Q1 2024 Crescent Energy Co Earnings Call

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Operator: Greetings and welcome to the Crescent Energy Q1 2024 results conference call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Reid Gallagher, from Mr. Relations. Thank you, Mr. Gallagher. You may begin.

Greetings and welcome to question Energy Q1, 'twenty 'twenty four results conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please.

Reid Gallagher: Press Star Zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Mr. Reid Canaccord Investor Relations. Thank you Mr. Gallagher you may begin.

Reid Gallagher: Good morning, and thank you for joining Crescent's first quarter 2024 conference call. Our prepared remarks today will come from our CEO, David Rockecharlie, and CFO, Brandi Kendall. Our Chief Accounting Officer, Todd Falk, and our Executive Vice President of Investments, Clay Rind, will also be available during Q&A. 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, global geopolitical conflict, 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.

Reid Gallagher: Good morning, and thank you for joining <unk> first quarter 2024 conference call. Our prepared remarks today will come from our CEO, David Ross, Charlie and CFO Brittany.

Reid Gallagher: Our Chief Accounting Officer, Tom Hall, and our executive Vice President of investments <unk> also be available during Q&A.

Reid Gallagher: Today's call may contain projections and other forward looking statements within the meaning of federal Securities laws. These statements are subject to risks uncertainties, including commodity price volatility global geopolitical conflict, our business strategies and other factors that may cause actual results to differ from those expressed or implied in these statements and other disclosures.

Reid Gallagher: We have no obligation to update any forward looking statements. After todays call. In addition, 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-Q and earnings press release available on our website with that I will turn it over to our CEO David.

Reid Gallagher: We have no obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings press release available on our website. With that, I will turn it over to our CEO, David.

David C. Rockecharlie: Good morning, and thank you for joining us. We have another great quarter to go over today, and we are eager to get started. Before we get into the details, I want to begin with a few things I hope you all take away from this call. Number one, 2024 is off to a great start.

David: Good morning, and thank you for joining US we had another great quarter to go over today and we are eager to get started.

David C. Rockecharlie: Before we get into the details I want to begin with a few things I hope you all take away from this call.

David C. Rockecharlie: Number one 'twenty 'twenty four is off to a great start.

David C. Rockecharlie: We continue to execute our consistent strategy, doing what we said we would do. Our scaled, low-decline production base is generating significant free cash flow, which we are returning to our shareholders. We are reinvesting in proven high-return capital projects in our attractive long-life development inventory. Additionally, we are actively focused on our returns-driven M&A strategy through accretive acquisitions and opportunistic divestitures to compound capital for our investors and further enhance our portfolio. And we have delivered on our goals in the capital markets, improving the float and trading liquidity of our business.

David C. Rockecharlie: We continue to execute our consistent strategy doing what we said we would do.

David C. Rockecharlie: Our scaled low decline production base is generating significant free cash flow, which we are returning to our shareholders.

David C. Rockecharlie: We are reinvesting in proven high return capital projects and our attractive long life development inventory.

David C. Rockecharlie: We are actively focused on our returns driven M&A strategy through accretive acquisitions and opportunistic divestitures to compound capital for our investors and further enhance our portfolio.

David C. Rockecharlie: And we have delivered on our goals in the capital markets, improving float and trading liquidity of our business enhancing our peer leading return on capital framework and maintaining our balance sheet strength.

David C. Rockecharlie: Enhancing our Peer-Leading Return of Capital Framework and Maintaining our Balance Sheet Strategy. Number two, our assets continue to outperform. We saw record production this quarter, with continued gains in well productivity, complemented by stronger realizations and best-in-class operational expertise. And number three, Crescent has never been better positioned.

David C. Rockecharlie: Number two our assets continue to outperform we saw record production this quarter with continued gains in well productivity complemented by stronger realizations and best in class operational execution.

David C. Rockecharlie: And number three crescent has never been better positioned.

David C. Rockecharlie: We believe Crescent is the best stock to own for long-term exposure to oil and gas prices, as it uniquely offers the discipline, stability, and capabilities of a large-cap business combined with the value and high growth potential of a proven mid-cap company. Following those quick highlights, I will now discuss things in a bit more detail. We had strong financial performance this quarter, beating consensus expectations on both EBITDA and free cash flow, driven by improved realizations and strong asset performance.

David C. Rockecharlie: We believe it's the best stocked up for long term exposure to oil and gas prices as we uniquely offer the discipline stability and capabilities of a large cat business combined with the value and high growth potential a proven mid cap company.

David C. Rockecharlie: Following those quick highlights I will now discuss things in a bit more detail.

David C. Rockecharlie: We had strong financial performance this quarter, beating consensus expectations, although the EBITDA and free cash flow driven by improved realizations and strong asset performance.

David C. Rockecharlie: On the operations side, our team has continued to outperform, generating record production this quarter with sustained gains in well productivity and continued efficiencies on the capital side. With the strong outperformance that we are seeing, we have increased our full-year production guidance while maintaining the same level of capital spend. Our stable, low-decline production base continues to generate consistent free cash flow, and we've been able to further improve our margin profile through a combination of proactive oil marketing efforts and the benefits of our balanced gas basis exposure.

David C. Rockecharlie: On the operation side, our team has continued to outperform generating record production. This quarter was sustained gains in well productivity and continued efficiencies on the capital side.

David C. Rockecharlie: With the strong outperformance that we're seeing we have increased our full year production guidance, while maintaining the same level of capital spend.

David C. Rockecharlie: Our stable low decline production base continues to generate consistent free cash flow and we've been able to further improve our margin profile through a combination of proactive oil marketing efforts and the benefits of our balanced gas basis exposure.

David C. Rockecharlie: We've talked about this a bit before, but one of the highlights of our recent Western Eagleford acquisitions was the complementary marketing overlap with our existing Central Eagleford position. Since acquiring the asset, we've implemented a successful blending campaign across our combined footprint to realize a premium across both assets. Or said another way; the whole of our Eagleford position today is greater than the sum of its parts from before we took control of operations in the Western Eagleford last year.

David C. Rockecharlie: We've talked about this a bit before but one of the highlights of our recent western Eagle Ford acquisitions, what's the complimentary marketing overlap with our existing central Eagle Ford position.

David C. Rockecharlie: Since acquiring the asset we've implemented a successful blending campaign across our combined footprint to realize a premium across both assets or said another way the whole of our Eagle Ford position today is greater than the sum of its parts from before we took control of operations in the Western Eagle Ford last year.

David C. Rockecharlie: These recent marketing gains represent further value on top of the capital savings we've discussed today, our improvements in well performance, and our ongoing efforts to reduce operating costs across the asset. These all represent meaningful synergies gains as they were not included in our acquisition underwriting, and they are also excellent examples of our continued enthusiasm about the value creation potential across our Eagleford footprint on the scale we've built over the last few years.

David C. Rockecharlie: These recent marketing gains represent further value on top of the capital savings we've discussed today.

David C. Rockecharlie: Our improvements to well performance and our ongoing efforts to reduce operating cost across the asset.

David C. Rockecharlie: These all represent meaningful synergy gains as they were not included in our acquisition underwriting.

David C. Rockecharlie: And they are also excellent examples of our continued enthusiasm about the value creation potential across our Eagle Ford footprint with.

David C. Rockecharlie: With the scale, we built over the last few years we.

David C. Rockecharlie: We are big believers in the value of scale-driven efficiencies and profitability in our sector, and we are focused on increasing our footprint and our core regions to continue compounding value for our shareholders through complementary and accretive M&A. Speaking more on our capital savings, our team has been able to drive further improvements to our drilling and completions program by implementing SimulFracts across our Eagleford portfolio, which has increased the efficiency of our completions program. Our completion rates are now 40% faster than just two years ago. If we look at what our team has accomplished to date, I could not be prouder.

David C. Rockecharlie: We are big believers in the value of scale, driven efficiencies and profitability in our sector and we are focused on increasing our footprint in our core regions to continue compounding value for our shareholders through complementary and accretive M&A.

David C. Rockecharlie: Speaking more on our capital savings our team has been able to drive further improvements to our drilling and completions program by implementing final fracs across our Eagle Ford portfolio, which has increased the efficiency of our completions program.

David C. Rockecharlie: Our completions are now 40% faster than just two years ago.

David C. Rockecharlie: If we look at what our team has accomplished to date I could not be prouder.

David C. Rockecharlie: With all the gains our team has driven over the past several years, our DNC performance is now among the best in the basin. We are developing our resources safely, consistently, and more efficiently than nearly anyone in the U.S. As I touched on with our increase to guidance, we are seeing consistent outperformance from our recent wells in both the Western Eagleford and U.N. In Western Eagleford, we are seeing a roughly 100% increase in early-time well performance versus the prior operation, which combined with our DNC cost performance represents a massive shift in capital efficiency on the asset. In Utah, we are seeing equally exciting results from our most recent completion design optimization.

David C. Rockecharlie: With all the games our team has driven over the past several years. Our D&C performance is now among the best in the basin, we are developing our resources safely consistently and more efficiently than nearly any one in the Eagle Ford.

David C. Rockecharlie: As I touched on with our increased guidance, we are seeing consistent outperformance from our recent wells in both the Western Eagle Ford and you went up in.

David C. Rockecharlie: In the Western Eagle Ford, we are seeing a roughly 100% increase in early time, well performance versus the prior operator.

David C. Rockecharlie: Which combined with our D&C cost performance represents a massive shift in capital efficiency on the assets.

David C. Rockecharlie: In Utah, we are seeing equally exciting results from our most recent completion design optimization.

David C. Rockecharlie: We touched on this last quarter, but when we acquired disposition the only horizontal development on the assets utilized a legacy smaller completion design with roughly 500 pounds of proppant per foot.

David C. Rockecharlie: We touched on this last quarter, but when we acquired this position, the only horizontal development on the assets utilized a legacy, smaller completion design with roughly 1,500 pounds of profit per foot. As we've implemented our operational approach, we are seeing significantly enhanced returns and improved capital efficiencies through larger completions, which we've doubled to roughly 3,000 pounds per foot. The results of this change and the long-term implications for our asset are becoming clearer and clearer over time as productivity remains strong. With a bit more than 150 days of production data, we are seeing a roughly 60% uplift versus the previous completions, with only minimal increases in our DMC costs.

David C. Rockecharlie: As we've implemented our operational approach, we are seeing significantly enhanced returns and improved capital efficiencies through larger completions, which we've doubled to roughly 3000 pounds per foot.

David C. Rockecharlie: The results of this change and long term implications for our asset are becoming clearer and clearer over time as productivity remains strong.

David C. Rockecharlie: With a bit more than a 150 days of production data, we are seeing a roughly 60% uplift versus the previous completion design with only minimal increases in our D&C costs.

David C. Rockecharlie: These results are still early, but the data supports our optimism about the long-term value creation potential of our inventory and the value potential for Crescent Energy. Building on the capital investment into our own business this quarter, we are always focused on creating further value through opportunistic and accretive M&A. To us, that means investing with financial discipline and a focus on compounding capital, improving our cash flow profile, executing our operational plans, and enhancing our overall portfolio.

David C. Rockecharlie: These results are still early time, but the data supports our optimism about the long term value creation potential of our inventory and the value potential for Crestwood.

David C. Rockecharlie: Building on the capital investments into our own business. This quarter, we are always focused on creating further value through opportunistic and accretive M&A too.

David C. Rockecharlie: To us that means investing with financial discipline and a focus on compounding capital.

David C. Rockecharlie: Improving our cash flow profile.

David C. Rockecharlie: Executing our operational plans and enhancing our overall portfolio.

David C. Rockecharlie: We've had a successful track record to date of acquiring assets at attractive values and generating incremental returns for our shareholders through improved operations, which you can see most recently through the results of our Western Eagleford and UINTA positions. We are constantly in the market and looking for opportunities to invest at attractive risk-adjusted returns. Recently, there have been a number of large cap deals making headlines, but we are vigilant and patiently looking for opportunistic value, large or small, that fits our skill set.

David C. Rockecharlie: We've had a successful track record to date of acquiring assets at attractive value and generating incremental returns for our shareholders through improved operations, which you can see most recently through the results on our Western Eagle Ford and you enter possessions.

David C. Rockecharlie: We are constantly in the market and looking for opportunities to invest at attractive risk adjusted returns.

David C. Rockecharlie: Recently, there have been a number of large cap deals making headlines.

David C. Rockecharlie: But we are vigilant and patiently looking for opportunistic value large or small that fits our skill set.

David C. Rockecharlie: This quarter, we executed on an attractive bolt-on to our existing minerals portfolio in the Eagle family with a small $25 million asset in Karnes County. These complementary assets generate compelling cash flow yields and enhance our existing minerals portfolio. Our minerals footprint today covers approximately 73,000 net royalty acres, focused across the Eagleford and Rockies, produces roughly 6,000 barrels of oil equivalent per day and generates roughly $70 million in annual cash flow, which we don't believe is fully appreciated by the market.

David C. Rockecharlie: This quarter, we executed on an attractive bolt on to our existing minerals portfolio in the Eagle Ford.

David C. Rockecharlie: With a small 25 million dollar asset in Karnes County.

David C. Rockecharlie: These complementary assets generate a compelling cash flow yield and enhance our existing minerals portfolio.

David C. Rockecharlie: Our minerals footprint today covers approximately 73000 net royalty acres focused across the Eagle Ford and Rockies.

David C. Rockecharlie: Produces roughly 6000 barrels of oil equivalent per day, and generates roughly $70 million in annual cash flow.

David C. Rockecharlie: Which we don't believe is fully appreciated by the market.

David C. Rockecharlie: When we talk about adding value through M&A, that doesn't only mean through acquisition. We are constantly watching our portfolio and the market, looking for opportunities to accelerate value through portfolio management, including by divesting non-core assets from our business. To that effect, we have divested more than $100 million of non-core assets over the past 18 months, thereby generating attractive value for our shareholders and simplifying our asset portfolio. This quarter, we signed an additional opportunistic divestiture of non-core assets in the Permian Basin for roughly $20 million, which we expect to close in the second quarter.

David C. Rockecharlie: When we talk about adding value through M&A that doesn't only mean through acquisitions, we are constantly watching our portfolio and the market looking for opportunities to accelerate value through portfolio management, including by divesting noncore assets from our business.

David C. Rockecharlie: To that effect, we have divested more than $100 million of noncore assets over the past 18 months crystallizing attractive value for our shareholders and simplifying our asset portfolio.

David C. Rockecharlie: This quarter, we signed an additional opportunistic divestiture of noncore assets in the Permian basin for roughly $20 million, which we expect to close in the second quarter.

David C. Rockecharlie: Looking forward, we have one of the largest pipelines of M&A opportunities in our recent history. With our successful track record of asset integration, strong operating and financial performance, and solid balance sheet, we remain confident that we are well positioned for accretive growth and further value creation over the remainder of 2024 and beyond. With that, I'll turn the call over to Brandi to provide more detail on the quarter.

David C. Rockecharlie: Looking forward, we have one of the largest pipelines of M&A opportunity and our recent history.

Brandi: With our successful track record of asset integration.

Brandi: <unk> operating and financial performance and solid balance sheet, we remain confident that we are well positioned for accretive growth and further value creation over the remainder of 2024 and beyond.

David C. Rockecharlie: With that I'll turn the call over to Brandi to provide more detail on the quarter Randy.

Brandi: Randy Thanks, David.

Brandi Kendall: As David mentioned, performance has been extremely strong, with another quarter of record production and significant cash flow, averaging approximately 166,000 barrels of oil equivalents per day, generating $313 million of adjusted EBITDA and $66 million in leverage-free cash flow. We had $193 million of capital expenditures during the first quarter, which we expect to be our heaviest quarter of expenditure for the entire year.

Brandi: As David mentioned performance has been extremely strong with another quarter of record production and significant cash flow, averaging approximately 166000 barrels of oil equivalents per day generating $313 million of adjusted EBITDA and $66 million and number of free cash flow.

Brandi Kendall: We had 193 million of capital expenditures during the first quarter, which we expect to be our heaviest quarter expand for the entire year.

Brandi Kendall: We brought online 20 gross-operated wells in Eagleford and four gross-operated wells in Uinta, all of which are posting strong early-time results and are expected to exceed our returns target of two times our capital invested at current commodity prices. Turning to our outlets for the remainder of 2024. As David mentioned, we increased production guidance to 157 to 162,000 barrels of oil equivalents per day, which represents a roughly 7% increase relative to 2023 production levels, while reaffirming our full year capital guidance of $575 million to $625 million.

Brandi Kendall: We brought online 20 gross operated wells in the Eagle Ford and four gross operated wells in the event that all of which are posting strong early time results and are expected to exceed our returns target at two times, our capital invested at current commodity prices.

Brandi Kendall: Turning to our outlook for the remainder of 'twenty 'twenty four and David mentioned, we increased production guidance to 157 to 162000 barrels of oil equivalents per day, which represents a roughly 7% increase relative to 2023 production model, while reaffirming our full year capital guidance of 575 million to 620.

Brandi Kendall: $5 million.

Brandi Kendall: At today's commodity prices, we expect to generate substantial free cash flow in 2024 and beyond. As we all know, our top priority is creating value for our investors. In addition to our strong financial and operational performance, we've executed on that goal in a number of different ways in the capital markets as well. We have truly transformed our positioning in the capital markets since we became public just a few years ago. Through a series of transactions on the equity side, we've more than doubled our public float in trading liquidity and effectively eliminated our private investor overhang as we work towards a more simplified corporate structure.

Brandi Kendall: Commodity prices, we expect to generate substantial free cash flow in 'twenty 'twenty four and beyond.

Brandi Kendall: As you all know our top priority is creating value for our investors. In addition to our strong financial and operational performance and executed on macro a number of different ways in the capital markets as well we have truly transformed our positioning in the capital markets. Since we became public just a few years ago.

Brandi Kendall: Or a series of transactions on the equity side to be more than doubled our public float and trading liquidity and effectively eliminated in a private investor overhang as we work towards a more simplified corporate structure.

Brandi Kendall: We've proven our access to both equity and debt capital to fund accretive growth, and we've meaningfully increased investor followership with the addition of 10 new research analysts. Creating value more directly, we've announced another dividend under our recently-enhanced framework, which provides certainty and simplicity to our shareholders with a peer-leading yield. We also executed on a portion of our authorized share buyback program, further increasing returns to our shareholders with the repurchase of roughly 2.3 million shares at an average price of $9.87 per share.

Brandi Kendall: We've proven our access to both equity and debt capital to fund accretive growth and we've meaningfully increased investor Followership with the addition of 10 New research analyst.

Brandi Kendall: Creating value more directly we've announced another dividend under our recently enhanced framework, which provides certainty and simplicity to our shareholders with a pure leading yield.

Brandi Kendall: Also executed on a portion of our authorized share buyback program further increasing returns to our shareholders with the repurchase of roughly $2 3 million shares at an average price of $9.87 per share.

Brandi Kendall: Now that our private overhang is eliminated, we will look to use the remaining $125 million authorization to opportunistically repurchase both Class A and Class B shares. During the quarter, we also successfully refinanced both our 2026 notes and our credit facility, improving our already strong credit profile and ensuring significant flexibility and liquidity to continue executing on our growth strategy. With that, I'll turn the call back over to David.

Brandi Kendall: Now that our private overhanging eliminated we will look to use the remaining $125 million authorization to opportunistically repurchase of class a class b shares.

Brandi Kendall: During the quarter. We also successfully refinanced both our 'twenty 'twenty six notes in our credit facility, improving our already strong credit profile and ensuring significant flexibility and liquidity to continue executing on our growth strategy with that I'll turn the call back over to Janet.

David: Thank you brandy.

David C. Rockecharlie: Before we wrap up, I want to highlight again a few key takeaways from this quarter. We've continued to demonstrate consistent performance towards our strategic priorities, doing what we said we were going to do. As Brandi alluded to, 2023 was a strong year for Crescent, and 2024 is off to a great start. I couldn't be prouder of our accomplishments to date.

David: Before we wrap up I want to highlight again, a few key takeaways from this quarter.

David C. Rockecharlie: First we.

David C. Rockecharlie: We have continued to demonstrate consistent performance towards our strategic priorities.

David C. Rockecharlie: Doing what we said we were going to do.

David C. Rockecharlie: As for Andy alluded to 2023 was a strong year for cross sell and 'twenty 'twenty four is off to a great start.

David C. Rockecharlie: I couldnt be prouder of our accomplishments to date.

David C. Rockecharlie: We've continued our peer-leading dividend framework, strongly positioned the business through a creative M&A, and we've achieved our initial goal of establishing a capital markets presence in line with a company of our size, with investor and equity analyst followership, a liquid public float, and a demonstrated track record of prudent capital access. Second, our assets continue to outperform. We saw record production this quarter with impressive well-performance, stronger realizations, and best-in-class operational execution, driving a significant free cash flow. We've increased production guidance without a change in capital.

David C. Rockecharlie: We've continued our peer leading dividend framework strongly positioned business through accretive M&A and we've achieved our initial goal of establishing a capital markets presence in line with a company of our size with Investor an equity analyst followership of liquid public float and a demonstrated track record of prudent capital access.

David C. Rockecharlie: <unk>.

David C. Rockecharlie: Second our assets continue to outperform we saw record production this quarter with impressive well performance stronger realizations and best in class operational execution, driving a significant free cash flow beat.

David C. Rockecharlie: We've increased production guidance without a change in capital spend.

David C. Rockecharlie: And finally, Crescent has never been better positioned for further value creation. We have an attractive asset profile with a stable decline rate and advantaged capital efficiency, which allows us to generate significant free cash flow relative to our peers, which we don't believe is reflected in our current valuation. We have momentum in the capital markets and a vision to make Crescent a must-own mid-cap company. We have the unique combination of operating and investing expertise required to execute on a growth-through-acquisition strategy and believe Crescent is the best stock to own for long-term exposure to oil and gas prices, with the discipline, stability, and capabilities of a large-cap business, combined with the value and high growth potential of a proven mid-cap company. With that, I'll open it up for Q&A. Operator.

David C. Rockecharlie: And finally Crescent has never been better positioned for further value creation.

David C. Rockecharlie: We have an attractive asset profile with a stable decline rate and advantaged capital efficiency, which allows us to generate significant free cash flow relative to our peers, which we don't believe is reflected in our current valuation.

David C. Rockecharlie: We have momentum in the capital markets and a vision to make Crescent Musto mid cap company.

David C. Rockecharlie: We have the unique combination of operating and investing expertise required to execute on our growth through acquisition strategy and believe Crescent is the best stock to own for long term exposure to oil and gas prices with the discipline stability and capabilities of a large cap business <unk>.

David C. Rockecharlie: Combined with the value and high growth potential of our proven mid cap company.

Speaker Change: With that I'll open it up for Q&A operator.

Operator: Thank you. We will now 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 tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the chat. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. One moment, please, while we poll for questions. The first question comes from the line of Neal Dingmann with True Securities. Please go ahead.

Speaker Change: Thank you if you will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Neal David Dingmann: Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the stock East one moment. Please while we poll for questions.

Operator: The first question comes from the line of Neal Dingmann with two Securities. Please go ahead.

Neal David Dingmann: Morning, all. Nice quarter. David, my first question for you or Brandi, just on capital allocation, specifically as you look at your stock price today, which, to me, seems still quite discounted versus what you see out there with potential Eagleford or other deals. Do you all have a strong opinion of where you believe it makes more sense to lean or focus for maybe the remainder of the year?

Neal David Dingmann: Morning, All a nice quarter I'm, David My first question for you or Brandon just on capital allocation, specifically as you look at your stock price today, which to me seems still quite discounted versus what you see out there with potential Eagle Ford or other deals do you all have a strong opinion of where do you believe it makes more sense to lead her focus and maybe the remainder of the year.

David C. Rockecharlie: Yeah, hey, thanks for the question. You know, I think the best thing is just to keep it simple. And as you know, the first thing we do with the free cash flow from the business is focus on the investors, which is us. To us, the balance sheet and the dividend. So I think we feel very good about the current position there. And then after that, it's really opportunistic, and Again, I think the thing we've highlighted this quarter is that we feel like we've done what we needed to do in the capital markets, and we have the buyback program available to us, but You know, to your question, I think we're just looking for value and starting, starting with the balance sheet.

Speaker Change: Yeah, Hey, thanks for the question.

David C. Rockecharlie: Yeah, I think the best thing is just to keep it simple and as you know the first thing we do with with the free cash flow from the business is focus on the investors, which has us tell us is the balance sheet and the dividend. So I think we feel very good about the current positioning there.

David C. Rockecharlie: And then after that it's really a opportunistic in some.

David C. Rockecharlie: Again, I think the thing we've highlighted this quarter is we feel like we've done what we needed to do in the capital markets and we have the buyback program available to us but.

David C. Rockecharlie: To your question I think we're just looking for value and starting you know starting with the balance sheet and the dividend.

Neal David Dingmann: Yeah, it makes a lot of sense. And then just secondly, on capital structure, specifically now that you've simplified the balance sheet, I'm just wondering, will the shareholder return just, I guess, will that continue to be just a mix of the base div and opco repurchases and regular stock repurchases, just a sort of a combination like we saw just this last quarter, more of the same, or should we think about that any other way?

Speaker Change: Yes, it makes a lot of sense and then just secondly on.

Neal David Dingmann: On capital structure, specifically now that you've simplified the balance sheet I'm, just wondering who the shareholder return just I guess will that continue to be just the mix of that.

Neal David Dingmann: The base did an optical repurchases and regular stock repurchases just a sort of a combination like we saw just this last quarter more of the same or should we think about it any other way.

Brandi Kendall: Yeah, so just more of the same. So as a reminder, right, we enhanced our dividend framework last quarter and moved to a fixed. Dividend of $0.12 per share, and then, as you mentioned, we'll opportunistically repurchase both Class A and Class B shares. When we came out with the buyback, initially, it was directed towards Class B shares. As David mentioned, we've made a lot of progress from an equity positioning standpoint and now view that the private investor overhang is gone. So really, we'll look to use it opportunistically on both classes of shares going forward.

Neal David Dingmann: Yeah, So just more more of the same.

Brandi Kendall: As a reminder, alright, we enhanced our dividend framework last quarter moved to the thick.

Brandi Kendall: A dividend of $12 per share and then as you mentioned, we'll opportunistically.

Brandi Kendall: Purchase both class, a and class B shares and when we came out with the buyback. Initially it was directed towards the class B shares as David mentioned, we've made a lot of progress from an equity positioning standpoint, and now view that the private investor overhang.

Brandi Kendall: Is gone.

Brandi Kendall: So really we'll look to use it opportunistically on both classes of shares going forward.

Neal David Dingmann: That makes a lot of sense. Thank you all.

Speaker Change: It makes a lot of sense. Thank you all.

Oliver Huang: Thank you. The next question comes from the line of Oliver Huang with TPH. Please go ahead.

Neal David Dingmann: Thank you next question comes from the line of Oliver Huang with DP edge. Please go ahead.

Oliver Huang: Good morning, David, Brandi, and team. Congratulations on a nice quarter. We're kind of looking at the revised guidance laid out for 2024 in volume. Just wondering if you could kind of walk us through the moving pieces that constitute the two and a half thousand BOE per day that is being attributed to operational outperformance. Really just trying to understand how much of the uplift that has been seen in the new Q1 wells is rolling through to the new wells that are planned for the remainder of the year in this update. Any color there would be helpful.

Oliver Huang: Good morning, David Randy and team congrats on a nice quarter.

Oliver Huang: We're kind of looking at the revised guidance laid out for 2024 and volumes. Just wondering if you all are able to kind of walk us through the moving pieces that constitute the tuna.

Oliver Huang: Per day that is being attributed to operational outperformance really just trying to understand how much of the uplift that has been seen in the new Q1, well that's rolling through for us.

Oliver Huang: The new wells that are planned for the remainder of the year and this update any color there would be helpful.

Brandi Kendall: Hi, everyone. Good morning. It's Brandi.

Oliver Huang: Alex Good morning, it's Randy so as we highlighted in our prepared remarks, we increased our full year production guide by 2000 barrels a day net in 'twenty 500 barrels a day, if you adjust for the small divestiture and the drivers of the increase is really the sustained performance that we're seeing both out of the western Eagle Ford as well.

Brandi Kendall: So, as we highlighted in our prepared remarks, we increased the full-year production guide by 2000 barrels a day net and 2500 barrels a day if you adjust for the small divestiture. The drivers of the increase are really the sustained performance that we're seeing both out of the Western Eagle Heard, as well as the result of the more intense completions in Utah. So we believe that the increased guidance reflects the performance trends that we're currently seeing. So it would point you towards the midpoint of the new guidance range for the time being.

Brandi Kendall: And more intense completion and Utah.

Brandi Kendall: We believe that the increased guidance reflects the performance trends that we're currently seeing that would point you towards the midpoint of our new guidance range for the time being.

Brandi Kendall: Yeah.

Oliver Huang: Okay, that's helpful. And maybe a follow-up on just the buyback. I know the equity for us continues to screen fairly undervalued on our numbers, and I'm sure you all would agree as well. But just kind of looking at what you all repurchased in Q1, is there any color that you all are able to offer up in terms of the pace or aggression of buybacks beyond that opportunistic commentary, especially as we kind of see free cash flows start to inflect higher as we kind of move throughout the Yeah,

Speaker Change: Okay. That's helpful and maybe a follow up just on the.

Oliver Huang: The buyback I know the equity for US continues to screen fairly undervalued on our numbers and I'm sure you all would agree as well, but just kind of looking at what you all repurchased in Q1 is there any color that you all are able to offer up in terms of the pace or aggression buybacks beyond that opportunistic.

Oliver Huang: Commentary.

Oliver Huang: Especially as we kind of see free cash flow to start to inflect higher or is it kind of move throughout the year.

Brandi Kendall: Yeah, I mean, I won't say anything other than we view it as an opportunistic tool. For us, our capital allocation framework remains of 1A, 1B is the dividend and the balance sheet, and then it's return-generating opportunities, whether that's M&A or our organic program. So we view the buyback as, you know, after those two items. But as we see value in our stock, right, again, it's a great tool to have for a... Transcribed by https://otter.ai

Speaker Change: Yeah, I mean, I I won't say anything other than we view it as an opportunistic tool.

Brandi Kendall: Our capital allocation framework remains of 181, b or the dividend and the balance sheet and then its return generating opportunities for that.

Brandi Kendall: M&A.

Brandi Kendall: Or are our organic program. So we view that the buyback as you know.

Brandi Kendall: After those to you.

Brandi Kendall: Items, but as we see value in our stock right again, it's a great tool to have.

Brandi Kendall: For us.

Brandi Kendall: Okay.

Oliver Huang: Sounds good. Thanks for the time.

Speaker Change: Sounds good thanks for the time.

Oliver Huang: Okay.

Jared Giroux: Thank you. The next question comes from the line of Jared Giroux with Stevens. Please go ahead.

Shattered Judo: Thank you next question comes from the line of shattered Judo with Stephens. Please go ahead.

Jared Giroux: Hey, good morning and congratulations on a strong quarter. Well, a couple quick questions. I was hoping you could maybe give a little color on the production and capital cycle for the remainder of the year.

Jared Giroux: Hey, good morning, and congrats on the strong quarter.

Jared Giroux:

Jared Giroux: Couple of quick questions I was hoping you could maybe give a little color on the production and capital cadence for the remainder of the year.

Brandi Kendall: Hey, Jared, it's Brandi. So I'll maybe start on the capital side. So similar to what we would have talked about. In March, alongside year-end earnings, we still expect to be front half weighted to 60% of capital for the first half of the year and expect this to be our heaviest quarter of capital spend to date at 193. From a production standpoint, we'd expect to be down. Hello, single digits quarter over quarter and then relatively flat towards the updated Midpoint. We do expect our oil production, though, to trend upwards over the course of the year just as we're bringing on our oil-weighted inventory.

Jared Giroux: Hey, Jerry this is Randy so I'll, maybe start on the capital side.

Brandi Kendall: So a similar to what we would have talked about in March alongside yearend earnings we still expect to be front half weighted for 60% of capital towards the first half of the year.

Brandi Kendall: And expect this to be our heaviest quarter of capital spend to date at 193 from a production standpoint, we'd expect to be down.

Brandi Kendall: Low single digits quarter over quarter, and then relatively flat towards the updated.

Brandi Kendall: Mid point and we do expect our oil production noted trend upwards over the course of the year or does it we're bringing on are.

Brandi Kendall: Oil weighted inventory.

Jared Giroux: Perfect. Thank you.

Jared Giroux: And then, in terms of the Austin chalk, I think the original plan was to drill four chalk wells this year. I'm just curious if that was still on the drilling schedule.

Jared Giroux: And then in terms of the Austin Chalk I think the original plan was to drill for chalk wells. This year I'm just curious if that was still in our drilling schedule.

Brandi Kendall: Yeah, that's right. And what we tell you is, you know, early results. We feel really excited about the opportunity set there. But that's still the

Jared Giroux: Yes, that's right and what we would tell you is early time results, we feel really excited about the opportunity set there.

Speaker Change: But that's still the plan.

Jared Giroux: Perfect. Thanks for taking my question.

Speaker Change: Perfect. Thanks for taking my questions.

Jared Giroux: Thank you.

Jared Giroux: Thank you next question comes from the line of John Freeman with Raymond James. Please go ahead.

John Holliday Abbott: Hi, everyone. Nice quarter. Just a follow-up on the last question and your response, Brandi. So when thinking about the production cadence, the 24 wells that came on in one queue were... They sort of just routable.

Speaker Change: Hi, everyone nice quarter, just a follow up on the last question.

Speaker Change: In your response branding so when I'm thinking about the production cadence. The the 24 wells that came on and and one Q, where they sort of just ratable you know very well through the quarter or was there any back end weighted nature of those wells just anything about once you're in the timing of how those came on.

Brandi Kendall: John, good, good question. So I would say a handful of those wells came online towards the end of the quarter, so they didn't contribute much to this quarter's production outperformance. Okay.

Speaker Change: Hey, Brian Good question, So I would say a handful of those wells came online towards the end of the quarter. So they didn't contribute.

Brandi Kendall: Much to this quarters production outperformance.

John Holliday Abbott: I got it. Perfect. And then just the other follow-up for me, you know, in the slides where you're highlighting the huge drilling and completion efficiency gains that you had in the Eagle for Uintah, would it be possible to kind of quantify what that would mean in terms of cycle times? I mean, obviously, I see the footage per day and then fluid pump per day, but is there any way to sort of just ballpark kind of say what that translates to from cycle times just for comparison purposes?

Speaker Change: Got it perfect and then just the other follow up for me.

John Holliday Abbott: In the slides, where you are highlighting the huge drilling and completion efficiency gains that you all have not in the Eagle Ford.

Speaker Change: Would it be possible to kind of quantify.

John Holliday Abbott: What that would mean in terms of cycle times, I mean, obviously I see the footage per day, and then fluid pumped per day, but is there any way to sort of just ballpark kind of see what that translates to from cycle times just for comparison purposes.

David C. Rockecharlie: Yeah, so, John, it's David. I think maybe the way you're asking it, we'd respond that it would, you know, save us a couple of days, a whole cycle there, so, you know, pretty, pretty meaningful improvement, given the performance we already have, I'll call it a year ago.

John Holliday Abbott: Yeah, So hey, John it's David.

David: Maybe the way you're asking it we'd respond that it would save US a couple of days.

David C. Rockecharlie: Oh, well and in the full full cycle. There so you know pretty.

David: Pretty meaningful improvement given the performance we already are.

David: We're having I'll call it a year ago.

John Holliday Abbott: Perfect. Yeah, that's exactly what I wanted. Thanks again. Great quarter.

Speaker Change: Perfect that's exactly what I wanted to thanks again, great quarter.

Speaker Change: Thanks, Sean.

Hanwen Chang: Thank you. The next question comes from the line of Hanwen Chang with Wells Fargo. Please go ahead.

Speaker Change: Thank you next question comes from the line of Hamed when Chung with Wells Fargo. Please go ahead.

Hanwen Chang: Thanks for taking my questions. With the ongoing efficiency gains in D&C activities you highlighted on slides A and I, could you discuss the flexibility of your 2024 capital plan? Specifically, would you consider accelerating activity if targeted goals are achieved ahead of schedule? Thank you.

Hanwen Chang: Thanks for taking my questions are with the ongoing efficiency gains D&C activities you highlighted on slide a N I could you discuss the flexibility of your 2024 capital plan.

Hanwen Chang: Specifically would you consider accelerating activity you've targeted goals are achieved ahead of schedule. Thank you.

David C. Rockecharlie: Hey, David, great question. I think maybe the best way I can answer that is just as a reminder that our view is that we want to manage the company based on returns on capital, first and foremost. When we deploy capital, we want to make sure we're getting the returns we expect, and our business plan is to maintain or slightly grow production through the drill bit and then really drive our outsized growth opportunistically through M&A.

Hanwen Chang: Hey, it's David Great question.

David C. Rockecharlie: I think maybe the best way I can answer that is just as a reminder, you know our view is that we.

David C. Rockecharlie: We want to manage the company based on returns on capital first and foremost.

David C. Rockecharlie: When when we deploy capital we want to make sure we're getting the returns we expect.

David C. Rockecharlie: And our business plan is to maintain or slightly grow production through the drill bit.

David C. Rockecharlie: And then really drive.

David C. Rockecharlie: Our outsized growth opportunistically through M&A, so in that context, the way, we think about rising prices and the opportunity in our asset base.

David C. Rockecharlie: So in that context, the way we think about rising prices and the opportunity in our asset base, we would not look to accelerate activity in that. I think our basic guidance of a two to three rig business today is... It's going to remain intact, and that extra free cash flow will come to the benefit of investors in a rising price environment.

David C. Rockecharlie: We would not look to accelerate activity into that I think are our basic guidance of a two to three rig business today is.

David C. Rockecharlie: It's going to remain intact and that extra free cash flow will come to the benefit of investors and a rising price environment.

David C. Rockecharlie: Yeah.

Clay Rind: Regarding the recent EGLE for mineral acquisition, could you elaborate on your appetite for investment in minerals or low-debt conventional assets? Thank you.

Speaker Change: Thank you regarding the recent ego for mineral acquisition could you elaborate on your appetite for investment in your mineral or low decline conventional assets. Thank you.

Clay Rind: Hey, this is Clay. So, you know, I think we've been consistent on this. We look at everything in particular, focused on our existing kind of footprint. So I think as we think about the mineral acquisition that was opportunistic, value-driven within our footprint, an area we know well and is acquisitive. So it kind of checked all the boxes for us from an investment opportunity perspective, and most importantly, from a financial point of view, it's a strong return opportunity.

Clay Rind: Hey, this is clay. So you know I think we've been consistent on as we look at everything in particular focused our existing kind of footprint. So I think as we as we think about the mineral acquisition that was opportunistic value driven within our footprint an area, we know well and accretive so I kind of checked all the box.

Clay Rind: And as for Us from a investment.

Clay Rind: Fertility perspective.

Clay Rind: Importantly, he kind of financially a strong return opportunity.

Clay Rind: And then, you know, clearly, we've highlighted the low decline kind of conventional business as something that we think of as a core strength. And so that's an area where you would expect us to continue to kind of look for opportunity, go forward. And if we can find opportunities that fit our framework, expect us to add those where they make sense. Thank you. Thank you.

Clay Rind: And then you know clearly.

Clay Rind: Clearly we've highlighted the low decline conventional business as something that when you think of it as a core strength and so that's an area where you would expect us to continue to kind of look for opportunity go forward and if we can find opportunities that fit our framework expect us to to address whether it makes sense.

Speaker Change: Thank you.

Operator: Thank you. The next question comes from the line of Tarek Hamid with J.P. Morgan. Please go back. Hi, good morning, this is Nevanon on behalf of Tarek Hamid.

Speaker Change: Thank you next question comes from the line of thought accompanied with JP Morgan. Please go ahead.

Nevanon: Hi, Good morning. This is Kevin on for Tarek I was wondering if you could touch a bit more on the current acquisition environment, both in the Uinta and the Western Eagle Ford and which of the two is more active from what you're saying.

Clay Rind: Hey, it's Clay. As David mentioned in the opening remarks, this year has been a very active year if you look at M&A activity in the space. But it's been very focused on some just very kind of large corporate transactions. We'll certainly see, I think, a pickup in activity. We've had a very active year looking at opportunities across our footprint. You know, we've highlighted on this call the efficiencies and the excitement we're having on the Synergy side with the Eagleford assets that we acquired last year.

Nevanon: Hey, Hey, it's clay.

Clay Rind: As David mentioned in the opening remarks, you know this year has been a very active year. If you looked at just.

Clay Rind: M&A activity in our space, but its been very focused on some just very kind of large corporate transactions.

Clay Rind: Certainly see I think a pickup in activity, we've had a very active year in looking at opportunities across our footprint.

Clay Rind: We've highlighted through this call.

Clay Rind: The efficiencies and.

Clay Rind: And we're having all of US energy side on our Eagle Ford assets that we acquired last year. So I would I would clearly expect us to lean into that opportunity from an acquisition perspective, where we see value.

Clay Rind: So I would clearly expect us to lean into that opportunity from an acquisition perspective where we see value. And I'm certainly excited about that. But I'd also say across our asset base, we're excited about where we can add value where we already operate. So I think we're active across the board. But clearly, the efficiency that we're seeing on the recent Eagleford side would give us the excitement to find opportunity there.

Clay Rind: And so I'm certainly excited about that but I'd also say across our asset base. You know, we're excited where we can add where we already operate a value. So I think we're active across the board, but clearly the efficiency that we're seeing on the recent Eagle Ford side would give us the excitement to find opportunity there.

Speaker Change: Got it thank you.

Clay Rind: Okay.

David C. Rockecharlie: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to David Rockecharlie for closing comments.

Clay Rind: Thank you ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to David rocket Charlie for closing comments.

David C. Rockecharlie: Great. Thank you all again for joining the call and for supporting the company. And we appreciate the opportunity every quarter to catch up with all of you and look forward to speaking again next time.

David C. Rockecharlie: Great. Thank you all again for joining the call and for supporting the company and we appreciate the opportunity every quarter to catch up with all of you and look forward to speaking again next time.

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Operator: Okay.

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