Why PDC Energy’s Stock Fell after 1Q16 Earnings
Why PDC Energy’s Stock Fell after 1Q16 Earnings
PDC Energy’s stock performance
Following PDC Energy’s (PDCE) 1Q16 earnings release on May 6, 2016, its stock fell 5% the same day. PDCE’s stock has risen ~5.7% YoY (year-over-year).
In comparison, PDCE’s upstream peers Whiting Petroleum (WLL), Oasis Petroleum (OAS), and EP Energy (EPE) have seen year-over-year declines of 71%, ~47%, and ~56%, respectively. WLL, OAS, and PDCE make up ~1.5% of the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).
In the above graph, we can see PDCE’s stock performance with respect to movements in the broader industry and the broader market.
In the period under discussion, April 25 to May 6, PDCE underperformed the broader energy industry (XLE), which fell 1.5%. PDCE fell 10.7% during the period. PDCE also underperformed the broader market (SPY), which fell ~1.4% during the period.
In the above graph, it’s clear that PDCE’s performance has been driven mostly by WTI (West Texas Intermediate) crude oil prices (USO). This, along with natural gas prices (UNG), has been a major driver of XLE.
Following PDCE’s 1Q16 earnings release on May 6, its stock fell mostly because of its dismal earnings. Crude oil prices rose ~0.8% on May 6 but failed to pull PDCE’s stock higher.
PDCE’s liquidity
As of March 31, 2016, PDCE had $615 million of debt outstanding including $500 million of 7.8% senior notes due 2022 and $115 million of 3.3% convertible senior notes due May 2016. PDCE noted in its earnings release that it was undrawn on its revolving credit facility and that its liquidity as of March 31, 2016, was ~$677 million.
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