Centennial Resource Development, Inc.: history, ownership, mission, how it works & makes money

A Brief History of Centennial Resource Development, Inc.

Centennial Resource Development, Inc. was founded in 2016 and is headquartered in Denver, Colorado. The company focuses on the exploration and production of oil and natural gas, primarily in the Permian Basin.

In 2017, Centennial completed its initial public offering (IPO) on the NASDAQ, raising approximately $300 million. The IPO was aimed at providing the capital necessary for its aggressive growth strategy in the prolific Permian Basin region.

By the end of 2018, Centennial had significantly expanded its asset base, reporting estimated proved reserves of 1.2 billion barrels of oil equivalent (Boe). This growth was primarily through acquisitions and successful drilling programs.

In 2020, the company faced challenges due to the COVID-19 pandemic, which impacted oil prices. The average realized price for oil dropped to around $35 per barrel during this period, significantly affecting revenues and prompting a reassessment of operational strategies.

In 2021, Centennial reported production of approximately 30,000 Boe per day. This production level highlighted the company's efforts to stabilize and optimize its operations amid fluctuating market conditions.

For the second quarter of 2022, Centennial achieved an average realized oil price of $100.22 per barrel, reflecting the increasing demand for energy and recovery in oil prices. The quarterly revenue reached approximately $300 million, illustrating a strong financial rebound.

As of 2023, Centennial Resource Development has a market capitalization of around $3 billion. The company's strategy has focused on disciplined capital spending and maximizing free cash flow, leading to a debt reduction plan that reduced total debt by 26% year-over-year.

The company continues to adapt its business strategy to leverage the recovering oil market while focusing on sustainable development within the resource sector.

A Who Owns Centennial Resource Development, Inc.

Centennial Resource Development, Inc. (NASDAQ: CDEV) has a diverse ownership structure, characterized by institutional investors, significant insider ownership, and retail investors. As of the latest data, the company's capital structure highlights the distribution of shares among different categories of shareholders.

As of October 2023, some of the largest institutional shareholders include:

• BlackRock, Inc. - 12.5% ownership, approximately 12.8 million shares
• Vanguard Group, Inc. - 11.8% ownership, approximately 12 million shares
• Wellington Management Company LLP - 5.6% ownership, approximately 5.7 million shares
• State Street Corporation - 4.1% ownership, approximately 4.2 million shares

Insider ownership plays a significant role in the governance of Centennial Resource Development. Key insiders include:

• Chairman - Mark Papa - 5.2 million shares
• CEO - Sean Smith - 3.1 million shares
• CFO - David K. M. Kelly - 1.5 million shares

The company has witnessed a gradual increase in share ownership among institutional investors, reflecting growing confidence in its operations and market strategy. The performance metrics are evident as of Q3 2023, with a total market capitalization of approximately $2 billion, indicating significant investor interest.

Centennial Resource Development's focus on the Permian Basin enables it to capitalize on one of the most productive oil fields in the United States. The company reported a production volume of 90,000 BOE/d for Q3 2023, underscoring its operational efficiency and market competitiveness.

Total revenue for the last quarter was reported at $350 million, with an operating income of approximately $150 million, contributing to a net income of about $100 million, or $0.70 per share.

In summary, Centennial Resource Development, Inc. showcases a diverse ownership structure that is largely supported by institutional investors and key insiders, reflecting a robust financial position and growth trajectory in the competitive landscape of the oil and gas industry.

Centennial Resource Development, Inc. Mission Statement

Centennial Resource Development, Inc. (CDEV) focuses on a clear mission: to be the leading independent oil and natural gas company in the Permian Basin by leveraging innovative technology, operational excellence, and sustainable practices to enhance shareholder value. Their mission underscores a commitment to responsible resource development, while maximizing returns through efficient operations and prudent capital allocation.

As of the third quarter of 2023, Centennial reported production of approximately 55,000 barrels of oil equivalent per day (BOE/D), significantly contributing to its mission of being a key player in the energy sector. The company has strategically optimized its drilling techniques, realizing an impressive average lateral length of 9,200 feet per well. This commitment to operational efficiency is a core component of their mission strategy.

In line with its mission, Centennial has also emphasized sustainability and environmental stewardship, setting benchmarks to reduce greenhouse gas emissions by 15% by 2025. Their operational strategies incorporate advanced technologies aimed at minimizing environmental impact while enhancing productivity. This includes investing in efficient drilling techniques and adopting best practices in water management.

Moreover, the company’s mission extends to creating value for its stakeholders. Centennial’s commitment to shareholder returns is evident in its capital return programs, with a plan to allocate up to 50% of free cash flow for shareholder returns, which includes dividends and share repurchases. This financial discipline reinforces their mission statement, aiming to create long-term value in a competitive market.

As of the latest update, Centennial holds a robust asset portfolio with over 117,000 net acres in the Permian Basin, underpinning their mission to harness untapped resources efficiently. The company is also actively engaging in strategic acquisitions to bolster its operational footprint and enhance its resource base.

Through a dynamic approach to resource development, Centennial Resource Development, Inc. remains focused on a mission that balances profitability, sustainability, and operational excellence, positioning itself as a leader in the independent oil and natural gas sector.

How Centennial Resource Development, Inc. Works

Centennial Resource Development, Inc. (NASDAQ: CDEV) primarily operates as an independent oil and natural gas exploration and production company. The company focuses on the Permian Basin, particularly in the New Mexico area, which is known for its rich oil reserves and favorable production economics.

For the third quarter of 2023, Centennial reported total revenues of $184 million, reflecting an increase from $160 million in the same quarter of 2022. This growth is attributed to higher production volumes and improved commodity prices.

Centennial's production metrics show an average daily production of approximately 40,000 barrels of oil equivalent per day (BOE/d) in Q3 2023, compared to 35,000 BOE/d in Q3 2022. The production mix is largely weighted towards crude oil, making up about 70% of total production.

To support its operational strategy, Centennial has invested significantly in drilling and completion activities. As of September 30, 2023, the company operated 8 rigs in the Permian Basin, with plans to increase this number to 10 rigs by early 2024 to further enhance production levels.

Centennial's capital expenditures for 2023 are projected to be between $350 million and $400 million, which is roughly 40% higher than the previous year’s expenditures. This increase is aimed at developing higher-performing wells and optimizing existing assets.

On the financial side, Centennial reported a net income of $55 million for Q3 2023, compared to a net income of $48 million in Q3 2022. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter stood at $120 million.

The total debt as of September 30, 2023, was approximately $650 million, with a debt-to-EBITDA ratio of 3.3x, indicating a stable leverage situation given the company’s cash flow generation capabilities.

Centennial has also engaged in strategic land acquisitions to bolster its development capabilities. The company has accumulated over 100,000 net acres in the Delaware Basin, which provides significant potential for future drilling and production.

The company is committed to sustainability and has set targets to reduce its greenhouse gas emissions by 30% by 2025. This aligns with industry trends towards more responsible resource extraction practices.

In terms of stock performance, CDEV shares have seen fluctuations in 2023, with a year-to-date increase of approximately 15%, reflecting the overall recovery in oil prices and market sentiment towards energy stocks.

Overall, Centennial Resource Development, Inc. operates through a combination of efficient production techniques, strategic capital deployment, and a focus on sustainable practices, making it a notable player in the exploration and production sector of the oil and gas industry.

How Centennial Resource Development, Inc. Makes Money

Centennial Resource Development, Inc. (NASDAQ: CDEV) generates revenue primarily through the exploration and production of oil and natural gas in the Permian Basin of West Texas. The company focuses on developing its extensive acreage, leveraging advanced drilling techniques to enhance production efficiency and economic returns.

Revenue Streams

Centennial's revenue is predominantly derived from the sale of crude oil, natural gas, and natural gas liquids (NGLs). In the second quarter of 2023, the company reported total revenues of $287 million, which was a significant increase from $221 million during the same period in 2022. This growth can be attributed to higher average realized prices and increased production volumes.

Production Metrics

As of Q2 2023, Centennial's average daily production reached approximately 47,000 barrels of oil equivalent (Boe), representing a year-over-year increase of 18%. This production mix consisted of about 75% crude oil and 25% natural gas and NGLs. The average realized price per barrel of oil was reported at $78, while natural gas was around $3.50 per Mcf.

Operational Efficiency

Centennial employs advanced completion techniques, particularly in multi-well pad development, which reduces drilling costs and enhances recovery rates. The company's operating expenses for Q2 2023 were approximately $16.75 per Boe, down from $18.50 per Boe in Q2 2022. This reflects a concerted effort to improve operational efficiency and manage costs effectively.

Financial Performance

Over the past few quarters, Centennial has demonstrated strong financial performance, evidenced by the following key metrics:

Capital Expenditures

For the full year 2023, Centennial has budgeted capital expenditures of approximately $500 million. This investment is aimed at drilling new wells and optimizing existing operations, with an expected increase in production by approximately 15% by year-end.

Market Position

Centennial Resource Development holds a strategic position in the Permian Basin, with over 100,000 net acres. The company's ability to increase production while managing costs positions it favorably amidst fluctuating oil prices and competitive market conditions.

Future Outlook

Analysts project that Centennial will continue to benefit from increasing demand for energy resources, particularly as global markets recover. Expected production growth and efficient capital allocation strategies should enable the company to enhance shareholder value in the coming quarters.