What Is PDC Energy’s Guidance for 2016?



PDC Energy’s 4Q15 and 2015 production

PDC Energy’s (PDCE) total production volumes in 2015 were 42,000 barrels of oil equivalent per day (boepd). This represents ~65% year-over-year growth.

PDCE’s 4Q15 production volumes were 52,000 boepd, 85% higher than 4Q14 production levels and 11% higher than 3Q15 production levels. PDCE’s earnings release noted that its 4Q15 production levels were higher on account of successful horizontal drilling in the Wattenberg Field.

For 2016, PDC Energy expects its annual production to grow in the range of 30%–40%.

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PDCE’s 4Q15 realized prices

PDCE’s crude oil price realizations excluding hedges in 4Q15 were $35.25 per barrel, 42.5% lower than 4Q14 realized prices. PDCE’s natural gas price realizations and natural gas liquids price realizations excluding hedges fell ~48% each versus 4Q14.

PDCE’s capex guidance

PDCE revised its 2016 capex (capital expenditure) budget downward from the $450–$500 million capex guidance that it had provided in December 2015, to $420–$450 million. This represents a 20%–25% reduction year-over-year. 91%–92% of PDCE’s 2016 capital budget will be allocated to the Wattenberg Field, and around 7%–8% will be allocated to PDCE’s Utica operations.

Many upstream companies have been reducing their 2016 capex in response to lower energy prices. ConocoPhillips (COP) and Anadarko Petroleum (APC) lowered their 2016 capex by 37% and 50%, respectively, versus 2015. Marathon Oil’s (MRO) 2016 capex is expected to be less than half of its 2015 capex. These companies make up ~7% of the Vanguard Energy ETF (VDE).

In its 4Q15 earnings conference, PDCE noted that it was free cash flow positive in 4Q15, and that it would further intensify its efforts to achieve positive free cash flow in 2016.


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