring a third quarter variable dividend, the Company has allocated 100% of its third quarter variable return of capital to share repurchases.
> Reduced total debt (inclusive of deferred Vencer acquisition payment) with cash payments of $88 million. Financial liquidity at the end of the third quarter totaled more than $1.4 billion, comprised of cash on hand and available borrowing capacity under the Company's credit facility.
> Fourth quarter oil volumes are anticipated to increase 3% from the third quarter, with October 2024 oil production averaging 165 MBbl/d. < This is good news.
> Average two-mile Midland Basin Wolfcamp A/B well costs (drilling, completion and equipment) have been reduced to $740 per lateral foot, a 13% decrease from the beginning of the year.
> Commenced production on 16 Wolfcamp D wells in the Midland Basin year-to-date, with higher than anticipated productivity. These results expand the economic competitiveness of the Wolfcamp D across Civitas' acreage position.
> Year-to-date, the Company has added more than 75 gross locations in the Delaware and Midland Basins through multiple "ground game" transactions. In addition, via several land trades and acreage swaps, Civitas has significantly extended lateral footage on near-term core developments in the Permian Basin.
> Four-mile laterals in the DJ Basin are performing above expectation, with the Blue 4AH well producing a state-record 165 thousand barrels of oil in its initial 90 days.
> Received approval by Colorado’s Energy and Carbon Management Commission of the Lowry Ranch Comprehensive Area Plan within the Watkins development area of the DJ Basin.
Management Quote
“We’ve accomplished great things in 2024, including rapidly integrating new assets, delivering sustainable capital efficiency gains, proving up new zones for future development, and capturing additional inventory that expands our runway of high-return opportunities,” said President and CEO Chris Doyle. “Our Board's recent action to further prioritize the balance sheet and share repurchases was well-timed, and we have been aggressively repurchasing our stock, while also reducing debt. As we look to 2025, we are focused on generating significant free cash flow, reducing leverage, and returning capital to shareholders. Our high-quality assets, with positions of scale in the lowest-cost oil basins in the U.S, strong capital discipline, and top-tier execution, position us well to create value in 2025 and beyond.” < I know some of you don't like the reduced dividend, but buying back stock and reducing debt should increase per share valuation. For a company of this size, Civitas does have a low number of shares outstanding.