It has been about a month since the last earnings report for Centennial Resource . Shares have lost about 22.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Centennial Resource due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Centennial Q3 Earnings Beat Estimates
Centennial Resource Development reported third-quarter 2021 adjusted earnings of 25 cents per share, beating the Zacks Consensus Estimate of 21 cents. The figure also improved from the year-ago adjusted loss of 19 cents per share.
Quarterly revenues from oil and gas sales increased to $288.5 million from the prior year’s $149.1 million. Also, the top line beat the consensus mark of $248 million.
Despite lower production and increased operating costs, Centennial reported strong third-quarter results due to higher realized commodity prices.
Operations:
Production
Overall production of 65,121 barrels of oil equivalent per day (Boe/d) declined from the year-ago period’s 68,934 Boe/d. Of the total output, 51.5% comprised crude oil.
Oil volumes deteriorated from 35,292 Bbls/d to 33,529 barrels per day (Bbls/d) for the September quarter. Also, natural gas liquids (NGLs) production totaled 11,707 Bbls/d, down from the year-ago quarter’s 14,885 Bbls/d. Nevertheless, natural gas production of 119,311 thousand cubic feet per day (Mcf/d) increased from the year-ago quarter’s 112,545 Mcf/d.
Price Realizations
Average realized crude price (excluding the effects of derivative settlements) was reported at $65.31 a barrel, up from $36.95 in third-quarter 2020. Also, the same for natural gas rose to $3.99 per Mcf from the prior year’s $1.15. Furthermore, NGLs price rose to $40.16 per barrel for the third quarter from the year-ago level of $12.58.
Operating Costs
Centennial’s total operating costs were $192 million for third-quarter 2021, higher than $181.1 million in the year-ago period due to increased lease operating, gathering, processing and transportation expenses.
On a per Boe basis, the company’s third-quarter lease operating expenses were $4.79, much higher than the year-ago level of $3.87. Also, gathering, processing and transportation costs flared up to $4.03 per Boe from the year-ago period’s $3.02.
Capital Expenditure & Balance Sheet
For the September quarter, it incurred a capital expenditure of $78.9 million, of which $74.9 million was allocated for drilling and completion activities.
At third quarter-end, cash and cash equivalents increased to $5 million from the second-quarter level of $4.7 million. Long-term net debt outstanding amounted to $1,004.9 million, down from $1,054.3 million at second quarter-end. Centennial had a net debt to capitalization of 29.4%. At third quarter-end, it had liquidity of $493.5 million.
Cash Flow & Free Cash Flow
The company’s constant focus on cost reduction helped it generate net cash of $153.5 million from operating activities compared with $45.7 million in the year-ago period. Free cash flow generated during the quarter under review was $77.2 million, up from $10.5 million in the year-ago period.
Guidance:
The company again boosted its free cash flow guidance for 2021 to $200-$220 million from the previous guided range of $140-$170 million. It will likely be sticking to the two-rig drilling program into 2022, despite the uptick in commodity prices. Also, the company made new oil hedging deals for the next year.
Centennial increased its 2021 production guidance to the band of 60,500-61,850 Boe/d from the previous estimate of 56,000-63,000 Boe/d. Capital expenditure is now estimated at $300-$315 million, up from the previous estimate of $260-$310 million. The majority of the capital spending will be allocated for drilling and completion activities. Previously, it anticipated to complete 40-48 gross wells this year. The range is now narrowed to 41-43 gross wells.
The company expects lease operating expenses within $4.65-$4.80 per Boe, indicating an increase from the 2020 level of $4.45. Gathering, processing and transportation expenses for 2021 are estimated at $3.90-$4.00 per Boe, suggesting a rise from the last year’s $2.90 level.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 8.9% due to these changes.
VGM Scores
Currently, Centennial Resource has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. It comes with little surprise Centennial Resource has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Centennial Resource (CDEV) Down 22.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Centennial Resource . Shares have lost about 22.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Centennial Resource due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Centennial Q3 Earnings Beat Estimates
Centennial Resource Development reported third-quarter 2021 adjusted earnings of 25 cents per share, beating the Zacks Consensus Estimate of 21 cents. The figure also improved from the year-ago adjusted loss of 19 cents per share.
Quarterly revenues from oil and gas sales increased to $288.5 million from the prior year’s $149.1 million. Also, the top line beat the consensus mark of $248 million.
Despite lower production and increased operating costs, Centennial reported strong third-quarter results due to higher realized commodity prices.
Operations:
Production
Overall production of 65,121 barrels of oil equivalent per day (Boe/d) declined from the year-ago period’s 68,934 Boe/d. Of the total output, 51.5% comprised crude oil.
Oil volumes deteriorated from 35,292 Bbls/d to 33,529 barrels per day (Bbls/d) for the September quarter. Also, natural gas liquids (NGLs) production totaled 11,707 Bbls/d, down from the year-ago quarter’s 14,885 Bbls/d. Nevertheless, natural gas production of 119,311 thousand cubic feet per day (Mcf/d) increased from the year-ago quarter’s 112,545 Mcf/d.
Price Realizations
Average realized crude price (excluding the effects of derivative settlements) was reported at $65.31 a barrel, up from $36.95 in third-quarter 2020. Also, the same for natural gas rose to $3.99 per Mcf from the prior year’s $1.15. Furthermore, NGLs price rose to $40.16 per barrel for the third quarter from the year-ago level of $12.58.
Operating Costs
Centennial’s total operating costs were $192 million for third-quarter 2021, higher than $181.1 million in the year-ago period due to increased lease operating, gathering, processing and transportation expenses.
On a per Boe basis, the company’s third-quarter lease operating expenses were $4.79, much higher than the year-ago level of $3.87. Also, gathering, processing and transportation costs flared up to $4.03 per Boe from the year-ago period’s $3.02.
Capital Expenditure & Balance Sheet
For the September quarter, it incurred a capital expenditure of $78.9 million, of which $74.9 million was allocated for drilling and completion activities.
At third quarter-end, cash and cash equivalents increased to $5 million from the second-quarter level of $4.7 million. Long-term net debt outstanding amounted to $1,004.9 million, down from $1,054.3 million at second quarter-end. Centennial had a net debt to capitalization of 29.4%. At third quarter-end, it had liquidity of $493.5 million.
Cash Flow & Free Cash Flow
The company’s constant focus on cost reduction helped it generate net cash of $153.5 million from operating activities compared with $45.7 million in the year-ago period. Free cash flow generated during the quarter under review was $77.2 million, up from $10.5 million in the year-ago period.
Guidance:
The company again boosted its free cash flow guidance for 2021 to $200-$220 million from the previous guided range of $140-$170 million. It will likely be sticking to the two-rig drilling program into 2022, despite the uptick in commodity prices. Also, the company made new oil hedging deals for the next year.
Centennial increased its 2021 production guidance to the band of 60,500-61,850 Boe/d from the previous estimate of 56,000-63,000 Boe/d. Capital expenditure is now estimated at $300-$315 million, up from the previous estimate of $260-$310 million. The majority of the capital spending will be allocated for drilling and completion activities. Previously, it anticipated to complete 40-48 gross wells this year. The range is now narrowed to 41-43 gross wells.
The company expects lease operating expenses within $4.65-$4.80 per Boe, indicating an increase from the 2020 level of $4.45. Gathering, processing and transportation expenses for 2021 are estimated at $3.90-$4.00 per Boe, suggesting a rise from the last year’s $2.90 level.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 8.9% due to these changes.
VGM Scores
Currently, Centennial Resource has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. It comes with little surprise Centennial Resource has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.