PDC Energy, Inc. (NASDAQ:PDCE) Q4 2022 Earnings Call Transcript

Scott Meyers: Yes. Again, our share repurchase is going to be the primary vehicle. I would say that, that’s our number one when we’re looking through this. We’re going to keep monitoring. We’re going to pace ourselves, so we’re buying back shares throughout the entire year. The special dividend is only if we need to top it off, but if we can do all 60%-plus through the share repurchases, that’s the goal. That’s what we’re going to try to achieve. The remaining 40%, yes, there is some more flexibility to do some more share repurchase, but also paying down a little bit of debt, I think, is important as well. So we’ll manage it throughout the year, but I’d expect debt to go down $100 million, $200 million throughout the year. Again, we’re ultimately over the next couple of years, trying to get that debt down to around that $800 million level, but the shareholder returns is still our first priority as we’re very comfortable where our debt balance and debt levels are right now.

Umang Choudhary: Got it. Very clear. Thank you.

Operator: And our next question comes from Bertrand Donnes of Truist. Your line is open.

Bertrand Donnes: Good morning guys. I think you just kind of brushed on the buyback strategy that you’re still focused on that more than higher cash payout, but your year-to-date performance kind of puts you in the top 10% of the group, and you are still trading at a good discount to the group. So there’s kind of two sides of the coin there. Maybe I think the prior thought process was you buy back a lot of your shares and then the CAP gets approved and then there’s kind of a re-rating. And I think we’ve seen some of that happening. So, I’m just wondering at what point do you kind of weigh the victory flag on buybacks and switch to more cash payments? Or do you really need to see your multiple go higher from here?

Scott Meyers: Yes, we still think €“ we still look at the multiples and look at the markets, and we don’t see a discernible trend between which one €“ and through talking to our investors, everyone is very supportive on the share buyback. So right now, I think we’re going to stay on that track. I mean, we still think our shares are undervalued. We still think there’s room for growth. Yes, it was a big step for us with the CAP approval. But now I think people that haven’t been looking at the names are starting to look at our name again and digesting. So, I still think there’s room for us to move North. So for now, we’re going to stay with the share buyback approach and look to have an aggressive plan in 2023.

Bertrand Donnes: That’s great. It makes total sense. And then the follow up, it’s a bit in the weeds. On your CAP, there’s a pad called the Wyndham . And I’m trying to read permit lines here. So forgive me if I’ve got it wrong. But it looks like your spacing has about 23 wells in the Nio across the section, and that seems a little bit tighter than normal. So I just wanted to get an update on maybe the Wattenberg spacing goal or maybe there was something special there?