Q3 2025 Vitesse Energy Inc Earnings Call

Speaker #2: Greetings . Welcome to the Vitesse Energy, Inc. . Third quarter 2020 Earnings Call . At this time , all participants are in a listen only mode .

Speaker #2: A question and answer session will follow the formal presentation . Please note this conference is being recorded . I will now turn the conference over to the director , Investor Relations and Business Development at Ben Messier .

Speaker #2: Thank you . You may begin .

Speaker #4: Good morning , everyone , and thanks for joining today . We will be discussing our financial and operating results for the third quarter of 2025 .

Speaker #4: And increased production and capital expenditures . Guidance . Our 10-q and earnings were released yesterday after market close and an updated investor presentation can be found on the website .

Speaker #4: I'm joined this morning by our chairman and CEO , Bob Garrity . Our president , Brian Cree , and our CFO , Jimmy Henderson .

Speaker #4: Before we begin , please be reminded that this call may contain estimates , projections , and other forward looking statements within the meaning of the federal securities laws .

Speaker #4: 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 from our current expectations .

Speaker #4: 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 .

Speaker #4: For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure . Please reference our 10-q and earnings release . Now , I will turn the call over to chairman and CEO Bob Gerardi .

Speaker #5: Thank you . Ben , and good morning , everybody . Thanks for joining in the third quarter . We stuck to our strategy of disciplined capital allocation .

Speaker #5: We participated in an increasing number of three . And four mile laterals drilled by our operating partners . And significantly , we successfully completed two .

Speaker #5: The tests operated wells as Brian will discuss as a result , we increased our production and capital expenditure guidance for 2025 . Advancements in technology continue to enhance the value of our assets .

Speaker #5: Extended laterals are delivering strong economic results through lower drilling and completion costs per lateral foot drilling activity continues to progress further into the areas where Vitesse holds concentrated positions .

Speaker #5: Our original strategy of acquiring acreage outside the core of the Bakken is paying off as activity now moves into these areas , generating returns comparable to historically seen .

Speaker #5: Those seen in the core. We estimate that we have over 2 million net lateral feet of development remaining on our asset, which translates to more than 200 net two-mile equivalent wells.

Speaker #5: The oil industry is highly cyclical . Our long duration asset , low leverage and disciplined hedging positions us not only to withstand , but to be opportunistic during market disruptions .

Speaker #5: We are capital allocators and will continue to make the best decisions with our capital each quarter, based on the opportunity set available.

Speaker #5: As a testament to our allocation decisions , last week , our board declared our fourth quarter dividend at an annual rate of $2.25 per share .

Speaker #5: I will now hand the call over to our president , Brian Cree , to provide more detail on our operations .

Speaker #6: Bob . Good morning , everyone , and thanks for joining today's call . In late September , pizza's operating team turned to production to gross 1.9 net drilled , but uncompleted wells acquired through the Lucero acquisition earlier this year .

Speaker #6: The wells are exceeding our initial oil and natural gas production expectations , and we're completed approximately 2 million or 15% under budget . We continue to contemplate the best time to advance a broader operated drilling plan , but we will only implement a development plan at a cadence and return thresholds that strengthen our dividend production for the quarter averaged 18,163 barrels of oil equivalent per day .

Speaker #6: This brings our year to date production to Thanks , 17,373 barrels of oil equivalent per day as of September 30th , 2025 , we had 20.8 net wells in our development pipeline , including 5.6 net wells that were either drilling or completing , and another 15.2 net locations that had been permitted for development for 2025 .

Speaker #6: We have approximately 60% of our remaining oil production hedged at nearly $70 per barrel, and just under half of our remaining 2025 natural gas production hedged with attractively priced collars at a weighted average floor of $3.73 and a ceiling of $5.85 per MMBtu. Both percentages are based on the midpoint of our revised guidance.

Speaker #6: Additionally , we have over 3300 barrels per day and 12,700 m2 per day of our 2026 oil and natural gas production . Hedged at $66.43 per barrel and through a costless collar of $3.72 by $4.99 per MMBtu .

Speaker #6: Thanks for your time . Now , I'll turn the call over to our CFO , Jimmy Henderson .

Speaker #7: Good morning everyone . I just wanted to highlight a few items from our financial results for the third quarter of 2025 . Please refer to our earnings release and 10-q , which were filed last night for any further details .

Speaker #7: Production for the quarter was 18,163 boe per day , with the 65% oil cut for the quarter . Adjusted EBITDA was 41.6 million and adjusted net income was 3.8 million .

Speaker #7: GAAP net income was a loss of 1.3 million , and you can see that reconciliation in our press release . Cash CapEx , including acquisition costs for the quarter , were 31.8 million .

Speaker #7: These costs were funded within our operating cash flows at the end of the third quarter , we had total debt of 114 million and net debt of 108 million , giving us net debt to adjusted annualized EBITDA of 0.65 times .

Speaker #7: We increased our annual guidance for 2025 due to the completion of our two ducts . As Brian discussed and incremental organic well proposals primarily focused on three and four mile development .

Speaker #7: We now anticipate production in the range of 17,000 to 17,500 boe per day for the full year of 2025 . With an anticipated oil cut of 65 to 67% .

Speaker #7: Cash CapEx for the year is now anticipated to be between 110 and 125 million , with that , let me turn the call over to the operator and open for Q&A .

Speaker #2: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .

Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press *2 to remove yourself from the queue for participants using speaker equipment, and it may be necessary to pick up the handset before pressing the star keys.

Speaker #2: One moment please , while we pull for questions . Our first question comes from the line of Jeff Grant with Northland Capital Markets .

Speaker #2: Please proceed with your question .

Speaker #8: Good morning guys . Hey Jeff , I was I was curious to start off on these these longer laterals . I know that's something that you guys have kind of talked as directionally happening a bit more for , for a bit , but it seems like maybe a bit of a step change in terms of the proportion there .

Speaker #8: So just hoping to dive into that a bit more . Do you guys have any numbers on I don't know what percent of the program are these three and four mile laterals now .

Speaker #8: And can you remind us how that may be compares to I don't know , earlier this year or this time last year ?

Speaker #4: Hi Jeff , it's Ben . I would say approximately over the course of the year , about half of our AFVs that we've received have been extended laterals .

Speaker #4: We don't see one mile laterals anymore . At least we haven't this year . So the remaining half has been two mile laterals .

Speaker #8: Got it . Perfect . Excuse me . And on the the acquisition side , it looked like , you know , you guys were a bit more active there .

Speaker #8: It looked like perhaps , maybe even the most active quarter since maybe a year or so ago . Is that can you guys just refresh us ?

Speaker #8: What are you seeing on the acquisition market ? Was this expected ? Was this surprising ? And what's kind of the outlook on the acquisition side is this is this a sign of more things to come ?

Speaker #8: Thanks .

Speaker #6: Yeah . Jeff , this is Brian . Obviously , as you know , we are always looking at near-term development opportunities , buying from from those that are looking to divest and , you know , over the course of the about the last year , it's just been a very competitive market .

Speaker #6: We've continued to be very disciplined with our rate of return approach on on how we look at those . And you just keep banging away and we we've looked at , you know , hundreds and hundreds of opportunities .

Speaker #6: We continue to bid them as we have in the past . And we were fortunate to be able to close a couple of deals in in the third quarter .

Speaker #6: And we'll continue to look at deals . The the market is very strong . We're seeing lots of AF opportunities . But again , we're being very disciplined with our approach in terms of how we're looking at at making those acquisitions .

Speaker #8: Thanks , Brian . Just just to clarify , I guess there's nothing I guess dramatically different that you guys saw either from a competitiveness standpoint or your underwriting practices .

Speaker #8: It's just a function of some days you win the lottery , some days you don't kind of thing .

Speaker #6: Yeah , I think there's you know , I think we are seeing more activity out there in terms of at least on , on our acreage , which is helpful because as , as we look at as we analyze those AFS that are coming into our acreage position , it gives us an opportunity to be a little more .

Speaker #6: You know , I don't want to use the word aggressive , but but it gives us a little bit of a leg up when we're looking at buying in AF opportunities on our existing acreage from others that are looking to sell them , because we've done a ton of work on that , and it just gives us a little bit of a leg up .

Speaker #8: That makes sense . Okay , I'll turn it back . I appreciate the time . Thank you guys .

Speaker #2: Thank you. Our next question comes from the line of Paul Frat with Alliance Global Partners. Please proceed with your question.

Speaker #9: Yeah. Just to follow up on CapEx, can you highlight what acquisitions might be built into the fourth quarter CapEx range?

Speaker #4: Hypo . It's been here . We tend to budget conservatively on acquisitions . We don't know exactly when , you know , as Jeff said , we're going to hit the lottery .

Speaker #4: And win acquisitions in any given quarter . Currently , we have a few hundred grand , but budgeted for acquisitions in the fourth .

Speaker #4: We hope that we come across economic opportunities that allow us to deploy more capital there , which is part of the reason you see a $15 million range for the fourth quarter , which is , you know , pretty , pretty wide range .

Speaker #4: But we leave some wiggle room to make attractive acquisitions if they present themselves .

Speaker #9: Sounds good . And then on the operated inventory , you finished the two ducts that were , you know , that you talked about previously .

Speaker #9: What what sort of the line of sight on , on any of the operated inventory opportunities that you have , you know , looking out into 2026 ?

Speaker #6: Well , you know , as we've said previously , we've we've got somewhere around 15 net undeveloped locations that we picked up through the acquisition of Lucero .

Speaker #6: We continue to look at those , look at the best ways to drill those , look at the ability to make trades with other partners to improve the economics on those .

Speaker #6: And that's , you know , as Bob stated in we've said , we're desperate . We're definitely looking at , you know , a 2026 plan .

Speaker #6: But a lot of that's going to depend on where oil prices are and what else we're seeing in terms of CapEx from our from our partners .

Speaker #6: So it's something that we're continuing to evaluate . We're kind of planning out a 2026 and 2027 operated program , but a lot of that will depend , as we as we finalize our models and budgets for 2026 .

Speaker #9: That's helpful . And then when I look at the cost structure for the third quarter , you know , the second quarter had a lot of noise .

Speaker #9: Just positive noise because of the settlement . Can you you know , look at the third quarter cost structure , run rate . And is that normal ?

Speaker #9: You know , is that more normalized compared to , you know , the the second quarter .

Speaker #7: Yeah , definitely . Though this is Jimmy . Definitely . Exactly as you constructed that third quarter is much better indicator of run rate for G&A , particularly low is slightly higher than we expected .

Speaker #7: But we're we've had some workovers , as we've talked before . And I think that's kind of coming to an end . So it should be slightly lower .

Speaker #7: There . And and on on say gas prices . We're probably in the range that we expect . Hopefully we'll see a little bit better results going forward as oil prices and NGL prices have some a little bit of life in the future .

Speaker #7: So hopefully that helps you in your modeling .

Speaker #6: Yeah . Let me just add this is Brian . I'll let me add to that . I mean , the low in the third quarter .

Speaker #6: Look , I mean we continue to look at all of the new wells that we acquired from Lucero . And I think we're making the right decisions in terms of when to spend money on , on on those wells .

Speaker #6: And as Jimmy said , I think we've seen a lot less activity in the fourth quarter than we did in the third quarter .

Speaker #6: So I agree with Jimmy's comment there . And then obviously with with the gas price differential , when you've got oil at $60 and NGLs where they are that third quarter , you know , looks pretty tough from a gas price standpoint .

Speaker #6: But we typically see that improve quite a bit in the fourth quarter . And first quarter . As we're in those winter months .

Speaker #9: Great . Thank you .

Speaker #10: Okay .

Speaker #2: Thank you . Our next question comes from the line of Noel Parks with two brothers . Please proceed with your question .

Speaker #11: Hi . Good morning . Just a couple . One thing I was thinking about is , you know , we're the still seeing a fair amount of uncertainty in the credit environment .

Speaker #11: Just as far as sort of a you occurred and so forth . I just wonder , do you sort of see any signs of that being on producers minds as they look at their , say , 20 , 26 budgets ?

Speaker #11: As far as just how inclined they are to be sort of either aggressive or hold back kind of again , because of the funding environment .

Speaker #7: Hey , Noel , this Jimmy , you know , there are a lot of a lot of factors play into what operators plans are , most notably , of course , is oil prices and consolidation is a big part of that .

Speaker #7: As many of our operators have continue to consolidate the basin . And and they're working on their plans to how they're going to allocate capital and move rigs in or out .

Speaker #7: We're still we feel like things are going our way . As Bob mentioned before , we're starting to see much more of our acreage get developed .

Speaker #7: We have a more concentrated position , so that probably plays more into the plans for next year than the the interest rate environment that we're in .

Speaker #7: But yeah , it certainly helps that that's a positive move . But we're still hopeful to to see operators put their budgets together for next year .

Speaker #7: And then we can have a better idea , better , more line of sight to what our plans are going to be .

Speaker #10: Okay .

Speaker #11: Great . Thanks . And just wondering if you had any updated thoughts as far as as you look at different opportunities and potentially different basins about the gas opportunities out there , these days ?

Speaker #5: Yeah , no , this is Bob . We look , we're looking a lot . So I can't speak to any specific asset that we're looking for other than , you know , our lens is pretty wide at this point .

Speaker #5: And we would love to buy gas assets at the right price . Look , the M&A market now is pretty frenetic . But if you take a look at the Bakken , it's pretty quiet .

Speaker #5: So you know we're going to be looking at the Bakken first . And you know the fun part about the the operators in the Bakken , they are very well funded .

Speaker #5: They're not stressed . And they're other than the Hess Chevron transaction , which we think is a certainly a net positive . And the corner plus , which is also a net positive , you know , there's you know , we're looking at the Bakken , first of the billion dollars of deals that we have in our deal shop right now .

Speaker #5: Probably a third of them are gas oriented . But it's you know , it's a very frenetic market . Noel . And I can't I can't handicap what's going to be the next deal .

Speaker #5: We do .

Speaker #11: Great. Fair enough. Thanks a lot.

Speaker #5: Thanks , Noel .

Speaker #2: Thank you . We have reached the end of the question and answer session . I would like to turn the floor back to Bob Garrity for closing remarks .

Speaker #5: Thanks and thanks for everybody for joining in . If you've got any follow up questions , Ben Messier does a great job in in answering those .

Speaker #5: So thanks everybody . See you in a couple of months . Bye bye .

Speaker #2: Thank you . And this concludes today's conference . And you may disconnect your lines at this time . Thank you for your participation .