PDC Energy Announces its Updated 2022 Guidance and Multi-Year Outlook, Raises its Free Cash Flow and Return of Capital Projections
Updated 2022 Guidance Highlights
|Total Oil and Gas Production (Mboe/d)||225-240||235-250|
|Oil Production (Mbbl/d)||74-81||78-83|
|Oil and Gas Capital Investments (millions)|
|Commodity Price Assumption (
|Adjusted Free Cash Flow (“FCF”)1 (billions)|
|Total Return of Capital (millions)||$800+|
|Year End 2022 Net Leverage Ratio||0.7x||0.4x|
1FCF is a non-GAAP measure as described below.
The Company’s 2022 projected free cash flow yield is estimated at 25% based on our recent market capitalization. Our expected $1+ billion in total shareholder returns includes our increased base quarterly dividend of
President and Chief Executive Officer
2022 Operations Update
As previously announced, the Company closed on its core Wattenberg acquisition, Great Western, on
In the Wattenberg Field, the Company expects to invest
The Company’s Kenosha Oil and Gas Development Plan (“OGDP”) is on the
PDC anticipates 2022 capital investments of
PDC expects this year’s capital program to generate
|2022 Estimated Commodity Price Sensitivity|
|Commodity Price Change:||Adjusted Cash Flows
from Operations Change:
The table below provides additional 2022 financial guidance:
|Capital investments (millions)||$||950||$||1,000|
|Lease Operating Expense ("LOE") (millions)||$||245||$||265|
|Transportation, gathering & processing expense (“TGP”) (per Boe)||$||1.45||$||1.60|
|Production taxes (% of Crude oil, natural gas & NGLs sales)||7.0||%||8.0||%|
|General & Administrative expense (“G&A”) (millions)||$||160||$||175|
|Estimated Price Realizations (excludes TGP)|
|Crude oil (% of NYMEX)||95||%||99||%|
|Natural gas (% of NYMEX)||70||%||80||%|
General and Administrative expense includes
At this time, the Company expects that for 2022 all Federal income tax expense will be deferred and that it will not be a cash taxpayer based on the commodity price outlook outlined above. In 2023, the Company expects that approximately one third of its Federal income tax would be deferred at the commodity price outlook.
The Company’s second quarter outlook remains generally unchanged as it expects to invest nearly
Multi-Year Outlook and Return of Capital Initiatives
The Company’s outlook through 2023 is predicated on generating substantial levels of FCF through consistent capital investments from efficient operations with an output of low-single digit compound annual growth rate in both total production and oil production. With the 2022 pricing assumptions described above and assuming
The Company recently announced its shareholder return framework in which at least 60% of FCF after base dividends will be returned to shareholders in the form of share repurchases and, if necessary, a year end special dividend. The Company has a
PDC is committed to keeping a strong balance sheet as it executes on its capital return initiatives. Long term net debt is currently approximately
Environmental, Social and Governance Highlights
The Company's Board recently approved quantitative metrics for greenhouse gas ("GHG") and methane emissions reductions for its 2022 short term incentive program, including 15% GHG and 30% methane emissions reduction targets from 2021 to 2022, respectively. This supports the Company's previously announced goals to reduce by 2025 (from 2020 baseline levels and on a per unit of production basis) GHG and methane emissions by 60% and 50% respectively. In total, over 25% of the Company’s short term incentive program is tied to ESG and EHS initiatives.
We use "adjusted free cash flow", a non-
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the United States (“U.S.”) Private Securities Litigation Reform Act of 1995 regarding our business, financial condition, results of operations and prospects. All statements, other than historical facts, that address activities or results that PDC assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. Forward-looking statements herein include statements regarding future investments, production, cash flows, dividends, share repurchases, costs, projects, permits, wells, locations, rigs employed, EURs, commodity prices and realizations, taxes, debt, leverage ratios and ESG matters. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of PDC. These include the risk of any unexpected costs or expenses resulting from the acquisition, the risk that problems may arise in integrating the businesses of the companies which may result in PDC not operating as effectively and efficiently as expected, the risk that PDC may be unable to achieve synergies or other anticipated benefits of the transaction or that it may take longer than expected to achieve those synergies or benefits, and other important factors that could cause actual results to differ materially from those projected. Additional risks and uncertainties include those detailed in PDC’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that are available on its website at http://www.pdce.com and on the SEC’s website at http://www.sec.gov.
All forward-looking statements are based on assumptions that PDC believes to be reasonable but that may not prove to be accurate. PDC undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
|VP - Finance|
Source: PDC Energy, Inc.