05/02/2019 | Press release | Distributed by Public on 05/02/2019 07:21
Kimmeridge Energy Management Company, LLC ('Kimmeridge' or the 'Firm'), beneficial owners of 5.1% of the shares of common stock of PDC Energy, Inc. ('PDC' or the 'Company') (NASDAQ: PDCE), today issued the following statement on PDC's 2019 first quarter operating and financial results:
Poor Return and Cash Burn Highlights the Need for Change
PDC's reported net loss of $120.2 million ($1.82 per diluted share) and negative free cash flow of $90 million in the first quarter of 2019 highlights the risk to shareholders of maintaining the status quo. On an adjusted basis, PDC generated a return on capital employed of ~3%, materially below the Company's weighted average cost of capital, continuing an unimpressive trend.
While Kimmeridge is pleased that the Company has followed its recommendation by announcing a $200 million dollar stock repurchase program, we remain disappointed that they have not committed to return 100% of the midstream proceeds to shareholders.
Kimmeridge is also concerned that Q1 2019 capex reflects a run rate of approximately $1.1 billion for 2019, well above the Company's full year guidance of $810-$870 million. The Company appears likely to repeat the failings of 2018 where capex is revised up and the promised free cash flow disappears. PDC's outlook for free cash flow generation is further compromised by the excessive SG&A and uncompetitive well costs.
Kimmeridge firmly believes that shareholders will be better served by having its nominees on the Board, as it believes they will help guide and hold management accountable, to align compensation and be well positioned to deliver top quartile operational and financial performance.
We urge shareholders to tell PDC's Board what you think by voting GOLD. Your vote is critical, no matter how many or how few shares you own. Please VOTE GOLD 'FOR ALL' of the Kimmeridge Nominees.
You can vote electronically via the Internet, by telephone or by signing and dating the GOLD proxy card and mailing it in the postage paid envelope provided. If you have questions about the voting process or need help in voting your shares, please feel free to reach out to our proxy solicitor, Innisfree M&A Incorporated, toll free at (877) 750-8338 or collect at (212) 750-5833.