A month has gone by since the last earnings report for PDC Energy . Shares have added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PDC Energy 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.
PDC Energy Q4 Earnings and Revenues Beat Estimates
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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 6.8% due to these changes.
VGM Scores
Currently, PDC Energy has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PDC Energy 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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Why Is PDC Energy (PDCE) Up 11.4% Since Last Earnings Report?
A month has gone by since the last earnings report for PDC Energy . Shares have added about 11.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PDC Energy 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.
PDC Energy Q4 Earnings and Revenues Beat Estimates
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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 6.8% due to these changes.
VGM Scores
Currently, PDC Energy has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PDC Energy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.