A month has gone by since the last earnings report for Centennial Resource . Shares have added about 66.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Centennial Resource due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Centennial Reports Narrower-Than-Expected Loss in Q3
Centennial Resourcereported third-quarter 2020 adjusted loss of 19 cents per share, slightly narrower than the Zacks Consensus Estimate of a loss of 22 cents. Notably, the company had reported adjusted earnings of 1 cent per share in the year-ago quarter.
Quarterly revenues from oil and gas sales significantly dropped to $149.1 million from the prior year’s $229.1 million. However, the top line beat the consensus mark of $116 million.
The better-than-expected results can be attributed to reduced lease operating expenses during the reported quarter. This was negated partially by lower oil equivalent production volumes and prices.
Operations:
Production
Overall production of 68,934 barrels of oil equivalent per day (Boe/d) was down from the year-ago period’s 76,312 Boe/d. Of the total output, 51.2% comprised crude oil.
Oil volumes deteriorated from 42,079 Bbls/d to 35,292 barrels per day (Bbls/d) in the September-end quarter. Natural gas production of 112,545 thousand cubic feet per day (Mcf/d) fell from the year-ago quarter’s 124,896 Mcf/d. However, natural gas liquids (NGLs) production totaled 14,885 Bbls/d, up 10.9% from the year-ago quarter’s 13,417 Bbls/d.
Price Realizations
The company reported average realized crude price of $36.95 a barrel (excluding the effects of derivate settlements), down from the $51.71 witnessed in the third quarter of 2019. NGLs were sold at $12.58 a barrel, down from the $14.47 seen in year-earlier quarter. However, average natural gas price rose to $1.15 per Mcf from the prior year’s 96 cents.
Operating Costs
Centennial’s total operating costs came in at $181.1 million in third-quarter 2020, lower than the $217.8 million witnessed in the year-ago period, mainly due to reduced lease operating expenses.
On a per Boe basis, the company’s third-quarter lease operating expenses were $3.87, lower than the year-ago level of $6.03. Nevertheless, gathering processing and transportation costs flared up to $3.02 per Boe from the year-ago period’s $2.97.
Capital Expenditure & Balance Sheet
In July-September quarter, it incurred capital expenditure of only $21.5 million, of which $19.7 million was assigned to drilling and completion activities.
At the end of the third quarter, cash balance amounted to $5.2 million, down from the second-quarter level of $7.2 million. Long-term debt outstanding amounted to $1,127.9 million, down 1.3% from the prior-quarter level of $1,142.9 million. Centennial had a net debt to book equity capitalization of 29%. Notably, it had $355 million available under the revolving credit facility.
Cash Flow & Free Cash Flow
The company’s constant focus on cost reduction generated net cash of $45.7 million from operating activities. Notably, free cashflow generated during the quarter under review was $10.5 million as compared to a free cashflow deficit of $95.8 million in a year-ago comparable period. Thus, it is evident that the upstream firm is boosting up its liquidity position.
Guidance
Centennial raised the 2020 net production outlook to the band of 66,000-68,000 million Boe/d from the earlier forecast of 64,000-68,000 Boe/d. Net oil production for the ongoing year is estimated in the band of 35,500-36,500 bpd.
Lease operating expense for the full year is expected to be $4.25-$4.50 per Boe, lower than the company’s prior projection of $4.60-$5.00. Gathering, processing and transportation costs will likely be in the range of $2.90-$3.00 per Boe. The company resumed drilling activities during the September-end quarter, with the addition of one rig. For the rest of 2020, the upstream energy firm anticipates to continue the one-rig program.
Management plans to spend approximately $240-$265 million of capital compared with the prior guidance of $240-$270 million for 2020, the majority of which will be used in drilling and completion activities. It anticipates to complete 31-33 wells this year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 10.92% due to these changes.
VGM Scores
At this time, Centennial Resource has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Centennial Resource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Centennial Resource (CDEV) Up 66.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Centennial Resource . Shares have added about 66.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Centennial Resource due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Centennial Reports Narrower-Than-Expected Loss in Q3
Centennial Resourcereported third-quarter 2020 adjusted loss of 19 cents per share, slightly narrower than the Zacks Consensus Estimate of a loss of 22 cents. Notably, the company had reported adjusted earnings of 1 cent per share in the year-ago quarter.
Quarterly revenues from oil and gas sales significantly dropped to $149.1 million from the prior year’s $229.1 million. However, the top line beat the consensus mark of $116 million.
The better-than-expected results can be attributed to reduced lease operating expenses during the reported quarter. This was negated partially by lower oil equivalent production volumes and prices.
Operations:
Production
Overall production of 68,934 barrels of oil equivalent per day (Boe/d) was down from the year-ago period’s 76,312 Boe/d. Of the total output, 51.2% comprised crude oil.
Oil volumes deteriorated from 42,079 Bbls/d to 35,292 barrels per day (Bbls/d) in the September-end quarter. Natural gas production of 112,545 thousand cubic feet per day (Mcf/d) fell from the year-ago quarter’s 124,896 Mcf/d. However, natural gas liquids (NGLs) production totaled 14,885 Bbls/d, up 10.9% from the year-ago quarter’s 13,417 Bbls/d.
Price Realizations
The company reported average realized crude price of $36.95 a barrel (excluding the effects of derivate settlements), down from the $51.71 witnessed in the third quarter of 2019. NGLs were sold at $12.58 a barrel, down from the $14.47 seen in year-earlier quarter. However, average natural gas price rose to $1.15 per Mcf from the prior year’s 96 cents.
Operating Costs
Centennial’s total operating costs came in at $181.1 million in third-quarter 2020, lower than the $217.8 million witnessed in the year-ago period, mainly due to reduced lease operating expenses.
On a per Boe basis, the company’s third-quarter lease operating expenses were $3.87, lower than the year-ago level of $6.03. Nevertheless, gathering processing and transportation costs flared up to $3.02 per Boe from the year-ago period’s $2.97.
Capital Expenditure & Balance Sheet
In July-September quarter, it incurred capital expenditure of only $21.5 million, of which $19.7 million was assigned to drilling and completion activities.
At the end of the third quarter, cash balance amounted to $5.2 million, down from the second-quarter level of $7.2 million. Long-term debt outstanding amounted to $1,127.9 million, down 1.3% from the prior-quarter level of $1,142.9 million. Centennial had a net debt to book equity capitalization of 29%. Notably, it had $355 million available under the revolving credit facility.
Cash Flow & Free Cash Flow
The company’s constant focus on cost reduction generated net cash of $45.7 million from operating activities. Notably, free cashflow generated during the quarter under review was $10.5 million as compared to a free cashflow deficit of $95.8 million in a year-ago comparable period. Thus, it is evident that the upstream firm is boosting up its liquidity position.
Guidance
Centennial raised the 2020 net production outlook to the band of 66,000-68,000 million Boe/d from the earlier forecast of 64,000-68,000 Boe/d. Net oil production for the ongoing year is estimated in the band of 35,500-36,500 bpd.
Lease operating expense for the full year is expected to be $4.25-$4.50 per Boe, lower than the company’s prior projection of $4.60-$5.00. Gathering, processing and transportation costs will likely be in the range of $2.90-$3.00 per Boe. The company resumed drilling activities during the September-end quarter, with the addition of one rig. For the rest of 2020, the upstream energy firm anticipates to continue the one-rig program.
Management plans to spend approximately $240-$265 million of capital compared with the prior guidance of $240-$270 million for 2020, the majority of which will be used in drilling and completion activities. It anticipates to complete 31-33 wells this year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 10.92% due to these changes.
VGM Scores
At this time, Centennial Resource has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Centennial Resource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.