Crescent Energy's Lowest Production Base Decline Rates Catches Eye Of Analyst, Initiates At Overweight

Stephens & Co. analyst Mike Scialla initiated coverage on Crescent Energy Company CRGY at an Overweight rating with a price target of $17. 

The analyst believes the company is well-positioned for growth given its lowest production base decline rates in the industry, strong balance sheet, underappreciated asset quality, and a long record of shareholders' appreciation policy.

Scialla expects CRGY to improve on prior operators' well results at its two primary assets. The analyst thinks optimizing spacing and completing the design in its recently acquired properties in South Texas can drive Lower Eagle Ford wells results.

However, the analyst believes a considerable decline in oil and natural gas prices can lower the near-term cash flow and EBITDA estimates despite the company's nearly 45% of 2024 oil production being hedged.

Scialla estimates EPS and adjusted EBITDA of $0.84 and $1,032.0 million in 2023 and $1.71 and $1,335.0 million in 2024.

Also Read: Crescent Energy's Latest Eagle Ford Acquisition Signals Solid Strategy: Why This Analyst Says 'Buy'

Price Action: CRGY shares are trading higher by 6.10% at $12.95 on the last check Wednesday.