2024-07-18 12:28:14 ET
Summary
- Civitas is an exploration and production company with expertise in the acquisition as well as the production of crude oil and gas.
- I think that the company's growth in cash, PP&E, assets, and equity over the last decade indicates proven expertise.
- Competitors trade more expensively than CIVI, with analysts reporting a strong buy rating and a target price of $94, suggesting significant upside potential.
- Civitas Resources, Inc. reported strong net sales growth and production expectations for 2024, with significant FCF, dividends, and buyback authorization.
- In my view, further capital expenditures and exploration expenses announced for 2024 will most likely bring new reserves and capacity increases.
Investment Thesis
Civitas Resources, Inc. ( CIVI ) reported the acquisitions of Vencer , Hibernia, and Tap Rock, which I think could accelerate future crude oil production in the coming quarters. Besides, with 2024 exploration expense of $15-$20 million and capital expenditures of $1.8-$2.1 billion expected in 2024, I would be expecting new reserves and production capacity increase. I think that investors did not take into account the total number of shares repurchased recently, the 2024 FCF expected to be close to $1.3 billion, and the total amount of dividends distributed. Given the ongoing unlevered FCF growth, production track record reported, and the distributions to shareholders, CIVI, in my view, appears very undervalued....
Read the full article on Seeking Alpha
For further details see:
Civitas Resources: M&A Driven Growth, And Very Undervalued