PDC Energy (PDCE, Financial) looks pretty attractive in spite of the drop in oil prices. PDC is uniquely positioned for growth that should enhance value for shareholders in fiscal 2015 and beyond. It is executing various value-added initiatives such as strong hedging volume of crude and gas at a better price, reduction in capital expenditures and enhanced drilling programs with improved per-well costs structure. Also, it has a rich portfolio of assets that remain pretty attractive in the lower oil price environments.
Apart from this, the company has a strong balance sheet with rock-solid liquidity of $650 million in fiscal 2015. It has cash reserves of $16.07 million and has borrowing base of $700 million. It has withdrawn only $56 million of the given facility. The company expects to generate approximately $360 million in cash flow this fiscal year. This is at the midpoint of its production guidance for 2015.
PDC Energy forecast more than 50% growth in production for fiscal 2015. The company is expected to produce about 37,000 to 39,700 barrels of oil equivalents a day in 2015.
These efficient drilling programs have improved the internal rate of return for the wells at the Wattenberg field while reducing costs per-well substantially. Most of the inventory at this project is quite economical even at  current oil prices. This project can deliver profits even at the $35 per barrel oil prices. It is planning to increase production from this project that should lead to better financial and operating results this year.
Conclusion
The company has lowered its capital expenditure by more than 29% to $473 million this year from $668 million in 2014. This is certainly a good decision, taking into consideration the soft commodity price environment. This move of reducing CapEx will strengthen its cash position in the future. The company can use this protected fund on the prospective projects in the future. PDC remains focused to spend money on developing low costs region such as Wattenberg field. It plans to spend nearly 92% of its capital expenditure on this project in fiscal 2015. Wattenberg is a lower costs region compared to the Utica Shale, which is another great asset for PDC in the future.
