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Here's Why Centennial Resource (CDEV) Looks Promising Right Now

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Centennial Resource Development, Inc. has witnessed upward earnings estimate revisions for 2021 and 2022 in the past 30 days. Also, this independent oil producer’s stock price has surged 312% year to date versus the industry’s rise of 86.5%.

Zacks Investment Research
Image Source: Zacks Investment Research

Factors Favoring the Stock

The price of West Texas Intermediate crude, which is trading at more than $70 per barrel, has improved drastically from the negative territory touched in April 2020. The momentum is likely to continue since the coronavirus vaccine rollout will possibly help the economy recover strongly this year, thereby aiding fuel demand.

The massive improvement in oil price is definitely a boon for oil explorers and producers and Centennial Resource, having a strong footprint in the liquid-rich Delaware Basin, is well placed to capitalize on the same. The company has more than 15 years of economic inventory in the prolific basin, making the production outlook bright.

Centennial Resource also has a strong focus on curtailing costs. The company’s lease operating expenses and drilling & completion costs per lateral foot have been declining, aiding its bottom line. The company’s strong operating activities are reflected in continued free cashflow generation for three quarters despite the pandemic.

The upstream firm, carrying a Zacks Rank #2 (Buy), is also planning to significantly lower its leverage through this year. Until early 2026, the company has no senior debt maturities.

Other Stocks to Consider

Other prospective players in the energy space include Whiting Petroleum Corporation , Continental Resources, Inc. and PDC Energy, Inc. . While Whiting Petroleum carries a Zacks Rank #2, Continental and PDC Energy sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.

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