2024-03-06 08:44:04 ET
Summary
- Crescent Energy beats earnings expectations, mainly through the effects of hedging gains compared to hedging losses the year before.
- Management's acquisition of Eagle Ford properties has led to significant improvements in well performance and lower costs. More free cash flow will result in the current year.
- Operational gains expected to become material in future quarterly reports.
- This management purchases properties from unnatural or distressed sellers. Therefore, high operating costs are often initially offset by lower depreciation.
- The hedging program allowed stronger earnings comparisons in the current year. It minimized the effects of volatile and declining commodity prices.
Crescent Energy ( CRGY ) beat a lot of consensus forecasts with the current earnings report. At first, the market was pointing to things like hedging gains and other things that are not really valued. But coming right behind that is some solid operational gains mentioned in the conference call. The only thing the operational gains need is enough new wells for those effects to become material to the quarterly reporting. Since the unconventional business has a sharp first year decline rate, that materiality should climb rather quickly to become apparent to shareholders.
Eagle Ford
Management acquired some Eagle Ford properties in the 2023 fiscal year. That transformed a previously non-operated situation in a material core operated play, according to the CEO in the conference call. Mr. Market would, of course, demand to see reported improvements that justify something like that....
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For further details see:
Crescent Energy: The Beginning Of A Lot Of Potential Gains