Crescent Energy (CRGY) Valuation Update - Dec 23

[dan_s]

I have updated my forecast model for Crescent Energy, breaking out 2025 by quarter and adding my initial forecast for 2026.

This is an Aggressive Growth Company, primarily focused on the South Texas Eagle Ford. They closed the "Transformative" SilverBow Resources acquisition on July 30, 2024 and another bolt on acquisition on October 1, 2024. They recently announced another large Eagle Ford acquisition from Ridgemar Energy that will close some time in Q1 2025. It will add ~20,000 Boepd of production (~70% oil) and a lot of high-quality "Running Room".

Heading into Q2 2025 Crescent Energy's production should be ~275,000 Boepd with a mix of 40% crude oil, 43% natural gas and 17% NGLs.

At the time of this post CRGY was trading for $13.53. < Less than 2.5 X 2024 operating CFPS.

My updated current valuation is $25/share, which is just 3.5 X annualized operating CFPS for 2024 - 2026.

There is upside for this one if Q4 beats my forecast, which is what TipRanks is forecasting, and they close the Ridgemar Energy by mid-Q1 2025.

Higher realized natural gas prices will give them a nice revenue boost in 1H 2025.

TipRanks: "In the last 3 months, 8 ranked analysts set 12-month price targets for CRGY. The average price target among the analysts is $17.63."

I believe that the Wall Street Gang is under-estimating this company. My 2025 forecast is actually quite close to the TipRanks' consensus forecast, but the analyst are using very low multiples to value it. All the M&A "noise" needs to settle down and 2025 guidance needs to verify their forecast models assumptions. If so, I expect CRGY to get a lot of upgrades after they report Q4 2024 results.