Q4 2024 Vitesse Energy Inc Earnings Call
We are in a listen only mode.
<unk> and answer session will follow the formal presentation. Please note. This conference is being recorded.
Speaker Change: I will now turn the conference over to the director of Investor Relations and business development at <unk> band Messier. Thank you you may begin.
Speaker Change: Good morning, and thank you for joining today, we will be discussing our 2024 results and the expectations for 2025, including the impact of the acquisition of <unk> Energy Corp, which closed last Friday.
Speaker Change: Our 10-K and earnings were released yesterday after market closed and an updated investor presentation can be found under the test's website I'm joined here. This.
Speaker Change: Morning by Bob Garrett, <unk>, Chairman and CEO, our President, Brian <unk>, and our CFO Jimmy Henderson.
Speaker Change: Before we begin please be reminded that this call may contain estimates projections and other forward looking statements with the meaning within the meaning of the federal Securities laws forward looking statements are subject to several risks and uncertainties many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially.
Speaker Change: I will now turn the conference over to the director of investor relations and business development at Vitesse, Ben Messier. Thank you, you may begin.
Speaker Change: From our current expectations. Please review our earnings release and risk factors discussed in our filings with the SEC for additional information. In addition, today's discussion may reference 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.
Speaker Change: Good morning, and thank you for joining. Today, we will be discussing our 2024 results in the expectations for 2025, including the impact of the acquisition of Lucero Energy Corp, which closed last Friday.
Speaker Change: Our 10K in earnings were released yesterday after market closed and an updated investor presentation can be found onto the test website. I'm joined here this morning by Bob Gerrity, Vitesse's Chairman and CEO , our President Brian Cree and our CFO , Jimmy Henderson.
<unk> earnings release, now I will turn the call over to <unk>, Chairman and CEO Bob guarantee.
Thanks, Ben Good morning, everyone and thank you for participating in todays earnings call.
Speaker Change: Before we begin, please be reminded that this call may contain estimates projections in other forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to several risks and uncertainties.
Speaker Change: In 2024, we continued to deliver on our mandate to return capital to shareholders.
It was a good year.
We increased our dividend in June and have now paid $4 seven <unk> of dividends per share since our spin off in January 2023.
Speaker Change: Many of which are beyond our control. These risks and uncertainties can cause actual results to different materially from our current expectations. Please review our earnings release and risk factors discussed in our filings with the SEC. Let's see.
While converting our undeveloped asset base to producing wells in sourcing highly economic deals at the same time, maintaining a conservative balance sheet.
Speaker Change: for additional information. In addition, today's discussion may reference non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable gap measure, please reference our 10K and earnings release.
Speaker Change: Last week, we closed the acquisition of loose Cerro Energy Corp in a stock for stock transaction.
Speaker Change: Now we'll turn the call over to Vitesse's Chairman and CEO Bob Gerrity.
Speaker Change: We expect this transaction to be immediately accretive.
Bob Garrity: Thanks, Ben. Good morning, everyone, and thank you for participating in today's earnings call.
Speaker Change: To key financial metrics bolstering the dividend and further strengthening our balance sheet.
Bob Garrity: In 2024, we continued to deliver on our mandate to return capital to shareholders.
Speaker Change: With Lucerne now closed our board declared a quarterly dividend up 56 <unk>.
It was a good year.
Bob Garrity: We increased our dividend in June and have now paid $4.07 of dividends per share since our spin-off in January 2023.
Speaker Change: Per common share to be paid on March 31.
That's $2 25 per share on an annualized basis. This represents a 7% increase to the dividend sequentially.
Bob Garrity: while converting our undeveloped asset base to producing wells and sourcing highly economic deals at the same time maintaining a conservative balance sheet.
Our board of directors has increased to nine members with Gary Reeves and Bruce churn off joining the tests board from Lucerne.
Bob Garrity: Last week we closed the acquisition of Lucero Energy Corp in a stock for stock transaction.
Speaker Change: Their deep knowledge and experience will complement our board nicely.
Bob Garrity: We expect this transaction to be immediately accretive to key financial metrics, bolstering
I want to thank all.
Speaker Change: All the team members, who have worked so diligently on this trends transaction, both from Cerro and Vitesse. The hard work on both size, what's key to its success for.
Thank you.
Bob Garrity: With Lucero now closed, our board declared a quarterly dividend of 56.25 cents per common share to be paid on March 31st.
Speaker Change: For 2025 or.
Speaker Change: Our strategy is consistent.
Speaker Change: We will continue to return capital to shareholders via the fixed dividend and allocate capital based on our returns.
Bob Garrity: That's $2.25 per share on an annualized basis. This represents a 7% increase to the dividend sequentially.
Speaker Change: Just hierarchy.
Speaker Change: We are well positioned to pursue additional acquisitions.
Speaker Change: I will now hand, the call over to our President Brian Cree to discuss our operations.
Bob Garrity: Our Board of Directors has increased to nine members with Gary Reeves and Bruce Turnoff, joining the Vitesse Board from Lucero.
Brian Cree: Good morning, everyone and thanks, Bob.
Brian Cree: Production for the year was just over 13000 barrels of oil equivalent per day, we expect production for the first quarter to be between 14000 15000 barrels of oil equivalent per day with a significant increase in the second quarter as Luke Sarah was closed in March.
Bob Garrity: I want to thank all the team members who have worked so diligently on this transaction, both from Lucero and Vitesse. The hard work on both sides was key to its success.
Brian Cree: As of December 31, 2024, we had $17 seven net wells in our development pipeline, including $9 seven net wells that were either drilling or completing and another eight net locations that had been permitted for development.
for 2025. Our strategy is consistent.
Bob Garrity: We will continue to return capital to shareholders via the fixed dividend and allocate capital based on our returns based hierarchy.
Brian Cree: <unk> assets include $1 nine net wells that are waiting on completion and another five three net locations that have been permitted for development. We currently plan to begin completion activities on the $1 nine net wells later this spring.
We are well positioned to pursue additional acquisitions.
Speaker Change: I will now hand the call over to our president, Brian Cree, to discuss our operations.
Good morning, everyone, and thanks, Bob.
At year end prior to incorporating loose Cerro total proved reserves for tests were $40 3 million barrels of oil equivalent.
Speaker Change: Production for the Year was just over 13,000 barrels of oil equivalent per day. We expect production for the first quarter to be between 14,000 and 15,000 barrels of oil equivalent per day with a significant increase in the second quarter, as Lucera was closed in March.
Brian Cree: Proved developed reserves were $27 2 million Boe.
Brian Cree: While proved undeveloped reserves increased 8% to 13 million barrels of oil equivalent.
Speaker Change: As of December 31st, 2024, we had 17.7 net wells in our development pipeline, including 9.7 net wells that were either drilling or completing, and another eight net locations that had been permitted for development.
Brian Cree: Proved undeveloped reserves are limited to those locations that are reasonably certain to be developed over the next five years. However, we believe our acreage also includes extensive undeveloped drilling and completion locations not clear not currently classified as proved.
Speaker Change: The Lucero assets include 1.9 net wells that are waiting on completion and another 5.3 net locations that have been permitted for development. We currently plan to begin completion activities on the 1.9 net wells later this spring.
Brian Cree: The test is total proved reserves at year end had a PV 10 value of $586 6 million with 78% being proved developed.
Brian Cree: Year end 2020 for reserves were impacted by the reduction in the net realized oil and natural gas prices used in accordance with SEC rules net realized prices decreased by $4 nine a barrel for oil and 51 per Mcf for natural gas between 2023.
Speaker Change: Proved developed reserves were 27.2 million BOE, while proved undeveloped reserves increased 8% to 13 million barrels of oil equivalent.
Brian Cree: In 2024.
Including our internal estimates of loose Cerro reserves using the same pricing the pro forma PV 10 value would've been just over $800 million.
Speaker Change: Proved undeveloped reserves are limited to those locations that are reasonably certain to be developed over the next five years. However, we believe our acreage also includes extensive undeveloped drilling and completion locations not currently classified as proved.
Brian Cree: To mitigate the impact of these commodity price changes for 2025, we have approximately 53% of our oil production hedged at a weighted average price of $71 16 per barrel at the midpoint of our guidance.
Speaker Change: Vitesse's total proof reserves at year end had a PV-10 value of 586.6 million with 78% being
Brian Cree: For the first time since going public we added natural gas hedges to take advantage of the increase in natural gas prices in the call SKU present in Henry hub Costless collars.
Speaker Change: Year-end 2024 reserves were impacted by the reduction in the net-realized oil and natural gas prices used in accordance with SEC rules.
Speaker Change: Net-realized prices decreased by $4.09 a barrel for oil, and 51 cents per MCF for natural gas between 2023 and 2024.
Brian Cree: We have 15% of our natural gas production now hedged at a weighted average floor of $3 73 and.
Brian Cree: And a weighted average ceiling of $4 88 per.
Speaker Change: Including our internal estimates of Lucero reserves using the same pricing, the pro form of PV-10 value would have been just over $800 million.
<unk> Btu.
Brian Cree: Again based on the.
Brian Cree: The midpoint of our guidance.
Brian Cree: For the same volumes, we swapped a basis differential to increase the effectiveness of our natural gas hedge.
Speaker Change: To mitigate the impact of these commodity price changes for 2025, we have approximately 53% of our oil production hedged at a weighted average price of $71.16 per barrel at the midpoint of our guidance.
Brian Cree: In addition to these volumes we have over 2500 barrels per day, and 8000, MN Btu per day of our 2026 oil and natural gas production hedged at roughly $67 per barrel and through a cost costless collar of $3 71.
Speaker Change: For the first time since going public, we added natural gas hedges to take advantage of the increase in natural gas prices and the call skew present in Henry Hub costless
Brian Cree: By $4 47 per <unk> Btu.
Speaker Change: Thanks for your time now I'll turn the call over to our CFO Jimmy Henderson.
Speaker Change: We have 15% of our natural gas production now hedged at a weighted average floor of $3.73 and a weighted average ceiling of $4.88 for MMBTU.
Jimmy Henderson: Good morning, everyone. Thanks, Brian.
Jimmy Henderson: I will provide a quick review of our financial results for the fourth quarter and full year of 2024 as well as an update on our financial status. Please.
Please refer to our earnings release, and 10-K, which we filed last night for any further details.
Jimmy Henderson: Our production for the <unk>.
Jimmy Henderson: For the quarter was just under 13000 Boe per day with a 68% oil cut.
Speaker Change: In addition to these volumes, we have over 2,500 barrels per day and 8,000 MMBTU per day of our 2026 oil and natural gas production hedge at roughly $67 per barrel and through a
Jimmy Henderson: This brought our total 2024 production to 13003 Boe per day with a 69% oil cut.
These amounts were just within guidance as some of our larger working interest wells were brought online during the fourth quarter, but shifted into early 2025.
of $3.71 by $4.47 per MMBTU.
Jimmy Henderson: For the year adjusted EBITDA was $156 8 million.
Speaker Change: Thanks for your time. Now I'll turn the call over to our CFO , Jimmy Henderson.
Jimmy Henderson: And adjusted net income was $35 7 million.
Good morning, everyone. Thanks, Brian .
Speaker Change: I will provide a quick review of our financial results for the fourth quarter and full year of 2024 as well as an update on our financial status.
Jimmy Henderson: GAAP net income was $21 1 million and you can see the reconciliation of that in our press release that we filed last night.
Speaker Change: Please refer to our earnings release in 10K, which we filed last night for any further details.
Cash Capex and acquisition costs combined for the year, we're at the midpoint of our revised guidance of $115 2 million.
Jimmy Henderson: These costs were funded within operating cash flows as well as draws on our credit facility.
Jimmy Henderson: At the end of 2024, we had total debt of $117 million.
Speaker Change: These amounts were just within guidance as some of our larger working interest wells were not brought online during the fourth quarter, but shifted into early 2025.
Jimmy Henderson: With net debt to adjusted full year EBITDA of just <unk> seven times.
Jimmy Henderson: In connection with the closing of Lucerne.
Jimmy Henderson: We increased our borrowing base to $315 million.
Speaker Change: For the year, Adjusted Evidol was 156.8 million and adjusted net income was 35.7 million.
Jimmy Henderson: With the aggregate elected commitments.
Jimmy Henderson: <unk> increased to $250 million.
Jimmy Henderson: Thanks, as always to all or all the banks and our syndicate for their continued support.
Speaker Change: GapNet income was 21.1 million. You can see the reconciliation of that in our press release that we followed last night.
Jimmy Henderson: So with Cerro closing further strengthen our balance sheet as they had no borrowings and held a net cash position of approximately $50 million at the close to.
Speaker Change: Cash CapEx and acquisition costs combined for the year were at the midpoint of our revised guidance of 115.2 million.
Jimmy Henderson: This transaction also has the benefits of increasing our public float while maintaining meaningful insider holdings.
Speaker Change: These costs were funded within operating cash flows as well as draws on our credit facility.
Speaker Change: At the end of 2024, we had total debt of 117 million with net debt to adjusted full-year even of just 0.7 times.
Jimmy Henderson: The tests insiders now on more than 25% of the company.
Jimmy Henderson: We are also providing guidance for 2025 on.
Speaker Change: In connection with the closing of Lucero, we increased our boiling base to 315 million with the
Jimmy Henderson: On a two stream basis, we anticipate production in a range of 17000 to 18000 Boe per day for the full year.
Jimmy Henderson: An increase of approximately 35% at the midpoint versus 2024 levels.
Speaker Change: Thanks, as always, to all the banks and our syndicate for their continued support.
Jimmy Henderson: We anticipate an oil cut of 66% to 70%.
Speaker Change: It was serial closing further sprint in our balance sheet as they had no borrowings and held a net cash position of approximately $50 million at the close.
Jimmy Henderson: With the <unk> transaction closed in March production for the first quarter as expected range, 14% to 15000 Boe per day.
Speaker Change: This transaction also had the benefits of increasing our public float while maintaining meaningful insider holdings.
Jimmy Henderson: Cash capex for the year as anticipated at 130 to 150 million weighted more towards the first half of the year as the larger working interest wells are brought online.
Jimmy Henderson: This includes the completion of two drilled uncompleted wells that Brian mentioned earlier and approximately $20 million of expected acquisitions during the year.
We are also providing guidance for 2025.
Speaker Change: On a two-stream basis, we anticipate production the range of 17,000 to 18,000 B.O.E. per day for the full year, in increase of approximately 35% at the midpoint versus 2024 levels.
Jimmy Henderson: Remember that production and Capex can be lumpy during the year and they were not held to a fixed capital budget, but we'll always allocate capital to the highest rate of return projects.
We anticipate an oil cut of 66 to 70 percent.
Jimmy Henderson: We are very excited to have <unk> as part of the test team.
Speaker Change: with the Lucero transaction closed in March. Production for the first quarter is expected to range 14 to 15,000 B.O.E per day.
Jimmy Henderson: Or put it into the closing of the transaction was readily apparent and we look forward to seeing the value of this hard work will produce as we move forward together.
Speaker Change: And Cash Cap, thanks for the year, is anticipated at 130 to 150 million, waited more towards the first half of the year as the larger working interest wells are brought online.
Speaker Change: With that let me turn the call over to the operator for Q&A.
Jimmy Henderson: Thank you.
Speaker Change: At this time, we will conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: This includes a completion of two drilled, uncompleted wells that Brian mentioned earlier, and approximately 20 million of expected acquisitions during the year.
A confirmation tone will indicate that your line is in the question queue. You can 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 your handset before pressing the star keys.
Speaker Change: And our first question comes from Jeff Gramm with Alliance Global Partners. Please state your question.
Jeff Gramm: Morning, guys.
Speaker Change: We are very excited to have Lucero as part of the good test team. The effort put into the closing of the transaction was readily apparent and we look forward to seeing the value this hard work will produce as we move forward together.
Speaker Change: Hey, Bob.
Jeff Gramm: Was curious Bob.
Jeff Gramm: To get your perspective.
Jeff Gramm: On the acquisition side of the World or ground game, obviously, you guys get a nice chunk of cash from Lucero and Delever, the balance sheet and free up some liquidity.
Speaker Change: With that, let me turn the call over to the operator for Q&A.
Jeff Gramm: Midst.
Jeff Gramm: Some.
Jeff Gramm: Volatile oil markets that I imagine could be lucrative from an acquisition standpoint. So does this does this maybe lead you guys to perhaps be a bit more aggressive on the ground game acquisition front, given those dynamics or how might you.
Thank you.
Speaker Change: And at this time, we'll conduct our question and answer session. If you would like to ask a question, please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate that your line is in the question queue. You can press star two if you would like to remove your question from the queue. For Bortism, using speaker equipment it may be necessary to pick up your handset before pressing the star keys.
Think about that strategy in the context of kind of the improvements on the balance sheet side.
Yes, Hi, Jeff and thanks for the question.
Jeff Gramm: When we look at the screen everyday of the oil price when we see it starting with a six.
Speaker Change: And our first question comes from Jeff Grampp with Alliance Global Partners. Please state your question.
Jeff Gramm: That is very advantageous for us.
For more information, visit www.FEMA.gov
One of your guests.
In the acquisition front.
Jeff Gramm: Oil in the <unk> allows our current asset to perform very well.
Jeff Gramm: And.
I will tell you we have not seen this much deal flow.
Jeff Gramm: And something that's a little chunkier since we've been public. So again, we'll be very methodical we waited a couple of years for Lucerne.
Jeff Gramm: But I'm, telling you that.
Speaker Change: Great question.
Jeff Gramm: Oil in the <unk> is a sweet spot for us Jeff.
Speaker Change: Great I appreciate those details and maybe switching from offense to defense.
Speaker Change: Curious to get updated on kind of the dividend philosophy, obviously, we have the <unk>.
Speaker Change: Kris with the transaction here.
Speaker Change: And you guys have some some nice hedges for the next couple of years, but to the extent.
Speaker Change: You use your balance sheet to maintain that dividend.
Speaker Change: That's something you guys are comfortable with and kind of the near medium term.
Speaker Change: Provided leverage is still low or like what are the toggles or variables that you guys are kind of looking for that we should look for that.
Speaker Change: That might necessitate.
Speaker Change: Revisiting the dividend plan if at any point, thanks, Yes, no. Thanks shifts.
Speaker Change: Our product is our dividend and everything we do is focused on supporting that dividend and growing that dividend. So we are risk managers, we do have hedges, but the biggest risk management is how economically we spend our capital.
Speaker Change: No.
Speaker Change: And you guys have some some nice hedges for the next couple of years, but to the extent.
Speaker Change: You need to remember everyone needs to remember when the price of oil goes down.
Speaker Change: You use your balance sheet to maintain that dividend.
Speaker Change: Our drilling and completion costs go down.
Speaker Change: So it's a dynamic process.
Speaker Change: That's something you guys are comfortable with and kind of the near medium term provide.
Speaker Change: It's almost impossible to figure out what a quote unquote breakeven and so as the price of oil goes down our Capex will go down and that is beneficial to our coverage ratio. So in a band of 50.
Speaker Change: Provided leverage is still low or like what are the toggles or variables that you guys are kind of looking for that we should look for.
Speaker Change: That might necessitate.
Speaker Change: Revisiting the dividend plan if at any point, thanks, Yes, no. Thanks shifts.
Speaker Change: <unk> $55 to $85 oil.
Speaker Change: Our product is our dividend and everything we do is focused on supporting that dividend and growing that dividend. So we are risk managers, we do have hedges, but the biggest risk management.
Speaker Change: Our dividend is.
Speaker Change: Is solid.
Speaker Change: Alright, Thats really helpful. Thank you for the time.
Jeff Gramm: Thanks, Jeff.
Speaker Change: Your next question comes from Bobby Brooks with Northland Capital markets. Please state your question.
Speaker Change: Is how economically we spend our capital so.
Bobby Brooks: Hey, good morning, guys. Thank you for taking my question I'll kind of piggyback on Jeff's question just point on.
Speaker Change: You need to remember everyone needs to remember when the price of oil goes down.
Speaker Change: Our drilling and completion costs go down.
Bobby Brooks: M&A outlook, but so you guys mentioned in the press release.
Speaker Change: So it's a dynamic process.
Bobby Brooks: You guys are positioned operationally and financially to pursue additional acquisitions and then the Capex guide bakes in $20 million of incremental acquisitions. So I was curious on one what does that $20 million consists of and second as you think about your acquisition strategy going forward.
Speaker Change: It's almost impossible to figure out what a quote unquote breakeven is.
Speaker Change: So as the price of oil goes down our Capex will go down and that is beneficial to our coverage ratio.
Speaker Change: In a band of <unk>.
Speaker Change: 55% to $85 oil our dividend is.
Bobby Brooks: Or is it kind of broadening in terms of the size and maybe region of what you guys were looking at the past or since you came public.
Speaker Change: Is solid.
Speaker Change: Alright, Thats really helpful. Thank you for the time.
Speaker Change: Yes, so the answer to that the second question is absolutely. So the ability to operate Jimmy Brian and I were of operators in the past the ability to operate gives us acquisition power that we can look at our lens is is broader.
Jeff Gramp: Thanks, Jeff.
Speaker Change: Your next question comes from Bobby Brooks with Northland Capital markets. Please state your question.
Bobby Brooks: Hey, good morning, guys. Thank you for taking my question I'll kind of piggyback on Jeff's question just point on the <unk>.
Bobby Brooks: M&A outlook, but so you guys mentioned in the press release that you guys are positioned operationally and financially to pursue additional acquisitions and then the Capex guide bakes in $20 million of incremental acquisitions. So I was curious on one what does that $20 million consist of in second.
Bobby Brooks: So we are looking for alpha where we can find it.
Bobby Brooks: Look with the gas strip, where the gas where it is today.
Bobby Brooks: We're looking at gas assets, where we have.
Bobby Brooks: Focused on that in the past.
So.
Bobby Brooks: As you think about your acquisition strategy going forward is it kind of broadening in terms of the size and maybe region of what you guys were looking at the past or since you came public.
Bobby Brooks: We are looking.
Bobby Brooks: We've always looked outside the basin.
Speaker Change: But obviously the Bakken is our first love and we still think there is acquisition running room in the Bakken, Brian you want to comment more on that.
Speaker Change: Yeah. So the answer to that the second question is absolutely. So the ability to operate Jimmy Brian <unk> operators in the past the ability to operate gives us acquisition power that we can look at our our lens is is broader.
Bobby Brooks: And I'll, just kind of touch on the fact that.
Speaker Change: You guys have seen us.
Speaker Change: Do quite a few acquisitions over the over the past few years, we're constantly looking at that ground game, we're looking at opportunities.
Speaker Change: Bob talked about oil prices being in the sixties.
We are seeing lots of deals we'll continue to evaluate all of these deals for US. There was a question earlier about whether or not we'd be more aggressive with the cash on our balance sheet. I don't think we ever really get aggressive we have a rate of return hierarchy that we talked about earlier, we're going to stick with that and as opportunities present themselves we will.
Bobby Brooks: So we are looking for alpha where we can find it.
Bobby Brooks: <unk> looked at with the gas strip, where the gas where it is today.
Bobby Brooks: We are looking at gas assets, where we have.
Bobby Brooks: Focused on that in the past.
Speaker Change: We'll definitely take advantage of those but certainly as we as we think about our.
Bobby Brooks: So.
Bobby Brooks: We are looking.
We've always looked outside the basin.
Speaker Change: Our guidance and our budgets for the year, we do build in those those acquisitions and they can take many different forms I mean, we may find something thats more of a Pvp type acquisition. We may find near term development. We're looking at a variety of things right now and we're pretty highly confident that we'll get.
Bobby Brooks: But obviously the Bakken is our first love and we still think there's acquisition running room in the Bakken, Brian you want to comment more on that.
Brian Cree: Just kind of touch on the fact that you guys have seen us.
Brian Cree: Do quite a few acquisitions over the over the past few years, we're constantly looking at that ground game, we're looking at opportunities.
Speaker Change: Some of those closed during the course of the year, we do not have a capex budget.
Brian Cree: Bob talked about oil prices being in the sixties.
Speaker Change: We guide simply because of what our expectations can be but with our capital structure, we will.
Brian Cree: We're seeing lots of deals we'll continue to evaluate all of these deals for US there was a question earlier about whether or not we'd be more aggressive with the cash on our balance sheet. I don't think we ever really get aggressive we have a rate of return hierarchy that we talked about earlier, we're going to stick with that and as opportunities present themselves.
Speaker Change: Seek hyatt highly economic things when we can find them. So Jimmy do you want to add anything okay. So if you guys covered a good.
Speaker Change: Yes, no that does great color I appreciate it.
Brian Cree: We will definitely take advantage of those but certainly as we as we think about our <unk>.
Speaker Change: Just wanted to kind of dove.
Circle back on the $20 million of that and I know you said you give the Capex guide.
Guidance and our budgets for the year, we do build in those those acquisitions and they they can take many different forms I mean, we may find something that's more of a PDP type acquisition. We may find near term development. We're looking at a variety of things right now and we're pretty highly confident that we will get some.
Speaker Change: Four four expectation purposes, but.
Speaker Change: Any any color that you could give on like what the expectation is of that $20 million is that just more ground game smaller acquisition suffers something a bit more or is it something maybe a bit more chunky like you mentioned.
Brian Cree: Some of those closed during the course of the year, we do not have a capex budget.
Rob: Yeah, Rob I think that.
Speaker Change: Brian covered it pretty well that can take.
Brian Cree: We guide simply because of what our expectations can be but with our capital structure, we will.
Speaker Change: Different forms.
Rob: Given where we are now.
Speaker Change: We want to put a number out there what our.
Speaker Change: Seek hyatt highly economic things when we can find them. So Jimmy do you want to add anything okay. So if you guys covered.
Rob: Patients are general line of sight to thing.
Rob: Things that are available, but it can take the form of several different.
Brian Cree: Good.
Rob: Styles with acquisitions.
Speaker Change: Yeah, no that does great color I appreciate it.
Rob: But we we look at everything from Chunkier deals that could be the entire 20 million to several smaller deals that total up to that so I hate to.
Speaker Change: Just wanted to kind of circle back on the $20 million of that and I know you said you gave the Capex guide.
Speaker Change: Got it.
Speaker Change: For for expectation purposes, but.
Rob: Put you off a little bit, but it's just a placeholder for things that we think that we can pull down during the year.
Speaker Change: Any any color that you could give on like what the expectation is of that $20 million is that just more ground game smaller acquisition stuff or is it something a bit more or is it something for maybe a bit more chunky like you mentioned.
Speaker Change: No fair enough that makes sense and then.
Speaker Change: As you mentioned you guys are looking at things outside of the Bakken right and I wanted to kind of maybe tied into like leukemia, I'm going to say the strong your system lumi meals.
Ravi: Yes, Ravi I think.
Speaker Change: Brian covered it pretty well that can take.
Speaker Change: And kind of how you can leverage because my understanding is its really kind of focused on while data within the Bakken or is it a bit more broad than that and kind of the advantages that you get using that for deals within the Bakken is that something that you can leverage as you look outside of it.
Speaker Change: Maybe a different forms.
Even where we are now that we want to put a number out there what are they.
Speaker Change: Our expectations are general line of sight to things that are available but again.
Speaker Change: Take the form of several different.
Speaker Change: Miles of acquisitions.
Bobby Brooks: Absolutely Bobby we have.
Speaker Change: We look at everything from Chunkier deals that could be the entire 20 million to several smaller deals that total up to that so I hate to.
Speaker Change: Luminous and thanks for mentioning it we take great pride in that and it expands every day.
Bobby Brooks: We scraped.
Speaker Change: Put you off a little bit, but it's just a placeholder for things that we think that we can pull down during the year.
Bobby Brooks: Unbelievable amounts of data so we've got data for the.
Bobby Brooks: The haynesville for the mid con for the Permian.
No fair enough that makes sense and then as.
Bobby Brooks: For certainly for the DJ and the powder.
Speaker Change: As you mentioned you guys are well.
Speaker Change: Looking at things outside of the Bakken right and I wanted to kind of maybe tied into like looming me I'm going to say this wrong your system lumi meals.
Bobby Brooks: Ed.
Bobby Brooks: <unk>.
Bobby Brooks: Very powerful engine, so we can analyze.
Speaker Change: It kind of how you can leverage because my understanding is thats really kind of focused on while data within the Bakken or is it a bit more broad than that and kind of the advantages that you get using that for deals within the Bakken is that something that you can leverage as you would look outside of it.
Bobby Brooks: A deal that has thousands of wells.
Bobby Brooks: Literally within days, so we lean on aluminum a lot and it's very critical that that becomes a more powerful.
Bobby Brooks: Tool in the future.
Speaker Change: Fair enough and then.
Speaker Change: Absolutely, but we have it's luminous and thanks for mentioning yet we take great pride in that and it expands every day.
Speaker Change: The last one for me as you guys you guys will make it very clear that youll allocate capital to the highest return assets.
Speaker Change: So keeping that in mind does the added loose CRO operated acreage bump kind.
Speaker Change: We scraped.
Speaker Change: Unbelievable amounts of data so we've got data for the.
Speaker Change: Kind of bumped down some of the non op inventory just trying to get a sense of how the added Lucy CRO.
Speaker Change: The haynesville for the mid con for the Permian.
Speaker Change: For certainly for the DJ and the powder.
Speaker Change: Acreage changes your perspective on how you want to work through your inventory over the next call. It two three years.
Speaker Change: It's a very powerful engine. So we can analyze.
Speaker Change: Yes, Brian, Yes, I think that.
Speaker Change: It just gives us the added flexibility right. We have we now have an operated asset that competes against our non op. So we said it many times, we don't have a budget will continue to invest capital, where we think it's best rewarded and.
Speaker Change: A deal that has thousands of wells.
Speaker Change: <unk> literally within days, so we lean on luminous a lot and it's very critical that that becomes a more powerful.
Speaker Change: <unk> in the future.
Speaker Change: But having that operated asset.
Speaker Change: Fair enough and then.
Speaker Change: They do have several.
Speaker Change: The last one for me is you guys make it very clear that youll allocate capital to the highest return assets.
Speaker Change: Very strong drilling locations that are now in our inventory that we can access for 2025, our intention at this point is only to complete the two drilled but unbilled Kate at the.
Speaker Change: So keeping that in mind does the added Lucy CRO operated acreage bump kind.
Speaker Change: Kind of bumped down some of the non op inventory just trying to get a sense of how the AD Lucy CRO.
Speaker Change: <unk> drilled but uncompleted.
Speaker Change: Wells are at this point, but we're going to continue to evaluate those drilling opportunities right now they're on are that are kind of on our budget for 2026, but we'll continue to evaluate it as we get other non operated opportunities in the door.
Speaker Change: Acreage changes your perspective on how you want to work through your inventory over the next call. It two three years.
Brian Cree: Yes, Brian I.
I think that it just gives us the added flexibility right. We have we now have an operated asset.
Speaker Change: Fair enough.
Speaker Change: Thank you guys for taking the questions and congrats on the great year.
Brian Cree: It competes against our non op. So we said it many times, we don't have a budget will continue to invest capital, where we think it's best rewarded and.
Barbara: Thanks Barbara.
Your next question comes from John White with Roth Capital Partners. Please state your question.
Brian Cree: But having that operated asset.
Good morning, and congratulations on closing the deal and your strong 2024 results.
Brian Cree: They do have several you know very strong drilling locations that are now in our inventory that we can access for 2025, our intention at this point is only two to complete the two drilled but unbilled Kate at the <unk>.
Yeah.
Thank you Chuck.
Barbara: Yes.
Barbara: The Lucerne properties what percentage are operated.
Barbara: Okay.
Brian Cree: <unk> drilled but uncompleted.
Barbara: Basically 100% of the assets. They do have some very very minor non operated working interest, but the vast majority of their interests are all operated properties.
Our wells are at this point, but we're going to continue to evaluate those drilling opportunities right. Now. They are on are that are kind of on our budget for 2026, but we'll continue to evaluate it as we get other non operated opportunities in the door.
Barbara: Okay and <unk>.
Barbara: Reading the operations update it looks like the sterno working interest is.
Speaker Change: Fair enough. Thanks, Thank you guys for taking the questions and congrats on the great year.
Barbara: Much higher than legacy.
Thanks, Bobby.
Barbara: The test in acreage.
Speaker Change: Your next question comes from John White with Roth Capital Partners. Please state your question.
Barbara: It is John remember that our average working interest in our 7000 properties is roughly 3%, but when you bring in the 60 to 65, producing wells that Lucerne has an interest in their average working interest is going to be closer to 75% to 80% in those properties.
John White: Good morning, and congratulations on closing the deal and your strong 2024 results.
Speaker Change: Yeah.
Chad: Thank you Chad.
Speaker Change: Yeah.
Speaker Change: The Lucerne properties what percentage are operated.
Speaker Change: Okay, So I read that right.
Barbara: You did.
Alright, well.
Speaker Change: Basically 100% of the assets. They do have some very very minor non operated working interest, but the vast majority of their interests are all operated properties.
Barbara: Thanks for the answers and I'll pass it back to the operator.
John: Thank you John.
Barbara: Yes.
Thank you just a reminder to ask a question press star one.
Speaker Change: Our next question comes from Noel Parks with <unk> Brothers. Please state your question.
Speaker Change: Okay and.
Speaker Change: Reading the operations update it looks like the sterno working interest is.
Noel Parks: Hi, good morning.
Apologize if you already touched on this but.
Speaker Change: Much higher than legacy <unk>.
Noel Parks: Can you just sort of talk about the status of infrastructure.
Speaker Change: <unk> acreage.
In the basin utilization thinking about gasoline, both gas and oil takeaway and.
Speaker Change: It is John remember that our average working interest in our 7000 properties is roughly 3%, but when you bring in the 60 to 65, producing wells that Lucerne has an interest in their average working interest is going to be closer to 75% to 80% in those properties.
Noel Parks: Yes, I don't think so much these days about footprint, but just about.
Noel Parks: What's the aging out there and might be might be in need of attention.
Speaker Change: Now all of this is Jeremy thanks for the question yes.
Speaker Change: Okay, So I read that right.
Speaker Change: You did.
Noel Parks: Yes.
Speaker Change: Alright, well.
Speaker Change: General I'd say, the Bakken is in pretty good shape.
Speaker Change: Thanks for the answers and I'll pass it back to the operator.
Noel Parks: More mature basin, if you will.
Speaker Change: Thank you John.
Noel Parks: I think from our oil takeaway situation.
Speaker Change: Thank you just a reminder to ask a question press star one.
Noel Parks: We're really good shape, where we are impacted from.
Speaker Change: Our next question comes from Noel Parks with two Oh. He brothers. Please state your question.
Noel Parks: No.
Noel Parks: Different markets are different sources of oil coming down from Canada, but in general for takeaway, we don't have issues moving out of the basin.
Speaker Change: Hi, Good morning, I apologize if you already touched on this but.
Speaker Change: Can you just sort of talk about the status of infrastructure.
Noel Parks: On the gas side, we could always use more gas processing.
Speaker Change: In the basin.
Speaker Change: Elevation thinking about gas in both gas and oil takeaway and.
Noel Parks: In particular, NGL takeaway capacity and so it's a bit of a balancing act right now to recover just enough ethane to fill up the gas pipes and get the Ngls moved on our NGL pipelines. So we could always always use more on that side.
Speaker Change: I guess I don't think so much these days about footprint, but just about you know.
Speaker Change: What's the aging out there and might be might be in need of attention.
Speaker Change: Now all of this is Jeremy thanks for the question yes.
Noel Parks: But.
Noel Parks: Generally I would say, we're pretty good shape for the current level of activity in the rig count in the basin.
Speaker Change: Yes.
Speaker Change: General I'd say, the Bakken is in pretty good shape.
Speaker Change: More mature basin, if you will.
Speaker Change: Great Thanks and.
I think from our oil takeaway situation.
Speaker Change: This is just sort of a reality check question as I was looking through the slides and I saw the Pie chart.
We're really good shape, where we are impacted from.
Speaker Change: That show.
Speaker Change: No.
<unk> of operators.
Speaker Change: Different markets are different sources of oil coming down from Canada, but in general for takeaway, we don't have issues moving out of the basin.
Speaker Change: It actually was.
You bet.
Speaker Change: It still is not more concentrated.
Speaker Change: As the operator ship then it is that.
Speaker Change: On the gas side, we could always use more gas processing and.
Speaker Change: So as much fragmentation, even the largest operators don't seem to have really.
Speaker Change: In particular, NGL takeaway capacity and so it's a bit of a balancing act right now to recover just enough ethane to fill up the gas pipes and get the Ngls moved on the NGL pipelines. So we could always always use more on that side.
Speaker Change: Dominic.
Speaker Change: A dominant share so I guess.
Speaker Change: Yeah.
Speaker Change: Is everyone I think about the private guys essentially Joseph so entrenched with.
Speaker Change: Getting getting the returns running down their wells et cetera are a little bit of drilling that.
Speaker Change: But.
Speaker Change: Generally I'd say, we're pretty good shape for the current level of activity in the rig count in the basin.
Speaker Change: Things are just.
Speaker Change: Probably a consolidated do you think theyre going to gap or or are there maybe some of those long awaited exits.
Speaker Change: Great. Thanks, and this is just sort of a reality check question as I was looking through the slides and I saw the pie chart that showed.
Speaker Change: On the Horizon would you say.
Bryan: So I'll take the first crack at that this is Bryan and let Bob Jimmy jump in but there's been quite a bit of consolidation and we've seen originally or the number of operators that we had interest with <unk>.
Speaker Change: Range of operators.
Speaker Change: It actually was.
Speaker Change: Astonished that.
Speaker Change: It still is not more concentrated.
Speaker Change: As the operator ship then it is that there's still as much fragmentation, even the largest operators don't seem to have really a dominant.
Bryan: <unk> up towards 40, and we're down closer to 30 now so that consolidation has happened and even from just the standpoint of I see the Pie chart, you're looking at and Thats on an acreage basis. If you look at it from a production basis, we've got about five operators now that make up roughly 75% of our total.
Speaker Change: Dominic sure so I guess.
Speaker Change: You know is is as everyone I think you'll have the private guys, especially Joseph so entrenched with getting getting the returns running down their wells et cetera are a little bit of drilling.
<unk>. So the consolidation has occurred and it probably will continue to to occur I think there is there is some other companies out there that over the next few years will likely.
Speaker Change: That things are just that.
Speaker Change: Probably of consolidated do you think theyre going to get or or are there maybe some of those long awaited exits.
Bryan: They will find ways to consolidate its a smart thing and a good way to do business.
Speaker Change: On the Horizon would you say.
Speaker Change: So I'll take the first crack at that this is Bryan and let Bob Jimmy jump in but there's been quite a bit of consolidation and we've seen originally or the number of operators that we had interests with where range.
Bryan: Right.
Speaker Change: And Im sorry, if somebody else wants to add something.
Speaker Change: I think Brian covered it pretty well.
Speaker Change: Okay, great. Thanks, a lot.
Joel: Thanks Joel.
Speaker Change: Ranging up towards 40, and we're down closer to 30 now so that consolidation has happened and even from just the standpoint of I see the Pie chart, you're looking at and that's on an acreage basis. If you look at it from a production basis. We've got about five operators now that make up roughly 75% of our total pre.
Speaker Change: Thank you there are no further questions at this time I'll hand, the floor back to Bob guarantee for closing remarks.
Speaker Change: I want to thank everyone for taking their time today and we look forward to the next call that we have with you.
Speaker Change: In the interim if you have any questions. Please contact them directly and thank you.
Speaker Change: <unk>. So the consolidation has occurred and it probably will continue to to occur I think there is there is some other companies out there that are over the next few years will will likely.
Speaker Change: Thank you with that we conclude today's call. All parties may disconnect have a good day.
Speaker Change: They will find ways to consolidate its a smart thing and a good way to do business.
Speaker Change: Right.
Speaker Change: And I'm, sorry was somebody else want to add something.
Speaker Change: No I think Brian covered it pretty well.
Speaker Change: Okay, great. Thanks, a lot.
Noel: Thanks Noel.
Speaker Change: Thank you there are no further questions at this time I'll hand, the floor back to Bob guarantee for closing remarks.
Speaker Change: I want to thank everyone for taking their time today and we look forward to the next call that we have with you.
The interim if you have any questions. Please contact them directly and thank you.
Speaker Change: Thank you with that we conclude today's call. All parties may disconnect have a good day.