Q4 2021 Crescent Energy Co Earnings Call

March 10, 2022

Greetings.

Greetings. Welcome to the Crescent Energy 2021 results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

I'll come to the Crescent energy 2021 results conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad and please note that this conference is being recorded.

I'd now like to turn the conference over to Emily Newport, as VP of Finance and Investor Relations. Thank you you may begin.

Good morning, and thanks for joining <unk> 2021 earnings call a.

Emily Newport: Good morning, and thanks for joining Crescent's 2021 earnings call. Our brief prepared remarks today will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall. Todd Falk, Chief Accounting Officer, and Ben Conner and Clay Rynd, both Executive Vice Presidents, are also here today and will be available during the Q&A session. Today's call may contain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, the continued impacts of COVID-19, geopolitical conflicts, including in Russia and Ukraine, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We disclaim any obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures.

Good morning, and thanks for joining Crescent's 2021 Earnings Call. Our brief prepared remarks today will come from our CEO , David Roccataroli, and our CFO , Brandi Kendall. Todd Falk, Chief Accounting Officer, and Ben Connor and Clay Rind, both Executive Vice Presidents, are also here today and will be available during the Q&A session.

A brief prepared remarks today will come from our CEO , David Rocker, Charlie and our CFO , Brandon Kendall Titanfall, Chief Accounting Officer, and Ben Connor and Clay ran those executive Vice President are also here today and will be available during the Q&A session.

Today's call may contain projections and other forward looking statements within the meaning of the federal security laws. These statements are subject to risks and uncertainties, including commodity price volatility. The continued impacts of COVID-19, geopolitical conflict, including in Russia, and Ukraine, our business strategies and other factors that may.

Today's call may contain projections and other forward-looking statements within the meaning of the federal security laws.

These statements are subject to risks and uncertainties, including commodity price volatility, the continued impacts of COVID-19, geopolitical conflict, including in Russia and Ukraine, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures.

Emily Newport: These statements are subject to risks and uncertainties, including commodity price volatility, the continued impacts of COVID-19, geopolitical conflicts, including in Russia and Ukraine, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We disclaim any obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures.

Cause actual results to differ from those expressed or implied in these statements and other disclosures.

Disclaim any obligation to update any forward looking statements after todays call.

We disclaim any obligation to update any forward-looking statements after today's call.

Today's discussion May include disclosure regarding non-GAAP financial measures for a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure. Please reference our 10-K and earnings press release available on our website with that I will turn the call over to David.

In addition, today's discussion may include disclosure regarding non-GAAP financial measures.

Emily Newport: For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-K and earnings press release available on our website. With that, I will turn the call over to David.

For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-K and earnings press release available on our website. With that, I will turn the call over to David.

Great. Thanks, Emily and good morning, everyone. We appreciate you joining us today on our first earnings call as a public company.

David Roccataroli: Great. Thanks, Emily, and good morning, everyone. We appreciate your joining us today on our first earnings call as a public company.

David Rockecharlie: Great. Thanks, Emily, and good morning, everyone. We appreciate your joining us today on our first earnings call as a public company. For our company, 2021 was truly a transformational year. We issued our inaugural bond offering in April. We announced the merger with Contango in June and were publicly listed in December. Last month, we announced the accretive acquisition of EP Energy's Uinta Basin assets, and we continue to advance our ESG strategy. Before we discuss our 2021 results and this year's outlook, I wanna take a moment to ensure you appreciate our strategy and the attractive and differentiated investment opportunity that Crescent presents. The guiding principles behind all of our decisions are quite simple, cash flow, risk management, and returns. Our model is unique, combining an investor mindset with deep operational expertise, and we have successfully executed this strategy for nearly a decade.

For our company 2021 was truly a transformational year.

David Roccataroli: For our company, 2021 was truly a transformational year. We issued our inaugural bond offering in April . We announced the merger with Contango in June and were publicly listed in December .

We issued our inaugural bond offering in April .

We announced the merger with contango in June and we're publicly listed in December .

Last month, we announced the accretive acquisition of EPS Uinta basin assets, and we continue to advance our ESG strategy.

David Roccataroli: Last month, we announced the accretive acquisition of EP's Uinta Basin assets and we continue to advance our ESG strategy.

David Rockecharlie: Last month, we announced the accretive acquisition of EP Energy's Uinta Basin assets, and we continue to advance our ESG strategy. Before we discuss our 2021 results and this year's outlook, I wanna take a moment to ensure you appreciate our strategy and the attractive and differentiated investment opportunity that Crescent presents. The guiding principles behind all of our decisions are quite simple, cash flow, risk management, and returns. Our model is unique, combining an investor mindset with deep operational expertise, and we have successfully executed this strategy for nearly a decade.

Before we discuss our 2021 results and this year's outlook I want to take a moment to ensure you appreciate our strategy and the attractive and differentiated investment opportunity the Crescent presents.

David Roccataroli: Before we discuss our 2021 results and this year's outlook, I want to take a moment to ensure you appreciate our strategy and the attractive and differentiated investment opportunity that Crescent presents.

The guiding principles behind all of our decisions are quite simple cash flow risk management and returns.

David Roccataroli: The guiding principles behind all of our decisions are quite simple, cash flow, risk management, and return.

Our model is unique combining an investor mindset with deep operational expertise.

David Roccataroli: Our model is unique, combining an investor mindset with deep operational expertise.

And we have successfully executed this strategy for nearly a decade.

David Roccataroli: And we have successfully executed this strategy for nearly a decade.

Cash flow is the foundation of our business, we have a large diversified and low decline producing asset base to generate significant free cash flow.

David Rockecharlie: Cash flow is the foundation of our business. We have a large, diversified, and low-decline producing asset base that generates significant free cash flow. I hope you've had a chance to review our 2022 outlook and recognize the scale and stability of the business. Assuming 9 months contribution from the Uinta acquisition, our 2022 estimated adjusted EBITDA is nearly $1.2 billion, with $425 million of projected levered free cash flow at $75 per barrel oil. Our proved developed PV-10 is more than $5 billion at SEC pricing of $66 a barrel of oil, with an industry-leading PDP decline rate of only 21%. We have a proven track record in effectively managing risk to protect asset value, generate strong returns, and pursue profitable growth. We maintain low leverage and a strong balance sheet.

David Roccataroli: Cash flow is the foundation of our business. We have a large, diversified, and low-decline producing asset base that generates significant free cash flow.

I hope you've had a chance to review, our 2022 outlook and recognize the scale and stability of the business.

David Roccataroli: I hope you've had a chance to review our 2022 outlook and recognize the scale and stability of the business.

Assuming nine months contribution from the Uinta acquisition our.

David Roccataroli: Assuming nine months contribution from the Uintah acquisition, our 2022 estimated adjusted EBITDA is nearly $1.2 billion, with $425 million of projected levered free cash flow at $75 per barrel oil.

Our 2022 estimated adjusted EBITDA is nearly $1.2 billion with $425 million of projected levered free cash flow.

At $75 per barrel oil.

Our proved developed PV 10 is more than $5 billion at SEC pricing of $66, a barrel of oil with an industry, leading PDP decline rate of only 21%.

David Rockecharlie: Our proved developed PV-10 is more than $5 billion at SEC pricing of $66 a barrel of oil, with an industry-leading PDP decline rate of only 21%. We have a proven track record in effectively managing risk to protect asset value, generate strong returns, and pursue profitable growth. We maintain low leverage and a strong balance sheet.

David Roccataroli: Our approved developed PV10 is more than $5 billion at SEC pricing of $66 a barrel of oil with an industry-leading PDP decline rate of only 21%.

We have a proven track record and effectively managing risk to protect asset value generate strong returns and pursue profitable growth.

David Roccataroli: We have a proven track record in effectively managing risk to protect asset value, generate strong returns, and pursue profitable growth. We maintain low leverage.

We maintain low leverage and a strong balance sheet.

We utilize hedging to protect cash flows and our capital investment decisions.

David Rockecharlie: We utilize hedging to protect cash flows and our capital investment decisions. We acquire and develop a diversified portfolio of low-risk assets, and we don't pursue any exploration. We also recognize the energy market is in long-term transition, and we're committed to continuous improvement on ESG measures as a core part of our strategy. Disciplined capital investments allow us to generate strong cash returns, and we have a well-defined framework of returning cash to shareholders through consistent dividends. We approach capital decisions from a risk-adjusted returns perspective for both organic and acquisition opportunities. On the organic side, we have 10 years of high return inventory in the Eagle Ford, and we believe the recently announced Uinta acquisition will provide a similar multiyear drilling inventory. While we have ample runway on our existing asset base, we do not simply drill to grow production. We focus on generating sustainable returns.

David Roccataroli: We utilize hedging to protect cash flows and our capital investment decisions.

We acquire and develop a diversified portfolio with low risk assets and we don't pursue any exploration.

David Roccataroli: We acquire and develop a diversified portfolio of low-risk assets, and we don't pursue any exploration.

We also recognize the energy market is in long term transition and we're committed to continuous improvement on ESG measures as a core part of our strategy.

David Roccataroli: We also recognize the energy market is in long-term transition and we're committed to continuous improvement on ESG measures as a core part of our strategy.

Disciplined capital investments allow us to generate strong cash returns and we have a well defined framework of returning cash to shareholders through consistent dividends.

David Roccataroli: Disciplined capital investments allow us to generate strong cash returns, and we have a well-defined framework of returning cash to shareholders through consistent dividends.

David Rockecharlie: Disciplined capital investments allow us to generate strong cash returns, and we have a well-defined framework of returning cash to shareholders through consistent dividends. We approach capital decisions from a risk-adjusted returns perspective for both organic and acquisition opportunities. On the organic side, we have 10 years of high return inventory in the Eagle Ford, and we believe the recently announced Uinta acquisition will provide a similar multiyear drilling inventory. While we have ample runway on our existing asset base, we do not simply drill to grow production. We focus on generating sustainable returns.

We approach capital decisions from a risk adjusted returns perspective for both organic and acquisition opportunities on.

David Roccataroli: We approach capital decisions from a risk-adjusted returns perspective for both organic and acquisition opportunities.

On the organic side, we have 10 years of high return inventory in the Eagle Ford and.

David Roccataroli: On the organic side, we have 10 years of high return inventory in the Eagleford.

And we believe the recently announced Uinta acquisition will provide a similar multiyear drilling inventory.

David Roccataroli: And we believe the recently announced Uinta acquisition will provide a similar multi-year drilling inventory.

While we have ample runway in our existing asset base, we do not simply drill to grow production, we focus on generating sustainable returns. This means we scaled back our capital program when commodity prices are low or when the returns do not justify the investment.

David Roccataroli: While we have ample runway on our existing asset base, we do not simply drill to grow production. We focus on generating sustained.

David Rockecharlie: This means we scale back our capital program when commodity prices are low or when the returns do not justify the investment. On the acquisition front, Crescent is well-positioned to participate in what we believe is an attractive market for industry consolidation. On top of our stable base business and dividend, we continue to see a substantial opportunity to drive shareholder value through accretive acquisitions that add cash flow and net asset value at attractive valuations. We have completed nine transactions in the last two years, or as we think about it, approximately one per quarter. In line with our acquisition strategy, we are very excited about our accretive entry into the Uinta Basin of Utah. The assets are a great addition to our existing Rockies footprint and will add substantial cash flow while maintaining our strong balance sheet.

David Roccataroli: This means we scale back our capital program when commodity prices are low or when the returns do not justify the investment.

On the acquisition front Crescent is well positioned to participate in what we believe is an attractive market for industry consolidation.

David Roccataroli: On the acquisition front, Crescent is well-positioned to participate in what we believe is an attractive market for industry consolidation.

On top of our stable base business and dividend, we continue to see a substantial opportunity to drive shareholder value through accretive acquisitions that add cash flow and net asset value at attractive valuations.

David Roccataroli: On top of our stable base business and dividend, we continue to see a substantial opportunity to drive shareholder value through accretive acquisitions that add cash flow and net asset value at attractive valuations.

We've completed nine transactions in the last two years.

David Roccataroli: We've completed nine transactions in the last two years, or as we think about it, approximately.

David Rockecharlie: We have completed nine transactions in the last two years, or as we think about it, approximately one per quarter. In line with our acquisition strategy, we are very excited about our accretive entry into the Uinta Basin of Utah. The assets are a great addition to our existing Rockies footprint and will add substantial cash flow while maintaining our strong balance sheet.

Or as we think about it approximately one per quarter.

In line with our acquisition strategy, we are very excited about our accretive entry into the Uinta basin of Utah.

David Roccataroli: In line with our acquisition strategy, we are very excited about our creative entry into the Uinta Basin of Utah.

The assets are a great addition to our existing Rockies footprint and will add substantial cash flow, while maintaining our strong balance sheet.

David Roccataroli: The assets are a great addition to our existing Rockies footprint and will add substantial cash flow while maintaining our strong balance sheet.

The Uinta acquisition provides a scaled largely contiguous 145000 net acre position in the oil window of the Uinta basin with high margin oil production low operating costs and substantial cash flow.

David Rockecharlie: The Uinta acquisition provides a scaled, largely contiguous 145,000 net acre position in the oil window of the Uinta Basin, with high margin oil production, low operating costs, and substantial cash flow. The asset is nearly 100% operated with greater than 80% working interest. At $75 per barrel of oil, we project the assets will generate annualized 2022 adjusted EBITDA of roughly $425 million and $100 million of free cash flow. About 85% of expected EBITDA comes from existing production or drilled but uncompleted wells, providing a lot of certainty around the cash flows from the assets. We were able to acquire this asset at an attractive entry point.

David Roccataroli: The Uintah acquisition provides a scaled, largely contiguous 145,000 net acre position in the oil window of the Uintah Basin.

David Roccataroli: with high margin oil production, low operating costs, and substantial cash flow.

The asset is nearly 100% operated with greater than 80% working interest.

David Roccataroli: The asset is nearly 100% operated with greater than 80% working interest.

At $75 per barrel of oil.

We project the assets will generate annualized 2022, adjusted EBITDA of roughly $425 million and $100 million of free cash flow.

David Roccataroli: We project the assets will generate annualized 2022 adjusted EBITDA of roughly $425 million and $100 million of free cash flow.

David Roccataroli: About 85% of expected EBITDA comes from existing production or drilled but uncompleted wells, providing a lot of certainty around the cash flows from the asset.

85% of expected EBITDA comes from existing production or.

Drilled, but uncompleted wells, providing a lot of certainty around the cash flows from the assets.

We were able to acquire this asset at an attractive entry point.

David Roccataroli: We were able to acquire this asset at an attractive entry point. The $815 million purchase price represents a cash flow multiple of less than two times 2022 estimated projected adjusted EBITDA.

The $815 million purchase price represents a cash flow multiple of less than two times 2022 estimated projected adjusted EBITDA.

David Rockecharlie: The $815 million purchase price represents a cash flow multiple of less than 2x 2022 estimated projected adjusted EBITDA, and an approximate 1x multiple to our estimated proved developed PV-10 of $800 million, assuming SEC pricing of $66 per barrel of oil. In addition to substantial PDP, we also acquired a multiyear inventory of high-quality, oil-weighted, undeveloped locations and see about $1.5 billion of potential future development opportunity on the asset. The Uinta is a well-understood basin with substantial existing production and a significant amount of resource in place. Offset operators have demonstrated the potential across multiple stacked reservoirs and highlighted the opportunity to improve performance and profitability with the application of modern completion designs. The Uinta transaction aligns well with our goals for any acquisition.

And an approximate one times multiple to our estimated proved developed P.

David Roccataroli: and an approximate one times multiple to our estimated proved developed.

PV 10 of $800 million, assuming SEC pricing of $66 per barrel of oil.

David Roccataroli: PV10 of $800 million, assuming SEC pricing of $66 per barrel of oil.

In addition to substantial PDP, we also acquired a multi year inventory of high quality oil weighted undeveloped locations.

David Roccataroli: In addition to substantial PDP, we also acquired a multi-year inventory of high-quality, oil-weighted, undeveloped locations and see about $1.5 billion of potential future development opportunity on the asset.

See about $1 5 billion of potential future development opportunity on the asset.

The Uinta is a well understood basin with substantial existing production and a significant amount of resource in place.

David Roccataroli: The Uinta is a well-understood basin with substantial existing production and a significant amount of resource in place.

David Rockecharlie: The Uinta is a well-understood basin with substantial existing production and a significant amount of resource in place. Offset operators have demonstrated the potential across multiple stacked reservoirs and highlighted the opportunity to improve performance and profitability with the application of modern completion designs. The Uinta transaction aligns well with our goals for any acquisition.

Offset operators have demonstrated the potential across multiple stacked reservoirs and highlighted the opportunity to improve performance and profitability with the application of modern completion designs.

David Roccataroli: Offset operators have demonstrated the potential across multiple stacked reservoirs and highlighted the opportunity to improve performance and profitability with the application of modern completion design.

The Uinta transaction aligns well with our goals for any acquisition.

David Roccataroli: The Uintah transaction aligns well with our goals for any acquisition.

From a financial perspective, it is accretive leverage neutral and allows us to significantly increase the scale of <unk>.

David Rockecharlie: From a financial perspective, it is accretive, leverage neutral, and allows us to significantly increase the scale of both our free cash flow and adjusted EBITDA. The transaction also meets our strategic goals of increasing operatorship and production from our Eagle Ford and Rockies regions and maintaining our industry-leading PDP decline. On a combined basis, we estimate that 70% of our 2022 production will come from the Eagle Ford and the Rockies regions. Before turning the call over to Brandi, let me quickly comment on our commitment to ESG and its integration into our business. We've achieved several important milestones despite only being public for three months. In December, we issued our inaugural ESG report in accordance with SASB standards and announced the formation of an ESG advisory council to advance our ESG efforts.

David Roccataroli: From a financial perspective, it is accretive, leverage neutral, and allows us to significantly increase the scale of both our free cash flow and adjusted EBITDA.

Our free cash flow and adjusted EBITDA.

The transaction also meets our strategic goals of increasing operator ship and production from our Eagle Ford and Rockies regions, and maintaining our industry, leading PDP decline.

David Roccataroli: The transaction also meets our strategic goals of increasing operatorship and production from our Eagleford and Rockies regions and maintaining our industry-leading PDP decline.

On a combined basis, we estimate that 70% of our 2022 production will come from the Eagle Ford and the Rockies regions.

David Roccataroli: On a combined basis, we estimate that 70% of our 2022 production will come from the Eagleford and the Rockies regions.

Before turning the call over to Brandy.

David Roccataroli: Before turning the call over to Brandy, let me quickly comment.

David Rockecharlie: Before turning the call over to Brandi, let me quickly comment on our commitment to ESG and its integration into our business. We've achieved several important milestones despite only being public for three months. In December, we issued our inaugural ESG report in accordance with SASB standards and announced the formation of an ESG advisory council to advance our ESG efforts.

Let me quickly comment.

On our commitment to ESG and its integration into our business.

Brandy: on our commitment to ESG and its integration into our business.

We've achieved several important milestones despite only being public for three months.

Brandy: We've achieved several important milestones despite only being public for three months.

In December we issued our inaugural ESG report in accordance with SaaS V standards and announced the formation of an ESG Advisory Council to advance our ESG efforts.

Brandy: In December , we issued our inaugural ESG report in accordance with SASB standards.

Brandy: and announce the formation of an ESG Advisory Council to advance our ESG efforts.

In February we joined the oil and gas methane partnership two point O initiative or <unk> to point out.

Brandy: In February , we joined the Oil and Gas Methane Partnership 2.0 Initiative, or OGMP 2.0.

David Rockecharlie: In February, we joined the Oil & Gas Methane Partnership 2.0 initiative, or OGMP 2.0. Reducing emissions is critical to slowing the impact of climate change. The first step to methane reduction is high-quality measurement data, and the OGMP 2.0 framework is among the most rigorous. Our membership will aid efforts to create targeted emissions reductions programs, perform accurate reporting, and establish us as a leader in emissions reduction. We view all of this as a core part of our business strategy. With that, I'll now turn the call over to Brandi to cover our 2021 results and 2022 outlook.

Reducing emissions is critical to slowing the impact of climate change.

Brandy: Reducing emissions is critical to slowing the impact of climate change.

The first step to methane reduction as high quality measurement data and the <unk> 2.0 framework is among the most rigorous.

Brandy: first step to methane reduction is high-quality measurement data, and the OGMP 2.0 framework is among the most rigorous.

Our membership will aid efforts to create targeted emissions reductions programs perform accurate reporting and establish us as a leader in emissions reduction.

Brandy: Our membership will aid efforts to create targeted emissions reductions programs, perform accurate reporting, and establish us as a leader in emissions reduction.

We view all of this is a core part of our business strategy.

Brandy: We view all of this as a core part of our business strategy.

With that I'll now turn the call over to Brandi to cover our 2021 results and 2022 outlook.

Brandy: With that, I'll now turn the call over to Brandy to cover our 2021 results and 2022 outlook.

Thanks, David before I turn to our results for the 2021 period, and our 2022 outlook I would like to provide an overview of our capital allocation strategy priority, one a and one b is the dividend and balance sheet we.

Brandy: Thanks, David. Before I turn to our results for the 2021 period and our 2022 outlook, I would like to provide an overview of our capital allocation strategy. Priority 1A and 1B is the dividend and balance sheet.

Brandi Kendall: Thanks, David. Before I turn to our results for the 2021 period and our 2022 outlook, I would like to provide an overview of our capital allocation strategy. Priority one A and one B is the dividend and balance sheet. We allocate free cash flow to our shareholders and the balance sheet before making any capital investment decisions. Today, we announced our first dividend as a public company, $0.12 per share for Q4 2021. We target a dividend equal to 10% of adjusted EBITDAX, which we refer to as fixed within a framework, given the inherent stability of our business with our low decline rates, our low leverage, and a robust hedge book.

We allocate free cash flow to our shareholders in the balance sheet before making any capital investment decision.

Brandy: We allocate free cash flow to our shareholders in the balance sheet before making any capital investment decisions.

Today, we announced our first dividend as a public company.

Brandy: Today we announced our first dividend as a public company, 12 cents per share for the fourth quarter of 2021.

<unk> per share for the fourth quarter of 2021.

We target a dividend equal to 10% of adjusted EBITDAX, which we refer to as fixed within a framework given the inherent stability of our business with our low decline rate, our low leverage and a robust hedge book.

Brandy: We target a dividend equal to 10% of adjusted EBITDAX, which we refer to as fixed within a framework given the inherent stability of our business with our low decline rate, our low leverage, and a robust hedge book.

Unlike many of our peers our dividend framework is based on a percentage of EBITDA not free cash flow. So it is not impacted by decisions on our capital program.

Brandy: Unlike many of our peers, our dividend framework is based on a percentage of EBITDA, not free cash flow, so it is not impacted by decisions on our capital program.

Brandi Kendall: Unlike many of our peers, our dividend framework is based on a percentage of EBITDA, not free cash flow, so it is not impacted by decisions on our capital program. We've paid consistent dividends to our private investors for nine years, and we'll continue the same consistent dividend policy as a public company. We expect our quarterly dividend will increase to $0.17 per share upon closing of the Uinta Basin transaction based on our 10% of EBITDAX framework. On the balance sheet, we exited the year at 1.3x net leverage, in line with our long-term goal of 1x. Over the past decade, our leverage has averaged 1.2x while making consistent acquisitions and facing volatile commodity price environments. We know the importance of a strong capital structure, and it allows us to weather the commodity price cycles inherent in this business.

We've paid consistent dividends to our private investors for nine years, and we will continue the same consistent dividend policy as a public company.

Brandy: We've paid consistent dividends to our private investors for nine years and will continue the same consistent dividend policy as a public company.

We expect our quarterly dividend will increase to <unk> 17 per share upon closing of the Uinta basin transaction based on our 10% of EBITDAX framework on.

Brandy: We expect our quarterly dividend will increase to $0.17 per share upon closing of the Uintah Basin transaction based on our 10% of EBITDAX framework.

On the balance sheet, we exited the year at one three times net leverage in line with our long term goal of one times over the past decade, our leverage has averaged 1.2 times, while making consistent acquisitions and facing volatile commodity price environment.

Brandy: On the balance sheet, we exited the year at 1.3 times net leverage in line with our long-term goal of one time.

Brandi Kendall: On the balance sheet, we exited the year at 1.3x net leverage, in line with our long-term goal of 1x. Over the past decade, our leverage has averaged 1.2x while making consistent acquisitions and facing volatile commodity price environments. We know the importance of a strong capital structure, and it allows us to weather the commodity price cycles inherent in this business.

Brandy: Over the past decade, our leverage has averaged 1.2 times while making consistent acquisitions and facing volatile commodity price environments.

We know the importance of a strong capital structure, and then allows us to weather the commodity price cycles inherent in this business.

Brandy: We know the importance of a strong capital structure and it allows us to weather the commodity price cycles inherent in this business.

Only after the dividend and balance sheet do we think about reinvestment opportunity both on our existing footprint and through potential acquisitions.

Brandi Kendall: Only after the dividend and balance sheet do we think about reinvestment opportunities, both on our existing footprint and through potential acquisitions. Due to the stability of our business, we are uniquely positioned to evaluate all of our investment decisions on a purely risk-adjusted returns-driven basis. Depending on broader commodity market conditions, we can and have elected to delay drilling when single well returns do not support our targeted return thresholds. In fact, we paused our development activity in 2020 and H1 2021 when commodity prices were depressed and returns didn't meet our targets. We are uniquely positioned to do this given our low base decline and high HCP nature of our inventory. We've historically invested approximately 45% of EBITDAX on average on organic development opportunities.

Brandy: Only after the dividend and balance sheet do we think about reinvestment opportunities both on our existing footprint and through potential acquisitions.

Due to the stability of our business, we are uniquely positioned to evaluate all of our investment decisions on a purely of risk adjusted returns driven basis.

Brandy: Due to the stability of our business, we are uniquely positioned to evaluate all of our investment decisions on a purely risk-adjusted, returns-driven basis.

Depending on broader market condition, we can and have elected to delay drilling one single well returns do not support our targeted return thresholds.

Brandy: Depending on broader market conditions, we can and have elected to delay drilling when single well returns do not support our targeted return threshold.

In fact, we pause our development activity in 2020 in the first half of 'twenty, one when commodity prices were depressed and returns didn't meet our targets.

Brandy: In fact, we paused our development activity in 2020 in the first half of 2021 when commodity prices were depressed and returns didn't meet our targets.

Brandi Kendall: In fact, we paused our development activity in 2020 and H1 2021 when commodity prices were depressed and returns didn't meet our targets. We are uniquely positioned to do this given our low base decline and high HCP nature of our inventory. We've historically invested approximately 45% of EBITDAX on average on organic development opportunities.

We are uniquely positioned to do that given our low base decline and high H B P nature of our inventory.

Brandy: We are uniquely positioned to do this given our low base decline and high HPP nature of our inventory.

We have historically invested approximately 45% of EBITDAX on average on organic development opportunities.

Brandy: We've historically invested approximately 45% of EBITDAX on average on organic development opportunities.

And and stronger commodity price markets like today, we develop our low risk inventory and draw on our substantial proven resource base and strong drilling capabilities.

Brandy: And in stronger commodity price markets, like today's, we develop our low-risk inventory and draw on our substantial proven resource base and strong drilling capabilities.

Brandi Kendall: In stronger commodity price markets like today, we develop our low-risk inventory and draw on our substantial proven resource base and strong drilling capabilities. Our hedge strategy supports our disciplined approach to capital allocation and the stability in our business. The hedge program is designed to achieve two key goals. First, we focus on protecting our balance sheet. We hedge a portion of our PDP cash flows to allow us to repay our debt with hedged cash flow within the tenor of our hedge book in a downside scenario. Second, we lock in expected returns when we commit capital to drilling or acquisitions. Consistent with this strategy, upon signing the Uinta transaction, we entered into additional oil swaps covering about 80% of our acquired Uinta PDPs for a three-year period. On a combined basis for the Uinta transaction, we are approximately 60% hedged in 2022.

Our hedge strategy supports our disciplined approach to capital allocation and the stability in our business.

Brandy: Our hedge strategy supports our disciplined approach to capital allocation and the stability in our business. The hedge program is designed to achieve two key goals.

The hedge program is designed to achieve two key goals.

Firstly focus on protecting our balance sheet.

We hedge a portion of our PDP cashless to allow us to repay our debt with hedge cash flow within the tenure of our hedge book in a downside scenario.

Brandi Kendall: We hedge a portion of our PDP cash flows to allow us to repay our debt with hedged cash flow within the tenor of our hedge book in a downside scenario. Second, we lock in expected returns when we commit capital to drilling or acquisitions. Consistent with this strategy, upon signing the Uinta transaction, we entered into additional oil swaps covering about 80% of our acquired Uinta PDPs for a three-year period. On a combined basis for the Uinta transaction, we are approximately 60% hedged in 2022.

Brandy: we hedge a portion of our PDP cash flows to allow us to repay our debt with hedged cash flow within the tenor of our hedge book in a downside scenario.

Brandy: Second, we lock in expected returns when we commit capital to drilling or acquisitions. Consistent with this strategy, upon signing the UINTA transaction, we entered into additional oil swaps covering about 80% of our acquired UINTA PDPs for a three-year period.

We lock in expected returns when we commit capital to drilling our acquisition.

With the strategy upon signing the you went to transaction we entered into additional oil swaps covering about 80% of our acquired <unk> for a three year period.

On a combined basis for the U S. A transaction we are approximately 60% hedged in 2022.

Brandy: On a combined basis for the UNTA transaction, we are approximately 60% hedged in 2022.

Our hedge book provides near term downside protection, but also provides long term exposure to future commodity prices.

Brandy: Our hedge book provides near-term downside protection, but also provides long-term exposure to future commodity prices.

Brandi Kendall: Our hedge book provides near-term downside protection, but also provides long-term exposure to future commodity prices, and we only have roughly 10% of our proved developed reserves are currently hedged. We achieved impressive results in 2021. Pro forma for the combination of Contango and Independence, we generated roughly $680 million of EBITDAX and $385 million of leverage free cash flow in 2021 after $230 million of development capital. We exited the year at 1.3x net debt to pro forma adjusted EBITDAX, and Crescent produced 116 net MBOE per day in December 2021. Turning now to the Uinta transaction and combined guidance. We plan to initially fund the transaction with borrowings on the revolver and cash on hand.

And we only have roughly 10% of our proved developed reserves are currently hedged.

Brandy: and we only have roughly 10% of our approved developed reserves are currently hedged.

We achieved impressive results in 2021 pro forma for the combination of contango and independence, we generated roughly $680 million of EBITDAX and $385 million of Levered free cash flow in 'twenty, one after $230 million of development capital.

Brandy: We achieved impressive results in 2021. Pro forma for the combination of Contango and Independence, we generated roughly $680 million of EBITDAX and $385 million of leverage-free cash flow in 21 after 230 million of development capital.

We exited the year at one three times net debt to pro forma adjusted EBITDAX.

Brandy: We exited the year at 1.3 times net debt to pro forma adjusted EBITDA.

<unk> produced 116 net Boe per day in December 2021.

Brandy: Crescent produced 116 net MVOE per day in December 2021. Turning now to the U.N.

Turning now to that you went to transaction and combined guidance.

We plan to initially fund the transaction transaction with borrowings on the revolver and cash on hand.

Brandy: We plan to initially fund the transaction with borrowings on the revolver and cash on hand.

Our lenders authorized an increase of the elected commitment amount under the existing revolving credit facility to $1 3 billion from $700 million contingent upon closing.

Brandi Kendall: Our lenders authorized an increase of the elected commitment amount under the existing revolving credit facility to $1.3 billion from $700 million contingent upon closing. We estimate the adjusted purchase price, assuming a March 31 closing date, is roughly $700 million based on customary purchase price adjustments. We announced a 2022 capital budget of $600 to 700 million, assuming 9 months of Uinta capital on our books. This budget reflects an approximate 1-rig program in the Eagle Ford, a 2-rig program in the Uinta Basin, and modest non-op activity. The operated Eagle Ford program includes 32 to 38 gross wells with greater than 90% average working interest. As I mentioned earlier, we paused the Eagle Ford development in 2020 and early 2021 and restarted activity in mid-2021.

Brandy: Our lenders authorized an increase of the elected commitment amount under the existing revolving credit facility to $1.3 billion from $700 million contingent upon closing. We estimate that

We estimate the adjusted purchase price.

Assuming a March 31 closing date is roughly $700 million based on customary purchase price adjustments.

Brandy: Assuming a March 31 closing date is roughly $700 million based on customary purchase price adjustment.

We announced the 2022 capital budget of $600 million to $700 million, assuming nine months, you went to capital on our books.

Brandy: We announced a 2022 capital budget of $600 to $700 million, assuming nine months of U.N. capital on our book.

This budget reflects an approximate one rig program in the Eagle Ford.

Brandy: This budget reflects an approximate one-rig program in the Eagleford.

Brandi Kendall: This budget reflects an approximate 1-rig program in the Eagle Ford, a 2-rig program in the Uinta Basin, and modest non-op activity. The operated Eagle Ford program includes 32 to 38 gross wells with greater than 90% average working interest. As I mentioned earlier, we paused the Eagle Ford development in 2020 and early 2021 and restarted activity in mid-2021.

A two rig program in the Uinta basin and modest non op activity.

Brandy: a two-rig program in the Uinta Basin, and modest non-op activity.

The operated Eagle Ford program includes 32 to 38 gross wells with greater than 90% average working interest as I mentioned earlier, we pause Eagle Ford development in 2020 and early 'twenty one.

Brandy: The operating EcoFERD program includes 32 to 38 growth wells with greater than 90% average working interest. As I mentioned earlier, we paused the EcoFERD development in 2020 and early 2021.

And restarted activity in mid 'twenty, one so that 2022 budget reflects them rollover activity in one third of the Eagle Ford Wells will come online towards the end of the first quarter.

Brandy: and restarted activity in mid-21. So the 2022 budget reflects some rollover activity, and one-third of the Eagle Ford Wells will come online toward the end of the first quarter.

Brandi Kendall: The 2022 budget reflects some rollover activity, and one-third of the Eagle Ford wells will come online toward the end of Q1. The impact to production will occur in Q2, and we expect our standalone ex-Uinta CapEx guidance of $400 million to be weighted towards H1 of the year. EP Energy is currently operating 2 rigs in the Uinta, and our pro forma capital guidance reflects this drilling pace. Like others, we are seeing inflationary pressures across the business. Our people are some of the best in the industry, and we are finding new ideas to safely offset some of these pressures. We have factored expected inflation in our outlook today.

The impact to production will occur in Q2, and we expect our stand alone you went to capex guidance at $400 million be weighted towards the first half of the year.

Brandy: The impact to production will occur in Q2, and we expect our standalone ex-U.N. to CapEx guidance of $400 million to be weighted towards the first half of the year.

EP energy is currently operating two rigs in the Uinta and our pro forma capital guidance reflects this drilling pace.

Brandy: EP Energy is currently operating two rigs in the U.N. and our pro forma capital guidance reflects this ruling phase. Like others, we are seeing inflation...

Like others, we are seeing inflationary pressures across the business. Our people are some of the best in the industry and we are finding new ideas to safely offset some of these pricing pressures.

Brandy: Our people are some of the best in the industry and we are finding new ideas to safely offset some of these pressures.

We have factored expected inflation.

Brandy: We have factored expected inflation in our outlook today.

Our outlook today.

<unk> is well positioned relative to our peers to weather. This inflationary period as our cash flow is weighted towards PDP production, which is less impacted by inflationary pressures in drilling and completion activity.

Brandi Kendall: Crescent is well-positioned relative to our peers to weather this inflationary period as our cash flow is weighted towards PDP production, which is less impacted by inflationary pressures than drilling and completion activities. Specifically on operating expense for BOE, I would note that our guidance includes certain costs that are indexed to commodity prices, including production taxes and certain other input costs, such as CO2 purchase costs related to our CO2 flood asset in Wyoming. Our guidance figures for OpEx per BOE are based on $75 per barrel WTI and $3.75 per MMBtu Henry Hub pricing, but a portion of these costs move in tandem with oil commodity prices.

Brandy: Crescent is well positioned relative to our peers to weather this inflationary period as our cash flow is weighted towards PDP production, which is less impacted by inflationary pressures than drilling and completion activities.

Specifically on operating expense per Boe.

Brandy: Specifically on operating expense per BOE, I would note that our guidance includes certain costs that are indexed to commodity prices, including production taxes and certain other input costs such as CO2 purchase costs related to our CO2 flood asset in Wyoming. Our guidance

Note that our guidance includes certain costs that are index to commodity prices, including production taxes and certain other input costs, such as CFO purchase costs related to our C. O two slight asset in Wyoming are.

Our guidance figures.

For Opex per BOE based on $75 per barrel, <unk> and $3.75 per hour and then Btu Henry hub pricing, but a portion of these costs move in tandem with oil commodity prices.

Brandy: For OPEX, per BOE, are based on $75 per barrel, WTI, and $3.75 per MMBTU Henry Hub pricing. But a portion of these costs move in tandem with oil commodity prices.

These higher costs are expected to be offset by higher price realization.

Brandy: these higher costs are expected to be offset by higher price realizations.

Brandi Kendall: These higher costs are expected to be offset by higher price realizations. On a combined basis for the Uinta acquisition, we project 2022 production of 134 to 148 MBOE per day. Assuming $75 oil and $3.75 natural gas, we would generate $1.15 billion of adjusted EBITDAX and $425 million of levered free cash flow in 2022 at the midpoint of guidance. This transaction would allow us to increase the $0.12 dividend we announced today to $0.17 per share. In summary, we believe Crescent is well-positioned in today's market with significant scale up scale, an industry-leading decline rate, and an attractive dividend program. With that, I'll turn the call back to David.

On a combined basis for the you went to acquisition. We project 2022 production of 134 to 148 <unk> per day.

Brandy: On a combined basis for the UN to acquisition, we project 2022 production of 134 to 148 MBUE per day.

Assuming $75 oil and $3 75 natural gas, we would generate 1.15 billion of adjusted EBITDAX and $425 million of Levered free cash flow in 2022 at the midpoint of guidance.

Brandy: Assuming $75 oil and $3.75 natural gas, we would generate

Brandy: $1.15 billion of adjusted EBITDAX and $425 million of leveraged free cash flow in 2022 at the midpoint of guidance.

This transaction will allow us to increase the 12 cents dividend we.

Brandy: This transaction would allow us to increase the $0.12 dividend we announced today to $0.17.

We announced today to 17 cents per share.

In summary, we believe <unk> is well positioned in today's market with significant scale and industry, leading decline rate and an attractive dividend program with that I'll turn the call back to David Thanks.

Brandy: In summary, we believe Crescent is well-positioned in today's market with significant scale, an industry-leading decline rate, and an attractive dividend program. With that, I'll turn the call back to David.

Thanks, Randy before we take your specific questions today, let me quickly summarize today's key highlights.

David Rockecharlie: Thanks, Brandi. Before we take your specific questions today, let me quickly summarize today's key highlights. First, we have a proven strategy to deliver long-term value to investors. We've been successfully executing this strategy for the last decade. Our strategy is simple and unwavering. We are focused on cash flow, risk management, and returns. Second, we are a large-scale business with $1.2 billion of projected 2022 adjusted EBITDA and proved developed PV-10 of over $5 billion at SEC pricing. We have a deep inventory of low risk, high return drilling opportunities. Scale is incredibly important to being competitive in today's E&P industry, and this is one of the key factors driving consolidation across our industry. Lastly, we have a proven track record of adding value through quality acquisitions.

David Roccataroli: Thanks, Brandy. Before we take your specific questions today, let me quickly summarize today's key highlights.

First we have a proven strategy to deliver long term value to investors.

David Roccataroli: First, we have a proven strategy to deliver long-term value to investors.

We've been successfully executing this strategy for the last decade.

David Roccataroli: We've been successfully executing this strategy for the last decade.

Our strategy is simple and unwavering, we're focused on cash flow risk management and returns.

David Roccataroli: Our strategy is simple and unwavering. We are focused on cash flow, risk management, and returns.

We are a large scaled business with $1 $2 billion of projected 2022, adjusted EBITDA improved developed PV 10 of over $5 billion.

David Roccataroli: Second, we are a large scaled business with $1.2 billion of projected 2022 adjusted EBITDA and proved developed PV10 of over $5 billion at SEC prices.

David Rockecharlie: Second, we are a large-scale business with $1.2 billion of projected 2022 adjusted EBITDA and proved developed PV-10 of over $5 billion at SEC pricing. We have a deep inventory of low risk, high return drilling opportunities. Scale is incredibly important to being competitive in today's E&P industry, and this is one of the key factors driving consolidation across our industry. Lastly, we have a proven track record of adding value through quality acquisitions.

SEC pricing.

We have a deep inventory of low risk high return drilling opportunities scale is incredibly important to being competitive in today's E&P industry and this is one of the key factors driving consolidation across our industry.

David Roccataroli: We have a deep inventory of low-risk, high-return drilling opportunities.

David Roccataroli: Scale is incredibly important to being competitive in today's EMP industry. And this is one of the key factors driving consolidation across our industry.

Lastly, we have a proven track record of adding value through quality acquisitions.

David Roccataroli: Lastly, we have a proven track record of adding value through quality acquisitions.

Our people are able to identify accretive opportunities that play to our operating strengths.

David Roccataroli: Our people are able to identify creative opportunities that play to our operating strength.

David Rockecharlie: Our people are able to identify accretive opportunities that play to our operating strengths, capture financial and operational synergies, and maintain our strong capital structure. Thanks again for joining us today and for your investment in our company. We will now be happy to take your questions. Operator?

Capture financial and operational synergies and maintain our strong capital structure.

David Roccataroli: capture financial and operational synergies, and maintain our strong capital structure.

Thanks, again for joining us today and for your investment in our company, we will now be happy to take your questions.

Speaker Change: Thanks again for joining us today and for your investment in our company. We will now be happy to take your questions. Operator? Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation

Operator.

Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up a handset before pressing the star keys.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up a handset before pressing the star keys. One moment please, while we pull for questions. Our first question comes from the line of Tarek Hamid with J.P. Morgan. You may proceed with your question.

One moment, please when we pull for questions.

Our first question comes from the line of Terry.

J P. Morgan you May proceed with your question.

Good morning, and thanks for taking my question.

Tarek Hamid: Good morning, and thanks for taking my question.

Good morning.

Brandi Kendall: Hey, Tarek. Good morning.

Speaker Change: It's obviously a very complicated fourth quarter with the transaction in only a 25-day stub period, but walking through the math, I get to roughly $240 million of true pro forma EBITDA if the transaction had closed as of the start of the quarter.

It's obviously, a very complicated fourth quarter with the transaction and only a 25 day stub period, but you sort of walking through the math I get to roughly $240 million of kind of a true pro forma EBITDA, if the transaction to close as we started the quarter.

Tarek Hamid: It's obviously a very complicated Q4 with the transaction and only a 25-day stub period. If you sort of walk through the math, I get to roughly $240 million of kind of true pro forma EBITDA if the transaction had closed as of the start of the quarter. As I look at that kind of versus the 2022 guidance, I just wonder if you'd kinda help me understand sort of how to bridge that to the standalone guidance. I assume a big part of it is the hedge book versus also guidance being at $35 below strip pricing at this point. Anything you can do to help would be appreciated.

As I look at that kind of versus the 'twenty two guidance I'm. Just wondering if you can kind of help me understand sort of how to bridge that to the Standalone guidance I assume a big part of it is the hedge book versus also guidance being at $35 below strip pricing at this point, but.

Speaker Change: As I look at that kind of versus the 22 guidance, I just wonder if you'd kind of help me understand sort of how to bridge that to the standalone guidance. I assume a big part of it is the hedge book versus also guidance being at $35 below strip pricing at this point, but anything you do to help would be appreciated.

Anything you do to help would be appreciated.

Target, it's Randy Thanks for the question.

Brandi Kendall: Hey, Tarek, it's Brandi. Thanks for the question. We announced pro forma 2021 EBITDAX of $682. On a standalone basis, it's $850. I would agree with you that it's largely related to an increase in our hedge book. We were hedged at just over $50 a barrel for 2021, and the hedge book increases to 16 in 2022, so largely attributed to the increase in the hedge book.

Speaker Change: Hey, Tariq. It's Brandi. Thanks for the question. So we announced Proforma 21 EBITDAx of $682. On a standalone basis, it's $800 to $850. I would agree with you that it's largely related to an increase in our hedge book. We were hedged at just over $50 a barrel for 2021, and the hedge book increases to $60 in 2022. So largely attributed to the increase in the hedge book.

<unk> announced pro forma 21 EBITDAX of 682.

On a standalone basis, it's 800 days if he I would agree with you that it's largely related to an increase in in our hedge book, we were hedged at just over $50 a barrel.

For 2021, and the hedge book increases to <unk> and 'twenty. Two you said largely attributed to the increase in the hedge book.

Got it.

Tarek Hamid: Got it. Then I think you touched on this, Brandi, but, you know, in terms of production cadence, I think you had a note in the release that the exit rate was kinda 115. It's probably closer to 120, I guess, if you sort of do the math correctly on the stub period. Can you just maybe give a flavor for what that kinda looks like, you know, Q1 then heading into sort of hopefully a closing of the Uinta transaction?

And then I think you touched on this brand but in terms of.

Speaker Change: And then, I think you touched on this, Brandy, but in terms of production cadence, I think you had a note in the release that you sort of, the X-rate was kind of 115, it's probably closer to 120, I guess, if you sort of do the math correctly on that.

Production cadence.

I think you had a note in the release that you sort of extra it was kind of 115 is probably closer to 120, I guess, if you could sort of do the math correctly on the on the stub period.

Brandy: on the stub period. Can you maybe just give us a flavor for what that kind of looks like, you know, first quarter then heading into sort of hopefully a closing of the UINTA transaction?

Can you just maybe just give us a flavor for what that kind of looks like.

First quarter than heading into sort of hopefully.

Closing on the you went to the transaction.

Yeah. So I agree that we're probably closer to $1 20 from an exit standpoint, if you account for the contango production for them for the period of time in which we actually owned it we did mention and guidance that we expect roughly a third of our Eagle Ford wells to come online in the first.

Speaker Change: Yeah, so I agree that we're probably closer to 120 from an exit standpoint if you account for the Contango production for the period of time in which we actually owned it. We did mention in guidance that we expect roughly a third of our Eagleford wells to come online in the first quarter. I will note that's towards the end of the first quarter, so that production and cash flow will really impact 2Q forward.

Brandi Kendall: Yeah. Agree that we're probably closer to 120 from an exit standpoint, if you account for the Contango production for the period of time in which we actually owned it. We did mention in guidance that we expect roughly a third of our Eagle Ford wells to come online in Q1. I will note that's towards the end of Q1, so that production and cash flow will really impact Q2 forward.

I will note that towards the end of the first quarter, so that production and cash flow.

Well really impact.

Two Q4 work.

Got it.

Tarek Hamid: Got it. Maybe just a bigger picture question. Obviously the Uinta sort of trade came up relatively quickly, but, you know, it's obviously in a very interesting environment, to say the least, just with commodity prices and sort of buyers and sellers. Kinda any flavor that you guys have in terms of kind of what's out there from a potential transaction target standpoint and kinda anything that you sort of think is worth kinda highlighting at this point.

And then maybe just a bigger picture question.

Speaker Change: And then maybe just a bigger picture question, obviously the UNTA sort of trade came up relatively quickly.

You went to sort of trade came up relatively quickly, but obviously in a very interesting environment us at least just with commodity prices and sort of buyers and sellers and kind of any flavor that you guys have in terms of kind of what's out there from a potential transaction target standpoint, and kind of anything that you saw.

Speaker Change: but obviously in a very interesting environment, to say the least, just with commodity prices and sort of buyers and sellers and kind of any flavor that you guys have in terms of kind of what's out there from a potential transaction target standpoint and kind of anything that you sort of think is worth kind of highlighting at this point.

I think it's worth highlighting at this point.

Hey, Derek it's been it's a good question.

Speaker Change: Hey, Derek, it's Ben. It's a good question. I'd say the big thing that we've seen coming into the year and expect to see is that there's going to be a large supply of assets continuing to come to the market with a backdrop of really no capital formation in the space. So we think that that does continue to set up a pretty interesting acquisition market. Having said that, though, I would say that obviously with the recent volatility, we would expect that.

Ben Conner: Hey, Tarek, it's Ben. It's a good question. I'd say, you know, the big thing that we've seen coming into the year and expect to see is that there's gonna be a large supply of assets continuing to come to the market, with a backdrop of really no capital formation in the space. We think that does continue to set up a pretty interesting acquisition market. Having said that though, I would say that, you know, obviously with the recent volatility, we would expect that to potentially put a little friction on the market just in terms of timing of getting deals done and just, you know, bid-ask spread in the context of that volatility.

Say, the big thing that we've seen coming into the year and expect to see is that there's going to be a large supply of assets continuing to come to the market with a backdrop of really no capital formation in this space. So we think that that does continue to set up a pretty interesting.

The acquisition market.

Having said that though I would say that obviously with the recent volatility we would expect that.

<unk>.

Speaker Change: potentially put a little friction on the market, just in terms of timing of getting deals done and just bid-ask spread in the context of that volatility. What I would tell you is that though we do expect people to be opportunistic and continue to look to...

Put a little friction on the market just in terms of timing of getting deals done and just bid ask spread in the context of that volatility what I would tell you is that we do expect people to be opportunistic and continue to look to.

David Rockecharlie: What I would tell you is that though we do expect people to be opportunistic and continue to look to, you know, find liquidity in this market, and so we do expect to see a large supply. You know, our focus continues to be around our two business segments, which is our low decline conventional as well as our mid-cycle, which is reflective of the Uinta acquisition. We've been very successful, you know, over the last 12 to 18 months buying low decline production where there's really just been less of a bid for those assets. But we expect to see a kind of a steady supply kind of in both segments, and we think that, you know, our strategy sets up for us to be pretty opportunistic there. The curve's still heavily backwardated with our risk management strategy.

Ben Conner: What I would tell you is that though we do expect people to be opportunistic and continue to look to, you know, find liquidity in this market, and so we do expect to see a large supply. You know, our focus continues to be around our two business segments, which is our low decline conventional as well as our mid-cycle, which is reflective of the Uinta acquisition. We've been very successful, you know, over the last 12 to 18 months buying low decline production where there's really just been less of a bid for those assets. But we expect to see a kind of a steady supply kind of in both segments, and we think that, you know, our strategy sets up for us to be pretty opportunistic there. The curve's still heavily backwardated with our risk management strategy.

Find liquidity in this market and so when we do expect to see a large supply our focus continues to be around our two businesses business segments, which is our low decline conventional as well as our mid cycle, which is reflective of the Uinta acquisition, we've been very successful.

Speaker Change: you know, find liquidity in this market. And so we do expect to see a large supply. You know, our focus continues to be around our two business segments, which is our low decline conventional as well as our mid cycle, which is reflective of the Uinta acquisition. We've been very successful, you know, over the last 12 to 18 months buying low decline production where there's really just been less of a bid for those assets.

You know over the last 12 to 18 months buying low decline production, where theres really just been less of a bid for those assets, but we expect to see that kind of a steady supply kind of in both segments and we think that our strategy sets up for us to be pretty opportunistic there and so the curve is still heavily backward dated with our risk management strategy. We think we were able to.

Speaker Change: But we expect to see a steady supply in both segments. And we think that our strategy sets up for us to be pretty opportunistic there. And so the curve's still heavily backwarded. With our risk management strategy, we think we were able to continue to capture things at interesting risk returns. But we continue to watch the back of the curve, which is certainly moving up here over the last quarter. Clay, I don't know if you'd.

David Rockecharlie: We think we're able to continue to capture things at interesting risk returns, but we continue to watch the back of the curve, which is certainly moving up here over the last quarter. Clay, I don't know if you'd add anything else to that, though.

Ben Conner: We think we're able to continue to capture things at interesting risk returns, but we continue to watch the back of the curve, which is certainly moving up here over the last quarter. Clay, I don't know if you'd add anything else to that, though.

Continuing to capture things at interesting risk returns, but we continue to watch the back of the curve, which was which is certainly.

Moving up here over the last quarter.

I don't know if you'd add anything else to that though I think that's right.

Clay Rynd: No, I think that's right.

Thanks, guys I appreciate it and congratulations again on your first earnings call as a public company.

Clay Rind: Thanks guys, I appreciate it and congratulations again on your first earnings call as a public company and I'll get back to you.

Tarek Hamid: Well, thanks, guys. I appreciate it. Congratulations again on your first earnings call as a public company, and I'll get back in the queue.

And I'll get back in the queue.

Brandi Kendall: Thank you, Tarek Hamid.

Thank you.

David Rockecharlie: Yeah, thank you.

Our next question comes from the line of Joseph <unk> with Wells Fargo. You May proceed with your question.

Operator: Our next question comes from the line of Joseph McKay with Wells Fargo. You may proceed with your question.

Speaker Change: Our next question comes from the line of Joseph McKay with Wells Fargo. You may proceed with your question.

Hey, guys. Thanks for taking the questions.

Joseph McKay: Hey, guys. Thanks for taking the question. Just kinda curious to get your thoughts around how you envision incremental cash flows coming in from higher commodity prices. Just thoughts around the dividends, debt reduction, you know, continued M&A activity, just any color you can provide there.

Just kind of curious to get your thoughts.

Rounds.

Do you envision incremental cash flows coming in from higher commodity prices just thoughts around the dividend debt reduction.

Joseph McKay: how you envision incremental cash flows coming in from higher commodity prices. Just thoughts around the dividends, debt reduction.

Can continue.

M&A activity just any color you can provide there.

Joseph McKay: M&A activity, just any color you can provide there.

Hey, Joe it's Brad.

Brandi Kendall: Hey, Joe. It's Brandi. As we talked about before with respect to our capital allocation strategy, you know, our priority is the balance sheet and the dividend. Just a reminder from a dividend standpoint, we set the annual dividend at the beginning of the year based on guidance pricing and our 10% of EBITDA framework. That obviously resulted in $0.12 a share, which we announced earlier this morning. If we do generate more free cash flow at higher prices, we'd expect to pay down additional debt and selectively pursue accretive acquisitions. No intent in the near term to increase the dividend outside of obviously the Uinta Basin transaction that we announced as going from $0.12 to $0.17.

Joseph McKay: Hey Joe, it's Brandi. As we've talked about before with respect to our capital allocation strategy, our priority is the balance sheet and the dividend. Just a reminder, from a dividend standpoint, we set the annual dividend at the beginning of the year based on guidance pricing and our 10% of EBITDA framework. That obviously resulted in 12 cents a share, which we announced.

Andy as we talked about before with just with respect to our capital allocation strategy. You know our priority is the balance sheet and the dividend. Mr. A reminder, from a dividend standpoint, we set the annual dividend at the beginning of the year based on guidance pricing in our 10% of EBITDA.

Framework that obviously resulted in 12 cents, a share, which we announced earlier.

Brandi Kendall: earlier this morning. If we do generate more free cash flow at higher prices, we'd expect to pay down additional debt and selectively pursue accretive acquisitions.

Morning, if we do generate more free cash flow at higher prices, we'd expect to pay down additional debt and selectively pursue accretive acquisition.

No no.

Brandi Kendall: So no intent in the near term to increase the dividend outside of obviously the U.S. to basin transaction that we announced as going from 12 cents to 17 cents.

And our intent in the near term to increase that.

The dividend.

Outside of obviously that you likely based on transaction that we announced that's going from 12 cents to 17 cents.

Got you Okay that helps.

Joseph McKay: Gotcha. Okay, that helps. Maybe, just kind of touching again on the M&A front. Can you just kind of talk about what you're seeing, you know, industries in consolidation mode, just kind of what you're seeing out there in terms of, you know, other potential opportunities and how that's being shaped by the higher commodity prices that we're seeing today?

And then maybe.

Just kind of touching again on the M&A front could you just kind of talk about what youre seeing.

Brandi Kendall: kind of touching again on the M&A front. Can you just kind of talk about what you're seeing, you know, industries and...

Histories and consolidation mode.

Brandi Kendall: consolidation mode, just kind of what you're seeing out there in terms of

Kind of what Youre seeing out there in terms of.

On the other potential opportunities and how thats being shaped by a.

Brandi Kendall: know, other potential opportunities and how that's being shaped by the higher commodity prices that we're seeing today.

The higher commodity prices that we're seeing today.

Yeah, Hey, it's David I'll give you a quick high level, and then I'll, let Ben and clay can be a little more specific.

Brandi Kendall: Yeah, hey, it's David. I'll give you a quick high level, and then I'll let Ben and Clay be a little more specific.

David Rockecharlie: Yeah. Hey, it's David. I'll give you a quick high-level, and then I'll let Ben and Clay be a little more specific. I think one thing to highlight is that we typically see 150 to 200 transactions a year come across kind of the business. We'd expect to be at the high end of that, this year. As you heard us say, we typically on average have, you know, done three or four deals a year or so, you know, low single-digit percentage of conversion on any of those. At a high level, the market environment looks attractive from the supply. We have a pretty low probability of getting things done in general on any particular thing we're looking at.

I think one thing to highlight.

Is that we typically see a 150 to 200 transactions a year come across kind of a business wed.

Brandi Kendall: is that we typically see 150 to 200 transactions a year come across.

We'd expect to be at the high end of that this year as you've heard us say, we typically on average.

Brandi Kendall: We'd expect to be at the high end of that this year. As you heard us say, we typically, on average, have.

Done three or four deals a year or so.

Brandi Kendall: you know, done three or four deals a year. So, you know, low single-digit percentage of conversion on any of those. So, at a high level, the market environment looks attractive from the supply. We have a pretty low probability of getting things done in general on any particular thing we're looking at.

Low single digit percentage.

Conversion of any of those so.

At a high level the market environment looks.

Attractive from the supply.

Of a pretty low probability of getting things done.

In general in any particular thing we're looking at.

But one thing I would highlight is it's I think different in this market environment.

David Rockecharlie: The one thing I would highlight that's, I think, different in this market environment and may specifically address your question. There's sort of two sellers in this market environment. There are the sellers who have a very strong keep case and are looking to get paid for a $100 oil. There are sellers who've been invested for a long time and have, you know, decided to reshape either their portfolio or just exit their position, and they just wanna get paid for this environment in general relative to a $40 environment that existed before. You can definitely assume that what we're looking for is to be patient and sort of find attractive sellers who are looking to just exit into the environment rather than opportunistically top tick things.

Brandi Kendall: The one thing I would highlight that's, I think, different in this market environment and...

Maybe specifically address your question, there's sort of two sellers in this market environment, the sellers who have.

Brandi Kendall: may specifically address your question. There's sort of two sellers in this market environment. They're the sellers who.

We have a very strong keep case and are looking to get paid for $100 oil and then there are sellers, who have been invested for a long time.

Brandi Kendall: have a very strong keep case and are looking to get paid for $100 oil, and then there are sellers who've been invested for a long time and have decided to reshape either their portfolio or just exit their position.

Decided to reshape either portfolio or just exit their position and they just want to get paid for this environment in general relative to a $40 environment.

Brandi Kendall: And they just want to get paid for this environment in general relative to a $40 environment that existed before. And so.

As to before and so.

You can definitely assume that what we're looking for is to be patient.

Brandi Kendall: You can definitely assume that what we're looking for is to be patient and sort of find attractive.

And sort of find attractive.

Sellers, who are looking to just exit into the environment, rather than Opportunistically top tick things since that's always a challenge when things move move this quickly on pricing.

Brandi Kendall: sellers who are looking to just exit into the environment rather than opportunistically top-tick things, and that's always a challenge when

David Rockecharlie: That's always a challenge when things move this quickly on the price line.

Alright.

Joseph McKay: All right. Thanks. That helps. Thanks for taking my questions.

Speaker Change: All right. That helps. Thanks for taking my questions. Yeah, thank you. Our next question comes from the line of Greg Brody with Bank of America. You may proceed with your question. All right. Good morning, guys.

That helps thanks for taking my questions.

Yes. Thank you.

David Rockecharlie: Yeah, thank you.

Our next question comes from the line of Gregg Brody with Bank of America. You May proceed with your question.

Operator: Our next question comes from the line of Gregg Brody with Bank of America. You may proceed with your question.

Hi, good morning, guys.

Gregg Brody: Good morning, guys. Just starting with, for the transaction that you announced, the Uinta transaction, what is pro forma your maintenance CapEx to maintain your whole asset profile? Just as you answer that question, can you talk a little bit how you do think about potentially growing? I know you said where cash will be allocated, prioritizing for debt repayment and then acquisitions. How do you think about allocating more capital to growth, and is there a point where it makes sense?

Just just starting with so.

For the transactions that you went to a transaction.

What is what does pro forma your maintenance capex.

For the to maintain their whole asset profile.

And just as you answer the question can you talk a little bit.

Greg Brody: And just as you answer that question, can you talk a little bit how you do think about potentially growing? I know you said where cash will be allocated, prioritizing for debt, repayment and acquisitions, but how do you think about allocating more capital to growth?

You do think about potentially.

I know you said with cash will be allocated and prioritizing for debt.

We came in with acquisitions, but.

How do you think about allocating more capital to growth.

Is there a point where it makes sense.

Yeah, Hey, happy to taking the question.

Speaker Change: Yeah, hey, happy to take the question. You know, obviously, we're adding an ad set where we're

David Rockecharlie: Yeah. Hey, happy to take the question. You know, obviously we're adding an asset where we're, you know, EP's currently active, and we expect to continue to be active. As we kind of look at that, you know, look where we continue to maintain a low decline. As we look at the asset kind of roughly, we kind of in this environment, where prices are, it's kind of a $500 to 600 million type maintenance capital business. I think, you know, as we've talked about before in our strategy, we're extremely focused on returns on capital and really strong operational execution. I think as we sit here today, you know, running a rig in the Eagle Ford and two in the Uinta is kind of where we would see ourselves continue to be.

Obviously, we're adding an asset where were EPS.

Currently active and we expect to continue to be active and so as we kind of look at that.

Speaker Change: currently active and we expect to continue to be active and so as we kind of look at that you know look where we continue to maintain a low decline but as we look at the asset kind of roughly we kind of in this environment where prices are kind of a 500 to 600 million dollar type maintenance capital business and so and I think you know as we've talked about before in our strategy we're extremely focused on returns on capital and really strong operational

We continued to maintain a low decline, but as we look at the Africa, roughly we kind of in this environment, where prices are it's kind of a $500 million to $600 million type maintenance capital business.

And so and I think as we've talked about before in our strategy. We're extremely focused on returns on capital and really strong operational execution. So I think as we sit here today running a rig in the Eagle Ford and then two in the U N does kind of where we would see ourselves continue to be so and from a.

Speaker Change: So I think as we sit here today, you know, running a rig in the Eagle Ford and

Speaker Change: UNTA is kind of where we would see ourselves continue to be. So, and from a pro rata perspective, I think that's, you know, between those two basins is largely where our capital will be going for the foreseeable future. I think that's, you know, close to 85% of our pro forma capital spend would be between

David Rockecharlie: From a pro rata perspective, I think that's, you know, between those two basins is largely where our capital will be going for the foreseeable future. I think that's, you know, close to 85% of our pro forma capital spend would be between those two basins. I think it's fair to kind of think in this environment, you know, we'd be at a consistent pace and not looking to really expand beyond that.

Pro rata perspective, I think thats between those two basins is largely where our capital will be going for the foreseeable future I think that's.

Close to 85% of our pro forma capital spend would be between those two basins. So I think it's fair to kind of think in this environment.

Consistent pace and not looking to really expand beyond that.

But that's what you said $5 million to $600 million in your budget 600 to 700. This year, so that that implies some pro forma growth.

Speaker Change: that's with the you said 500 to 600 million your budget 600 to 700 this year so that that implies some pro forma growth.

Gregg Brody: That's what you said $500 to 600 million. Your budget's $600 to 700 million this year. That implies some pro forma growth. Is that right? And then, is that... Should we be thinking that you won't have a low growth strategy from here into 2023 and 2024, assuming things stay where we are?

Speaker Change: Is that right, and then just, is that, should we be thinking that you will have a low-growth strategy from here into 2023 and 2024?

Is that right and then just is that should we be thinking that you will have a low growth strategy.

From here until 'twenty three 'twenty four.

I mean, they can stay where we are.

Hey, Greg it's Randy.

Speaker Change: Hi Greg, it's Brandy. That does imply some slight growth for the year. I will also just highlight, given we just restarted our capital program in the Eagleford in the back part of 2021, there is some kind of carryover capital that's coming into 2022, which makes it a little bit

Brandi Kendall: Hey, Gregg, it's Brandi. So it does imply some slight growth for the year. I will also just highlight, given we just restarted our capital program in the Eagle Ford in the back part of 2021, there is some kind of carryover capital that's coming into 2022, which makes it a little bit noisy. I think Ben's right that in the $500 to 600 million range is a good maintenance level for us going forward.

That doesn't imply some some slight growth for the year I will also just highlight given we just restarted our capital program in the Eagle Ford in the back part of 2021. There is some carryover capital that's coming into 2020, which makes it a little bit.

But I think that's right that in the $5 million to $600 million range is a good maintenance level for us going forward.

Speaker Change: But I think Ben's right that in the $500-$600 million range, it's a good maintenance level for us going forward.

Got it.

Gregg Brody: Got it. You said 1 in the Eagle Ford, 2 in the Uinta, that's 85% of your capital. Are the 15% infrastructure, or is that for non-op, or could you just explain what that is?

Speaker Change: And you said one nasal for two and you went to that 85% of your capital is the other 15% infrastructure or is there is that for non-op?

You said, one Eagle Ford two in the U S. So that's 85% of your capital is 15% infrastructure, whereas there is that for non op or could you just explain what that is it mostly non op.

Speaker Change: explain what that is. Yeah, mostly non-op.

Brandi Kendall: Yeah. Mostly non-op, for the remainder.

For the remainder.

And when you when you got you.

Speaker Change: And when you've got that 85% that you're saying is EOFRS and you like that, that includes equipment, it's a full DC&E number? Correct, full DC&E.

Gregg Brody: When you guide to that 85% that you're saying is Eagle Ford and Uinta, that includes equipment and it's a full DC&E number or-

That 85% that you're saying is you might get.

That includes.

Equipment.

It's a full D C any.

Correct.

Brandi Kendall: Correct. Full DC&E.

Danny.

Speaker Change: Look, you're public now. Obviously, you have a unique structure. I know management's incentivized.

Okay.

Gregg Brody: You know, look, you're public now. Obviously you have a unique structure. I know management's incentivized with shares. I'm curious if you can think of just kinda help for the new investors here. How do you benchmark your incentives versus the general public market, pluses and minuses? Are you thinking about making any changes? I'd be interested to hear your thoughts and if there's any updates.

Your public now obviously you have a unique structure I know management is incentivized.

Sure I'm curious if you can think of.

Speaker Change: Chairs, I'm curious if you can think of just kind of help for the new investors here. How do you think, how do you benchmark your incentives versus the general public market? Pluses and minuses? Are you thinking about making any changes? Be interested to hear your thoughts now if there's any updates.

To help for the new investors here, but how do you think how do you benchmark your incentives versus.

Federal public market.

Pluses and minuses are you thinking about making any changes.

Be interested to hear your thoughts there if there's any updates.

Yeah happy to take that it's David.

David Rockecharlie: Yeah, happy to take that. It's David. I'll call it no updates or changes from what's been disclosed, but I'm happy, to your point, to just cover it again from how we think about it. We think that two things are important. One, the absolute level of, I'll call it cost in the business, needs to be in line or better than market. Then secondly, the incentives to management should be heavily driven by performance.

No updates or changes from from what's been disclosed.

Speaker Change: I'll call it no updates or changes from what's been disclosed, but I'm happy to your point to just cover it again from how we think about it.

Happy to your point too to just cover it again from from how we think about it.

We think that the two things are important one the absolute.

Speaker Change: We think that the two things are important one the absolute level of

Level of.

I'll call it cost in the business needs to be.

Speaker Change: I'll call it cost in the business needs to be.

In line or better than market and then secondly, the incentives.

Speaker Change: In line or better the market and then secondly the incentives to management

Management should.

Should be heavily.

Driven by performance and so in the first case when.

Speaker Change: driven by performance. And so, in the first case, when we benchmark ourselves and the public data that is out there from the industry, we think that the overall operating costs of the business associated with

David Rockecharlie: In the first case, when we benchmark ourselves and the public data that is out there from the industry, we think that the overall operating costs of the business associated with management are in line or better than the peers. On the performance and incentive compensation, it's 100% stock based and it's 100% performance based, which we think is unique in the sector. There's no time-based vesting or anything like that. Just as a reminder for everyone on the phone, 60% of the potential long-term incentive on the equity side is based around total shareholder return, which has a minimum of an 8% IRR.

When we benchmark ourselves in the public data that is out there from from the industry, we think that the overall operating cost of the business.

Associated with.

With management.

Our all in line or better than the peers and then on the.

Speaker Change: are in line or better than the peers. And then on the.

Performance incentive compensation to 100% stock.

Speaker Change: performance, incentive compensation, it's 100% stock.

Based and it's 100% performance based which we think is unique.

Speaker Change: based and it's a hundred percent performance-based, which we think is unique in the sector. There's no time-based vesting or anything like that. So just as a reminder for everyone on the phone, 60% of the potential long-term incentives

<unk> in the sector Theres, no time based vesting or anything like that so just.

Just as a reminder for everyone on the phone.

60% of the potential long term incentive.

On the equity side is based around total shareholder return, which has a minimum of an 8% IRR.

Speaker Change: on the equity side is based around total shareholder return, which has a minimum of an 8% IRR. And the second piece of that, which represents 40% of the long-term incentive comp is a requirement to have.

The second piece of that which represents 40% of the long term incentive comp is a requirement to have.

David Rockecharlie: The second piece of that, which represents 40% of the long-term incentive comp, is a requirement to have a strong relative value performance compared to peers. We feel great about how that compares. We also feel motivated by the opportunity to do good work and have performance for the shareholders and all the investors also be well aligned with how management's compensated.

Strong relative value performance compared to peers. So we feel great about how that compares we also feel motivated by the opportunity.

Speaker Change: strong relative value performance compared to to peers. So we feel great about how that compares. We also feel motivated by the opportunity to do good work and and have performance.

To do good work and have performance for the shareholders and all the investors also be well aligned with how management is compensated.

Speaker Change: for the shareholders and all the investors also be well-aligned with.

Okay.

Speaker Change: I mean, and you've talked about your shareholder return strategy. I appreciate the limited float makes it difficult to buy back shares. But is there a clearly where your stocks traded?

Gregg Brody: You've talked about your shareholder return strategy. I appreciate the limited float makes it difficult to buy back shares. Clearly, with your stock trading, it definitely points to that might be a good use of capital. Is it a shareholder program? Is a buyback just not something you can contemplate today, or is it something maybe in the future you might?

You talked about your shareholder return strategy I appreciate the limited float it makes it difficult to buy back shares but that is there.

Currently where your stock's trading at definitely points to that might be a good use of capital is it is it is.

Speaker Change: points to that might be a good use of capital. Is it a shareholder program? Is it buyback? Is there something you can contemplate today?

This shareholder program as a buyback just not something you can contemplate today or is it something maybe in the future.

Right.

Yes, I think in the in the current.

Speaker Change: Yeah, I think in the current mindset and market environment, we're all about two things. One, really transitioning the company from...

David Rockecharlie: Yeah. I think in the current mindset and market environment, we're all about two things. One, really transitioning the company from the, I'll call it, smaller market capitalization that Contango had pre-merger, into, I'll call it, an institutional recognition both on the research as well as the investor side, that would be more typical of a company of this scale. I think that's, long story short, we're focused on creating incremental liquidity, as well as awareness and coverage of the company. In terms of what we would do with the cash, in particular, obviously, we have a very strong focus on free cash flow.

Mindset and market environment, we're all about.

Two things one really transitioning the company from.

The I'll call it smaller market capitalization that contango had pre merger.

Speaker Change: I'll call it smaller market capitalization that Contango had pre-merger into, I'll call it institutional recognition both on the research as well as the investor side that would be more

Into I'll call it a <unk>.

Institutional recognition both on the research as well as the Investor side.

It would be more typical of a.

The company of this scale and I think that's a long story short we're focused on creating incremental.

Speaker Change: company of this scale and I think that's long story short we're focused on creating incremental

Liquidity.

Speaker Change: liquidity as well as awareness and coverage of the company.

As well as our awareness and coverage of the company.

In terms of what we would do with the cash in particular, obviously, we have a very strong focus on free cash flow.

Speaker Change: In terms of what we would do with the cash, and in particular, obviously, we have a very strong focus on free cash flow. As Brandy said, we're focused on maintaining the historical framework for the dividend, which we've announced now publicly, and so we're very actually excited to deliver the first cash payment through dividends to the public investors of Crescent.

As Randy said, we're focused on maintaining the.

David Rockecharlie: As Brandy said, we're focused on maintaining the historical framework for the dividend, which we've announced now publicly. We're very actually excited to deliver the first cash payment through dividends to the public investors of Crescent. Secondly, it's gonna be all about the balance sheet. We think in this type of environment, the free cash flow available to the business should be really strengthening the value proposition of the company, and that includes the balance sheet. I think you can assume that we're gonna be really heavily focused there and no change in that strategy from what we've historically done.

The historical framework for the dividend.

With which we've announced now publicly and so we're very actually excited to deliver the first cash payment through.

Through dividends to the public investors.

And secondly, it's going to be all about the balance sheet, we think.

Speaker Change: And secondly, it's going to be all about the balance sheet. We think in this type of environment, the free cash flow available to the business should be really strengthening the value proposition of the company, and that includes the balance sheet. So I think you can assume that we're going to be really heavily focused there and no change in that.

In this type of environment, the free cash flow available to the business should be really strengthening the value proposition of the company and that includes the balance sheets. So I think you can assume that we're going to be really heavily focused there and no change in that strategy from what we've historically done.

I got it and.

Gregg Brody: I got it. Last question for you. I think you're assuming some inflation in there. Could you give us a sense of how much you're assuming right now?

Speaker Change: I got it. And last question for you, I think you're assuming some inflation in there. Could you give us a sense of how much you're assuming?

Gregg Brody: I got it. Last question for you. I think you're assuming some inflation in there. Could you give us a sense of how much you're assuming right now?

Last question for you I think you are assuming some inflation in there could you give us a sense of how.

How much you're assuming.

All right now.

Yeah. So we are experiencing as you can imagine similar impacts as the rest of the industry. We've embedded all of the known inflation into our guidance I would say in the range of you know 5% to 10%.

Speaker Change: Yeah, so we are experiencing, as you can imagine, similar impacts as the rest of the industry. We've embedded all of the known inflation into our guidance, I would say, in the range of 5 to 10 percent. I will note, though, given we have a really large base decline and we're only really running one rig today and three rigs pro forma for U.S., our cash flow is weighted towards PDP production, which is less impacted by these inflationary pressures.

Brandi Kendall: Yeah. We are experiencing, as you can imagine, similar impacts as the rest of the industry. We've embedded all of the known inflation into our guidance, I would say in the range of, you know, 5% to 10%. I will note, though, given we have a really large base decline and we're only really running 1 rig today and 3 rigs pro forma for Uinta, our cash flow is weighted towards PDP production, which is less impacted by these inflationary pressures.

I will note, though given we have a really large base decline and we're only really running one rig today and three rigs pro forma for you went to our cash flow is weighted towards our PDP production, which is less impacted by these inflationary pressures.

And that's partly because of maintenance.

Gregg Brody: That's $500 to 600 million of maintenance CapEx. That includes the 5% to 10% inflation?

Speaker Change: And that's $500 to $600 million of maintenance cutbacks. That includes the 5% to 10% inflation. That's right.

Cutbacks that that includes the.

The 10% inflation that's right.

Brandi Kendall: That's right.

Right.

Gregg Brody: Great. Thanks for the time, guys, and welcome to the public markets.

Speaker Change: Great, thanks for your time, guys, and welcome to the public markets. Thank you, Greg.

And welcome to the public markets.

Thanks.

Brandi Kendall: Thank you, Greg.

David Rockecharlie: Thank you.

At this time, we have reached the end of the question and answer session and that also concludes today's conference call.

Operator: At this time, we have reached the end of the question and answer session, and that also concludes today's conference call. Thank you everybody for participating. You may disconnect your lines at this time. Thank you for your participation.

You everybody for participating you may disconnect your lines at this time. Thank you for your participation.

[music].

Speaker Change: Thank you for watching!

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