Recent Financial and Operational Highlights
Generated free cash flow during the quarter
Reduced LOE per unit costs for the fourth consecutive quarter
Lowered well cost targets and full-year unit cost guidance
Increased full-year oil and total company production guidance
Borrowing base reaffirmed at
Increased liquidity compared to the prior quarter
Resumed drilling and completions activity with solid results
Expect to be free cash flow positive in the fourth quarter at current strip pricing
Financial Results
For the third quarter 2020, Centennial reported a net loss of
Total equivalent production during the third quarter 2020 averaged 68,934 barrels of oil equivalent per day ('Boe/d') compared to 76,312 Boe/d in the prior year period. Average daily crude oil production for the quarter was 35,292 barrels of oil per day ('Bbls/d') compared to 42,079 Bbls/d in the prior year period.
NGL volumes increased 21% to 14,885 Bbls/d compared to the second quarter 2020. The increase compared to the prior quarter was largely attributable to the Company's primary gas processor shifting to ethane recovery during the quarter, in addition to higher gas capture rates.
'Centennial delivered a solid third quarter driven by lower operating expenses and well costs. Additionally, we increased our liquidity position organically by utilizing free cash flow to pay down debt,' said
Third Quarter Operational Results
During the quarter, Centennial resumed operational activity adding one drilling rig, while achieving lower well costs. Additionally, the Company continued its successful implementation of various field-level initiatives to lower lease operating expenses ('LOE'). In July, Centennial completed the second phase of its electric substation in
'Our recent field-level projects have positively impacted Centennial's economics in a number of ways. The electrification of the field and the transition to gas lift have dramatically lowered equipment rental costs, provided our well-sites with a more consistent power source and reduced the amount of workovers,' said Smith. 'Combined, these programs have improved cash flow by reducing LOE costs by 36% over the past year, in addition to providing a more stable production base with lower downtime.'
Also during the quarter, Centennial completed five previously drilled but uncompleted ('DUC') wells in
'These wells highlight the quality of our asset base with strong 30-day initial production rates, as well as 60-day initial production rates exceeding 1,200 barrels of oil per day on average,' Smith said. 'Importantly, we were able to deliver these wells for an average cost of
Total capital expenditures incurred for the quarter were
Updated 2020 Operational Plans and Targets
Centennial recommenced drilling activity during the quarter and plans to continue operating a one-rig program for the remainder of the year. Based on recent operational performance, Centennial increased its 2020 oil production target by one percent to 36,000 Bbls/d and total company production target by two percent to 67,000 Boe/d. The Company also slightly reduced its full-year capital expenditure budget, as a result of lower facilities and infrastructure capital. Due to recent cost reduction initiatives, Centennial lowered its full-year 2020 guidance range for LOE per unit, in addition to G&A, DD&A, and severance & ad valorem taxes. Furthermore, the Company adjusted its estimates for operated wells spud and completed during the full-year.
'Based on enhanced operating margins and structural well cost improvements, we expect to generate incremental free cash flow in the fourth quarter, assuming strip pricing,' Smith said.
Capital Structure and Liquidity
As previously announced, the Company's
Hedge Position
For the fourth quarter of 2020, Centennial has 16,000 Bbls/d of oil hedged, consisting of approximately 80% fixed price swaps, at a weighted average floor price of
About
Cautionary Note Regarding Forward-Looking Statements
The information in this press release 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 press release, 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 press release, the words 'could,' 'may,' '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.
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