Goodrich Petroleum Corporation (NYSE:GDP) today announced it has lowered its 2020 preliminary capital expenditure budget by $15 million to $40 - $50 million, which is expected to generate free cash flow of an estimated $15 - $25 million at $2.00 - $2.50 natural gas prices. At the midpoint of this revised guidance, the Company estimates it will generate a free cash flow yield of approximately 13% and 40% on the Company's current enterprise value and market capitalization, respectively, and remain below the Company's net Debt to EBITDA target of 1.5 times.
The Company now expects to grow production by 5 - 7% versus 2019 to a range of approximately 50 – 52 Bcfe, or an average of 137,000 – 142,000 Mcfe per day for the year. Natural gas is expected to comprise approximately 99% of total production.
The preliminary capital expenditure budget is subject to quarterly review and approval by the Company's board of directors, with the flexibility to accelerate in the second half of the year depending on commodity prices. The Company has allocated the majority of the budget to drilling and completing core Haynesville Shale wells in the Bethany-Longstreet area of Caddo and DeSoto Parishes, Louisiana.
The Company has hedged approximately 50% of its expected natural gas volumes for the year at a blended average price of approximately $2.60. In addition, to further support and protect the capital plans and balance sheet, the Company has recently added hedges from April, 2021 through March, 2022 as shown on the current management presentation posted on the Company's website.