What happened
Shares of SRC Energy (NYSEMKT: SRCI) are up 13% on Tuesday, as of 11:30 a.m. EDT. The impetus for today's share-price gain comes after the company issued preliminary operational results ahead of earnings.
So what
The thing that likely has Wall Street so excited about this operational update is the incredible production growth. Management's update today said that production for the quarter was 32,600 barrels of oil equivalent per day (BOE/d), 65% of which was liquids. Compare that to just the prior quarter where SRC produced 17,742 BOE/d -- 64% liquids, by the way.
Image source: Getty Images.
On top of that, SRC's lease operating expenses decreased 27%, to just $1.69 per barrel of oil equivalent. That cost reduction should help to offset the decline in revenue as the average selling price for the quarter was down, as well.
SRC's progress so far this year has also allowed management to increase its guidance. The company now expects annual production to be in the 32,000-34,000 BOE/d range. Management also expects those decreases in lease operating expenses to decline thanks to this past quarter's results.
Now what
All the commotion in the shale patch has been about the Permian Basin in West Texas, but SRC's update goes to show that companies outside the Permian are doing just fine. The company has mostly flown under the radar because it's in the Denver-Julesburg Basin and doesn't have a huge footprint. If the company can continue to produce results like these, though, it may be worth watching.
