Q3 2024 Vital Energy Inc Earnings Call
<unk> for either purchasing.
Speaker Change: At this time, all participants are in listen only mode.
We'll be conducting question and answer session after the financial and operations report.
Speaker Change: As a reminder, this conference is being recorded for replay purposes.
Speaker Change: It is now my pleasure to introduce Mr. Ron Hagen.
Speaker Change: Vice President Investor Relations you May proceed Sir.
Ron Hagen: Thank you and good morning, joining.
Speaker Change: Joining me today are adjacent target President and Chief Executive Officer.
Speaker Change: Brian Zimmerman.
Speaker Change: <unk>, Vice President and Chief Financial Officer.
Speaker Change: Katy Hill, Senior Vice President and Chief operating Officer.
Speaker Change: Well as additional members of our management team.
Speaker Change: During today's call, we'll be making forward looking statements.
Speaker Change: These statements, including those describing our beliefs goals expectations forecasts and assumptions are intended to be covered by the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Speaker Change: Our actual results may differ from these forward looking statements for a variety of reasons many of which are beyond our control.
Incident, Chief Financial Officer.
Speaker Change: In addition, we will be making reference to non-GAAP financial measures.
Katie Hill, Senior Vice President and Chief operating Officer as.
Speaker Change: Reconciliations to GAAP financial measures are included in the press release and presentation, we issued yesterday afternoon.
As well as additional members of our management team.
During today's call, we'll be making forward looking statements.
Speaker Change: This release and presentation can be accessed on our website at www dot vital energy Dot com.
These statements, including those describing our beliefs.
<unk> expectations forecasts and assumptions are intended to be covered by the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Speaker Change: I'll now turn the call over to Jason Pigott, President and Chief Executive Officer.
Jason Pigott: Good morning, and thank you for joining us today.
Jason Pigott: We are delighted to announce that vital energy has delivered exceptional results in the third quarter, surpassing our expectations.
Our actual results may differ from these forward looking statements for a variety of reasons many of which are beyond our control.
In addition, we will be making reference to non-GAAP financial measures.
Speaker Change: Our recent strategic acquisitions, particularly the transformative <unk> acquisition have propelled us to new Heights, we reached a new production record during the quarter and our cost reduction initiatives.
Reconciliations to GAAP financial measures are included in the press release and presentation, we issued yesterday afternoon.
Press release and presentation can be accessed on our website at www dot vital energy Dot com.
Speaker Change: <unk>, improving our cash flow.
Speaker Change: Before we take your questions today I'll cover four key items.
Speaker Change: I will now turn the call over to Jason Pigott, President and Chief Executive Officer.
Speaker Change: First some quick highlights from the third quarter Importantly, recent results will increase our fourth quarter production outlook.
Jason Pigott: Good morning, and thank you for joining us today.
Jason Pigott: We are delighted to announce that vital energy has delivered exceptional results in the third quarter, surpassing our expectations.
Speaker Change: Next I'll provide additional information about our recent point acquisition. This asset has exceeded expectations early on and provides us with a luxury of adding activity and a higher productivity area in 2025.
Our recent strategic acquisitions, particularly the transformative <unk> acquisition have propelled us to new Heights, we reached a new production record during the quarter and our cost reduction initiatives.
Speaker Change: Then I will discuss how our team is continuing to improve and extend our inventory.
Speaker Change: Lastly, I will share some early thoughts on our 2025 outlook, while we won't share full details until early next year, we expect to build on the strengths we have reinforced with our third quarter results.
Significantly improving our cash flow.
Jason Pigott: Before we take your questions today I'll cover four key items.
Jason Pigott: First some quick highlights from the third quarter Importantly, recent results, we will increase our fourth quarter production outlook.
Speaker Change: Now, let's talk about the third quarter, our financial results surpassed expectations driven by higher than expected production in line capital and a solid demonstration of our ability to lower operating costs overtime on acquired assets.
Jason Pigott: Next I'll provide additional information about our recent point acquisition. This asset has exceeded expectations early on and provides us with a luxury of adding activity and a higher productivity area in 2025.
Speaker Change: For the quarter, both Standalone vital energy and the point energy assets delivered at the high end of production expectations combining to produce about 59200 barrels of oil per day.
Jason Pigott: Then I will discuss how our team is continuing to improve and extend our inventory.
Jason Pigott: Lastly, I will share some early thoughts on our 2025 outlook, while we won't share full details until early next year, we expect to build on the strengths we have reinforced with our third quarter results.
Speaker Change: Our oil production guidance for the quarter was 55% to 58000 barrels of oil per day and did not include any volumes for point.
Now, let's talk about the third quarter, our financial results surpassed expectations driven by higher than expected production in line capital and a solid demonstration of our ability to lower operating costs overtime on acquired assets.
Speaker Change: However, the team did a great job to close this transaction early giving us a boost for the quarter.
Speaker Change: If it weren't for some weather related flooding in Howard County, which caused approximately 650 barrels of oil per day to be shut in.
Jason Pigott: For the quarter, both Standalone vital energy and the point energy assets delivered at the high end of production expectations combining to produce about 59200 barrels of oil per day.
Speaker Change: Beat would have been almost 6% altogether.
Speaker Change: To help demonstrate why we're so excited about the point transaction, we have a slide in today's deck with two charts showing point production, surpassing underwriting expectations are both base production and on a new 10 well package.
Jason Pigott: Our oil production guidance for the quarter was 55% to 58000 barrels of oil per day and did not include any volumes for point.
Speaker Change: Additionally, these wells were completed with an optimized frac design on wider spacing than the previous operator paving the way for us to develop this asset at a significantly reduced cost compared to the prior operator.
Jason Pigott: However, the team did a great job to close this transaction early giving us a boost for the quarter.
Jason Pigott: If it weren't for some weather related flooding in Howard County, which caused approximately 650 barrels of oil per day to be shut in.
Speaker Change: Lease operating expenses substantially improved during the quarter coming in at $8 78 per Boe.
Jason Pigott: Beat would have been almost 6% altogether.
Speaker Change: Our LOE guidance of $8 95 per Boe a.
Jason Pigott: Help demonstrate why we're so excited about the point transaction, we have a slide in today's deck with two charts showing point production, surpassing underwriting expectations are both base production and on a new 10 well package.
Speaker Change: A 9% improvement over our second quarter operating expense.
Speaker Change: These costs are inclusive of higher LOE related to the point assets.
Speaker Change: Excluding point <unk> would have been just over $8 70 per Boe.
Jason Pigott: Additionally, these wells were completed with an optimized frac design on wider spacing than the previous operator paving the way for us to develop this asset at a significantly reduced cost compared to the prior operator.
Speaker Change: In the third quarter, we delivered on our planned reduction in operating costs through several targeted initiatives aimed at improving efficiency and optimizing resource use.
Speaker Change: Key projects included optimizing our Workover fleet and in transitioning several rigs to 24 hour operations, which reduced downtime and improved cost efficiency.
Jason Pigott: Lease operating expenses substantially improved during the quarter coming in at $8 78 per Boe.
Jason Pigott: Our LOE guidance of $8 95 per Boe a.
Jason Pigott: A 9% improvement over our second quarter operating expense.
Speaker Change: We also implemented changes to our <unk> chemical processing and introduce chemical improvements across both the Midland and Delaware basins.
Jason Pigott: These costs are inclusive of higher LOE related to the point assets.
Jason Pigott: <unk> point.
Speaker Change: <unk> material cost and improving product quality.
Jason Pigott: <unk> would have been just over $8 70 per Boe.
Speaker Change: Throughout the quarter, we made strategic labor and staffing adjustments to better align with the long term based operational needs.
Jason Pigott: In the third quarter, we delivered on our planned reduction in operating costs through several targeted initiatives aimed at improving efficiency and optimizing resource use.
Speaker Change: We continue to use our cross base and scale to support a cost effective power strategy and have locked in a significant portion of our power cost through hedging to reduce volatility and derisk future cost pressure.
Jason Pigott: Key projects included optimizing our Workover fleet and in transitioning several rigs to 24 hour operations, which reduced downtime and improved cost efficiency.
Speaker Change: These combined efforts have delivered substantial cost savings enhancing our overall profitability and positioning us for sustained operational efficiency.
Jason Pigott: We also implemented changes to our <unk> chemical processing and introduce chemical improvements across both the Midland and Delaware basins, reducing material costs and improving product quality.
Speaker Change: Capital investments for Standalone vital energy were $236 million for the quarter within guidance of $215 million to $240 million. The early close of point resulted in $6 million of additional capital in the quarter, resulting in a total capital expenditure of $242 million.
Speaker Change: For the quarter the momentum from production outperformance and cost savings will carry into the fourth quarter we.
Speaker Change: We have increased the midpoint of our oil production guidance by 500 barrels of oil per day, and 3000 Boe per day of total production, while reiterating our previous capital guidance.
Speaker Change: Since April of 2023, we have completed six acquisitions and have fundamentally changed our Permian basin footprint growing our Delaware position to almost 90000 acres.
Speaker Change: The point acquisition materially enhanced the quality of our Delaware basin assets and complements our overall Permian position our portfolio today is more optionality and flexibility to shift capital to our highest return projects than ever before.
Speaker Change: The team has done an incredible job of adding inventory organically over the last couple of years through innovating on well designs like horseshoe shaped wells, reducing our cost structure and testing new formations.
Speaker Change: Through these efforts we have added over 300 locations, representing just under three five years of inventory.
Speaker Change: We have a large number of wells that sits just above our $50 breakeven cutoff.
Speaker Change: As little as a 5% improvement in the cost of these wells, which shipped 155 wells into the sub $50 breakeven range, extending our runway of sub $50 breakeven well to just over six years.
Speaker Change: Five times the number of wells, we had available to us in January of 2023.
Speaker Change: Our operations team has already reduced costs in the Delaware basin from $200 per foot to $1040 per foot since we entered the basin.
Speaker Change: 2025 expectation is $925 per foot with longer laterals and faster drill times next year.
Speaker Change: We have delivered at a rapid rate of change and we see plenty of opportunities to continue this trend.
Speaker Change: In addition to ads via cost cutting measures new formations like the Barnett could also linked in our inventory runway.
Speaker Change: Crane County, Barnett well reached a peak rate over 1000 barrels of oil per day. These initial results are very encouraging or.
Speaker Change: Our second Crane County, well is being completed right now and with a smaller more efficient completion design.
Speaker Change: The relative performance of these two wells will help triangulate the optimal design for the future.
Speaker Change: The rapid increase in inventory length and quality that we have delivered on over the last few years allows us to take a pause on M&A and put more emphasis on operational excellence instead of asset transitions.
Speaker Change: Going forward, we will use nearly all of our free cash flow for debt reduction, which will provide the greatest positive impact for our shareholders.
Speaker Change: We anticipate that at current commodity prices, we should be able to generate more than $400 million of adjusted free cash flow over the next five quarters or through the end of 2025.
Speaker Change: Our strong hedge position over this timeframe supports our cash flows and our forecast our lower debt and maintaining leverage.
Speaker Change: And looking forward.
Speaker Change: We expect to hold oil production flat with our original <unk> guidance range midpoint of 66500 barrels of oil per day with a capital range of around $900 million.
Speaker Change: Below consensus expectations of around $925 million for 2025.
Speaker Change: And as efficiencies continue to improve our intention is to maintain flat production with improving capital efficiency and we believe we can maintain this trend for the next five years.
Speaker Change: To conclude my comments for this morning, we beat expectations for the third quarter, we are raising guidance for the fourth quarter point is a great asset for us our operating efficiencies are progressing on all fronts, resulting in lower expected capital spending for 2025.
Speaker Change: Well quality and operational efficiencies should allow us to maintain production for the next five years with flat to decreasing capital cost.
Speaker Change: Operator, we are now ready for questions.
Speaker Change: And we will now begin the question and answer session.
Speaker Change: I would like to ask a question. Please press star one.
Speaker Change: One on your telephone keypad.
Speaker Change: Hey, Jonathan.
Speaker Change: He would like to withdraw your question Sandeep power one again.
Speaker Change: Our first question comes from Neal Dingmann.
Speaker Change: Louis Securities. Your line is now open.
Speaker Change: Good morning, guys. My first question just on your cost reductions on slide six.
Speaker Change: Sheldon D&C per foot targeted 95 mixed I'm just wondering how much of this improvement is driven by the lateral length efficiency, you mentioned and maybe could you give details about other upside within that world class experience and it sort of notable in that slide.
Speaker Change: Yeah Neal when we were really excited about all the progress we've made in the Delaware basin and in both basins really the team has not had a lot of swings at bat, but had been improving very quickly over time, but I'll turn it over to Katie to give you some more color on the future.
Speaker Change: Morning, Neil My statements that we're really excited about that 925%.
Katie: A lot of great work across both the operations team and our land team in getting a position put together that allows us to drill extended laterals next year.
Speaker Change: Jason side, we've already reduced costs in the basin by about 20% since we entered a little over a year ago and I think something that's really worth noting is that it.
Speaker Change: Really less than 15 wells that we've had the opportunity to take from the time line and we've been able to deliver that dollar per foot reduction with a small program. So far and excited about the opportunity going forward that 925% reflects the operating efficiencies that we've already implemented and are executing on today.
Speaker Change: Some additional work that we have line of sight on being able to implement over the next few months and then also the ability to drill extended laterals next year, that's helping to drive that cost down even further one of the areas that we're really pleased with progress looking at drilling cycle times. When we first started and most of that underwriting back at the end of 'twenty three.
Speaker Change: The expectations were $25 to 30 day wells from spud it regularly and we're consistently delivering much lower than that today posted a 20 days away and have even set a record at 60 days per well and that trend is really consistent across all phases. There just great work by the execution team until some opportunity in front of us.
Speaker Change: Okay, and then maybe just my follow ups I think its still so important than just the operations is looking at 25 regional operations and can you remind me maybe broadly.
Speaker Change: How much ops will be in Dell versus Midland than within the available most of that would be the point in.
Speaker Change: I assume so and if so what.
Speaker Change: What type of potential low benefit.
Speaker Change: Or sort of trajectory could be good.
Speaker Change: <unk> in that direction.
Speaker Change: The Delaware the great opportunity for us, particularly with the point that we're working to integrate today you can see on slide five early outperformance on on the point well. So really excited about what that can meet our portfolio, we're going to take capital if that asset almost immediately where existing activity there towards the end of this.
Speaker Change: Year, and certainly really heavily investing next year about 75% of our 2025 capital will be in the Delaware, 25% in the Midland.
Speaker Change: Of that 75% about half will be on that point and then half will be on other Delaware assets that we've put together over the last year or so I think the LNG question.
Speaker Change: One is an important one for us their draft, we had a great quarter I'm really pleased with 878 that we were able to report in Q3, we executed on a lot of the projects that we've talked about delivering in 2004 that helped to drive costs down across both basins and a lot of those opportunities are absolutely applicable to point, we left Q4 at 935 <unk>.
Speaker Change: So really just to reflect that we are in a period of asset integration and on boarding that is not our expected long term run rate a lot of the work that again, we have done in 24 in both Midland and Delaware, We can take the point and we are starting to do that already so I would expect to exit this year around 935 will be driving costs down.
Speaker Change: <unk> <unk> thousand 25, and expect by end of next year to be back into the high eight.
Speaker Change: Pleased with the opportunity to be investing great App that does a lot for us.
Speaker Change: Portfolio.
Louise: Great. Thanks Louise.
Speaker Change: Thanks, Kevin.
Speaker Change: Yes.
Speaker Change: Our next question comes from Scott Graham.
Speaker Change: Morgan.
Speaker Change: Your line is now open.
Speaker Change: Hey, guys. Thanks for taking my question.
Speaker Change: First you commented on the Barnett wells, a little bit earlier.
Speaker Change: You talk a little bit about the costs, there and how those will compete with your wells in the Delaware and Midland Basin.
Speaker Change: We're really excited about the Barnett zac.
Speaker Change: <unk> also very early I wouldn't take our costs that we for these wells to be.
Speaker Change: What we plan on for the future. We did these about is inefficient and hence you can drill four wells spaced across our footprint, both on our HCP and and the new acreage and when Youre drilling a well in a new formation and completing one well instead of a zipper frac like those costs arent as relative.
Speaker Change: And it's still early as I mentioned, where we pumped a very large frac with a lot of sand on the first one my message to the team was like we're going to see exactly how much. These wells can deliver and that can deliver a 1000 barrels a day or more.
Speaker Change: Next phase for US is test a smaller frac on it which should be much cheaper and see does that does the performance come down or not we're kind of doing the same thing that you saw a point, where they pump big Fracs then you step it down to a smaller frac. So I think it's too. It's just still too early these wells are new they haven't hit we don't.
Speaker Change: Have a good estimate on final decline rates. They are very different production profile than we see from other assets. These wells kind of get slowly better everyday versus our wolfcamp a wells they start off at high peaks in decline, but it's just it's real it's early but we're really excited about it for me when I think of all that what we've done in <unk>.
Speaker Change: This is the first time that we've gone out there and had an idea for a new concept in a zone that's been tested but not tested where we were.
Speaker Change: Acreage and have a really good initial production test on it we started this two years ago and now we're doing it in parallel with all of our acquisitions setting up the future that we have today, where we don't need M&A to add wells and we can add it organically. So we'll give you some more color in the future, but it's still really early.
Speaker Change: Early but results are very positive so far.
Speaker Change: Thanks, Jason and then my follow up I wanted to ask on the cave bear well or can't bear pad that you had in the slide deck.
Speaker Change: Can you give us some detail on how that pad was developed that no. You said it was drilled and completed by point, but with the vital design was that at four wells per section and if that kind of how you expect to develop those assets going forward and maybe comment on which zones.
Speaker Change: <unk> developed as well thanks.
Speaker Change: I think that because of the a 10 well pad that was being developed during the transition point drove these at a little bit tighter spacing in our long term plans with our firewall protection, it's across the a and B we did.
Speaker Change: Our completion design on all the wells. This is reflective of what our go forward completion look like but we expect the up space and plan to update on the remainder of the development going forward.
Speaker Change: Thanks, a lot.
Speaker Change: Our next question comes from Noah.
Speaker Change: With Bank of America. Your line is now open.
Speaker Change: Good morning, Paul.
Speaker Change: Just wanted to start off here on hedges, just given that the strip for oil in the second half of 'twenty five 'twenty six is below $70. How should we think about you all adding hedges it kind of as we move through this year and into next year.
Speaker Change: And we've been very consistent with our hedges, we again, we tend to be tended to be 75% hedged out into the future.
Speaker Change: I think the team has done a great job of lately here is displaying volatility and when we see it.
Speaker Change: We will add hedges in that $75 range, we added out of them. When we have this conflict in the middle East This flare up in the Middle East.
Speaker Change: Kind of where we are as we get closer to the end of next year, we may add those but for right. Now we're two thirds hedged for 25, I think we're 88% hedged or so for.
Speaker Change: And the rest of this year. So that's what we've been doing and we make 24 million barrels per year $5, a barrel with over $100 million impact to our free cash flow. So we want to give opportunity for oil prices to rise, but also protect cash flows as we get.
Speaker Change: Closer to year end, and where we are setting up a 26.
Speaker Change: That makes sense and then could you guys give any maybe additional color on what you all may be planning.
Speaker Change: To try to lower D&C costs.
Speaker Change: Just noting the impact of a 5% reduction and how that adds here inventory is there anything any operational details you guys could give us on maybe what you are looking to implement.
Speaker Change: We've already implemented really good work on cycle time, and that kind of spud to turn in line efficiency. That's been accomplished what is still left to do and the team.
Speaker Change: Constantly questioning and I would say learning from repeat experiences in the Delaware, What's still left to do is really working through every service Coffing story that were either at or better than market and frankly.
Speaker Change: Working through with our partners that we're implementing best practices, both in the Midland and the Delaware you noted that that continued 5% improvement when I think about the work that we've been able to deliver on in the.
Speaker Change: The year on a pretty small subset of while they had a lot of confidence in our ability to continue to drive costs down path at 925%.
Speaker Change: The 5% sensitivity that would show on inventory is really a question of when and not if and I think it is it really fair Gulfport over the next couple of years are excited to continue to be developing in the Delaware, we have a fair amount of capital allocation there next year there.
Speaker Change: There will be a good opportunity for us to continue to drive cost down.
Speaker Change: Sounds good guys. Thank you.
Speaker Change: Thank you.
Speaker Change: There are no further questions I'll hand, the call over to Mr. Brian <unk>.
Speaker Change: Well, thank you all for joining us today.
Speaker Change: We've discussed and you can hear we're very excited about this quarter and what the future has in store for us.
Speaker Change: Alright.
Speaker Change: Slow down the M&A for the future Youre going to see this operational excellent showing up every quarter, allowing us to I can take our free cash flow and pay down our debt, which is going to be a great return for our shareholders in the future. So we look forward to talking to you on our next call. Thank you.
Speaker Change: Conference has now concluded thank you for joining.
Speaker Change: Let's see.
Speaker Change: [music].
Speaker Change: [music].
Thanks for watching!
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Speaker Change: [music].
Speaker Change: Good day, ladies and gentlemen, and welcome to <unk> Energy Inc.
Speaker Change: Third quarter 2024 earnings conference call.
Speaker Change: My name's Jafco and I will be your operator for today.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: We will be conducting question and answer session after the financial and operations report.
Speaker Change: As a reminder, this conference is being recorded for replay purposes.
Speaker Change: It is now my pleasure to introduce Mr. Juan <unk>.
Speaker Change: Vice President Investor Relations you May proceed Sir.
Speaker Change: Thank you and good morning.
Speaker Change: Joining me today are adjacent target President and Chief Executive Officer.
Speaker Change: Brian Zimmerman.
Speaker Change: Jackie <unk>, Vice President and Chief Financial Officer.
Speaker Change: Katy Hill, Senior Vice President and Chief operating Officer as.
Speaker Change: As well as additional members of our management team.
Speaker Change: During today's call, we'll be making forward looking statements.
Speaker Change: These statements, including those describing our beliefs.
Speaker Change: <unk> expectations forecast and assumptions are intended to be covered by the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Speaker Change: Our actual results may differ from these forward looking statements for a variety of reasons many of which are beyond our control.
Speaker Change: In addition, we will be making reference to non-GAAP financial measures.
Speaker Change: Reconciliations to GAAP financial measures are included in the press release and presentation, we issued yesterday afternoon.
Speaker Change: Press release and presentation can be accessed on our website at www dot vital energy Dot com.
Speaker Change: I will now turn the call over to Jason Pigott, President and Chief Executive Officer.
Jason Pigott: Good morning, and thank you for joining us today.
Jason Pigott: We are delighted to announce that vital energy has delivered exceptional results in the third quarter, surpassing our expectations.
Jason Pigott: Our recent strategic acquisitions, particularly the transformative <unk> acquisition have propelled us to new Heights, we reached a new production record during the quarter and our cost reduction initiatives.
Jason Pigott: Significantly improving our cash flow.
Jason Pigott: Before we take your questions today I'll cover four key items.
Jason Pigott: First some quick highlights from the third quarter Importantly, recent results, we will increase our fourth quarter production outlook.
Jason Pigott: Next I'll provide additional information about our recent point acquisition. This asset has exceeded expectations early on and provides us with the luxury of adding activity and a higher productivity area in 2025.
Jason Pigott: Then I will discuss how our team is continuing to improve and extend our inventory.
Jason Pigott: Lastly, I will share some early thoughts on our 2025 outlook, while we won't share full details until early next year, we expect to build on the strengths we have reinforced with our third quarter results.
Jason Pigott: Now, let's talk about the third quarter, our financial results surpassed expectations driven by higher than expected production in non capital and a solid demonstration of our ability to lower operating costs overtime on acquired assets.
Jason Pigott: For the quarter <unk>, Standalone vital energy and appoint energy assets delivered at the high end of production expectations combining to produce about 59200 barrels of oil per day.
Jason Pigott: Our oil production guidance for the quarter was 55% to 58000 barrels of oil per day and did not include any volumes for point.
Jason Pigott: However, the team did a great job to close this transaction early giving us a boost for the quarter.
Jason Pigott: If it weren't for some weather related flooding in Howard County, which caused approximately 650 barrels of oil per day to be shut in or.
Jason Pigott: <unk> beat would have been almost 6% altogether.
Jason Pigott: Help demonstrate why we're so excited about the point transaction, we have a slide in today's deck with two charts showing point production, surpassing underwriting expectations for both base production and on a new 10, well package. Additionally, these wells were completed with an optimized frac design on wider spacing than the previous opera.
Jason Pigott: Later paving the way for us to develop this asset at a significantly reduced cost compared to the prior operator.
Jason Pigott: Lease operating expenses substantially improved during the quarter coming in at $8 78 per Boe.
Jason Pigott: Our LOE guidance of $8 95 per Boe a.
Jason Pigott: A 9% improvement over our second quarter operating expense.
Jason Pigott: These costs are inclusive of higher LOE related to the point assets.
Jason Pigott: Including point.
Jason Pigott: <unk> would have been just over $8 70 per Boe.
Jason Pigott: In the third quarter, we delivered on our planned reduction in operating costs through several targeted initiatives aimed at improving efficiency and optimizing resource use.
Jason Pigott: Key projects included optimizing our Workover fleet and in transitioning several rigs to 24 hour operations, which reduced downtime and improved cost efficiency.
Jason Pigott: We also implemented changes to our <unk> chemical processing and introduce chemical improvements across both the Midland and Delaware basins, reducing material costs and improving product quality.
Jason Pigott: Throughout the quarter, we made strategic labor and staffing adjustments to better align with the long term based operational needs.
Jason Pigott: We continue to use our cross base and scale to support a cost effective power strategy and have locked in a significant portion of our power cost through hedging to reduce volatility and derisk future cost pressure.
Jason Pigott: These combined efforts have delivered substantial cost savings enhancing our overall profitability and positioning us for sustained operational efficiency.
Jason Pigott: Capital investments for Standalone vital energy were $236 million for the quarter within guidance of $215 million to $240 million. The early close of point resulted in $6 million of additional capital in the quarter, resulting in a total capital expenditure of 242 million.
Jason Pigott: For the quarter the momentum from production outperformance and cost savings will carry into the fourth quarter.
Jason Pigott: We have increased the midpoint of our oil production guidance by 500 barrels of oil per day, and 3000 Boe per day of total production, while reiterating our previous capital guidance.
Jason Pigott: Since April of 2023, we have completed six acquisitions and have fundamentally changed our Permian basin footprint growing our Delaware position to almost 90000 acres.
Jason Pigott: The point acquisition materially enhanced the quality of our Delaware basin assets and complements our overall Permian position our portfolio today is more optionality and flexibility to shift capital to our highest return projects than ever before.
Jason Pigott: The team has done an incredible job of adding inventory organically over the last couple of years through innovating on well designs like a horseshoe shaped wells, reducing our cost structure and testing new formations through.