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Centennial (CDEV) Rises 3% on Q2 Earnings & Revenues Beat

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Centennial Resource Development, Inc’s stock price rose 3% since it reported strong second-quarter results on Aug 3.

Centennial Resource’s second-quarter adjusted earnings of 61 cents per share beat the Zacks Consensus Estimate of 41 cents. The bottom line improved from the year-ago profit of 2 cents per share.

Quarterly revenues of $473 million increased from $233 million in the year-ago quarter and beat the Zacks Consensus Estimate of $394 million.

The strong quarterly results were owing to higher oil equivalent production and increased commodity prices.  

Operations:

Production

Centennial Resource’s overall production of 70,240 barrels of oil equivalent per day (Boe/d) increased from the year-ago period’s 61,647 Boe/d. Of the total output, 52.2% comprised crude oil.

Oil volumes increased from 31,912 Bbls/d to 36,696 barrels per day (Bbls/d) in the June quarter. Natural gas liquids (NGLs) production totaled 13,507 Bbls/d, up from the year-ago quarter’s 10,297 Bbls/d. Natural gas production of 120,225 thousand cubic feet per day (Mcf/d) increased from 116,629 Mcf/d.

Price Realizations

Average realized crude price (excluding the effects of derivative settlements) of Centennial Resource was reported at $104.69 a barrel, up from $60.99 in second-quarter 2021. The same for natural gas rose to $6.22 per Mcf from the prior year’s $2.55. Furthermore, NGLs price rose to $44.77 per barrel in the second quarter from $30.37.

Operating Costs

Centennial Resource’s total operating expenses were $189.6 million in second-quarter 2022, higher than $171.5 million in the year-ago period.

On a per Boe basis, the company’s second-quarter lease operating expenses were $4.52, higher than the year-ago level of $4.10. Also, gathering, processing and transportation costs increased to $4.03 per Boe from $3.47.

Capital Expenditure & Balance Sheet

In the June quarter, it incurred a capital expenditure of $140.6 million. At the second quarter-end, cash and cash equivalents were reported at $201.1 million. Long-term net debt outstanding amounted to $801.8 million.

Cash Flow & Free Cash Flow

The company reported net cash flow of $295 million from operating activities compared with $107.3 million in the year-ago period. Free cash flow generated during the quarter under review was $137.4 million, up from $34.2 million.

Zacks Rank & Stocks to Consider

Centennial Resource currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the energy space include Exxon Mobil Corporation (XOM - Free Report) , BP plc (BP - Free Report) and Matador Resources (MTDR - Free Report) . While Matador carries a Zacks Rank #2 (Buy), ExxonMobil and BP sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil’s upstream operation is benefiting from high oil price. Recently, XOM reported strong earnings thanks to higher realized commodity prices and solid refinery utilization, offset partially by increased ethane feed costs in North America. In 2022, ExxonMobil is likely to see earnings growth of 131%.

High oil prices are aiding BP’s upstream operations. Its sizable refining and marketing operations will protect it if the crude pricing scenario turns unfavorable again. For 2022, it is likely to witness earnings growth of 108.6%. Over the past few quarters, BP has successfully been reducing long-term debt.

High oil price is also aiding Matador. MTDR is highly efficient in its operations, as it is increasing production significantly despite lowering its costs. Matador has a strong focus on reducing debt and returning capital to shareholders.


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