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Centennial Resource Development : Barclays CEO Energy-Power Conference

09/09/2020 | 07:20am EDT

Core Oil

Delaware Basin Pure-Play

Barclays CEO

Energy-Power Conference

September 9, 2020

Important Information

Forward-Looking Statements

The information in this presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "project," "goal," "plan," "target" and similar expressions are intended to identify forward-looking statements, although not all forward- looking statements contain such identifying words. These forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, commodity price volatility, the COVID-19 pandemic and governmental responses thereto, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures and the other risks described in our filings with the Securities and Exchange Commission. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation.

Use of Non-GAAP Financial Measures

This presentation includes non-GAAP financial measures, such as Adjusted EBITDAX, Net debt and Net debt to last twelve months ("LTM") EBITDAX. Please refer to slide 16 for a reconciliation of Adjusted EBITDAX to net income, the most comparable GAAP measure. We believe Adjusted EBITDAX is useful as it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to financing methods or capital structure. We exclude the items listed on

slide 16 from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting

methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic cost of depreciable assets, none of which are components of Adjusted EBITDAX. Our presentation of Adjusted EBITDAX should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

The Company defines Net debt as the aggregate principal amount of the Company's notes outstanding minus cash and cash equivalents. The Company presents this metric to help evaluate its capital structure and financial leverage and believes that it is widely used by professional research analysts, including credit analysts, and others in the evaluation of total leverage.

The Company defines Net debt to LTM EBITDAX as Net debt (defined above) divided by Adjusted EBITDAX (reconciled on slide 16) for the prior twelve-month period. The Company presents this metric to show trends that investors may find useful in understanding the Company's ability to service its debt. This metric is widely used by professional research analysts, including credit analysts, in the valuation and comparison of companies in the oil and gas exploration and production industry.


Centennial Resource Development Overview

Key Company Statistics

Company Overview

Operational Overview

Large contiguous oil-rich acreage in the core of the Southern and Northern Delaware



Maintaining focus on balance sheet and reducing D&C and operating costs

Q2 Total Production (Boe/d)


Q2 Oil Production (Bo/d)


Top-tier technical team with consistent track record of solid well results

% oil


Resuming modest activity in 2H'20, with completion of DUCs and addition of one rig

Capital Expenditures ($ mm)

Minimal federal acreage exposure (~5% of total net acreage)

Q2 Total Capital Exp.


Updated FY 2020 Total Capital Exp.

$240 - 270

Asset Overview2

1H'20 Capital Exp.


Southern Delaware (TX)

Northern Delaware (NM)

Implied 2H'20 Capital Exp.1


Acreage (as of 12/31/19) 2



Total net acreage




% CDEV Operated



% Held by Production



Financial Overview (Q2 2020)

Leverage (as of 6/30/20)

First Lien Debt / LTM EBITDAX





TX: ~59,350

NM: ~18,850

Net Debt / Book Capitalization


net acres2

net acres2

(1) 2H'20 implied total capital expenditure figure equal to midpoint of revised 2020 guidance range less actual capital incurred in 1H'20

(2) As of 12/31/19; does not include mineral or surface acreage positions


Centennial's Response to Macro Environment

  1. Operational Initiatives
    • Reduced operated rig count from five to zero in April 2020 and halted completion activity
    • Total capital budget reduced by ~60% from original guidance
    • Curtailed ~20% of production during May in response to weak realized prices (majority of wells back online by end of June)
  2. Cost Control & Margin Improvement
    • Realized significant reductions to D&C costs, lease operating expenses and G&A
      • Reduced D&C costs per well by over 20%, compared to FY 2019
      • Reduced LOE and G&A1 unit costs by 17% and 12%, respectively from Q1 2020 to Q2 2020
  1. 3 Financial Action

    • Executed debt exchange resulting in reduction to senior unsecured notes and lower interest expense
    • Amended credit facility to replace total leverage covenant through YE'21 with first lien leverage covenant of 2.75x
    • Hedged significant amount of 2020 oil volume to mitigate downside risk
  2. Q2'20 Cash G&A excludes one-time severance payments related to "Reduction In Force" (RIF) of ~$2.9mm incurred in Q2 2020


This is an excerpt of the original content. To continue reading it, access the original document here.


Centennial Resource Development Inc. published this content on 09 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 September 2020 11:19:05 UTC

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Financials (USD)
Sales 2021 847 M - -
Net income 2021 70,4 M - -
Net Debt 2021 928 M - -
P/E ratio 2021 19,3x
Yield 2021 -
Capitalization 1 505 M 1 505 M -
EV / Sales 2021 2,87x
EV / Sales 2022 2,37x
Nbr of Employees -
Free-Float 62,8%
Duration : Period :
Centennial Resource Development, Inc. Technical Analysis Chart | CDEV | US15136A1025 | MarketScreener
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 15
Last Close Price 5,39 $
Average target price 6,47 $
Spread / Average Target 20,1%
EPS Revisions
Managers and Directors
Sean R. Smith Chief Executive Officer & Director
George S. Glyphis Chief Financial Officer & Vice President
Steven J. Shapiro Non-Executive Chairman
Colleen C. Proctor Vice President-Information Technology
Matthew R. Garrison Chief Operating Officer & Vice President
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