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Centennial (CDEV) Slides 16.3% as Q1 Earnings Miss Estimates

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Centennial Resource Development, Inc. has declined 16.3% since it reported lower-than-expected first-quarter 2022 earnings on May 4, after the closing bell.

Centennial Resource’s first-quarter adjusted earnings of 37 cents per share missed the Zacks Consensus Estimate of 40 cents. The bottom line, however, improved from the year-ago loss of 1 cent per share.

Quarterly revenues of $347 million increased from $192 million in the year-ago quarter and beat the Zacks Consensus Estimate of $307 million.

The lower-than-expected quarterly earnings of Centennial Resource were owing to increased lease operating expenses and exploration and other expenses. This was offset partially by higher oil equivalent volumes and commodity prices.  

Operations:

Production

Centennial Resource’s overall production of 61,359 barrels of oil equivalent per day (Boe/d) increased from the year-ago period’s 54,202 Boe/d. Of the total output, 53.4% comprised crude oil.

Oil volumes increased from 28,239 Bbls/d to 32,741 barrels per day (Bbls/d) in the March quarter. Natural gas liquids (NGLs) production totaled 10,238 Bbls/d, up from the year-ago quarter’s 8,662 Bbls/d. Natural gas production of 110,280 thousand cubic feet per day (Mcf/d) increased from 103,806 Mcf/d.

Price Realizations

Average realized crude price (excluding the effects of derivative settlements) of Centennial Resource was reported at $89.17 a barrel, up from $52.62 in first-quarter 2021. The same for natural gas rose to $3.93 per Mcf from the prior year’s $3.79. Furthermore, NGLs price rose to $49.37 per barrel in the first quarter from $29.78.

Operating Costs

Centennial Resource’s total operating costs were $182.2 million in first-quarter 2022, higher than $158.4 million in the year-ago period due to increased lease operating expenses and exploration and other expenses.

On a per Boe basis, the company’s first-quarter lease operating expenses were $5.20, lower than the year-ago level of $5.30. Also, gathering, processing and transportation costs fell to $3.96 per Boe from $4.23.

Capital Expenditure & Balance Sheet

In the March quarter, it incurred a capital expenditure of $114.7 million, of which $111.6 million was allocated for drilling, completion and facilities.

At the first quarter-end, cash and cash equivalents were reported at $50.6 million. Long-term net debt outstanding amounted to $801.2 million. Centennial had a debt to capitalization of 22.4%.

Cash Flow & Free Cash Flow

The company’s constant focus on cost reduction helped it generate net cash of $160.1 million from operating activities compared with $72.4 million in the year-ago period. Free cash flow generated during the quarter under review was $88.8 million, up from $10.6 million.

Zacks Rank & Other Stocks to Consider

Centennial Resource currently carries a Zacks Rank #2 (Buy). Other prospective players in the energy space include ConocoPhillips (COP - Free Report) , Marathon Oil (MRO - Free Report) and Occidental Petroleum (OXY - Free Report) . All the stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Considering production and reserves, ConocoPhillips is one of the leading exploration and production players in the global market. COP has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, ConocoPhillips is likely to see earnings growth of 141.6%.

Marathon Oil is a leading oil and natural gas exploration and production company. MRO has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Marathon Oil is likely to see earnings growth of 200%.

In the United States, Occidental Petroleum is among the largest oil producers. OXY has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Occidental Petroleum is likely to see earnings growth of 264.3%.


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