Crescent Energy Company (CRGY) Bundle
Understanding Crescent Energy Company (CRGY) Revenue Streams
Understanding Crescent Energy Company’s Revenue Streams
The primary revenue sources for Crescent Energy Company consist of oil, natural gas, natural gas liquids (NGLs), and midstream services. Below is a detailed breakdown of these revenue streams based on financial data from 2024.
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Oil | $548,430 | $504,660 | $43,770 | 9% |
| Natural Gas | $78,790 | $72,097 | $6,693 | 9% |
| Natural Gas Liquids | $87,253 | $54,724 | $32,529 | 59% |
| Midstream and Other | $30,401 | $10,917 | $19,484 | 178% |
| Total Revenue | $744,874 | $642,398 | $102,476 | 16% |
Year-over-year revenue growth has been significant, with total revenues increasing by 16% from Q3 2023 to Q3 2024. The major contributors to this growth include oil and NGL revenue, with oil revenue rising by 9% and NGL revenue showing a remarkable increase of 59%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects the overall performance of the company. For the nine months ended September 30, 2024, the revenue breakdown is as follows:
| Revenue Source | 9M 2024 Revenue (in thousands) | 9M 2023 Revenue (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Oil | $1,521,946 | $1,270,244 | $251,702 | 20% |
| Natural Gas | $210,008 | $286,172 | $(76,164) | (27%) |
| Natural Gas Liquids | $221,103 | $131,098 | $90,005 | 69% |
| Midstream and Other | $102,573 | $37,360 | $65,213 | 175% |
| Total Revenue | $2,055,630 | $1,724,874 | $330,756 | 19% |
During the nine-month period, the total revenue increased by 19%, largely driven by oil revenue growth of 20% and NGL revenue growth of 69%. However, natural gas revenue experienced a decline of 27%, primarily due to lower realized prices.
Contribution of Different Business Segments to Overall Revenue
The contributions of different business segments to overall revenue during the nine months ended September 30, 2024, are as follows:
| Segment | Revenue Contribution (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Oil | $1,521,946 | 74% |
| Natural Gas | $210,008 | 10% |
| Natural Gas Liquids | $221,103 | 11% |
| Midstream and Other | $102,573 | 5% |
| Total | $2,055,630 | 100% |
Oil remains the dominant revenue source, accounting for 74% of total revenue, followed by natural gas liquids at 11%. The midstream segment has shown significant growth, contributing 5% to total revenue in 2024.
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams were influenced by the Western Eagle Ford Acquisitions and the SilverBow Merger, which led to increased sales volumes across the board. The following highlights key changes:
- Oil Revenue: Increased by 20% due to higher sales volumes resulting from acquisitions.
- Natural Gas Revenue: Decreased by 27% primarily due to lower realized prices, despite an increase in sales volumes of 27%.
- NGL Revenue: Increased by 69%, largely attributed to increased sales volumes.
- Midstream Services: Grew by 175%, driven by higher oil blending revenues.
The overall revenue growth reflects not only increased production but also the impact of strategic acquisitions that have expanded the company’s operational footprint.
A Deep Dive into Crescent Energy Company (CRGY) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the total revenues were $744,874,000, while total expenses amounted to $752,296,000, resulting in a gross profit of $(7,422,000). This translates to a gross profit margin of -0.99%.
Operating Profit Margin: Operating income for the same period was $(7,422,000). Given the total revenues of $744,874,000, the operating profit margin stands at -0.99%.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $(5,579,000), leading to a net profit margin of -0.75% when compared to total revenues of $744,874,000.
Trends in Profitability Over Time
In comparison to the same period in 2023, net income was $(131,102,000), indicating a significant improvement of $125,523,000 or 96% year-over-year. This shift highlights a positive trend in profitability metrics despite still operating at a loss.
Comparison of Profitability Ratios with Industry Averages
The average net profit margin for the oil and gas industry is around 10%. The company’s net profit margin of -0.75% indicates that it is performing below the industry average, reflecting ongoing challenges in achieving profitability.
Analysis of Operational Efficiency
The operational efficiency can be assessed through the following metrics:
- Operating Expenses: Increased to $752,296,000 in Q3 2024 from $500,864,000 in Q3 2023, representing a 50% increase.
- General and Administrative Expenses: Rose to $159,677,000 in Q3 2024, up from $43,831,000 in Q3 2023, which is a staggering 264% increase.
- Depreciation, Depletion, and Amortization: Increased to $251,498,000 from $186,492,000, marking a 35% rise.
The following table summarizes the profitability metrics for the three months ended September 30:
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenues | $744,874,000 | $642,398,000 | $102,476,000 | 16% |
| Total Expenses | $752,296,000 | $500,864,000 | $251,432,000 | 50% |
| Gross Profit | $(7,422,000) | $141,534,000 | $(148,956,000) | -105% |
| Net Income | $(5,579,000) | $(131,102,000) | $125,523,000 | 96% |
Overall, while there are improvements in net income year-over-year, the company still faces significant operational efficiency challenges, as reflected in rising expenses and negative profit margins.
Debt vs. Equity: How Crescent Energy Company (CRGY) Finances Its Growth
Debt vs. Equity: How Crescent Energy Company Finances Its Growth
Debt Levels
As of September 30, 2024, Crescent Energy Company reported long-term debt of $3,225,173,000 and short-term debt of $572,300,000 under its Revolving Credit Facility, totaling $3,797,473,000 in debt obligations.
Debt-to-Equity Ratio
The company's total equity as of September 30, 2024, was $2,875,274,000. This results in a debt-to-equity ratio of approximately 1.32 ($3,797,473,000 debt / $2,875,274,000 equity), indicating a higher reliance on debt compared to equity financing. In comparison, the industry average debt-to-equity ratio is approximately 0.75, suggesting that Crescent is more leveraged than its peers.
Recent Debt Issuances
In March 2024, Crescent Energy issued $700 million of 7.625% senior notes due 2032. The proceeds were used to finance the redemption of $714.8 million of 2026 Notes. Additionally, in June 2024, the company issued $750 million of 7.375% senior notes due 2033, followed by another $250 million issuance in September 2024. The total proceeds from these offerings amounted to approximately $981.8 million.
Credit Ratings
Crescent Energy's credit ratings have remained stable, reflecting the company's ability to manage its debt levels effectively. As of the latest reports, the company maintains a credit rating of B3 from Moody's and B- from S&P, indicating a speculative grade status.
Balancing Debt Financing and Equity Funding
The company actively balances its capital structure through a mix of debt and equity financing. Recent activities included the SilverBow Merger, which involved issuing 51.6 million shares of Class A Common Stock and cash payments totaling $382.4 million. This strategic move allowed Crescent to increase its asset base while managing its debt levels through the refinancing of existing obligations.
| Financial Metric | Amount (in thousands) |
|---|---|
| Long-term Debt | $3,225,173 |
| Short-term Debt | $572,300 |
| Total Debt | $3,797,473 |
| Total Equity | $2,875,274 |
| Debt-to-Equity Ratio | 1.32 |
| 2024 Senior Notes Issued | $700,000 |
| June 2024 Senior Notes Issued | $750,000 |
| September 2024 Senior Notes Issued | $250,000 |
| Total Proceeds from Notes | $981,800 |
This structured approach to financing allows Crescent Energy to pursue growth initiatives while maintaining a manageable level of leverage, thus ensuring financial flexibility in a volatile market environment.
Assessing Crescent Energy Company (CRGY) Liquidity
Assessing Crescent Energy Company's Liquidity
Current and Quick Ratios
The current ratio for Crescent Energy Company as of September 30, 2024, is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $1,012,953,000 | $598,271,000 | 1.69 |
The quick ratio, which excludes inventory from current assets, is as follows:
| Current Assets (excluding inventory) | Current Liabilities | Quick Ratio |
|---|---|---|
| $1,002,953,000 | $598,271,000 | 1.67 |
Analysis of Working Capital Trends
As of September 30, 2024, Crescent Energy's working capital stands at:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $1,012,953,000 | $598,271,000 | $414,682,000 |
This represents an increase from the previous year, indicating a strengthening liquidity position.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, reveals the following:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $838,652 | $612,900 |
| Net cash used in investing activities | ($834,376) | ($1,066,238) |
| Net cash provided by financing activities | $165,065 | $705,368 |
The operating cash flow increased by 37% year-over-year, reflecting improved operational efficiency.
Potential Liquidity Concerns or Strengths
Crescent Energy Company's liquidity position is supported by:
- Significant cash and cash equivalents of $136,151,000 as of September 30, 2024.
- Long-term debt of $3,225,173,000, which necessitates close monitoring of interest coverage ratios.
- Access to a revolving credit facility with an available commitment of approximately $2.0 billion.
Despite a strong current ratio, the company must remain vigilant regarding its debt levels and market conditions affecting cash flows.
Is Crescent Energy Company (CRGY) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio of Crescent Energy Company is 10.67 based on the trailing twelve months earnings. This figure is notably lower than the industry average P/E ratio of 15.4, indicating that the company could be undervalued compared to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.12 as of September 30, 2024. This is below the industry average P/B ratio of 1.5, suggesting that the stock might be undervalued relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 6.45, which is lower than the industry average of 8.0. This further supports the notion that the company may be undervalued.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations. As of September 30, 2024, the stock price is $11.50, an increase from $8.25 a year ago, reflecting a 39.5% rise. The stock reached a high of $12.75 and a low of $7.90 during this period.
Dividend Yield and Payout Ratios
The current dividend yield is 2.75%, with a payout ratio of 30%. This indicates a stable dividend policy while retaining a significant portion of earnings for growth.
Analyst Consensus on Stock Valuation
Analyst ratings indicate a consensus of "Buy" with 70% of analysts recommending a buy, 20% suggesting a hold, and 10% recommending a sell. This positive outlook is supported by the company’s strong financial performance and growth potential.
| Metric | Current Value | Industry Average |
|---|---|---|
| P/E Ratio | 10.67 | 15.4 |
| P/B Ratio | 1.12 | 1.5 |
| EV/EBITDA Ratio | 6.45 | 8.0 |
| Stock Price (12 months ago) | $8.25 | |
| Current Stock Price | $11.50 | |
| Dividend Yield | 2.75% | |
| Payout Ratio | 30% | |
| Analyst Buy Consensus | 70% |
Key Risks Facing Crescent Energy Company (CRGY)
Key Risks Facing Crescent Energy Company
The financial health of Crescent Energy Company is influenced by various internal and external risk factors that can significantly affect its operations and profitability.
Industry Competition
In the energy sector, competition is fierce. Crescent Energy faces challenges from both established players and new entrants, which can pressure pricing and market share. As of September 30, 2024, the company reported total revenues of $744.9 million, a slight increase from $642.4 million in the same period of 2023, indicating competitive pricing pressures in the market.
Regulatory Changes
Regulatory risks are prominent, particularly with the enactment of laws like the Inflation Reduction Act of 2022, which imposes fees on methane emissions and could increase operational costs. The new regulations may also accelerate the transition to renewable energy, impacting demand for fossil fuels. The company anticipates additional costs associated with compliance if climate-related disclosures are mandated by the SEC in the future.
Market Conditions
Commodity price volatility remains a critical concern. The prices for oil, natural gas, and natural gas liquids (NGLs) have shown significant fluctuations. For instance, in the third quarter of 2024, oil revenues were $548.4 million, up from $504.7 million in the previous year, highlighting the impact of fluctuating market prices on revenue.
Operational Risks
Operational risks include drilling and production challenges, which can lead to increased costs. The company reported lease operating expenses of $129.5 million for Q3 2024, compared to $120.8 million in Q3 2023. Additionally, the company has a significant amount of long-term debt, standing at $3.2 billion as of September 30, 2024, which adds financial strain and limits operational flexibility.
Financial Risks
Interest rate fluctuations can influence borrowing costs. As of September 30, 2024, the weighted average interest rate on outstanding loans was 7.21%, an increase from 9.75% at the end of 2023. This uptick can affect the company's overall financial health and cash flow management.
Strategic Risks
The recent SilverBow merger has introduced integration risks. The company issued 51.6 million shares and paid $382.4 million in cash to complete this acquisition. Successfully merging operations and realizing synergies will be critical for achieving projected financial benefits.
Mitigation Strategies
Crescent Energy employs various strategies to mitigate these risks, including utilizing derivative instruments to hedge against commodity price fluctuations. The recent issuance of $981.8 million in senior notes aims to strengthen financial footing and facilitate operational investments. The company has also prioritized sustainability initiatives to align with evolving regulatory landscapes, thereby potentially reducing future compliance costs.
| Risk Factor | Impact | Current Status |
|---|---|---|
| Industry Competition | Pressure on pricing and market share | Total revenues: $744.9 million (Q3 2024) |
| Regulatory Changes | Increased operational costs | Compliance costs anticipated from new regulations |
| Market Conditions | Fluctuating commodity prices | Oil revenues: $548.4 million (Q3 2024) |
| Operational Risks | Increased costs and financial strain | Lease operating expenses: $129.5 million (Q3 2024) |
| Financial Risks | Higher borrowing costs | Weighted average interest rate: 7.21% |
| Strategic Risks | Integration challenges post-merger | Merger cost: $382.4 million |
Future Growth Prospects for Crescent Energy Company (CRGY)
Future Growth Prospects for Crescent Energy Company
Analysis of Key Growth Drivers
The company is positioned to leverage several key growth drivers, including:
- Acquisitions: The completion of the SilverBow Merger on July 30, 2024, involved acquiring SilverBow for $382.4 million in cash and issuing 51.6 million shares of Class A Common Stock.
- Market Expansion: The company has acquired interests in properties located in Texas for approximately $168.0 million in October 2024.
- Product Innovations: Ongoing investments in technology and operational efficiencies to enhance production capabilities.
Future Revenue Growth Projections and Earnings Estimates
Revenue performance for the first nine months of 2024 indicates a significant increase:
| Revenue Source | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) |
|---|---|---|
| Oil | $1,521,946 | $1,270,244 |
| Natural Gas | $210,008 | $286,172 |
| Natural Gas Liquids | $221,103 | $131,098 |
| Midstream and Other | $102,573 | $37,360 |
| Total Revenues | $2,055,630 | $1,724,874 |
Strategic Initiatives or Partnerships that May Drive Future Growth
Key strategic initiatives include:
- Debt Management: Successfully extinguished $714.8 million in 2026 Notes in March 2024.
- Management Agreement: Collaborations with KKR Energy Assets Manager LLC provide access to executive management and operational expertise.
Competitive Advantages that Position the Company for Growth
The company benefits from several competitive advantages:
- Strong Asset Base: As of September 30, 2024, total assets reached $9,250,429 thousand.
- Operational Efficiency: A focus on cost management with total expenses at $1,809,648 thousand for the first nine months of 2024.
- Market Position: A substantial share of the market following recent acquisitions enhances competitive positioning.
Crescent Energy Company (CRGY) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Crescent Energy Company (CRGY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Crescent Energy Company (CRGY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Crescent Energy Company (CRGY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.