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PDC Energy (PDCE) Shares Gain Since Q4 Beat, Buyout Deal
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The stock of upstream operator PDC Energy has gained 17.9% since its fourth-quarter earnings announcement on Feb 28. In addition to delivering top and bottom-line beats, the company hiked its dividend and announced an accretive acquisition.
What Did PDC Energy’s Earnings Unveil?
PDC Energy reported adjusted earnings per share of $2.86, comfortably ahead of the Zacks Consensus Estimate of $2.40. The company had reported a profit of $1.10 in the year-ago quarter. The outperformance can be primarily attributed to better-than-anticipated production volumes and higher commodity prices. Precisely, the Colorado-focused company’s output of 19,405 thousand barrels of oil equivalent (MBoe) surpassed the Zacks Consensus Estimate of 18,928 MBoe.
Meanwhile, PDC Energy recorded total revenues of $854.6 million, ahead of the consensus mark by 23.6% and significantly higher than the year-ago level of $278.6 million.
In more news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, PDCE’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record on Mar 11. The payout, which represents a 108% sequential increase, will be made on Mar 25. The payout will likely increase further to 35 cents once the acquisition closes in the second quarter. PDC Energy also hiked its share buyback authorization to $1.25 billion, which it plans to implement by the end of next year.
PDC Energy, Inc. Price, Consensus and EPS Surprise
Concurrent with the earnings release, PDCE announced the acquisition of privately-held Great Western Petroleum LLC for $1.3 billion, comprising $543 million of cash, $500 million in debt assumption and around $230 million of shares. The to-be-acquired assets, at the core of the Wattenberg Field in Colorado, will add 55 Mboe per day (42% oil) to PDC Energy’s production and bring 315 potential new drilling sites. Additionally, the company has confirmed that the acquisition will be accretive to most of its key financial metrics.
Production & Prices
For the fourth quarter of 2021, PDC Energy’s production totaled 19,405 MBoe (60% liquids), reflecting an increase of around 17% from 16,574 MBoe a year ago. Of the aggregate output, 16,732 MBoe (or some 86%) came from Wattenberg Field and the rest from Delaware Basin.
The average realized natural gas price increased from $1.58 per thousand cubic feet (Mcf) in the year-ago quarter to $4.10. PDC Energy sold NGLs at an average price of $32.74 per barrels (Bbls) compared to $12.76 a year ago. Meanwhile, the average oil price realization came in at $76.50 per barrel, 89% higher than $40.43 in the year-ago period. Overall, PDC Energy fetched $32.74 per MBoe compared with $12.76 a year ago.
Capital Expenditure & Balance Sheet
The energy explorer shelled out $154.3 million in the form of oil and gas capital investments. As of Dec 31, PDC Energy had approximately $33.8 million in cash and cash equivalents, and $942.1 million in long-term debt, representing a debt-to-capitalization of 24.5%. During the quarter, the company returned approximately $110 million through dividends and share repurchases.
Guidance
In 2022, PDC Energy expects to pump 195,000-205,000 Boe per day of hydrocarbon on a standalone basis, with the midpoint approximately 5.2% below the Q4 average. Including the acquisition, the company is guiding for a daily average output of 250,000-260,000 Boe. It also gave its oil production expectation of 62,000-65,000 Boe per day (standalone) and 82,000-87,000 Boe per day (pro forma).
The company forecast a standalone capital spending budget between $675 million and $725 million, which represents an increase from the 2021 actual figure of $583.1 million. Considering the acquisition, the figure is expected between $900 million and $1 billion.
Finally, PDCE believes it is capable of generating approximately $2.7 billion in cumulative free cash flow (at a WTI price of $75, natural gas at $4 and NGL at $27.50) this year and next, while returning $1.7 billion to its shareholders during this period. The company has committed to return at least 60% of free cash flow to its shareholders in 2022 and beyond.
Zacks Rank & Stock Picks
PDC Energy currently carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked players in the energy space are Devon Energy (DVN - Free Report) , Chevron (CVX - Free Report) and Marathon Petroleum (MPC - Free Report) . Each of the companies sports a Zacks Rank of 1.
Devon Energy: Devon Energy is valued at some $39 billion. The Zacks Consensus Estimate for DVN’s 2022 earnings has been revised 16.8% upward over the past 60 days.
Devon Energy, headquartered in Oklahoma City, OK, delivered a 14.9% beat in Q4. DVN shares have gained around 154.4% in a year.
Chevron: Chevron is valued at around $333 billion. The consensus estimate for CVX’s 2022 earnings has been revised 27.8% upward over the past 60 days.
CVX beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, the average being 6.3%. Chevron has rallied around 62.7% in a year.
Marathon Petroleum: Marathon Petroleum has a projected earnings growth rate of 149.4% for this year. The Zacks Consensus Estimate for MPC’s 2022 earnings has been revised 45.5% upward over the past 60 days.
Marathon Petroleum beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 74.8%. MPC shares have gained around 40.7% in a year.
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PDC Energy (PDCE) Shares Gain Since Q4 Beat, Buyout Deal
The stock of upstream operator PDC Energy has gained 17.9% since its fourth-quarter earnings announcement on Feb 28. In addition to delivering top and bottom-line beats, the company hiked its dividend and announced an accretive acquisition.
What Did PDC Energy’s Earnings Unveil?
PDC Energy reported adjusted earnings per share of $2.86, comfortably ahead of the Zacks Consensus Estimate of $2.40. The company had reported a profit of $1.10 in the year-ago quarter. The outperformance can be primarily attributed to better-than-anticipated production volumes and higher commodity prices. Precisely, the Colorado-focused company’s output of 19,405 thousand barrels of oil equivalent (MBoe) surpassed the Zacks Consensus Estimate of 18,928 MBoe.
Meanwhile, PDC Energy recorded total revenues of $854.6 million, ahead of the consensus mark by 23.6% and significantly higher than the year-ago level of $278.6 million.
In more news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, PDCE’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record on Mar 11. The payout, which represents a 108% sequential increase, will be made on Mar 25. The payout will likely increase further to 35 cents once the acquisition closes in the second quarter. PDC Energy also hiked its share buyback authorization to $1.25 billion, which it plans to implement by the end of next year.
PDC Energy, Inc. Price, Consensus and EPS Surprise
PDC Energy, Inc. price-consensus-eps-surprise-chart | PDC Energy, Inc. Quote
Acquisition
Concurrent with the earnings release, PDCE announced the acquisition of privately-held Great Western Petroleum LLC for $1.3 billion, comprising $543 million of cash, $500 million in debt assumption and around $230 million of shares. The to-be-acquired assets, at the core of the Wattenberg Field in Colorado, will add 55 Mboe per day (42% oil) to PDC Energy’s production and bring 315 potential new drilling sites. Additionally, the company has confirmed that the acquisition will be accretive to most of its key financial metrics.
Production & Prices
For the fourth quarter of 2021, PDC Energy’s production totaled 19,405 MBoe (60% liquids), reflecting an increase of around 17% from 16,574 MBoe a year ago. Of the aggregate output, 16,732 MBoe (or some 86%) came from Wattenberg Field and the rest from Delaware Basin.
The average realized natural gas price increased from $1.58 per thousand cubic feet (Mcf) in the year-ago quarter to $4.10. PDC Energy sold NGLs at an average price of $32.74 per barrels (Bbls) compared to $12.76 a year ago. Meanwhile, the average oil price realization came in at $76.50 per barrel, 89% higher than $40.43 in the year-ago period. Overall, PDC Energy fetched $32.74 per MBoe compared with $12.76 a year ago.
Capital Expenditure & Balance Sheet
The energy explorer shelled out $154.3 million in the form of oil and gas capital investments. As of Dec 31, PDC Energy had approximately $33.8 million in cash and cash equivalents, and $942.1 million in long-term debt, representing a debt-to-capitalization of 24.5%. During the quarter, the company returned approximately $110 million through dividends and share repurchases.
Guidance
In 2022, PDC Energy expects to pump 195,000-205,000 Boe per day of hydrocarbon on a standalone basis, with the midpoint approximately 5.2% below the Q4 average. Including the acquisition, the company is guiding for a daily average output of 250,000-260,000 Boe. It also gave its oil production expectation of 62,000-65,000 Boe per day (standalone) and 82,000-87,000 Boe per day (pro forma).
The company forecast a standalone capital spending budget between $675 million and $725 million, which represents an increase from the 2021 actual figure of $583.1 million. Considering the acquisition, the figure is expected between $900 million and $1 billion.
Finally, PDCE believes it is capable of generating approximately $2.7 billion in cumulative free cash flow (at a WTI price of $75, natural gas at $4 and NGL at $27.50) this year and next, while returning $1.7 billion to its shareholders during this period. The company has committed to return at least 60% of free cash flow to its shareholders in 2022 and beyond.
Zacks Rank & Stock Picks
PDC Energy currently carries a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked players in the energy space are Devon Energy (DVN - Free Report) , Chevron (CVX - Free Report) and Marathon Petroleum (MPC - Free Report) . Each of the companies sports a Zacks Rank of 1.
Devon Energy: Devon Energy is valued at some $39 billion. The Zacks Consensus Estimate for DVN’s 2022 earnings has been revised 16.8% upward over the past 60 days.
Devon Energy, headquartered in Oklahoma City, OK, delivered a 14.9% beat in Q4. DVN shares have gained around 154.4% in a year.
Chevron: Chevron is valued at around $333 billion. The consensus estimate for CVX’s 2022 earnings has been revised 27.8% upward over the past 60 days.
CVX beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, the average being 6.3%. Chevron has rallied around 62.7% in a year.
Marathon Petroleum: Marathon Petroleum has a projected earnings growth rate of 149.4% for this year. The Zacks Consensus Estimate for MPC’s 2022 earnings has been revised 45.5% upward over the past 60 days.
Marathon Petroleum beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 74.8%. MPC shares have gained around 40.7% in a year.