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PDC Energy (PDCE) Q2 Earnings Beat on Strong Realizations

·4 min read

Upstream operator PDC Energy PDCE reported adjusted earnings per share of $5.11, comfortably beating the Zacks Consensus Estimate of $4.57. The company had reported a profit of $1.66 in the year-ago quarter. The outperformance can be primarily attributed to higher commodity prices.

Meanwhile, PDC Energy recorded total revenues of 1.1 billion, soaring from the year-ago level of $228.9 million and exceeding the consensus mark by 3.8%.

The company is using the excess cash from a supportive environment to reward investors with dividends and buybacks. As part of that, PDCE’s board of directors declared a quarterly cash dividend of 35 cents per share to its common shareholders. In fact, PDC Energy returned $250 million to its shareholders during the second quarter through dividends and buybacks.

PDC Energy, Inc. Price, Consensus and EPS Surprise

PDC Energy, Inc. Price, Consensus and EPS Surprise
PDC Energy, Inc. Price, Consensus and EPS Surprise

PDC Energy, Inc. price-consensus-eps-surprise-chart | PDC Energy, Inc. Quote

 

Production & Prices

For the second quarter of 2022, PDC Energy’s production totaled 21,410 thousand barrels of oil equivalent/MBoe (61% liquids), reflecting an increase of 22.9% from 17,424 MBoe a year ago. However, the Colorado-focused company’s quarterly average production came in below the Zacks Consensus Estimate of 21,800 Mboe due to certain operational issues. Of the aggregate output, 18,328 MBoe (or some 86%) came from Wattenberg Field and the rest from Delaware Basin.

The average realized natural gas price jumped from $1.98 per thousand cubic feet (Mcf) in the year-ago quarter to $5.57. PDC Energy sold NGLs at an average price of $34.99 per barrel (Bbls) compared to $20.11 a year ago. Meanwhile, the average oil price realization came in at $108.24 per barrel, 66.4% higher than $65.05 in the year-ago period. Overall, PDC Energy fetched $57.81 per MBoe compared with $30.60 a year ago.

Capital Expenditure & Balance Sheet

The energy explorer shelled out $346.7 million in the form of oil and gas capital investments, while it raked in $405 million in adjusted free cash flow. As of Jun 30, PDC Energy had approximately $38.5 million in cash and cash equivalents, and $1.7 billion in long-term debt, representing a debt-to-capitalization of 32.9%.

Guidance

For 2022, PDC Energy expects to pump 230,000-240,000 Boe per day of hydrocarbon. It also gave its average oil production expectation of 73,000-77,000 barrels per day. The Zacks Rank #3 (Hold) company forecast capital spending of $1.025 billion to $1.075 billion. The company has guided for some $1.6 billion in free cash flow in 2022 and hopes to return $1 billion to its shareholders.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Some Key E&P Earnings

While we have discussed PDCE’s second-quarter results in detail, let’s see how some other exploration and production companies have fared this earnings season.

ConocoPhillips COP reported second-quarter adjusted earnings per share of $3.91, beating the Zacks Consensus Estimate of $3.78. Further, COP’s bottom line significantly improved from the prior-year quarter’s $1.27 per share. Strong quarterly results of one of the world’s largest independent oil and gas producers based in Houston, TX, ConocoPhillips, may have been aided by increased oil-equivalent production volumes and realized commodity prices.

ConocoPhillips revised higher its expected 2022 return of capital to shareholders. The new guidance is $15 billion versus the prior projection of $10 billion. COP’s incremental returns to stockholders will get distributed through share repurchases and variable returns of cash tiers.

Another upstream giant, EOG Resources EOG, reported second-quarter adjusted earnings per share of $2.74, missing the Zacks Consensus Estimate of $2.99. EOG’s weaker-than-expected earnings were attributed to higher lease and well expenses, as well as transportation costs. However, the bottom line jumped from the year-ago quarter’s earnings of $1.73 due to increased volumes and prices.

For the quarter under review, EOG Resources’ production increased 11% year over year, while it generated $1.3 billion in free cash flow. Committed to shareholder returns, EOG announced a special dividend of $1.50 per share.

Finally, we have Pioneer Natural Resources Company PXD, which reported second-quarter earnings of $9.36 per share (excluding one-time items), beating the Zacks Consensus Estimate of $8.81. The bottom line surged from the year-ago quarter’s profit of $2.55 per share. PXD’s robust bottom line can be attributed to higher production volumes and commodity price realizations.

Pioneer Natural announced a dividend payment of $8.57 per share of common stock, which includes a variable dividend of $7.47 per share and a base dividend of $1.10. This suggests a 16.1% increase from the prior dividend of $7.38 per share.


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