Why Is PDC Energy (PDCE) Up 21.4% Since Last Earnings Report?

It has been about a month since the last earnings report for PDC Energy (PDCE). Shares have added about 21.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PDC Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

PDC Energy Q1 Earnings Top Estimates, Sales Miss Mark

PDC Energy reported adjusted earnings per share of $1.41, comfortably ahead of the Zacks Consensus Estimate of 83 cents. The bottom line also rebounded from a loss of 98 cents reported in the year-ago quarter. This outperformance can be primarily attributed to better-than-anticipated commodity price realizations. Precisely, the company’s oil price realization came in at $56.34 per barrel, surpassing the Zacks Consensus Estimate of $54. Also, PDC Energy’s natural gas and natural gas liquids (NGLs) price came in at $2.63 per thousand cubic feet (Mcf) and $21.19 per barrels (Bbls) each, outpacing the Zacks Consensus Estimate of $1.92 Mcf and $16.76 Bbls, respectively.

Meanwhile, PDC Energy recorded total revenues of $286 million, missing the consensus mark by 62.2% and also the year-ago quarter’s sales of $757 million due to lower-than-anticipated production volumes. Precisely, this Colorado-focused company’s output of 15,740 thousand barrels of oil-equivalent (MBoe) lagged the Zacks Consensus Estimate of 15,825 MBoe.

Production & Prices

For the first quarter of 2021, PDC Energy’s production totaled 15,740 MBoe (57.5% liquids), reflecting a decrease of 7% from 16,845 MBoe a year ago. Of the aggregate output, 13,900 MBoe (or 88.3%) came from Wattenberg Field and the rest from Delaware Basin.

The average realized natural gas price increased from 96 cents per Mcf in the year-ago quarter to $2.63. PDC Energy sold NGLs at an average price of $21.19 per Bbls compared with $7.78 a year ago. The average oil price realization came in at $56.34 per barrel, 33% higher than $42.32 in the year-ago period. Overall, the company fetched $29.74 per MBoe compared with $19.02 a year ago.

Capital Expenditure & Balance Sheet

The energy explorer shelled out $125 million in the form of oil and gas capital investments. As of Mar 31, 2021, PDC Energy had $59.1 million in cash and cash equivalents, and $1.24 billion as long-term debt, representing a debt-to-capitalization of 32.43%.

Guidance

PDC Energy expects to churn out 190,000-200,000 Boe per day in 2021. It reiterated its oil production guidance of 64,000-68,000 Bbls per day. The company still expects to spend between $500 million and $600 million this year. It lifted its free cash flow (FCF) generation forecast to above $600 million (at a WTI price of $55, natural gas at $2.50 and NGL at $15) for 2021.

PDC Energy hiked its debt-reduction goal to more than $350 million for 2021 from more than $200 million and its planned shareholder returns, which comprise share buybacks and future dividend payouts, to more than $150 million from $120 million plus, in line with the rise in FCF prediction.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.99% due to these changes.

VGM Scores

Currently, PDC Energy has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PDC Energy has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

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