Civitas Resources (CIVI) AI Stock Analysis

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Civitas Resources

(NYSE:CIVI)

72Outperform

Civitas Resources shows strong financial performance with significant revenue and cash flow growth. The company's valuation is attractive due to its low P/E ratio and high dividend yield. However, technical indicators suggest a bearish trend, and the earnings call presents both strengths in operational efficiencies and challenges such as production declines and workforce reductions. The balance between these factors results in a moderate overall stock score.

Positive Factors

Leadership

The appointment of Billy Helms to the Board introduces a well-respected industry veteran, which is seen as a positive move for the company's leadership.

Valuation

Civitas Resources shares are valued at $72, trading at a notable discount to peers, which could present an attractive investment opportunity.

Negative Factors

Financial Strategy

The updated cash return framework prioritizes debt reduction over additional variable dividends or buybacks, resulting in lower overall cash returns.

Production Guidance

The company is scaling back activity due to macro volatility, which has led to a lower oil volume guidance for the first quarter of 2025, falling more than 6% below expectations.

Civitas Resources (CIVI) vs. S&P 500 (SPY)

Market Cap

$2.49B

Dividend Yield6.93%

Average Volume (3M)2.80M

Price to Earnings (P/E)3.2

Beta (1Y)1.54

Revenue Growth49.65%

EPS Growth-5.53%

CountryUS

Employees655

SectorEnergy

Sector Strength47

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)1.78

Shares Outstanding93,017,260

10 Day Avg. Volume3,795,957

30 Day Avg. Volume2,803,001

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.62

Price to Cash Flow (P/CF)0.90

P/FCF Ratio0.70

Enterprise Value/Market Cap3.59

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit4.17

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$48.27

Price Target Upside67.20% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering12

Civitas Resources Business Overview & Revenue Model

Company DescriptionCivitas Resources, Inc., an exploration and production company, focuses on the acquisition, development, and production of oil and natural gas in the Rocky Mountain region, primarily in the Wattenberg Field of the Denver-Julesburg Basin of Colorado. As of December 31,2021, it had proved reserves 397.7 MMBoe comprising 143.6 MMbbls of crude oil, 106.0 MMbbls of natural gas liquids, and 888.5 Bcf of natural gas. The company was formerly known as Bonanza Creek Energy, Inc. Civitas Resources, Inc. was founded in 1999 and is based in Denver, Colorado.

How the Company Makes MoneyCivitas Resources generates revenue primarily through the sale of crude oil, natural gas, and natural gas liquids (NGLs) extracted from its operations in the DJ Basin. The company's revenue model is centered around the exploration and production activities, where it drills and completes wells to extract hydrocarbons. Civitas Resources benefits from strategic partnerships and joint ventures that enhance its operational efficiency and access to technology and expertise. The company's earnings are influenced by factors such as commodity prices, production volumes, and operational costs. Additionally, Civitas Resources may engage in hedging activities to manage commodity price risks and stabilize cash flows.

Civitas Resources Financial Statement Overview

Summary

Civitas Resources demonstrates strong financial health with robust revenue growth and significant improvements in cash flow. The balance sheet shows low leverage and financial stability. Despite a remarkable gross profit margin, challenges are noted in EBIT margins, suggesting some operational difficulties.

Income Statement

Very Positive

Civitas Resources has shown robust revenue growth, with a significant increase from $930.61 million in 2021 to $5.21 billion in 2024, marking a strong upward trajectory. The gross profit margin is exceptionally high at 99.40% for 2024, indicating efficient cost management. Net profit margin improved to 16.11% in 2024 from 8.40% in 2021, demonstrating enhanced profitability. However, the EBIT margin dropped significantly to 0.08% in 2024, reflecting potential operational challenges.

Balance Sheet

Positive

The company maintains a strong equity base with a 44.35% equity ratio in 2024, highlighting financial stability. The debt-to-equity ratio has improved, moving to 0.00 in 2024 from 0.86 in 2020, indicating a reduction in leverage and a stronger balance sheet. Return on equity has decreased slightly to 12.65% in 2024 from 13.63% in 2022, impacted by lower net income relative to equity growth.

Cash Flow

Very Positive

Civitas Resources has demonstrated significant growth in free cash flow, increasing from $121.85 million in 2021 to $2.87 billion in 2024, reflecting strong cash generation capabilities. The operating cash flow to net income ratio is robust at 3.42 in 2024, indicating efficient conversion of earnings to cash. Free cash flow to net income ratio is high at 3.42, emphasizing strong cash flow relative to profitability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
5.20B	3.48B	3.79B	930.61M	218.09M
	Gross Profit
2.14B	1.39B	2.18B	504.25M	69.22M
	EBIT
4.40M	1.22B	2.05B	421.48M	37.80M
	EBITDA
3.54B	2.34B	2.52B	589.30M	173.61M
	Net Income Common Stockholders
838.72M	784.29M	1.25B	178.92M	103.53M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
75.83M	1.12B	768.03M	254.45M	24.74M
	Total Assets
14.94B	14.10B	7.97B	6.74B	1.18B
	Total Debt
4.49B	4.96B	418.08M	531.98M	30.02M
	Net Debt
4.42B	3.84B	-349.95M	277.53M	5.28M
	Total Liabilities
8.32B	7.92B	2.60B	2.09B	137.56M
	Stockholders Equity
6.63B	6.18B	5.37B	4.65B	1.05B
Cash Flow		Free Cash Flow
893.36M	729.63M	1.13B	121.85M	95.00M
	Operating Cash Flow
2.87B	2.24B	2.48B	274.60M	158.80M
	Investing Cash Flow
-2.67B	-5.24B	-1.31B	73.55M	-63.80M
	Financing Cash Flow
-1.24B	3.36B	-657.37M	-118.44M	-81.25M

Civitas Resources Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price28.87

Price Trends

50DMA

32.53

Negative

100DMA

40.34

Negative

200DMA

47.20

Negative

Market Momentum

MACD

-1.24

Negative

RSI

46.00

Neutral

STOCH

31.51

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CIVI, the sentiment is Neutral. The current price of 28.87 is above the 20-day moving average (MA) of 27.78, below the 50-day MA of 32.53, and below the 200-day MA of 47.20, indicating a neutral trend. The MACD of -1.24 indicates Negative momentum. The RSI at 46.00 is Neutral, neither overbought nor oversold. The STOCH value of 31.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CIVI.

Civitas Resources Peers Comparison

Overall Rating

UnderperformOutperform

Sector (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIVI	72 Outperform	$2.49B	3.16	13.09%	6.93%	49.65%	-5.53%
SM	72 Outperform	$2.48B	3.25	20.28%	3.42%	13.33%	-2.72%
BSM	70 Outperform	$3.07B	12.67	23.12%	10.32%	-12.71%	-39.85%
STR	63 Neutral	$2.37B	31.79	2.66%	8.06%	5.23%	―
GPOR	56 Neutral	$3.22B	16.69	-13.60%	―	-11.68%	-123.15%
Sector *	56 Neutral	$6.99B	3.76	-4.38%	5.90%	-0.24%	-48.46%
CRGY	54 Neutral	$2.23B	23.27	-4.74%	5.57%	23.01%	-153.02%

* Energy Sector Average

Performance Comparison

CIVI

Civitas Resources

28.87

-40.94

-58.64%

SM Energy

22.82

-26.78

-53.99%

BSM

Black Stone Minerals

14.54

-0.60

-3.96%

STR

Sitio Royalties

17.37

-4.39

-20.17%

GPOR

Gulfport Energy

179.79

23.38

14.95%

CRGY

Crescent Energy Company Class A

8.62

-1.73

-16.71%

Civitas Resources Earnings Call Summary

Earnings Call Date:Feb 24, 2025

(Q4-2024)

% Change Since: -40.52%|

Next Earnings Date:May 07, 2025

Earnings Call Sentiment Neutral

Civitas Resources reported strong operational efficiencies and strategic expansions in 2024, generating substantial free cash flow and shareholder returns. However, the company faces challenges with workforce reductions, production declines, and a focus on debt reduction over aggressive shareholder returns, indicating a cautious approach amid market volatility.

Q4-2024 Updates

Positive Updates

Strong Free Cash Flow Generation

Civitas generated approximately $1.3 billion in free cash flow for 2024 and returned over 70% to shareholders through dividends and stock repurchases.

Operational Efficiencies in Midland Basin

Midland Basin well costs decreased by 15%, daily drilling footage increased by nearly 20%, and daily completion throughput increased by 50%.

Significant Inventory Extension

Civitas added nearly two years of future development in the Permian business unit and extended lateral lengths and working interest across the portfolio by 5%.

Successful Ground Game Activities

Strengthened both Midland and Delaware positions through over 50 trades, swaps, and new leasing with little to no cash outlay.

Record-Setting Wells in DJ Basin

Turned in-line the industry's first four-mile laterals in Colorado, achieving the state's highest 180-day cumulative oil production.

Strategic Bolt-on Acquisition

Acquired 19,000 acres in the Midland Basin with 130 locations, offset by a $300 million asset sales target primarily from the DJ Basin.

Negative Updates

Reduction in Workforce

Announced a 10% reduction in workforce to streamline organizational structure and maintain a low-cost position.

Drop in Oil Production

First quarter production in 2025 expected to be the low point due to natural declines and low till counts exiting 2024, exacerbated by severe winter weather and unplanned third-party processing downtime.

Focus on Debt Reduction

Prioritizing debt reduction with a target of $4.5 billion for 2025, representing an $800 million reduction from 2024, indicating a shift away from aggressive shareholder returns.

Volatility and Cost Management Challenges

Encountered significant volatility in oil prices and higher LOE in the Permian due to winterization projects and increased workover activity.

Company Guidance

In the Civitas Resources Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025 with a focus on maximizing free cash flow, targeting approximately $1.1 billion at a $70 WTI price. Key strategic initiatives include maintaining a leading cost structure, reducing debt by $800 million to reach a net debt target of $4.5 billion by year-end, and returning capital to shareholders, primarily through a $2 per share base dividend. Production is expected to average 150,000 to 155,000 barrels of oil per day, with capital investments of $1.8 billion to $1.9 billion, split evenly between the Permian and DJ Basins. The company also plans to execute a $300 million asset sales program, primarily from the DJ Basin, to offset a recent Midland Basin acquisition and extend its development runway in the Permian. The company aims to streamline its operations by reducing its workforce by 10% and enhancing operational efficiencies, while also focusing on ESG initiatives to further reduce emissions.

Civitas Resources Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Civitas Resources Expands Board and Adjusts Leadership

Neutral

Feb 24, 2025

On February 24, 2025, Civitas Resources expanded its board of directors from nine to ten members and appointed Lloyd W. ‘Billy’ Helms, Jr. as the new director. Mr. Helms, with over 40 years of experience in the oil and gas industry, will serve on the Sustainability and Audit Committees and is recognized for his operational and technical expertise. Concurrently, the company terminated the employment of its Chief Operating Officer, T. Hodge Walker, and Chief Transformation Officer, Jeffrey S. Kelly, without cause. M. Christopher Doyle, the current President and CEO, assumed the additional role of principal operating officer. These changes reflect Civitas Resources’ strategic adjustments in its leadership to enhance operational efficiency and governance.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.