Latest News and Analysis
Deals and Transactions
Track Drilling (Rigs by operator) | Completions (Frac Spreads)

Drilling & Completions | Quarterly / Earnings Reports | Fourth Quarter (4Q) Update | Financial Results | Capital Markets | Environmental, Social, Governance (ESG) | Capital Expenditure - 2023

PDC Energy Q4, Full Year 2022 Results; Bets Bulk of 2023 Capex on DJ Basin

emailEmail    |    printPrint    |    bookmarkBookmark
   |    Friday,February 24,2023

PDC Energy, Inc. announced its full year and fourth quarter 2022 financial and operating results and provided 2023 guidance.

2022 Fourth Quarter Highlights:

  • Total production of 22.7 million barrels of oil equivalent ("MMBoe") or approximately 247,000 Boe per day and oil production of 7.4 million barrels ("MMBbls") or approximately 80,000 Bbls per day.

  • Net cash from operating activities of approximately $690 million, adjusted cash flows from operations, a non-U.S. GAAP metric defined below, of approximately $605 million and oil and gas capital investments of approximately $345 million.

  • Approximately $260 million of adjusted free cash flow ("FCF"), a non-U.S. GAAP metric defined below.

  • Returned approximately $355 million of capital to shareholders through the repurchase of approximately 3.6 million shares, or approximately 4.0 percent of weighted common stock outstanding, and $1.00 in base and special dividends.

  • Reduced debt by approximately $80 million, exiting the quarter with approximately $1.3 billion in long-term debt and a leverage ratio of 0.5x.

  • In December. 2022, the Colorado Oil and Gas Conservation Commission ("COGCC") unanimously approved PDC's Guanella Comprehensive Area Plan ("CAP"), which encompasses approximately 33,000 consolidated net acres, 22 locations and approximately 450 wells in Weld County, Colorado.

2022 Full Year Highlights:

  • Total production of 85.0 MMBoe or approximately 233,000 Boe per day and oil production of 27.5 MMBbls or approximately 75,000 Bbls per day.

  • Net cash from operating activities of approximately $2.8 billion, adjusted cash flows from operations, a non-U.S. GAAP metric defined below, of approximately $2.5 billion and oil and gas capital investments of approximately $1.1 billion.

  • Approximately $1.4 billion of adjusted free cash flow ("FCF"), a non-U.S. GAAP metric defined below.

  • Returned approximately $1.0 billion of capital to shareholders through the repurchase of approximately 12.1 million shares, or approximately 12 percent of weighted common stock outstanding, and $1.95 in base and special dividends.

  • Estimated SEC proved reserves as of year-end 2022 were approximately 1,100 MBoe with a standardized measure value of its proved reserves of $15.0 billion and a discounted pre-tax PV-10 value of $19.1 billion.

President and Chief Executive Officer, Bart Brookman, commented, "Execution in 2022 helped expand the foundation of PDC's continued long-term success in creating value for its shareholders. The Great Western transaction early in the year increased our inventory of top tier opportunities in the core Wattenberg Field. Last year we also gained confidence in the long-term development of our drilling programs with the COGCC's unanimous approval of the Guanella CAP. PDC achieved these major 2022 milestones while simultaneously returning $1 billion of free cash flow to shareholders. We exited the year with approximately 1.1 billion barrels equivalent of proved reserves, a rock-solid balance sheet and a durable inventory of projects capable of driving a sustainable production growth profile for years to come."

"Finally, I want to recognize the work our PDC team has done on the environmental front. These efforts have resulted in year-over-year GHG intensity and methane emission reductions greater than 30 percent and 50 percent respectively, far surpassing our 15 percent and 30 percent targets. I am also proud to report that the 2022 methane emission numbers effectively met our 2025 methane emission target three years ahead of schedule. Expect a reassessment of our 2025 and 2030 emissions goals in the near future which will align with this 2022 outperformance. Through all these efforts, PDC is positioned to contribute some of the lowest emissions production in the world."

2023 Capital Investment and Financial Guidance

PDC anticipates 2023 capital investments of $1,350 to $1,500 million to generate between 255,000 and 265,000 Boe per day of production and 82,000 to 86,000 Bbls per day of oil.

Wattenberg

In the Wattenberg Field, the Company expects to invest approximately 80 percent of its total capital investments in 2023 to run a three rig program and one full time plus an intermittent completion crew. PDC expects to spud and complete approximately 200 to 225 wells in the field in 2023. The capital budget also includes non-op, infrastructure, land and ESG-related projects.

Delaware

In the Delaware, the Company expects to invest approximately 20 percent of its total capital investments in 2023 to run a one rig program and a partial completion crew. PDC expects to spud and complete approximately 15 to 25 wells in 2023. The 2023 program reflects its relaxed spacing design with a focus primarily on the Wolfcamp A and B zones.

2023 Guidance Highlights

  2023 Guidance
Operational  
Total Oil and Gas Production (Mboe/d) 255-265
Oil Production (Mbbl/d) 82-86
Oil and Gas Capital Investments (millions) $1,350-$1,500
   
Financial  
Commodity Price Assumption (NYMEX Oil & Gas, NGL) $75/$3/$20
Adjusted Free Cash Flow ("FCF")1 (millions) ~$825
   
Balance Sheet  
Year End 2023 Net Leverage Ratio 0.5x

_____________
(1) FCF is a non-U.S. GAAP financial measure.

The table below provides additional 2023 financial guidance:

  Low   High
Operating Expenses
Lease operating expense ("LOE") (millions) $ 290     $ 320  
Transportation, gathering and processing expense ("TGP") (per Boe) $ 1.40     $ 1.60  
Production taxes (% of Crude oil, natural gas & NGLs sales)   7 %     8 %
General and administrative expense ("G&A") (millions) $ 155     $ 170  
Cash Income Taxes (millions) $ 5     $ 25  
       
Estimated Price Realizations (excludes TGP)
Crude oil (% of NYMEX)   95 %     99 %
Natural gas (% of NYMEX)   70 %     80 %


In the first quarter, the Company expects to invest between $400 and $475 million and total production to be in a range of 240,000 to 255,000 Boe per day and 78,000 to 84,000 Bbls per day of oil production.

In the second quarter, the Company expects to invest between $325 and $400 million and total production to be in a range of 257,000 to 272,000 Boe per day and 84,000 to 90,000 Bbls per day of oil production.

Operations Update

In the fourth quarter of 2022, PDC invested approximately $345 million while delivering total production of 22.7 MMBoe, or approximately 247,000 Boe per day, and oil production of 7.4 MMbls, or approximately 80,000 barrels per day. Total production and oil production were relatively flat in the fourth quarter of 2022 compared to the third quarter of 2022, primarily due to the net impact of turn-in-line activities in the fourth quarter offset by an approximate 450 thousand Boe impact as a result of severe weather conditions in December 2022. For the full year, we invested approximately $1.1 billion while delivering total production of 85.0 MMBoe, or approximately 233,000 Boe per day, and oil production of 27.5 MMbls, or approximately 75,000 barrels per day.

Wattenberg Field

In the Wattenberg Field, the Company invested approximately $318 million to operate an average of three drilling rigs and approximately two completion crews in the fourth quarter, resulting in 53 spuds and 50 TILs. Total production for the quarter was 20.1 MMBoe, or approximately 219,000 Boe per day, while oil production was approximately 6.4 MMBoe, or approximately 70,000 Boe per day. Full-year Wattenberg activity consisted of capital investments of approximately $925 million, 174 spuds and 164 TILs. Total production was 74.0 MMBoe, or approximately 203,000 Boe per day, while oil production was approximately 23.1 MMBbls, or approximately 63,000 Bbls per day. PDC exited the fourth quarter with approximately 200 drilled, uncompleted wells ("DUCs") and approximately 915 approved permits in hand, inclusive of the CAP approved locations.

Delaware Basin

In the Delaware Basin, PDC invested approximately $27 million to operate one drilling rig in the fourth quarter. Total production was 2.6 MMBoe, or approximately 28,000 Boe per day, while oil production was approximately 1.0 MMBoe, or approximately 11,000 Boe per day. For the full-year, PDC invested approximately $195 million to spud 13 wells and TIL 19 wells. Total production and oil production averaged approximately 30,000 Boe per day and 12,000 Bbls per day, respectively.

Shareholder Returns and Financial Position

The Company returned approximately $1.0 billion of capital to shareholders in 2022 through share repurchases, base dividends and special dividends. In the fourth quarter the Company invested approximately $260 million to repurchase approximately 3.6 million shares of common stock, paid its $0.35 per share base quarterly dividend and paid a $0.65 per share special dividend. In February, the Board of Directors declared an increase to its quarterly cash dividend from $0.35 to $0.40 per share on PDC's outstanding common stock.

Also in February, 2023, the Board of Directors approved an incremental $750 million dollar increase to the Company's existing $1.25 billion share repurchase program,bringing the total authorization to $2.0 billion. The Company remains committed to returning a minimum of 60 percent of its annual post base dividend FCF to shareholders through the Company's share repurchase program and a year-end special dividend, if needed.

During the fourth quarter, the Company reduced its debt by approximately $80 million. At year end, the Company had approximately $6 million of cash on hand and approximately $370 million drawn on its credit facility. The leverage ratio was 0.5x at December 31, 2022.

Colorado Permitting and Guanella Comprehensive Area Plan ("CAP")

In December, the Colorado Oil and Gas Conservation Commission ("COGCC") unanimously approved, with overwhelming support of PDC's efforts, the Company's CAP, which encompasses approximately 33,000 consolidated net acres, 22 locations and approximately 450 wells in Weld County, Colorado.

The Guanella CAP further supports the Company's long-term planning and permitting efforts. The Company expects to continue an active Oil & Gas Development Plan ("OGDP") permitting program to maintain a multi-year inventory of projects and provide operational flexibility to most responsibly develop our 275,000 net acres in the Wattenberg Field.

Year-End Proved Reserves and Inventory

PDC's estimated SEC proved reserves as of year-end 2022 were approximately 1,100 MBoe, with proved developed reserves accounting for approximately 47 percent of the total. Year-end 2022 reserves reflect an increase of 35 percent compared to year-end 2021, which equates to a 440 percent reserve replacement ratio. Using SEC pricing of approximately $93.67 per Bbl WTI, $6.36 per MMBtu natural gas and NGL realizations of approximately $31.60 per Bbl, the Company's standardized measure value of its proved reserves was $15.0 billion and the discounted pre-tax PV-10 of those reserves was $19.1 billion.

Wattenberg

In Wattenberg, the Company's estimated year-end undeveloped inventory, including DUCs, was approximately 2,100 locations, inclusive of 200 DUCs, with an average lateral length of approximately 10,000 feet. From a regulatory prospective, more than 50 percent of our TIL inventory are DUCs, have permits or fall under the CAP. Total inventory represents an inventory life of more than ten years at the current development pace.

Delaware

In the Delaware Basin, with a relaxed spacing program, we have a gross operated core economic inventory of approximately 60 horizontal locations, inclusive of 12 gross operated DUCs. Our core economic inventory represents three plus years of running room at current rig activity levels. The team has also identified approximately 40 additional contingent locations targeting other known producing zones and shorter lateral wells that require additional evaluation or improved pricing before including in our core inventory count.

Environmental, Social and Governance ("ESG")

Year-over-year GHG intensity and methane emission reductions were greater than 30 percent and 50 percent, respectively, and surpassed our 15 percent and 30 percent targets. Compared to our 2020 baseline, the 2022 methane emission numbers effectively met our 2025 target reduction of 50 percent. The key components to our success in 2022 include benefits from the ESG accretive Great Western transaction, retrofitting wells with air pneumatics, the essential elimination of all routine flaring in both basins, and the plugging and abandonment of more than 250 wells. As a result of our accelerated achievement, we are currently reassessing our 2025 and 2030 goals to align with 2022 outperformance.

Oil and Gas Production, Sales and Operating Cost Data

Fourth quarter crude oil, natural gas and NGLs sales, excluding net settlements on derivatives, were $976 million, a 19 percent decrease compared to third quarter of 2022 of $1,201 million. The decrease in sales between periods was due to an 18 percent decrease in the weighted average realized sales price per Boe to $42.95 from $52.25 and a 1 percent decrease in production from 23.0 MMBoe to 22.7 MMBoe. The decrease in sales price was primarily driven by a 10 percent, 30 percent and 24 percent decrease in weighted average realized crude oil, natural gas and NGLs prices, respectively. The combined revenue from crude oil, natural gas and NGLs sales and net settlements on commodity derivative instruments was $809 million in the fourth quarter of 2022 compared to $948 million in the prior quarter.

Full-year crude oil, natural gas and NGLs sales, excluding net settlements on derivatives, were $4,297 million, a 68 percent increase over 2021 levels of $2,553 million. The increase in sales between periods was due to a 41 percent increase in weighted average realized sales price per Boe to $50.53 from $35.78. The increase in sales price between periods was driven by a 39 percent, 67 percent and 16 percent increases in weighted average realized crude oil, natural gas and NGL prices, respectively. The combined revenue from crude oil, natural gas and NGLs sales and net settlements on commodity derivative instruments was approximately $3,417 million in 2022 compared to approximately $2,142 million in 2021.


Related Categories :

Fourth Quarter (4Q) Update   

More    Fourth Quarter (4Q) Update News

Permian News >>>


Rockies News >>>