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PDC Energy Remains Rock Solid

Summary

PDC Energy Inc is in a rock solid financial position with cash flow neutrality well within reach.

Strong upstream growth coupled with lower spending levels leads the way.

With plenty of liquidity, an extensive hedging program, and no major near term debt maturities, PDC Energy is in great shape to capitalize on higher energy prices.

One of the things that really stood out during PDC Energy Inc's (NASDAQ:PDCE) Q2 earnings release was management stating that the company could generate enough cash flow during the second half of 2015 to cover its spending levels. Keep in mind this assumes WTI averages $48.98/barrel, NGLs [natural gas liquids] realizations average $8.57/barrel, and natural gas prices as measured by Henry Hub averages $2.87 mmBtu, with prices being substantially enhanced by PDC Energy's extensive hedging program. Spot prices have moved lower since that announcement was made, but it shows that PDC Energy is miles away from being in dire financial straights compared to some of its other small cap E&P peers.

PDC Energy plans on spending between $203 million - $233 million of its $535 million 2015 capex budget during the second half of this year. As it spends less, PDC Energy's upstream growth will remain incredibly strong due to its rock solid Wattenberg operations. In Q2 2015, PDC Energy produced 37,001 BOE/d, up 15% from the previous quarter. By the end of 2015, management hopes to ramp that up to an exit rate of 48,000 BOE/d. That sets the company up perfectly for 2016.

Stable cash flow
Below is a look at PDC...


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