Camber Energy vs. Centennial Resource Development: Which Oil & Gas Stock is a Better Buy?

: CEI | Camber Energy, Inc. News, Ratings, and Charts

CEI – In this article I will analyze and compare Camber Energy (CEI) and Centennial Resource Development (CDEV) to determine which oil & gas stock is currently a better investment.

Since the start of 2022, the energy sector has been outperforming the overall market, driven by surging oil and gas prices. The main reason for this rally is a highly uncertain supply outlook amid the Russian invasion of Ukraine.

Year-to-date (YTD), the energy industry demonstrated a strong bullish momentum and surpassed the broader market, as evidenced by the 41.17% increase in the Energy Select Sector SPDR ETF (XLE) compared to SPDR S&P 500 Trust ETF’s (SPY) 15.91% loss over the same period. Therefore, investors could consider adding shares of those companies to hedge their portfolios against the current bear market. 

With this in mind, today, I am going to analyze and compare two popular energy stocks, Camber Energy, Inc. (CEI) and Centennial Resource Development, Inc. (CDEV) to determine which is a better investment at current levels.

Camber Energy is an energy company that engages in the acquisition, development, and sale of crude oil, natural gas, and natural gas liquids (NGL) in the Cline shale and upper Wolfberry shale in Glasscock County, Texas. Centennial Resource is a Denver-based oil and gas company that concentrates on the development of crude oil and related liquids-rich natural gas reserves in the United States. 

YTD, shares of CEI have dropped 19.5%, while CDEV stock gained about 24.4% over the same period.

Recent Developments

On March 11th, Camber Energy declared that it had redeemed 2,636 shares of its Series G Preferred Stock dated December 31st, 2021. This development was supported by a $100 million financing commitment from an institutional investor. Besides, Camber Energy reduced the number of its Series C Preferred Shares by around 59% since December 1st, 2021, via redemptions and conversions. 

On April 1st, Derrick Whitfield, an analyst from Stifel, upgraded Centennial Resource Development to “Buy” from “Hold”. Whitfield noted that Stifel’s new commodity price forecast and the company’s strong free cash flow outlook were the main reason for the upgrade. The analyst believes that the company will experience a further improvement in capital efficiency and cost reduction. With that, Stifel boosted its price target on CDEV shares to $11.20 from $8.40.

Financials Overview & Analysts Estimates

Camber Energy, Inc. last reported its financial results on November 23rd. It is worth mentioning that the latest available financial report for Camber Energy is for the third quarter of 2020 and it submitted a restated report in November 2021. In the first half of 2020, the company’s top line decreased 57% year-over-year to $91,147, driven by a significant plunge in the price of oil and gas amid the COVID-19 pandemic.

When it comes to expenses, CEI’s total operating costs dropped 36% year-over-year to $1.65 million in 1H2020, mainly because of a decrease in General & Administrative and Lease Operating expenses. On the other hand, the company’s net loss increased drastically to $29.6 million in 1H2020 versus $6.5 million in 1H2019 amid the loss on the fair value of derivatives contracts.

As of September 30th, 2020, the company’s cash balance stood at $1.11 million. With a cash burn rate of $1.34 million in 1H2020, its liquidity position looks concerning. However, the recent financing agreement should strengthen its liquidity and help avoid dilution. 

On May 4th, Centennial Resource revealed an earnings report for the first quarter of 2022. In Q1, the company’s total revenue increased 80.5% year-over-year to $347.2 million, beating Wall Street estimates by $26.38 million. The revenue growth was driven by a 96% YoY increase in Oil sales to $262.8 million amid an increased average realized sales price. Besides, NGL sales advanced 96% YoY to $45.5 million. However, Centennial Resource reported a GAAP EPS of $0.05, missing analysts’ consensus by $0.34.

Furthermore, CDEV’s net income stood at $15.8 million during the quarter compared to a net loss of $34.6 million in the year-ago period. It also generated a record free cash flow of $89 million.

For the second quarter, analysts expect CDEV’s earnings to be $0.43 a share, up 577.90% year-over-year. Besides, its top line for the current quarter should increase 55.25% YoY to $361.08 million.

Comparing Options Market Sentiment

Looking at the July 15th, 2022, option chain for both CEI and CDEV, let’s determine options market sentiment by comparing the calls/puts ratio. In CEI’s matter, the open calls/open puts ratio at the $1.00 strike price stands at 5.95x, implying a bullish options market sentiment. The open calls/open puts ratio for CDEV at the $8.00 strike price is 7.16x, indicating a relatively stronger bullish options market sentiment.

Conclusion

While both energy companies should capitalize on the higher commodity prices, I believe that Centennial Resource Development is currently a better investment based on its superior financials, favorable analysts coverage, high forward growth rates, and higher open calls/puts ratio.


CEI shares were trading at $0.72 per share on Monday morning, up $0.04 (+5.26%). Year-to-date, CEI has declined -15.29%, versus a -15.55% rise in the benchmark S&P 500 index during the same period.


About the Author: Oleksandr Pylypenko


Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CEIGet RatingGet RatingGet Rating
CDEVGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

3 Energy Stocks Set to Soar Beyond Expectations

Given the geopolitical tensions, increasing global oil demand, and supply adjustments, the energy sector is poised for robust growth. Therefore, investors might consider investing in energy stocks TechnipFMC (FTI), Weatherford International (WFRD), and ChampionX (CHX), which are poised to exceed expectations. Keep reading…

Has Carnival (CCL) Stock Turned Into a Buy After Earnings Release?

Carnival Corporation (CCL) reported record revenue in its most recent quarter but still faces a negative bottom line. The collapse of Francis Scott Key Bridge brings more uncertainty to its financials. Given these events, what stance should one take with CCL stock? Read more to find out…

3 China Stocks Positioned for Long-Term Growth

Despite facing challenges, the Chinese economy has demonstrated resilience, as evidenced by recent robust industrial output and retail sales data. Given this outlook, it might be an opportune time to own three top-notch China stocks, JD.com, Inc. (JD), China Automotive Systems (CAAS), and Youdao, Inc. (DAO). Read on…

Investor Alert: “Buy the Rumor, Sell the News!”

Everyone knows that the Fed is going to cut rates at some point this year. That is the worst kept secret on the planet helping to explain how we keep making new highs for the for the S&P 500 (SPY). Unfortunately that creates an interesting predicament for stocks after rates are cut. Plus another hurdle in the 2024 Presidential election. Steve Reitmeister is here to share his insights on the market outlook along with a preview of his top 12 stocks to outperform. Read on for more...

Read More Stories

More Camber Energy, Inc. (CEI) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CEI News