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Centennial (CDEV) Looking to Divest Delaware Basin Assets

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Centennial Resource Development, Inc. CDEV has been reportedly looking for buyers for some assets located in the southern Delaware Basin of Texas. Around 6,000 net acres in Reeves County, TX, are expectedly up for sale.

The assets to be divested are estimated to produce 1,600 barrels of oil equivalent per day, of which 76% comprise liquids. About 20 horizontal wells are currently in place in the region, which has a low cost of lifting. Centennial is expecting $100 million from the divestment, per Reuters. Dallas, TX-based TenOaks Energy Advisors is working as an exclusive adviser for the divestment. Bids on the assets are reportedly due on Oct 15, while a deal is expected to be struck by Oct 29.

A recovery in commodity prices has made divestments of oil and gas assets more profitable for upstream companies. As such, Centennial expects to attract more cash from selling non-core properties. The divestment plan is likely to help the company streamline the upstream portfolio. As investors these days are putting pressure on companies to boost shareholder value rather than production, upstream companies like Centennial are bound to focus more on profitable resources.

Cash from offloading the assets can enable it to reduce debt burden and provide its balance sheet with some breathing room. At June quarter-end, Centennial’s cash balance decreased to $4.7 million from the first-quarter level of $10.9 million. Long-term debt outstanding amounted to $1,054.3 million.

Price Performance

Shares of this company have gained 47.7% in the past six months compared with a 28.7% rise of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Key Picks

The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space include RPC, Inc. RES, Cheniere Energy, Inc. LNG and Kinder Morgan, Inc. KMI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RPC’s bottom line for 2021 is expected to surge 88.9% year over year.

The Zacks Consensus Estimate for Cheniere Energy’s bottom line for 2021 is pegged at $2.98 per share, indicating a massive improvement from the year-ago loss of 34 cents.

Kinder Morgan’s bottom line for 2021 is expected to rise 47.7% year over year.


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Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report

Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report

RPC, Inc. (RES) : Free Stock Analysis Report

Centennial Resource Development, Inc. (CDEV) : Free Stock Analysis Report

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