01—Abstract
Summary
Summary of the 10-K filed February 24, 2020. Cited figures are marked; the original filing is the authoritative source.
Centennial Resource Development, Inc. is an independent oil and natural gas company focused on unconventional oil and liquids-rich natural gas in the Delaware Basin, a sub-basin of the Permian Basin, primarily in West Texas and New Mexico.
In 2019 the company produced 27,766 MBoe (76,072 Boe/d), up 25% from 22,295 MBoe in 2018, and reported oil and gas sales of $944.3 milliona, up 6% from $891.0 million. Net income attributable to Class A Common Stock fell to $15.8 million from $199.9 million in 2018, as higher lease operating expenses, DD&A of $444.2 million, and $47.2 million of impairment and abandonment expense offset higher volumes. Average realized prices declined, with oil at $52.02 per Bbl (down 7%), natural gas at $1.07 per Mcf (down 46%) and NGLs at $17.03 per Bbl (down 38%).
Proved reserves rose to 301,139 MBoe at December 31, 2019, from 261,826 MBoe a year earlier, with proved undeveloped reserves at 51% of the total. Capital expenditures were $891.8 millionb in 2019, and the 2020 capex budget is $590 million to $690 million.
Cash from operations was $564.2 millionc, and long-term debt, net, was $1,057.4 million at year-end, including $500.0 million of 6.875% Senior Notes due 2027 issued in March 2019. On February 24, 2020, the company agreed to sell its water disposal assets for a base price of about $150 million in cash, with up to an additional $75 million in deferred payments.
02—Key points
Key Highlights
- Net income attributable to Class A Common Stock was $15.8 million in 2019, versus $199.9 million in 2018; total revenues were $944.3 million.
- Net production grew to 27,766 MBoe (76,072 Boe/d), with oil volumes up 23% and natural gas volumes up 32% year over year.
- Realized prices fell: oil averaged $52.02 per Bbl, natural gas $1.07 per Mcf and NGLs $17.03 per Bbl, with natural gas differentials widened by pipeline takeaway constraints in the Permian Basin.
- Total proved reserves reached 301,139 MBoe at year-end 2019, up from 261,826 MBoe; standardized measure of discounted future net cash flows was $2,062.4 million.
- Capital expenditures totaled $891.8 million in 2019; the 2020 capex budget is $590 million to $690 million, expected to be funded mainly by operating cash flow.
- Long-term debt, net, rose to $1,057.4 million after issuing $500.0 million of 6.875% Senior Notes due 2027; $624.2 million was available under the revolving credit facility at year-end.
- Subsequent to year-end, the company agreed to sell its water disposal assets for about $150 million in cash plus up to $75 million in deferred incentive payments.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $944.33M$891.04M | +6.0% |
| Operating Expenses | $864.04M$608.33M | +42.0% |
| Operating Income | $79.43M$283.19M | −72.0% |
| Interest Expense | $55.99M$26.36M | +112.4% |
| Net Income | $15.80M$199.90M | −92.1% |
| EPS (Basic) | $0.06$0.76 | −92.1% |
| EPS (Diluted) | $0.06$0.75 | −92.0% |
| Shares Outstanding (Basic) | 267.70M263.34M | +1.7% |
| Shares Outstanding (Diluted) | 276.63M266.86M | +3.7% |
05—Questions
Frequently Asked Questions
How did revenue and profitability change in 2019?
Oil and gas sales rose to $944.3 million from $891.0 million, a 6% increase driven by higher volumes, partly offset by lower realized prices. Net income attributable to Class A Common Stock fell to $15.8 million from $199.9 million, reflecting higher lease operating expenses, DD&A of $444.2 million, impairment and abandonment expense of $47.2 million, and lower derivative and income tax results.
What drove the increase in production?
The company operated a six-rig drilling program through mid-September 2019 and a five-rig program thereafter, completing and bringing online 84 gross operated wells. Oil production rose 23% to 15,582 MBbls, and natural gas production rose 32% to 41,703 MMcf.
How much debt does the company carry and what are its liquidity sources?
Long-term debt, net, was $1,057.4 million at December 31, 2019, including $175.0 million under the credit facility and $882.4 million of Senior Notes. The revolving credit facility had a $1.2 billion borrowing base, $800.0 million of elected commitments, and $624.2 million of available capacity. Cash from operating activities was $564.2 million.
What are the company's capital spending plans for 2020?
The estimated 2020 capital expenditure budget is $590 million to $690 million, of which $490 million to $550 million is allocated to drilling and completion activity. The company expects to fund it primarily with operating cash flow, with any remaining amount from borrowings or proceeds from the contemplated divestiture of its saltwater disposal assets.
What dividend policy does the company have?
The company has not paid cash dividends on its Class A or Class C Common Stock to date and intends to retain earnings for use in its business operations. The board does not anticipate declaring dividends in the near future.
06—Continue