CRGY - Crescent Energy: Suddenly Operational Improvements Are Center Stage

2024-05-11 23:42:40 ET

Summary

• Crescent Energy's operational outperformance has led to increased production guidance.
• The focus on operational gains is continuing, as attractive acquisition opportunities are currently limited.
• The cost of wells in the Eagle Ford region is decreasing while productivity is increasing, leading to lower operating costs and increasing potential future profitability.
• Free cash flow as calculated by management took a big leap in the current quarter.
• Bolt-on acquisitions appear to be the future focus.

Long-time readers know that Crescent Energy ( CRGY ) was a combination of Chairman John Goff's Contango (MCF) and a privately held KKR Entity. The main idea at the time was to combine forces to go after bigger deals that were discounted. To some extent that has happened. The unexpected bonus was operational outperformance of the properties that led to a current guidance increas e (net of some acquisitions and sales). If this continues as should now be expected, then investors have two potential ways to win with this common stock as a growth vehicle.

The previous article noted that operational gains were beginning to be the major focus of the quarterly review beginning in the last quarter. This focus appears to be continuing because management is (probably temporarily) not finding attractive acquisition opportunities that had taken center stage for previous articles before this one. The strong buy idea adds still another way for investors to win....

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