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Centennial (CDEV) Jumps 27.1% Year to Date: More Room to Run?

Centennial Resource Development, Inc.’s CDEV shares have jumped 27.1% year to date, compared with the energy sector’s 21.6% rally. The Zacks Rank #1 (Strong Buy) stock has witnessed upward estimate revisions for 2022 and 2023 earnings in the past seven days.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Factors Favoring the Stock

The price of West Texas Intermediate crude, trading at more than $95 per barrel, has improved drastically over the past year. The significant rise in oil price is owing to conflict and geopolitical muscle-flexing between Russia and Ukraine.

Being a leading exploration and production company globally, Centennial Resource is well-positioned to capitalize on the rally in crude price. Centennial Resource is a core Delaware basin pure-play, with operations spreading across 73,675 net acres. Notably, the Delaware basin is a sub-basin of the broader Permian – the most prolific basin in the United States.

Centennial Resource’s production outlook looks bright since the company has roughly 15 years of economic inventory in the oil-rich core regions of the Delaware Basin. CDEV has decided to continue its two-rig drilling program with an expectation to grow its crude oil production 10% to 15% year over year in 2022.

Centennial Resource has decided to lower its leverage and total debt outstanding further with a strong emphasis on strengthening its balance sheet. Thus, the company is poised for further upside in the days to come.

Other Stocks to Consider

Other top-ranked players in the energy space includeExxon Mobil Corporation XOM, EOG Resources EOG and Chevron Corporation CVX, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil is banking on key upstream projects centered around Permian — the most prolific basin in the United States — and offshore Guyana resources.

ExxonMobil reported strong fourth-quarter results, thanks to improved realized oil and natural gas prices as well as higher refining and chemical margins. In the past 30 days, ExxonMobil has witnessed upward earnings estimate revisions for 2022.

For this year, EOG Resources has laid out a plan to generate $6.4 billion in free cashflow at West Texas Intermediate crude price of $80 per barrel. EOG Resources has also committed to $1.7 billion in regular dividend payments.

With the employment of premium drilling, EOG Resources is reducing its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.

In the Permian Basin, Chevron has a strong footprint. The majority of Chevron’s assets in the most prolific basin of the United States have minimal royal payments, thereby securing handsome cash flows in the long run.

In the past seven days, Chevron has witnessed upward earnings estimate revisions for 2022.


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