Download Centennial Resource Development, Inc. and more Summaries Business in PDF only on Docsity!
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
EPG Commentary by Dan Steffens
Centennial Resource Development, Inc. (CDEV) is going to be added to our Sweet 16 Growth Portfolio in my next newsletter. This company has a Top Shelf management team, led by Mark Papa. Mark is the former CEO of EOG Resources. I am adding it the Sweet 16 because it now has a clear path to 100,000 Boepd of production. From production of 54,000 Boepd in Q1 2018 the Company should reach six digit production by mid-2019. “In 2018, we expect to grow our annual oil production by
approximately 85%. As predicted, crude oil prices have
responded positively to tightening global supply and demand
fundamentals. At this time, we plan to remain fully unhedged
on future oil production given our positive macro view, ” –
Mark Papa, CEO
My Fair Value Estimate for CDEV is $ 32 .00/share
Compare to First Call’s 12 - month Price Target of $26.
Disclosure: I do not have a position in CDEV. I do not intend on buying or selling any shales in the next 72 hours. I wrote this profile myself, and it expresses my own opinions. I am not receiving compensation for it from the company. I have no business relationship with any company whose stock is mentioned in this article.
Management
Mark G. Papa, Chairman & CEO Sean R. Smith , VP & COO George S. Glyphis , VP & CFO Davis O. O’Connor, VP & General Counsel Brent P. Jensen, VP & CAO Matt R. Garrison, VP Geosciences Sean W. Marshall, VP Land Oscar L. Peters , VP Operations Kathleen M. Phillips , VP Human Resources Jeff B. Thompson, VP Reservoir Engineering http://www.cdevinc.com/
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Company Overview: Centennial Resource Development, Inc. (CDEV) is an independent oil and natural gas
company focused on the development of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin. Centennial was formed in 2016 through the business combination of Centennial Resource Production, LLC and Silver Run Acquisition Corporation, a special purpose acquisition company formed by Mark G. Papa, the company’s Chairman and CEO, and Riverstone Holdings, LLC, an energy private equity fund. Centennial is headquartered in Denver, Colorado. Centennial’s assets are located primarily in Reeves County, Texas in the core of the Southern Delaware Basin, in addition to properties in Lea County, New Mexico in the Northern Delaware Basin. The Permian Basin represents one of the most attractive operating areas in the United States due to its favorable operating environment, stacked pay potential, high oil content, extensive infrastructure base, significant service provider network, and historically high drilling success rates. Centennial believes activity in the Delaware Basin will continue to evolve as new drilling completion techniques and enhanced development practices are employed. Centennial’s drilling inventory consists of approximately 2,400 horizontal drilling locations across seven proven zones in the Delaware Basin with upside potential from additional prospective formations across its acreage position.
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Operational Results Centennial continues to efficiently develop its acreage position in the Delaware Basin. In Lea County, New Mexico, the Juliet Federal Com 1H (85% WI) was drilled with an approximate 4,000-foot effective lateral and reported an initial 30-day production rate of 1,447 Boe/d (78% oil). The well averaged 282 Bbls/d of oil per 1,000 foot of lateral for the first 30 days and produced over 50,000 barrels of oil during its initial 60-day period. “The Juliet is Centennial’s first operated well targeting the Wolfcamp A in Lea County. The initial results are very positive, and we believe this confirms the productivity of this interval on our acreage in the Northern Delaware,” Papa said. “Since entering this part of the basin last year, essentially every well has either met or exceeded expectations, highlighting the quality of our acreage and the expertise of our technical team.”
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Capital Structure and Liquidity
As of March 31, 2018, Centennial had approximately $38 million in cash on hand, with zero borrowings under the revolving credit facility and $400 million of senior unsecured notes. On May 4, 2018, the Company closed a new five-year revolving credit facility. The borrowing base under the new credit facility increased by 39% to $800 million from $575 million under the Company’s prior credit facility, with a new elected commitment of $600 million. As of March 31, 2018, after giving effect to the new borrowing base and elected commitment, total liquidity was approximately $637 million, including letters of credit.
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Hedge Position
As of May 8, 2018, Centennial had no fixed-price crude oil hedges. For the period April to December 2018, Centennial’s crude oil basis hedges represent approximately 27% of its expected crude oil production (using the mid-point of guidance) at a weighted average price of $(1.77) per barrel. To protect its associated rich natural gas production from current market dynamics in the Permian Basin, Centennial also entered into additional natural gas swap and basis hedges effective 2019. “As predicted, crude oil prices have responded positively to tightening global supply and demand fundamentals. At this time, we plan to remain fully unhedged on future oil production given our positive macro view,” Papa said. “We will also look to ensure adequate gas takeaway from the basin and minimize basis pricing risk for both crude oil and natural gas.”
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Acreage Position Update
On February 8, 2018, Centennial acquired approximately 4,000 net acres in Lea County, New Mexico from OneEnergy Partners, LLC for a total purchase price of $95 million. The operated acreage position contains an average 95% working interest and is largely contiguous to Centennial’s existing position. Centennial has identified approximately 100 gross horizontal locations on the acreage, which are additive to its existing inventory in Lea County. Centennial also entered into a definitive agreement with an undisclosed third-party for the sale of approximately 8,600 net acres in Reeves County for a purchase price of $141 million. The divested acreage represents a largely non-operated position (average 32% WI) on the western portion of Centennial’s position in Reeves County. 2017 average net production on the divested acreage was less than 250 Boe/d, or less than 1% of total company production. The transaction is expected to close on March 1, 2018, subject to customary closing terms and conditions. “These transactions are consistent with our strategy to own and operate high-quality acreage in the Delaware Basin. The acquisition increases our Northern Delaware position by approximately thirty percent to over 16,000 net acres and adds operated locations to our inventory in Lea County,” Papa said. “The net of these two transactions will upgrade our overall portfolio. We basically sold acreage with low working interest in Reeves County for higher quality, operated acreage in Lea County.”
Our newsletters, company profiles and the information contained herein are strictly the opinion of the publishers (Energy Prospectus Group, a Division of DMS Publishing, LLC) and is intended for informational purposes only. Readers are encouraged to do their own research and due diligence before making any investment decisions. The publishers will not be held liable for any actions taken by the reader. Although the information in the newsletters and company profiles has been obtained from resources that the publishers believe to reliable, DMS Publishing, LLC dba Energy Prospectus Group does
Development, Inc.
May 20, 2018
Secondary Public Offering Announced
On March 5, 2018, Centennial announced the commencement of an underwritten public offering of an aggregate of 25,000,000 shares of Class A common stock by Riverstone VI Centennial QB Holdings, L.P. (14,758, shares), REL US Centennial Holdings, LLC (4,362,317 shares), Riverstone Non-ECI USRPI AIV, L.P. (1,071, shares), Silver Run Sponsor, LLC (1,312,840 shares), Celero Energy Company, LP (752,315 shares), Centennial Resource Development, LLC (2,128,462 shares), NGP Centennial Follow-On LLC (466,870 shares) and CP VI-A Centennial, L.P. (146,936 shares) (collectively, the “selling stockholders”). Certain of the selling stockholders have also granted the underwriter a 30-day option to purchase up to an aggregate of 3,750,000 additional shares of Class A common stock. Non-Dilutive: Centennial will not sell any shares of Class A common stock in the offering and will not receive any proceeds therefrom. On March 6, Centennial announced the pricing of this secondary offering. The underwriter intends to offer the shares from time to time for sale in one or more transactions on The NASDAQ Capital Market, in the over-the- counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The gross proceeds from the sale of the shares by the selling stockholders is expected to be approximately $491.3 million. The offering is expected to close on March 8, 2018, subject to customary closing conditions. Centennial will not sell any shares of Class A common stock in the offering and will not receive any proceeds therefrom. Proven Reserves Update Centennial reported a 125% increase in year-end 2017 total proved reserves to 186,454 MBoe, consisting of 54% oil, 29% natural gas and 17% natural gas liquids. Proved developed reserves increased by 197% to 74,929 MBoe (40% of total proved reserves) as of December 31, 2017, reflecting the continued successful development of the Company's horizontal well inventory. During 2017, Centennial’s organic reserves replacement ratio was 954%. The Company's 2017 proved developed finding and development cost totaled $10.62 per Boe. Centennial's drill-bit finding and development cost was $5.47 per Boe for 2017. Using SEC prices and discounting the present value at 10% (“PV-10”), the value of Centennial’s total proved reserves at December 31, 2017 increased 309% to $1,748 million, and Centennial had a standardized measure of discounted future net cash flows of $1,503 million. Netherland Sewell & Associates, Inc., an independent reserve engineering firm, prepared Centennial’s year-end reserves estimates as of December 31, 2017.
