Q1 2025 Crescent Energy Co Earnings Call
Speaker Change: Greetings and welcome to the Crescent Energy Q1 2025 Results conference call. At this time, all participants are in a listening mode. A question and answer session will follow the former presentation.
If anyone should require operator assistance, please press store zero and your telephone keybed.
as a reminder, this conference is being recorded.
Speaker Change: is not my pleasure to choose your host, Reid Gallagher, Investor Relations. Thank you, you may begin.
Thank you.
Speaker Change: Morning, and thank you for joining Crescent's first quarter 2025 conference call. Today's prepared remarks will come from our CEO David Rockecharlie and our CFO Brandi Kendall.
Speaker Change: For Executive Vice President of Endustments, Clay Rind will also be available during Q&A.
Speaker Change: Today's call may contain projections and other forward-looking statements within the meeting of the Federal Security's laws [inaudible]
Speaker Change: These statements are subject to risk and uncertainties, including commodity price volatility, global geopolitical conflict, per business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures.
Speaker Change: We have no obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-depth financial measures.
Speaker Change: for reconciliation of historical, non-depth financial measures to the most directly comparable gap measure. Please reference our 10Q and earnings press release available under the Investor section on our website. With that, I will hand it over to David.
David Rockecharlie: Good morning, and thank you for joining us. Yesterday, Crescent posted financial and operating results for the first quarter. In summary, it was a great quarter of continued execution for our business.
David Rockecharlie: As always, I want to begin with a few key points that I hope you take away from this call. First, we continue to deliver strong performance across our asset base.
This quarter, all key metrics met were exceeded expectations.
David Rockecharlie: We are a cash flow focus company and I'm pleased to highlight our continued free cash flow generation in excess of $240 million this quarter which is an annualized free cash flow yield of approximately 45% [inaudible]
David Rockecharlie: Our talented team continues to find ways to create value through efficient operations.
David Rockecharlie: Second, we will remain flexible with our approach to capital allocation.
David Rockecharlie: We are reiterating our commitment to cash flow, risk management, and returns, which always requires flexibility but especially in light of this dynamic macro environment.
David Rockecharlie: Our scaled low decline in HPP asset base provides us with unique optionality to allocate capital across both oil and natural gas development.
David Rockecharlie: We expect attractive returns on our current capital program in this market environment.
David Rockecharlie: However, we continuously monitor both relative and absolute commodity prices and we will be flexible in our development as we seek to maximize free cash flow and returns on invested capital.
David Rockecharlie: Whether that be executing on our current plans, shifting further activity across commodities or reducing overall activity levels.
David Rockecharlie: Finally, Crescent was built to succeed through commodity cycles and we are confident in our ability to outperform through periods of volatility.
David Rockecharlie: Both our strategy and core management team have remained consistent for more than a decade. We intentionally built the lower decline and less capital intensive business.
David Rockecharlie: with Commodity Flexibility and a consistent hedge program to generate durable free cash flow.
David Rockecharlie: Our strategy and advantage portfolio allow us to create significant value through periods of dislocation like we are beginning to see today.
David Rockecharlie: We are investors and operators and as one team we continually evaluate opportunities to enhance our portfolio, simplify our business, and deliver long-term value for investors.
David Rockecharlie: Following those quick highlights, I will now discuss our results in a bit more detail.
David Rockecharlie: We reported impressive financial performance for the first quarter, with record production of 258,000 barrels of oil equivalent per day, and approximately $242 million of free cash flow. Well above all street expectations.
David Rockecharlie: Our significant outperformance on free cash flow is largely due to a meaningful beat on capital spend driven by modest timing shifts in activity quarter to quarter and continued execution from our talented team.
David Rockecharlie: With the recent volatility in commodity prices, we've remained focused on driving capital efficiencies through improved operations and we are generating savings of 10% on our current drilling,
David Rockecharlie: Our broader operating plan for the remainder of the year remains focused on strong execution to maximize returns on our capital and free cash flow for our investors.
David Rockecharlie: and as always, we will continuously evaluate returns and opportunities while remaining flexible with our capital allocation.
David Rockecharlie: By consistently executing our strategy, we've demonstrated the benefits of our business model and the advantage portfolio we've built over more than a decade since our inception.
David Rockecharlie: Our business is characterized by a low decline production base, lower capital intensity and the flexibility to invest across both oil and natural gas inventory.
David Rockecharlie: As a result, we are uniquely positioned to maximize free cash flow and returns through commodity cycles.
David Rockecharlie: We've maintained an active hedge program and have approximately 60% of our 2025 oil and natural gas production hedged at a significant premium to current market pricing.
David Rockecharlie: All of these facets of our strategy have enabled us to succeed through cycles.
David Rockecharlie: Paying an average dividend yield of 6% since inception with a reinvestment rate below 50% an average leverage of 1.2 times.
David Rockecharlie: The current environment is nothing new and our business is well positioned [inaudible]
David Rockecharlie: Arguidance at the beginning of the year highlighted the benefits of our commodity flexibility and discipline to capital allocation.
David Rockecharlie: and we have remained dynamic in our approach to capital allocation for the year.
David Rockecharlie: Our current plan remains in line with our initial guidance, with a slightly increased focus on gas weighted development to optimize returns on our capital program.
David Rockecharlie: which, despite notable volatility across the oil and gas commodity curves, is expected to generate returns in excess of our two times multiple and invested capital target.
David Rockecharlie: Supporting our return of capital, strengthening our balance sheet and maintaining Crescent's strong positioning for continued growth through opportunistic and accretive MNA.
David Rockecharlie: Crescent has a consistent strategy and we are a team with compelling advantages that come from combining strong investing and operating skills.
David Rockecharlie: We are prepared, we are focused, we are proactive. This allows us to view periods of heightened volatility as exciting opportunities, and Crescent has never been better positioned to capitalize on what is in front of us.
David Rockecharlie: While traditional A&D markets tend to slow down during periods like this, as Bid Ask Spreads Whiten, our pipeline remains active. And historically, we've been successful capitalizing on periods of volatility to execute on transformative opportunities for our business.
David Rockecharlie: These periods also offer time to focus even more on our own business. Finding the gold buried within our existing operations and enhancing our value proposition at the ground floor.
David Rockecharlie: As we strive to optimize our business, we constantly review our portfolio for non-core divestiture opportunities to maximize value.
David Rockecharlie: To that end, we were pleased to have closed on roughly $90 million of a creative asset sales so far in 2025.
David Rockecharlie: These divestitures have been in process since our original announcement in late 2024 and their closing further streamlines our portfolio and simplifies our business.
David Rockecharlie: Proceeds from the sales will accelerate debt repayment and improve our position for long-term success.
David Rockecharlie: We are also pleased to report the successful closing and seamless integration to date of our Ridge
David Rockecharlie: The Ridgemore Bolt-On, added high margin production and significant low-risk inventory to our business.
and early performance has exceeded expectations. [inaudible]
David Rockecharlie: There's no question that we're seeing increased market volatility, but we've been here before and Crescent was built to succeed through cycles.
David Rockecharlie: As a free cash flow focus strategy remains consistent and I'm confident that we have the team, the assets and the balance sheet to capitalize on the current environment and generate long-term value for our shareholders
David Rockecharlie: With that, I'll turn the call over to Brandi to provide more detail on the quarter.
Brandi Kendall: Thanks, David. Crescent had impressive results for the quarter with approximately 530 million of adjusted EBIDA and approximate 242 million in leopard free cashflow across the three
Brandi Kendall: We had 208 million of capital expenditures during the quarter, notably better than forecast, as the team continues to drive improvements in DNC costs and certain projects were shipped until later in the year.
Brandi Kendall: We've brought online 36 gross operated wells in the Eagle Furt and four gross operated wells in the UN set, all of which are generating strong initial results.
Brandi Kendall: We will look to maintain flexibility over the remainder of the year dependent on both relative and absolute commodity prices to maximize free cash flow and returns.
Brandi Kendall: Whether that be executing on our current plan, further shifting activity across commodities or reducing overall activity.
Brandi Kendall: Our portfolio is largely held by production which gives us the flexibility to pace development a purely on reinvestment economics rather than lease obligations.
Brandi Kendall: During COVID in 2020, we demonstrated discipline by stopping all drilling and completion activity.
Brandi Kendall: This is a real world example of our willingness to prioritize value over volumes.
Brandi Kendall: We exited the quarter with net leverage of 1.5 times, within our publicly stated range of 1-1.5 times. We have approximately 1.4 billion of liquidity, with no near-term maturities and we recently reaffirmed our borrowing base, highlighting the strong support from our lender group.
Brandi Kendall: We announce another dividend of 12 cents per share and have been actively repurchasing shares in the open market to capitalize on this current market dislocation.
Brandi Kendall: You to date, we have repurchased approximately $30 million worth of stock at a weighted average price of $8.26.
Brandi Kendall: We also made a significant step in the evolution of our business as a public company, with a transition to a single class of common chairs and the elimination of our up-c structure.
Brandi Kendall: This simplification increases investor accessibility and significantly reduces the reporting complexity of our business.
David Rockecharlie: With that, I'll turn the call back over to David for clothing remarks.
David Rockecharlie: Thanks, Brandi. Before we wrap up, I want to reiterate our key messages for investors. First, we continue to see strong performance across our assets. All key metrics this quarter were in line or exceeding expectations.
David Rockecharlie: We are a cash flow focused company and we generated an annualized free cash flow yield of approximately 45% this quarter.
Second, we will remain flexible with our approach to capital allocation.
David Rockecharlie: Our scaled load decline and HPP asset base provides us with unique optionality, and we will be flexible with our capital, dependent on both relative and absolute commodity prices to maximize free cash flow and returns.
David Rockecharlie: and finally, Crescent was built to succeed through commodity cycles and we are confident in our ability to outperform during the volatility.
David Rockecharlie: Our strategy has been consistent for more than a decade. We are focused on generating substantial free cash flow and we intentionally built a lower decline and less capital intensive business. [inaudible]
David Rockecharlie: with advantaged commodity flexibility and a consistent hedge strategy to increase free cash flow durability.
David Rockecharlie: We operate in a dynamic sector. We have seen times like this before, and we have a uniquely advantage portfolio built to capitalize on the current environment. With that, I'll open it up for Q&A. Operator?
Speaker Change: Great, thank you. We now be conducting a question and answer session.
Speaker Change: If you'd like to ask a question, please press star one under telephone keybed. A confirmation to all will indicate your line is in the question queue. You may press star two to remove yourself in the queue.
Speaker Change: for participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please let go of your questions.
Albert Wang: First question here is from Alverweng from TVHN Company, please go ahead [inaudible]
Albert Wang: Good morning, David, Brandi, and Clay, and thanks for taking the questions.
Albert Wang: I know you all touched on this briefly in the prepared remarks already and have a lot of flexibility within the program but just when we're thinking about the current commodity price environment and looking at the oily versus hybrid versus dry gas breakouts on capital allocation for the year.
Albert Wang: Is it fair to say we're sitting at the lower end of the oily targeted range and the higher end of the gassy range? And what would need to really occur to push beyond the bounds of those outline ranges?
Albert Wang: Hey, it's David. Great question. Really appreciate it. I think the main thing to know about us any time you think about capital allocation is we think what differentiates us as a firm is we're investors and we think we combine investing and operating better than anybody. So to your point, it's all about returns. We came into the year, you know, the forward term for oil has been pretty steady.
Albert Wang: and his level for a long time. So no surprises there. Obviously spots moved around a lot. We've been pretty pleased with the portfolio. We've been able to build through the cycle. And so long story short, we sit here with...
Albert Wang: Allocate Capital within our framework but we're also looking at that kind of stuff every day and it's not just absolute returns it's also where else can we find returns and so as you know
Albert Wang: and we highlighted a little more of this quarter. We're obviously a growth through M&A company, so we're always looking at that market environment, and we also view our stock as an M&A opportunity as well at different points in the cycles. So...
Albert Wang: Long story short, we like where we are, but we're absolutely focused on returns and free cash regeneration, and we'll just kind of continue to manage through a volatile environment, but we like this. We're good at this.
Okay, perfect. That's helpful color.
Albert Wang: and maybe just for a follow-up question, just on trajectory of the rest of the year, any sort of color you all can provide in terms of expectations for oil volumes and capex.
Albert Wang: Just trying to think through some of the key moving pieces given the significant ramp until out of the Eagle Ferd, light in Q1, those flow through impacts and the
Albert Wang: that most of the Q4 Eagle furtiles are probably going to come out of the drag-ass window.
Brandi Kendall: Hey, Oliver, it's Brandi. So we expect oil production to increase quarter of a quarter. So I think we'll have low to mid single digits, just given we'll have a full quarter of owning the Ridge Mar asset from a full year standpoint, still expect to be towards the midpoint at that kind of 40 to 41 percent oil cut.
Brandi Kendall: and then from a capital standpoint, the David head on in the prepared remarks.
Brandi Kendall: Right, we performed well from a D.A.C. perspective, but a big part of the beat was timing, so it would expect that capital to show up in the second quarter, and would expect Q2 to be our highest capital quarter for the year. But as you saw, we also reaffirmed our capital guidance.
For the years of no change, it's just really timing.
Speaker Change: The next question is from Tim Rezvan, from T-Bank Album Markets. We'll use the lead
Speaker Change: Good morning. This is John on for Tim. Thanks for taking our questions.
Peace.
Speaker Change: He's starting off with a Easter and he went to J.B. He just talked about its current status and...
Speaker Change: whether the JV agreement includes any contractual arrangements, termination clauses, or anything that might require the rig to be maintained in the basin for a specified period of time.
Clay Rind: Hey, it's Clay, I can, I can take that, you know...
Speaker Change: As you know, part of what we hit on with prayer remarks, but also part of our operating philosophy is not to...
Speaker Change: to make commitments and ignore ourselves maximum flexibility. So consistent with that, the JV was really set for the single pad, so no commitments to ongoing capital associated with that JV.
that go forward.
Speaker Change: and just to hit on the JB, we disclosed this really strong 30-day IPs as part of our...
Speaker Change: Q4 Results. I just tell you, we've continued to be really encouraged by the results around.
Speaker Change: The development there continued to really outperform the broader basin from a kind of upper acute perspective, and we're really encouraged about the opportunity it presents for us across the asset base.
Thank you.
Okay, okay, next chance.
Speaker Change: and Schiffing over two assets sales. You previously mentioned the market for Merrill's assets remains active. Would you consider exceeding your asset sales target if...
You come across some attractive fits [inaudible]
for it.
Speaker Change: Yeah, listen, as we've said, we're we do ourselves as kind of value creators by both buying assets and selling assets so where we see opportunity to create value for the business.
We'll do so. I'm going to think the asset sales.
Speaker Change: are going to be viewed through that lens, so where we see a market where we can drive accretion to our business and also we think that someone...
Speaker Change: The assets hold more value in someone else's hands than ours. We won't pursue that. So, don't think of kind of the $250 million pipeline that we put out as a limiter. It's just really where we see opportunity and where we think there's a chance to create value for the business through pursuing those sales. [inaudible]
Thanks for the details. I'll be there.
Next question is from John Freeman. Please go ahead.
John Freeman: Yeah, thanks. Y'all are one of the most hedge EMP companies out there, and I'm just curious sort of what kind of a role the hedge is playing in the decision to...
John Freeman: You know, potentially reduce activity or not or if hedges are sort of viewed as kind of a separate part of the decision process.
Yeah, great. Question, John , it's David, and I'll let you know.
John Freeman: Brandi out onto it if necessary, but I think you hit it, which is it's a completely separate asset.
John Freeman: We put hedges in place to protect the balance sheet and the capital we invest, but we don't view hedges as implicating the drill bit at all once we've got that independent decision. So, we love having a hedge asset in times like this.
but no, we don't like the two. [inaudible]
Great, and then how does the hollows?
Speaker Change: The follow-up for me, just given the attractiveness of your stock at these levels, we all highlight it in terms of what the free cash will yield is, et cetera. Maybe just discuss how you all think about, you know, allocating that free cash form and decision process between buybacks versus debt reduction.
Brandi Kendall: Hey John , it's Brandi. So I think with respect to the buyback and we said this before, it's 100% of an opportunity and it's also 100% returns driven.
Brandi Kendall: Fundamentally, no change in how we think about cap allocation and priority, the balance sheet and the effective and I continue to be at the top priority, but after that it's...
Brandi Kendall: Great, we weigh our investment return opportunities across, buy back our own assets.
Brandi Kendall: as the stock, M&A, or Drilling Wells. You saw a step in quite a bit earlier this quarter, buying roughly $25 million of stock when it traded off. So again, I think you'll continue to see us be active within that framework.
David Rockecharlie: and the one thing I would highlight, Sean, is David again.
David Rockecharlie: We talk about the M&A market locking up in periods of volatility. This is the one area that trades every day and we can access what we want.
It's a good point. Thank y'all.
See you then.
Speaker Change: Next question is from Charles Meade from Johnson Rice. Please go ahead.
Thank you.
Charles Meade: Morning, David, Bradie and the rest of the Crescent team there. David, I want to go back to your prepared comments about, you just referenced them there with the M&A market, the bid-ass bread.
Charles Meade: Why do you mean out? You know, that's certainly the conventional wisdom. Can you tell me what you're seeing on the ask side of it to the extent that you can share any thoughts on the way that part of the market is evolving?
Charles Meade: and Kenny also give some thoughts on how Crescent's approach is different during these times of
Charles Meade: That's great. Thanks for the question. It's David. I'm going to go ahead and just pass that one to Clay to answer, but we'll both cover it if needed.
Hey Charles
Speaker Change: The, you know, as David mentioned, is a pair of marks what we typically see after these periods of significant volatility is just to kind of a hold up in the market. So, which you're not going to, you know, there's less of a ask is here, bit is here, it's more just a kind of a pause and decision making.
Speaker Change: We expect that over time to kind of thaw out and you start to see decisions getting made by different parties for different reasons and so I think what our real strength in this
Speaker Change: Market Opportunities is kind of, as we've mentioned, we're kind of investment driven, so we're always focused on returns and also we've had a very consistent strategy.
Speaker Change: So that allows us to move with real conviction when we do see opportunity in this type of market environment I think that's our advantage and so
Speaker Change: Where we hope to see opportunity here and where we've seen opportunity historically and these types of periods of volatility is the opportunity. We're always in the market, we're very disciplined, we're very focused on accretion, but where we do see opportunity, we're able to move very quickly on those opportunities.
Speaker Change: God, that's helpful. Thank you, Clay. And then, oh, I'm sorry, David, you have anything to say? Thank you.
David Rockecharlie: No, I think you nailed it. Okay, great. And then back to the, back to the UNTA, you talked about those, you gave us an update on the three wells, I think three wells in the Eastern JV. Any?
David Rockecharlie: Colour, you can offer on the four operating wells, you guys turn to sail both you know where they are in your position and where they are up and down the stack.
Speaker Change: Yeah, those are kind of more core and what's been our traditional development window on the western side of the asset, you've been viewed development, I'd say early time results there, look very good and consistent with where we've seen results historically, that part of the play.
Great. Thank you. Thank you.
Speaker Change: Next question is from Michael Scialla, David, please go ahead [inaudible]
Michael Schiella: Good morning, buddy. You mentioned the activity, some activity shifted from the first quarter to later in the year. I want to see if you could quantify that and was that all just due to timing or was there a decision made there to...
and proactively move some activity. [inaudible]
Brandi Kendall: It's Brandi. I'll cover this. It was really just a timing. We had a couple pads that shifted from Q1 to Q2, so I think days. So again, we expect that capital to show up.
Brandi Kendall: in the second quarter, and as I mentioned earlier, we did reaffirm our capital guide for the years to still feel comfortable with the 925 to 1025 guide.
Brandi Kendall: Okay. And you were asked about your commitment and the UNTA sounds like really nothing there that would dictate any minimal activity. I guess more broadly, if you were to slow down or be able to slow down because it's not there, it's not there, it's not there, it's not there.
Speaker Change: Oil Prices, or whatever, can you talk about any commitments, whether it be rigged commitments or lease expirations that would put a floor under your activity level, or could you, you know, Brandi, you mentioned during COVID, you went to zero, is that the floor could be zero?
as much HPP encourages we can. So, punchline is...
Speaker Change: We're prepared to drop activity as soon as it makes sense and to your point there's very limited.
Speaker Change: Requirements that we would have, you know, call it over the rest of this year and even going forward. So there's always some things you need to do but I think you can safely assume the floor is zero and in our minds.
Very good. Thank you. Thank you. Thank you.
Next question is from John Abbott. What research will we go ahead?
Speaker Change: Pay team, this is Colin Bond for John . Thank you for taking our question. I guess we'd like to start where you just ended David in terms of how your business has been.
Speaker Change: Deliberately made to be hedged in certain ways, and so we're wondering if you could provide some more color on what you're seeing on the deal from in terms of size and commodity
because we've seen the two commodities do completely different, take completely different directions.
Speaker Change: and we want to ask if you think it's possible to get something done given that much volatility on both ends or if and if you are more likely to see some success in the gas market versus the normal market.
Thank you.
Speaker Change: Yeah, hey David, great question. Maybe I'll just start with the framing of that, which is you're absolutely right, the commodities.
Speaker Change: Can move independently at any point in time, and so assets do trade through that cycle.
Speaker Change: by an individual asset that looks like our portfolio. We're managing a portfolio as investors and operators, and so we look to find attractive opportunities through the cycle. So long story short, I do think that...
Speaker Change: The hard work that everybody, this company's done over the last three-plus years as a public company You know we we're certainly highlighting this quarter we've also had our stock as an M&A opportunity and so I think that we've got all the tools out there
Clay Rind: As Clay mentioned earlier, we're always in the market looking for value, and so when we find this...
Clay Rind: We can transact on it and if there's nothing to do then we don't have to do anything at all either so hopefully that's just good context on what we're seeing but we do expect the market to continue to be active over time but when things move quickly it locks up in the short term.
Speaker Change: Thank you, that makes sense. And then for our follow-up, you've made significant strides and simplifying your corporate structure to a single class of shares. What are your thoughts on maintaining the non-economic preferred?
Speaker Change: Yeah, thanks for the question and thanks for the acknowledgement on the structure. We really have a work card and I'll steal some of Brandi's words but to make the stock a lot.
Speaker Change: He's your town, and so we came from a company with very limited...
Speaker Change: Float and Trading Volume through Reverse Merger, and today we're a company part of the S&P 600 and really frankly a lot easier to own.
Speaker Change: as an investor. So, we're pleased to have simplified the up-fee structure, again, at no cost to the company because of how we set that up. We've got a single class of stock.
Speaker Change: and the other thing I would highlight is, while the non-economic preferred you mentioned does have some unique attributes in our view at all at disability in the company and I just also...
Speaker Change: Pointed out again that we really value the fact that the board members. [inaudible]
Speaker Change: that we have represents 30 percent of the equity ownership in the company. So we see really strong alignment at the board level and are really pleased with how we've been able to simplify the structure. But our assumption is that everything else, you know, stay as is and we think it's a real value added to the company and its stability long term.
Thank you, team. Appreciate you. Have a great day.
Speaker Change: Next question is from Michael Furrow from Pickering Energy Partners, please go ahead
Speaker Change: Good morning. Just one quick question for me on operating costs. Looks like there was a slight uptake this quarter in L.O.E., which I believe was on higher fuel use gas.
Speaker Change: Is there any way that you can quantify those impacts, you know, maybe as a percentage of overall L.O.E. and whether that's something that we should anticipate seasonally up to the fourth quarter as well?
Brandi Kendall: Michael, it's Brandi, I'll take this one. Our LOE is always highest in InQ1 and given winter weather and as you mentioned we use some of our gases.
Speaker Change: as fuel. So, from our perspective, it's right in line with expectations. We laid out a guide of 12, 25 to 13, 25 and it would expect...
Next, a quarter to be in line with the midpoint [inaudible]
Speaker Change: All right, great, that's all for me. Thanks for your time.
Speaker Change: Thanks, Crescent. Here is Maroni Kiorat from Deep and Morgan. Please go ahead.
La'Ron Jarrett: Yeah, kind of question, maybe follow up on the oil mix. Brandi, can you give us a sense for the Ridge Mar acquisition, what the oil mix was in those properties and just trying to think about how your oil mix could trend over the balance of the year?
Speaker Change: Arun, those assets were roughly 70 percent oil, so as I hit on...
La'Ron Jarrett: Earlier, we do expect oil cut to increase, again, low single, low to mid single digit percentage
just given the full three months of owning that asset.
Got it. Got it.
Speaker Change: and maybe Brandi just a bit of a follow-up, have you, as you've eliminated the up-sea structure?
Speaker Change: Could you talk about some of the tangible benefits that you're seeing from that and maybe just a clarification? I think in the press release...
Speaker Change: It did indicate that your longer-term investor KKR has signed a 180-day lockup, so just thoughts on their long-term, your views on their views on the equity and one of my clarification on that lockup provision.
Speaker Change: Yeah, hey, David, just a couple of quick thoughts. So one, as you know, we've...
Speaker Change: We've had to report certain adjusted metrics, and by the way, that's a standard for all companies that have an up-seat structure because of where things end up on the different financial statements. So we're just really pleased, frankly, to have our...
Speaker Change: Accounting team have less to do and have investors be able to look at a consolidated
Speaker Change: Financial Presentation in the way in the way you normally would. So I think those are all really value add and then as a reminder there was no tax receivable agreement or anything like that associated with it. So it was really
Speaker Change: Something we had hoped and expected to get done, but really pleased to have that out of the way, and I think it just aligns everything, both externally and internally, and there's what I would call real value to that, and then there's also just the intangible benefit of what I'll call mine share.
and then the second part of the question.
filming.
Speaker Change: Yeah, so I think one of the questions we get a lot is um
Speaker Change: We and they both view it as just a positive indicator with or without the lock up there be no selling and so I think you should take it that way. We expect them to be long term owners and a lock up just further evidence of that but not an indication that there's any short term decision coming.
Great, thank you. Thank you.
Speaker Change: and a question from Tarek Hamid from Kate Morgan is the lead.
Hi, good morning. This is Nevin on Sir Tarek.
Speaker Change: You've guys have shown how DNC costs have declined just from 2024 levels already. How much lower do you think you have room to go? And...
Speaker Change: How would you describe the overall cost environment when you're balancing lower-service costs from declining activity overall as well as OCTG costs potentially going higher?
Brandi Kendall: Dean Evans is Brandi, so we did highlight Q1 DNC costs down 10% relative to the 2024 program so our team continues to do an incredible job.
Brandi Kendall: in the field from an efficiency standpoint. So I would say the savings is really efficiency sources, you know, any softening from a service cost.
Brandi Kendall: St. Boy, as we look at tariff, and obviously it's a very fluid situation, but the 25% tariff translates
Brandi Kendall: 10 to $15 million of the impact to our capital program that's embedded in the capital guide that we just reaffirmed, so that's one and a half percent so it's a pretty...
Brandi Kendall: Minimal, I think absent terrorists, I think we'd expect DNC costs to come down. I think for now, we're probably assuming they're relatively flat, but hopeful that we can continue to drive efficiencies in the field.
I got it. Thank you.
Speaker Change: Just to conclude, to be a question and answer question, I'd like to turn it forward back to management for any closing comments.
David Rockecharlie: Great, this is David. I just want to thank you all again for your support of the company. We enjoy the dialogue and we'll continue to.
David Rockecharlie: to communicate frequently and transparently about what we're seeing and doing. And until then, again, we're going to stick to the strategy we've had for a long time. We think the company's well positioned and these are market environments where we tend to do our best work. So thank you again.
This concludes today's telecom group. You may disconnect your eyes at this time. Thank you again for your participation.