Q4 2025 Crescent Energy Co Earnings Call

February 26, 2026

Speaker #1: Greetings and welcome to the Crescent Energy Co Q4, 2025 results call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

Operator: Greetings, welcome to the Crescent Energy Q4 2025 Results Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Reid Gallagher, Investor Relations. Thank you. You may begin.

Speaker #1: Should anyone require operator assistance during the conference, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Reid Gallagher, Investor Relations.

Speaker #1: Thank you. You may begin.

Speaker #2: Good morning, and thank you for joining Crescent’s fourth quarter and full year 2025 conference call. Today’s prepared remarks will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall.

Reid Gallagher: Good morning, and thank you for joining Crescent's Q4 and full year 2025 conference call. Today's prepared remarks will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall. Our Chief Operating Officer and Executive Vice President of Investments will also be available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, global geopolitical conflict, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We have no obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures.

Speaker #2: Our chief operating officer and executive vice president of investments will also be available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the Federal Securities Laws.

Speaker #2: These statements are subject to risks and uncertainties, including commodity price volatility, global geopolitical conflict, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures.

Speaker #2: We have no obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-K and earnings press release available under the Investor section on our website.

Reid Gallagher: For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-K and earnings press release available under the Investor section on our website. With that, I'll hand it over to David.

Speaker #2: With that, I'll hand it over to David.

Speaker #3: Good morning, and thank you for joining us. 2025 was a transformational year for Crescent. Our team delivered strong performance by executing on our consistent strategy and capitalizing on our leading combination of investing and operating skills.

David Rockecharlie: Good morning. Thank you for joining us. 2025 was a transformational year for Crescent. Our team delivered strong performance by executing on our consistent strategy and capitalizing on our leading combination of investing and operating skills. As a result, we entered 2026 better positioned than ever, with more scale, more focus, and more opportunity. As always, I'd like to begin with three key takeaways. First, our base business continues to deliver impressive results. In 2025, we generated significant free cash flow, exceeded expectations on both production and capital, and demonstrated the durability of our investing and operating model, and we are bringing that significant momentum into our 2026 plan. Second, we are now a focused and scaled operator in three premier basins: the Eagle Ford, the Permian, and the Uinta, and we see tremendous upside potential across our portfolio.

Speaker #3: As a result, we entered 2026 better positioned than ever, with more scale, more focus, and more opportunity. As always, I'd like to begin with three key takeaways.

Speaker #3: First, our base business continues to deliver impressive results. In 2025, we generated significant free cash flow, exceeded expectations on both production and capital, and demonstrated the durability of our investing and operating model.

Speaker #3: And we are bringing that significant momentum into our 2026 plan. Second, we are now a focused and scaled operator in three premier basins. The Eagleford, the Permian, and the Uinta.

Speaker #3: And we see tremendous upside potential across our portfolio. Our investing and divesting activity materially upgraded the quality and scale of our portfolio. In total, we executed nearly $5 billion of transactions in 2025, closing over $4 billion of acquisitions at less than three times EBITDA.

David Rockecharlie: Our investing and divesting activity materially upgraded the quality and scale of our portfolio. In total, we executed nearly $5 billion of transactions in 2025, closing over $4 billion of acquisitions at less than 3x EBITDA and divesting nearly $1 billion of non-core assets at over 5x EBITDA. This is how we compound value, recycling capital out of non-core positions and into higher return, scalable assets where we can apply our operational playbook to drive value for years to come. You have seen us successfully execute our strategy in the Eagle Ford. Over multiple years, we have built a top three position while generating strong returns and hundreds of millions of annual synergies. It is just the beginning for us in the Permian, but we are off to a strong start, and we are doubling our original synergy target.

Speaker #3: And divesting nearly $1 billion of non-core assets at over five times EBITDA. This is how we compound value, recycling capital out of non-core positions, and into higher returns, scalable assets, where we can apply our operational playbook to drive value for years to come.

Speaker #3: You have seen us successfully execute our strategy in the Eagleford. Over multiple years, we have built a top three position while generating strong returns and hundreds of millions of annual synergies.

Speaker #3: It is just the beginning for us in the Permian, but we are off to a strong start, and we are doubling our original synergy target.

Speaker #3: And third, our equity value proposition is even more compelling. We will continue to build long-term value through strong free cash flow and returns from our base business, but we also have significant upside catalysts embedded in our business.

David Rockecharlie: Third, our equity value proposition is even more compelling. We will continue to build long-term value through strong free cash flow and returns from our base business, but we also have significant upside catalysts embedded in our business. We are excited to introduce one of those key catalysts today, our world-class minerals platform, Crescent Royalties. Let me now discuss our strong Q4 in more detail. We produced 268,000 BOE per day for the quarter, including 106,000 barrels of oil per day, and generated approximately $239 million of levered free cash flow. In Q4, our activity was focused predominantly in the Eagle Ford gas and condensate windows to capitalize on strength in the natural gas curve....

Speaker #3: We are excited to introduce one of those key catalysts today, our world-class minerals platform, Crescent Royalties. Let me now discuss our strong fourth quarter in more detail.

Speaker #3: We produced 268,000 barrels of oil equivalent per day for the quarter. Including 106,000 barrels of oil per day. And generated approximately 239 million dollars of levered free cash flow.

Speaker #3: In the fourth quarter, our activity was focused predominantly in the Eagleford gas and condensate windows to capitalize on strength in the natural gas curve.

Speaker #3: Early performance has been strong, and our ability to allocate capital across both oil and gas-weighted inventory enhances the durability of our returns in a volatile commodity environment.

David Rockecharlie: Early performance has been strong. Our ability to allocate capital across both oil and gas-weighted inventory enhances the durability of our returns in a volatile commodity environment. Operationally, we continue to raise the bar across our asset base. Over the past year, we have increased drilling and completion efficiencies, extended lateral lengths, and expanded the use of simulfrac operations across our footprint. These initiatives drove a 15% reduction in drilling and completion cost per foot year-over-year and contributed to full-year CapEx outperformance. Our operational expertise is foundational to our strategy of buying assets and making them better. We intend to apply the same proven playbook to our newly acquired Permian assets, which gives us confidence in our increased synergy target. Our entry into the Permian was a defining step in Crescent's evolution.

Speaker #3: Operationally, we continue to raise the bar across our asset base. Over the past year, we have increased drilling and completion efficiencies, extended lateral lengths, and expanded the use of simulafract operations across our footprint.

Speaker #3: These initiatives drove a 15% reduction in drilling and completion cost per foot, year-over-year, and contributed to full-year CapEx outperformance. Our operational expertise is foundational to our strategy of buying assets and making them better.

Speaker #3: And we intend to apply the same proven playbook to our newly acquired Permian assets, which gives us confidence in our increased synergy target. Our entry into the Permian was a defining step in Crescent's evolution.

Speaker #3: Today, we operate scaled positions across three premier basins. The Eagleford, the Permian, and the Uinta. Which is complemented by a substantial and world-class minerals portfolio.

David Rockecharlie: Today, we operate scaled positions across three premier basins: the Eagle Ford, the Permian, and the Uinta, which is complemented by a substantial and world-class minerals portfolio. This combination provides inventory depth, commodity flexibility, and a durable free cash flow profile that positions us to outperform through cycles. Turning to our new Permian assets, integration has progressed seamlessly. As we have spent more time with the assets, our conviction in the value creation opportunity has increased. This acquisition remains one of the most compelling we've evaluated, with immediate accretion across key metrics and highly attractive cash-on-cash returns. Importantly, our synergy targets are now 100% higher than what we underwrote, which meaningfully enhances expected investment returns. That increase reflects clearer visibility into incremental operational efficiencies, overhead optimization, marketing improvements, and additional balance sheet opportunities as we implement the Crescent playbook.

Speaker #3: This combination provides inventory depth, commodity flexibility, and a durable free cash

Speaker #1: Low profile that positions us to outperform through cycles . Turning to our new Permian assets , integration has progressed seamlessly as we have spent more time with the assets .

Speaker #1: Our conviction in the value creation opportunity has increased . This acquisition remains one of the most compelling we've evaluated with immediate accretion across key metrics and highly attractive cash on cash returns Importantly , our synergy targets are now 100% higher than what we underwrote , which meaningfully enhances expected investment returns that increase reflects clearer visibility into incremental operational efficiencies , overhead optimization , marketing improvements , and additional balance sheet opportunities .

Speaker #1: As we implement the Crescent Playbook Looking ahead to 2026 , our plan reflects the consistent execution of our long term free cash flow strategy .

David Rockecharlie: Looking ahead to 2026, our plan reflects the consistent execution of our long-term free cash flow strategy. Our focus is on maximizing free cash flow while maintaining operational and capital allocation flexibility. We expect to run a 6 to 7-rig program across our asset footprint. 4 rigs in the Eagle Ford will span multiple phase windows, providing flexibility to pursue the highest returns across commodity cycles. 1 rig in the Uinta will target our core Uinta Butte formation and continue prudent delineation of the upside across our significant resource base, following the success of our Eastern JV. In the Permian, consistent with our acquisition announcement, we are right-sizing capital and operational intensity with a disciplined 1 to 2-rig program.

Speaker #1: Our focus is on maximizing free cash flow while maintaining operational and capital allocation flexibility . We expect to run a 6 to 7 rig program across our asset footprint for rigs in the Eagle , Ford will span multiple phase windows , providing flexibility to pursue the highest returns across commodity cycles .

Speaker #1: One rig in the Uintah will target our core Butte formation and continue prudent delineation of the upside across our significant resource base Following the success of our eastern JV and in the Permian , consistent with our acquisition announcement , we are right capital and operational intensity with a disciplined 1 to 2 rig program Our upgraded portfolio , enhanced capital efficiency and commodity flexibility position us to generate some of the strongest development returns we have seen in recent years .

David Rockecharlie: Our upgraded portfolio, enhanced capital efficiency, and commodity flexibility position us to generate some of the strongest development returns we have seen in recent years, despite the current commodity price volatility. In addition to upgrading our operated portfolio, we're excited to announce the formation of Crescent Royalties. This is a major milestone in our strategy to build a leading royalties business. We have been active buyers of minerals and royalties assets for nearly 15 years and have built one of the largest and most established minerals and royalties platforms in the sector, anchored by a core position in the Eagle Ford under world-class operators. Today, our minerals portfolio contributes approximately $160 million of annual cash flow. By placing these assets within a dedicated capital structure, we enhance strategic flexibility and create additional pathways for long-term value recognition.

Speaker #1: Despite the current commodity price volatility In addition to upgrading our operated portfolio , we're excited to announce the formation of Crescent Royalties This is a major milestone in our strategy to build a leading royalties business .

Speaker #1: We have been active buyers of minerals and royalties assets for nearly 15 years , and have built one of the largest and most established minerals and royalties platforms in the sector , anchored by a core position in the Eagle Ford under world class operators Today , our minerals portfolio contributes approximately $160 million of annual cash flow .

Speaker #1: By placing these assets within a dedicated capital structure , we enhance strategic flexibility and create additional pathways for long term value recognition . With Crescent's differentiated knowledge , experience and sourcing pipeline , we see meaningful opportunity to continue scaling this platform in a value accretive manner .

David Rockecharlie: With Crescent's differentiated knowledge, experience, and sourcing pipeline, we see meaningful opportunity to continue scaling this platform in a value-accretive manner. Our transformation in 2025 was significant and a testament to the power of our consistent strategy. We are relentlessly focused on building a great business with a great team that talented people feel proud to be a part of. With our success in 2025, we are well positioned to continue on our trajectory with more scale, more focus, and more opportunity than ever before. With that, I'll turn the call over to Brandi.

Speaker #1: Our transformation in 2025 was significant and a testament to the power of our consistent strategy . We are relentlessly focused on building a great business with a great team that talented people feel proud to be a part of .

Speaker #1: With our success in 2025 , we are well positioned to continue on our trajectory with more scale , more focus and more opportunity than ever before .

Speaker #1: With that , I'll turn the call over to Brandi

Speaker #2: Thanks , David . Crescent delivered another quarter of strong financial performance , generating approximately $536 million of adjusted EBITDA with 226 million of capital expenditures and approximately $239 million of free cash flow These results underscore the significant free cash flow generation capacity of our portfolio , and the strength of our lower capital intensity operating model .

Brandi Kendall: Thanks, David. Crescent delivered another quarter of strong financial performance, generating approximately $536 million of Adjusted EBITDAX, with $226 million of capital expenditures and approximately $239 million of levered free cash flow. These results underscore the significant free cash flow generation capacity of our portfolio and the strength of our lower capital intensity operating model. Our free cash flow enables what we view as an all-of-the-above return of capital framework. First, it provides substantial coverage of our fixed dividend. We declared a $0.12 per share dividend for the quarter, equating to an approximate 5% annualized yield, and our cash flow profile provides significant cushion to support and sustain that return. Second, it allows us to meaningfully strengthen the balance sheet.

Speaker #2: Our free cash flow enables what we view as an all of the above return of capital framework . First , it provides substantial coverage of our fixed dividend .

Speaker #2: We declared a 12 cent per share dividend for the quarter , equating to an approximate 5% annualized yield , and our cash flow profile provides significant cushion to support and sustain that return Second , it allows us to meaningfully strengthen the balance sheet during the quarter , we repaid more than $700 million of debt , and we retained the capacity to continue deleveraging throughout the course of 2026 .

Brandi Kendall: During the quarter, we repaid more than $700 million of debt, we retain the capacity to continue deleveraging throughout the course of 2026. Third, it gives us flexibility to repurchase shares when market dislocation occurs. We increased our buyback authorization to $400 million, providing the ability to repurchase a meaningful amount of shares when we believe doing so represents an attractive use of capital. Our balance sheet remains strong, our liquidity is significant, and our capital allocation framework is disciplined, flexible, and focused on long-term per share value creation. With that, I'll turn the call back to David.

Speaker #2: And third , it gives us flexibility to repurchase shares when market dislocation occurs . We increased our buyback authorization to $400 million , providing the ability to repurchase a meaningful amount of shares .

Speaker #2: When we believe doing so represents an attractive use of capital . Our balance sheet remains strong . Our liquidity is significant , and our capital allocation framework is disciplined , flexible and focused on long term per share value creation .

Speaker #2: With that , I'll turn the call back to David .

Speaker #1: Thanks , Brandi Let me close by reiterating our three key messages First , our base business is strong , improving and generating meaningful cash flow , and we are bringing significant momentum into our 2026 plan .

David Rockecharlie: ... Thanks, Brandi. Let me close by reiterating our three key messages. First, our base business is strong, improving, and generating meaningful cash flow, and we are bringing significant momentum into our 2026 plan. Second, our 2025 investing and divesting activity materially upgraded our portfolio. We entered the Permian at compelling value with significant synergy potential and exited non-core assets at attractive multiples. Third, Crescent's value proposition has never been more compelling. We combine investing discipline with operational expertise, we generate substantial and durable free cash flow, and we have multiple pathways to drive long-term per-share value creation. We are larger, more focused, and better positioned than we've ever been, and we believe we are just getting started. Thank you for your time this morning, and I will now open it up for Q&A.

Speaker #1: Second , our 2025 Investing and Divesting Activity materially upgraded our portfolio . We entered the Permian at compelling value with significant synergy potential and exited non-core assets at attractive multiples And third , Crescent's value proposition has never been more compelling We combine investing , discipline with operational expertise .

Speaker #1: We generate substantial and durable free cash flow , and we have multiple pathways to drive long term per share value creation . We are larger , more focused , and better positioned than we've ever been , and we believe we are just getting started .

Speaker #1: Thank you for your time this morning , and I will now open it up for Q&A

Speaker #3: 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 .

Operator: 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. A confirmation tone will indicate your line is in the question queue. You may 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. One moment please while we poll for questions. The first question is from Neal Dingmann from William Blair. Please go ahead.

Speaker #3: A confirmation tone will indicate your line is in the question queue . You may press star two . If you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys .

Speaker #3: One moment please . While we pull for questions The first question is from Bert Jones from William Blair Please go ahead

Speaker #4: Morning , team . On on Crescent . Royalties . Could you maybe help us understand where we are in the the value creation process ?

Neal Dingmann: Morning, team. On Crescent Royalties, could you maybe help us understand where we are in the value creation process? It seems evident to us that the value is not really showing up in the shares, you know, if you use peer multiples. You noted scaling the business is probably maybe the next step. What options are you know, open to, or what options are you not open to to eventually monetize the assets?

Speaker #4: It it seems evident to us that the value is not really showing up in the shares . If you use pure multiples . And you noted scaling the business is probably maybe the next step .

Speaker #4: But what options are you open to, or what options are you not open to, to eventually monetize the assets?

Speaker #5: Yeah . Hey , it's David , great question . I think the most important place to start is that this has been a core business of ours .

David Rockecharlie: Yeah. Hey, it's David. Great question. I think the most important place to start is that this has been a core business of ours. We've built a scale portfolio over the last 15 years. It's world-class assets, and there's significant embedded value in the company, and we want to make sure that investors in Crescent understand what they own. The other couple of key messages I would give, these assets that we've put together are among the lowest cost in the Lower 48. We think they've got tremendous upside potential in just what we already own, but we see significant future growth potential, just like we do in the rest of the business. I'll let Clay give you a little bit more color on that.

Speaker #5: We built the scale portfolio over the last 15 years . It's world class assets and significant

Speaker #1: Embedded value in the company. And we want to make sure that investors in Crescent understand what they own. The other couple key messages I would give: these assets that we've put together are among the lowest cost in the Lower 48.

Speaker #1: We think they've got tremendous upside potential . And just what we already own . But we see significant future growth potential , just like we do in the rest of the business .

Speaker #1: I'll let Clay give you a little bit more color on that Yeah . Hey , the only thing I notice , you know , we view this as really step one in terms of value creation , in terms of allowing our shareholders to kind of recognize the value that we see embedded in the business .

[Company Representative] (Crescent Energy): Yeah. Hey, the only thing I'd note is, you know, we view this as really step one in terms of value creation, in terms of allowing our shareholders to kind of recognize the value that we see embedded in the business. As David mentioned, we kind of see clear pathway for growth. We've been able to compound this business at 20% annual growth over the last five years. We continue to see pathway for kind of accretive growth for the business. You know, we're committed in 2026 to continuing to unlock value for our shareholders with this business.

Clay Rynd: Yeah. Hey, the only thing I'd note is, you know, we view this as really step one in terms of value creation, in terms of allowing our shareholders to kind of recognize the value that we see embedded in the business. As David mentioned, we kind of see clear pathway for growth. We've been able to compound this business at 20% annual growth over the last five years. We continue to see pathway for kind of accretive growth for the business. You know, we're committed in 2026 to continuing to unlock value for our shareholders with this business.

Speaker #1: As David mentioned , we kind of see clear pathway for growth . We've been able to compound this business at 20% annual growth over the last five years .

Speaker #1: We continue to see pathway for kind of accretive growth for the business . And then , you know , we're committed in 2026 to continue into unlock value for our shareholders with this business

Speaker #4: Sounds great . And then maybe this one's for Brandy on the maybe the vanilla upstream M&A . We've kind of heard both sides of the story that this is a you know a seller's market .

Neal Dingmann: Sounds great. Then, maybe this one's for Brandi. On maybe the vanilla upstream M&A, we've kind of heard both sides of the story, that this is a, you know, a seller's market, prices are reaching high water marks, but also that inventory is drying up, you should probably be grabbing inventory while you can. Just wondering if, you know, Crescent thinks this is a time where maybe you do whatever it takes to win a bid, like maybe the Canadian curling team, or is it smarter to just take a step back and catch a few low-price silvers, like the hockey team?

Speaker #4: Prices are reaching high water marks . But also that inventory is drying up . And you should probably be grabbing inventory while you can .

Speaker #4: So just wondering if Crescent thinks this is a time where maybe you do whatever it takes to win a bid , like maybe the Canadian curling team ?

Speaker #4: Or is it smarter to just take a step back and catch a few low price silvers like the hockey team

Speaker #6: Hey , Bert , it's David . I'll take that one . And thanks for an amazing setup . What I would say a couple things Your comment just makes me want to communicate how many significant catalysts that we think we have in the company , but to run through them on the M&A side , we've just completed a transformational year .

David Rockecharlie: Hey, Bert, it's David. I'll take that one, thanks for an amazing setup. What I would say, a couple things. Your comment just makes me want to communicate how many significant catalysts that we think we have in the company. To run through them on the M&A side, we've just completed a transformational year. We think we made a great entry into the Permian at fantastic value. That integration is going great. As you know, our number one thing when we make an acquisition is to get that right. What you should hear from us today is that it's going really well. We think it's gonna be a tremendous long-term opportunity for us. From a preparedness perspective, we're active in the market all the time, we're ready to be opportunistic.

Speaker #6: We think we made a great entry into the Permian at fantastic value . That integration is going great . As you know , our number one thing , when we make an acquisition is to get that right .

Speaker #6: What you should hear from us today is that it's going really well. We think it's going to be a tremendous long-term opportunity for us from a preparedness perspective.

Speaker #6: We're active in the market all the time , and we're ready to be opportunistic from an actionability perspective , which is very different .

David Rockecharlie: From an actionability perspective, which is very different, what we're telling you is we see a huge amount of opportunity even within the company. We're focused on driving value with what we already own. We're focused on making sure investors understand all the levers we have in the business, including, as we've talked about, the royalties assets, which again, are world-class and scaled. The market, from our perspective, we'll be ready when it's there. It's an interesting time right now, but we're kind of always in the market. The number one thing is, are we prepared to be opportunistic? Yes, we are.

Speaker #6: What we're telling you is we see a huge amount of opportunity even within the company . So we're focused on driving value with what we already own .

Speaker #6: We're focused on making sure investors understand all the levers we have in the business , including , as we've talked about the royalties , assets , which again , are world class and scaled , and the market , from our perspective will be ready when it's when it's there .

Speaker #6: So it's an interesting time right now . But we're kind of always in the market . But the number one thing is are we prepared to be opportunistic .

Speaker #6: And yes, we are.

Speaker #4: That's great . Thanks , David

Neal Dingmann: That's great. Thanks, David.

Speaker #3: See you . Next question is from Charles Mead from Johnson Rice . Please go ahead .

Operator: The next question is from Charles Meade from Johnson Rice. Please go ahead.

Speaker #7: Good morning , David , to you and your whole team . There on the on the desire to grow the mineral royalty position .

Charles Meade: Good morning, David, to you and your whole team there. On the, on the desire to grow the mineral royalty position, can you talk about what advantage Crescent has in that, in that process? My impression is it's generally a pretty competitive market, but it's less competitive. There's fewer players as you get to the size you guys are playing in. What do you view are your advantages that let you compound this value 20% year-over-year? Perhaps, you know, is there one geography over another where you think there's the most opportunity?

Speaker #7: Can you talk about what what what advantage Crescent has in that , in that process , my impression is it's generally a pretty competitive market , but but it's less competitive .

Speaker #7: There's fewer players as you get to the size you guys are playing in . But but what do you view or your advantages that let you compound this value 20% year over year ?

Speaker #7: And and and perhaps , you know are there is there one geography over another where you think there's the most opportunity

David Rockecharlie: Yeah, I'd say a couple of things. It goes back to just the core of kind of who we are as a company, which is, we're investors and operators. We've got the core skill set and activity on the technical and operational side that we're looking at assets that we operate every day and paying attention to what others are doing. Then on the investing side, not only are we disciplined, we're very active. It's a core competency. We see and we try to see everything. When you put that together, at the end of the day, we're just opportunistic. There's no difference in how we look at growing or investing in minerals than we do the operating business. It's about patience.

Speaker #6: Yeah , I'd say a couple of things . And it goes back to just the core of , of kind of who we are as a company , which is we're investors and operators .

Speaker #6: So we've got the core skill set and activity on the technical and operational side that we're looking at assets that we operate every day .

Speaker #6: And paying attention to what others are doing . And then on the investing side , not only are we disciplined , we're we're very active .

Speaker #6: It's a core competency, so we see and we try to see everything. So when you put that together, at the end of the day, we're just opportunistic.

Speaker #6: There's no difference in how we think about look at growing or investing in minerals than we do the operating business . It's about patience .

Speaker #6: It's about sticking to the returns and asset profiles we want. And what we've found is we've been able to compound in both of these asset classes over time.

David Rockecharlie: It's about sticking to the returns, and asset profiles we want. What we found is, we've been able to compound in both of these asset classes, over time, as long as we're patient, disciplined, and prepared, and acquiring the assets that we want to own. I do think the track record speaks for itself, but the inherent advantages we have are really who we are as a company, and just really what we've built, how integrated as a team we are, and how well we combine investing and operating expertise.

Speaker #6: As long as we're patient and disciplined and prepared and acquiring the assets that we want to So I do think the track record speaks for itself .

Speaker #6: But the inherent advantages we have are really who we are as a company and just really what we've what we've built , how integrated a team we are and how well we combine investing and operating expertise .

Speaker #7: Got it . Thank you for that . And then if I could ask a question that that drills down on your your Midland Basin position , I know it's relatively new for you guys , but there's another operator that made a made a big really a big reveal about about the Barnett , the prospective Barnett in the Midland Basin .

[Company Representative] (Crescent Energy): Got it. Thank you for that. If I could ask a question that drills down on your Midland Basin position. I know it's relatively new for you guys, but there was another operator that made a big, really, a big reveal about the Barnett, the prospective of the Barnett in the Midland Basin. I know there's been operators who've It's not new that companies have been targeting the Barnett, but there was some new information with some frankly impressive rates. I'm curious, I know you guys have only had your hands on those assets since December, but have you, do you have any kind of estimate on Barnett potential that you'd be able to share?

Clay Rynd: Got it. Thank you for that. If I could ask a question that drills down on your Midland Basin position. I know it's relatively new for you guys, but there was another operator that made a big, really, a big reveal about the Barnett, the prospective of the Barnett in the Midland Basin. I know there's been operators who've It's not new that companies have been targeting the Barnett, but there was some new information with some frankly impressive rates. I'm curious, I know you guys have only had your hands on those assets since December, but have you, do you have any kind of estimate on Barnett potential that you'd be able to share?

Speaker #7: And I know there's been operators who've it's not new that that companies have been targeting Barnett . But there was some new information with some some frankly impressive impressive rates .

Speaker #7: So I'm curious I know you guys have only had your hands on those assets since December , but have you have you do you have any kind of estimate on on Barnett potential that that you'd be able to share

Speaker #6: Hey David, again, and then I'll let Joey and Clay also give you some more context on your broader Midland question. But very specifically, I'd say two things.

David Rockecharlie: Hey, David again. Then I'll let Joey and Clay also give you some more context on your broader Midland question. Very specifically, I'd say 2 things. We think we've made a phenomenal entry into the basin. We feel really good about it. It's going well, and we think we got it at great value. We don't feel any, what I'll call, pressure to do anything other than make sure we get that integration and then synergy captured right. The second thing I would say, kind of before I hand it off, is if you look at really our strategy in action and what we've been able to do in the Eagle Ford, we put together a very significant position really over a decade.

Speaker #6: We think we've made a phenomenal entry into the basin. We feel really good about it. It's going well. And we think we got it at great value.

Speaker #6: So we don't feel any what I'll call pressure to to do anything other than make sure we get that integration and then synergy capture .

Speaker #6: Right. The second thing I would say before I hand it off is, if you look at really our strategy in action and what we've been able to do in the Eagle Ford, we put together a very significant position, really over a decade.

Speaker #6: We're now a top three producer in that basin , and a lot of the resource that we're developing today was not thought to be there or thought to be economic at the time we acquired it , which is fantastic .

David Rockecharlie: We're now a top three producer in that basin. A lot of the resource that we're developing today was not thought to be there or thought to be economic at the time we acquired it, which is fantastic. I would just say we have high hopes for our entire business in terms of the long-term inventory potential, without trying to comment specifically on the Barnett. I'll let Joey and Clay also give you some more perspective just on how the Midland and Permian's going.

Speaker #6: So I would just say we have high hopes for our entire business in terms of the long term . Inventory potential , without trying to comment specifically on , on on the Barnett .

Speaker #6: But I'll let Joey and Clay also give you some more perspective just on how the Midland and Permian is going .

Speaker #1: Yeah , the only thing I'd add , Charles , is clearly , you know , we've mentioned a lot when we talk about M&A , how active we are , and in the market , I think the same thing would apply to resource expansion .

[Company Representative] (Crescent Energy): Yeah. The only thing I'd add, Charles, is clearly, you know, we've mentioned a lot when we talk about M&A, how active we are in the market. I think the same thing would apply to resource expansion. You'd expect us to be kind of very actively following where the market's going there and what opportunity we have. As David mentioned, I think one of the reasons you're hearing so much excitement for us on the Permian entry is that we think there's a ton of opportunity around that asset base. Really excited about where we sit today.

Clay Rynd: Yeah. The only thing I'd add, Charles, is clearly, you know, we've mentioned a lot when we talk about M&A, how active we are in the market. I think the same thing would apply to resource expansion. You'd expect us to be kind of very actively following where the market's going there and what opportunity we have. As David mentioned, I think one of the reasons you're hearing so much excitement for us on the Permian entry is that we think there's a ton of opportunity around that asset base. Really excited about where we sit today.

Speaker #1: And so you'd expect us to be kind of very actively following where the market's going there and what opportunity we have . And as David mentioned , I think one of the reasons you're hearing so much excitement for us on the on the Permian entry is that we think there's a ton of opportunity around that asset base .

Speaker #1: So really excited about where we sit today . And Charles , in regard , we've seen the same announcements on the Barnett and we just consider that potentially more upside to what we've already up highlighted .

[Company Representative] (Crescent Energy): Yeah, Charles, in regard, we've seen the same announcements on the Barnett. We just consider that potentially more upside to what we've already highlighted. Looking forward to exploring that with everybody else and seeing what we can do with it.

Clay Rynd: Yeah, Charles, in regard, we've seen the same announcements on the Barnett. We just consider that potentially more upside to what we've already highlighted. Looking forward to exploring that with everybody else and seeing what we can do with it.

Speaker #1: And so looking forward to exploring that with everybody else and seeing what we can do with it .

Speaker #7: Great. Thanks for the detail.

[Company Representative] (Crescent Energy): Great. Thanks for the detail.

Clay Rynd: Great. Thanks for the detail.

Speaker #3: The next question is from Michael Furrow from Pickering Energy Partners . Please go ahead .

Operator: The next question is from Michael Furrow, from Pickering Energy Partners. Please go ahead.

Speaker #4: Hi . Good morning . I'd like to stick on Crescent royalties quickly . We appreciate your comments and that strategy sounds quite clear towards adding scale , but given that this is a different business model , are the acquisition rates going to be consistent with legacy crescent of five year payback periods at a two times multiple invested capital

David Rockecharlie: Hi, good morning. I'd like to stick on Crescent Royalties quickly. We appreciate your comments, and that the strategy sounds quite clear towards adding scale. You know, given that this is a different business model, are the acquisition rates gonna be consistent with legacy Crescent, five-year payback periods and a 2x multiple on invested capital?

Michael Furrow: Hi, good morning. I'd like to stick on Crescent Royalties quickly. We appreciate your comments, and that the strategy sounds quite clear towards adding scale. You know, given that this is a different business model, are the acquisition rates gonna be consistent with legacy Crescent, five-year payback periods and a 2x multiple on invested capital?

Speaker #1: Yeah , that's right . It's the same . It's the same lens . We bring . So as you know right . This is cash flow orientation on the royalty side clear focus on two times multiple money and very clear focus on Nav per share and free cash flow per share .

[Company Representative] (Crescent Energy): Yeah, that's right. It's the same, it's the same lens we bring, right? As you know, this is cash flow orientation on the royalty side, clear focus on 2x multiple of money, and very clear focus on NAV per share and free cash flow per share accretion. What we are excited about on the business is we've been able to build it the way we built it, with those as kind of our core focus, and that is the opportunities that we see going forward.

Clay Rynd: Yeah, that's right. It's the same, it's the same lens we bring, right? As you know, this is cash flow orientation on the royalty side, clear focus on 2x multiple of money, and very clear focus on NAV per share and free cash flow per share accretion. What we are excited about on the business is we've been able to build it the way we built it, with those as kind of our core focus, and that is the opportunities that we see going forward.

Speaker #1: Accretion . So what we are excited about on the business is we've been able to build it the way we've built it with those as kind of our core focus .

Speaker #1: And that is the opportunity set we see going forward.

Speaker #4: All right , that's great . Appreciate the color there . There's a follow up I was hoping for some clarification on one of your slides in the deck .

David Rockecharlie: All right. That's great. Appreciate the color there. As a follow-up, I was hoping for some clarification on one of your slides in the deck, slide 11 here. By our math, it looks like the implied oil rate for the Q4 in the Permian was nearly 70,000 barrels a day. Represent a pretty meaningful step up from the Q3 level of, like, 61,000. Even more impressive is that you're disclosing 0 turning lines in the Q4. Are there moving pieces here in terms of what was disclosed, or maybe some M&A or other transactions that occurred? Just trying to square that circle. Thanks.

Michael Furrow: All right. That's great. Appreciate the color there. As a follow-up, I was hoping for some clarification on one of your slides in the deck, slide 11 here. By our math, it looks like the implied oil rate for the Q4 in the Permian was nearly 70,000 barrels a day. Represent a pretty meaningful step up from the Q3 level of, like, 61,000. Even more impressive is that you're disclosing 0 turning lines in the Q4. Are there moving pieces here in terms of what was disclosed, or maybe some M&A or other transactions that occurred? Just trying to square that circle. Thanks.

Speaker #4: Slide 11 here . So it looks like the implied oil rate for the fourth quarter in the Permian was nearly 70,000 barrels a day .

Speaker #4: Represent a pretty meaningful step up from the three key level of 61,000 , and even more impressive is that you're just closing zero turn lines in the fourth quarter .

Speaker #4: So are there moving pieces here in terms of what was disclosed, or maybe some M&A or other transactions that occurred? Just trying to square that circle.

Speaker #4: Thanks .

Speaker #2: Hey , Michael . So no additional transactions , I would say that our base business outperformed production expectations in the fourth quarter . So I think we're carrying forward good momentum into 2026 .

[Company Representative] (Crescent Energy): Hey, Michael. No additional transactions. I would say that, right, our base business outperformed production expectations in Q4. I think we're carrying forward good momentum into 2026. I will also flag, though, that Vital did not bring on any new wells since early October. That business was in decline, and that ultimately is what's translating into a pretty flat oil production cadence for 2026.

Brandi Kendall: Hey, Michael. No additional transactions. I would say that, right, our base business outperformed production expectations in Q4. I think we're carrying forward good momentum into 2026. I will also flag, though, that Vital did not bring on any new wells since early October. That business was in decline, and that ultimately is what's translating into a pretty flat oil production cadence for 2026.

Speaker #2: I will also flag , though that Vidal did not bring on any new wells since early October , so that business was in decline and that's ultimately is what translating into a pretty flat oil production cadence for 2026 .

David Brown: All right. Thank you, that's helpful. I'll turn it back.

Speaker #4: All right. Thank you. That's helpful. I'll turn it back.

Michael Furrow: All right. Thank you, that's helpful. I'll turn it back.

Speaker #3: The next question is from Philip Youngworth from BMO. Please go ahead.

Operator: The next question is from Phillip Jungwirth from BMO. Please go ahead.

Speaker #4: Yeah . And congrats on the successful vital integration and increase in synergies on the well costs . I know these numbers aren't always apples to apples across companies , but I think you're at 700 per foot in the Midland 875 in the Delaware .

Phillip Jungwirth: Yeah, thanks. Congrats on the successful Vital integration and increase in synergies. On the well costs, I know these numbers aren't always apples to apples across companies, but I think you're at 700 per foot in the Midland, 875 in the Delaware. I know there's a lot of tough competitors in these basins, but it does feel like there's a nice gap you could reduce. I know we're just getting started, but just wondering how much runway do you see to lower and improving well costs beyond what's being underwritten currently in the asset until?

Speaker #4: No , there's a lot of tough competitors in these basins , but it does feel like there's a nice gap you could reduce .

Speaker #4: I know we're just getting started , but just wondering how much runway do you see to lowering Permian ? Will cost beyond what's being underwritten currently in the asset detail Good morning .

[Company Representative] (Crescent Energy): Good morning, Phillip. Thanks for the question. Yeah, we're gonna be working the DMC piece of it diligently. We do see some great opportunity for improvement. We've already seen some, even in the short time that we've had things moving forward. The other part of it that I always like to encourage people or point out to people, is just the value of slowing down. The fact that we've slowed down, get the opportunity to catch our breath, understand from the past learnings from Vital, and apply the things that we're gonna do going forward. You know, just a slower pace gives us a better opportunity for higher capital efficiency and reducing costs. We're very bullish on our opportunity to reduce well costs in the Permian.

Clay Rynd: Good morning, Phillip. Thanks for the question. Yeah, we're gonna be working the DMC piece of it diligently. We do see some great opportunity for improvement. We've already seen some, even in the short time that we've had things moving forward. The other part of it that I always like to encourage people or point out to people, is just the value of slowing down. The fact that we've slowed down, get the opportunity to catch our breath, understand from the past learnings from Vital, and apply the things that we're gonna do going forward. You know, just a slower pace gives us a better opportunity for higher capital efficiency and reducing costs. We're very bullish on our opportunity to reduce well costs in the Permian.

Speaker #1: Philip .

Speaker #4: Thanks for .

Speaker #1: The question . Yeah . We're going to be working the DNC piece of it diligently . We do see some great opportunity for improvement .

Speaker #1: We've already seen some even in the short time that we've had things moving forward . The other part of it that I always like to encourage people , there's or point out to people is just the value of slowing down .

Speaker #1: The fact that we slowed down get the opportunity to catch our breath . Understand from the Past learnings from vital and apply the things that we're going to do going forward .

Speaker #1: You know , just a slower pace gives us a better opportunity for higher capital efficiency and and reducing costs . So we're very bullish on our opportunity to to to reduce well costs in the Permian

Speaker #4: Okay . And slowing down is actually going to be my follow up here . Just on the base decline . Vital used to give us a year end figure for oil and dose .

Phillip Jungwirth: Okay, slowing down is actually gonna be my follow-up here. Just on the base decline, Vital Energy used to give us a year-end figure for oil and BOEs. Last year was 42% for oil and 36% for BOEs. I'm guessing this is a lot lower today, but any sense on where the Permian base decline is now or by year-end 2026? Just to confirm an earlier comment, can we imply that Permian oil production is also gonna trend flat through the year, similar to total company?

Speaker #4: Last year is 42% for oil and 36% for for BOE . So I'm guessing this is a lot lower today . But any sense on where the Permian base decline is now or by year end , 26 .

Speaker #4: And just to confirm it earlier comment can can we imply that Permian oil production is also going to trend flat through the year , similar to total company

Speaker #2: Hey , Philip , this is Brandi . I think similar to my prior comment , I would expect relatively flat oil volumes . Both in the Eagle Ford and in the Permian .

Brandi Kendall: Hey, Phillip, this is Brandi. I think similar to my prior comment, I would expect relatively flat oil volumes both in the Eagle Ford and in the Permian throughout the course of 2026.

Speaker #2: Throughout the course of 2026 .

Speaker #4: Okay , great . And anything on the base decline or

Phillip Jungwirth: Okay, great. Anything on the base decline or?

Speaker #2: Yeah , on a corporate level , we did pick up a post the merger pro forma for divestitures . We're in the high 20s across the base .

Brandi Kendall: On a corporate level, we did pick up post the merger, pro forma for divestitures. We're in the high 20s across the base, the broader business. Expect to kind of get back to our corporate target of 25% or below over the next 12 to 18 months.

Speaker #2: The broader business . But it expect to kind of get back to our corporate target of 25% or below over the next 12 to 18 months

Speaker #4: Great . Thank you

Phillip Jungwirth: Great. Thank you.

Speaker #3: The next question is from Jared Giroux from Stephens . Please go ahead

Operator: The next question is from Mike Scialla from Stephens. Please go ahead.

Speaker #4: Hey , good morning guys . Congrats on a strong quarter . And thanks for taking my questions . So my first question is around synergies from the vital acquisition in your release , you stated that Crescent had already hit 40 million plus in synergies from the deal .

Mike Scialla: Hey, good morning, guys. Congrats on a strong quarter, and thanks for taking my questions. My first question is around synergies from the Vital Energy acquisition. In your release, you stated that Crescent Energy had already hit $40 million+ in synergies from the deal, and it's causing you to double your annual targets at about $190 million. I was just hoping you could give a little color on what savings you've already seen and what you expect to get to the $190 million. Thanks.

Jarrod Giroue: Hey, good morning, guys. Congrats on a strong quarter, and thanks for taking my questions. My first question is around synergies from the Vital Energy acquisition. In your release, you stated that Crescent Energy had already hit $40 million+ in synergies from the deal, and it's causing you to double your annual targets at about $190 million. I was just hoping you could give a little color on what savings you've already seen and what you expect to get to the $190 million. Thanks.

Speaker #4: And it's causing you to double your annual target to about $190 million. I was hoping you could give a little color on what savings you've already seen and what you expect to get to the $190 million.

Speaker #4: Thanks , Jared .

Brandi Kendall: Hey, Jared, it's Brandi. I'll start, and then I'll turn it over to Joey. With respect to the $40 million that has been captured to date, I would say largely overhead, duplicative public company expenses, as well as cost of capital synergies. Of the 100% increase on synergies, I would say 50% of that is ops related, and then the remaining 50% is additional overhead, incremental marketing synergies, and then additional opportunities to further drive down cost of capital.

Speaker #2: It's Brandi . I'll start and then I'll turn it over to Joey . So with respect to the 40 million that has been captured to date , I would say largely overhead , duplicative public company expenses as well as cost of capital synergies of the 100% increase on synergies , I would say 50% of that is ops related .

Speaker #2: And then the remaining 50% is additional overhead, incremental marketing synergies, and then additional opportunities to further drive down cost of capital.

Speaker #1: And Jared , I'll , you know , one of the things since I've been here at Crescent that's been incredibly impressive , you know , this is going back in history .

[Company Representative] (Crescent Energy): Jared, I'll, you know, one of the things since I've been here at Crescent that's been incredibly impressive, you know, this is going back in history, their 16th asset that they've acquired since going public and have a very good tried-and-true playbook on integration. I've been incredibly impressed at how efficiently we've been able to integrate these assets. The team integrations and operational performance are exceeding our expectations. Just some color on some things specifically. You know, going forward, we'll be increasing the number of wells per pad, which will allow us to implement simulfrac. We're also increasing lateral lengths by doing land trades, so we'll build to increase our capital efficiency there. The supply chain opportunities are starting to come to us now that we're a company of scale, you know, combining services and contracts.

Clay Rynd: Jared, I'll, you know, one of the things since I've been here at Crescent that's been incredibly impressive, you know, this is going back in history, their 16th asset that they've acquired since going public and have a very good tried-and-true playbook on integration. I've been incredibly impressed at how efficiently we've been able to integrate these assets. The team integrations and operational performance are exceeding our expectations. Just some color on some things specifically. You know, going forward, we'll be increasing the number of wells per pad, which will allow us to implement simulfrac. We're also increasing lateral lengths by doing land trades, so we'll build to increase our capital efficiency there. The supply chain opportunities are starting to come to us now that we're a company of scale, you know, combining services and contracts.

Speaker #1: There's 16th asset that they've acquired since going public . And have a very good tried and true playbook on integration . I've been incredibly impressed at how efficiently we've been able to integrate these assets .

Speaker #1: The team integrations and operational performance are exceeding our expectations . Just some color on some things . Specifically , you know , going forward will be increasing the number of wells per pad , which will allow us to implement some frac .

Speaker #1: We're also increasing lateral links by doing land trades . So we'll be able to increase our capital efficiency . There . The supply chain opportunities are starting to come to us now that we're a company of scale .

Speaker #1: You know , combining services and contracts . You know , some specific examples . You know , combining contracts on generators , compression chemicals , tubulars .

[Company Representative] (Crescent Energy): You know, some specific examples, you know, combining contracts on generators, compression, chemicals, tubulars. As I was explaining to Charles, you know, just don't underestimate the value of slowing down. Slowing down gives us better operational planning, which drives better execution. Also, on the LOE side, huge opportunity on the artificial lift side. With our cash flow focus, free cash flow focus, we're focusing on long-term value versus short time rates, so that affects ESP sizing and how we do, you know, the timing of artificial lift swaps.

Clay Rynd: You know, some specific examples, you know, combining contracts on generators, compression, chemicals, tubulars. As I was explaining to Charles, you know, just don't underestimate the value of slowing down. Slowing down gives us better operational planning, which drives better execution. Also, on the LOE side, huge opportunity on the artificial lift side. With our cash flow focus, free cash flow focus, we're focusing on long-term value versus short time rates, so that affects ESP sizing and how we do, you know, the timing of artificial lift swaps.

Speaker #1: And as I was explaining to Charles , you know , just don't underestimate the value of slowing down , slowing down gives us better operational planning , which drives better execution .

Speaker #1: Also on the low side , huge opportunity on the artificial lift side with our with our cash flow focus , free cash flow focus .

Speaker #1: We're focusing on long term value versus short term rates . So that affects the SP sizing and and how we do . You know the timing of of artificial lift swaps .

David Rockecharlie: you know, the list is pretty long. All of these opportunities will be feathering in over 2026, but we're pretty excited and looking forward to getting through 2026 and capturing all these synergies.

Speaker #1: You know the list is pretty long . All of these opportunities will be feathering in over 2026 . But we're pretty excited . And looking forward to getting through 2026 .

Speaker #1: And capturing all these synergies

Speaker #4: That's great . Thank you for the for the color on that . And then just my second question with the earnings release , you announced an upsize and extended share repurchase authorization of 400 million .

Mike Scialla: That's great. Thank you for the color on that. Then just my second question. With the earnings release, you announced an upsize and extended share repurchase authorization to $400 million. Just kind of curious how Crescent prioritizes shareholder return between the base dividend, shareholder returns, and debt reduction in 2026. Thank you.

Jarrod Giroue: That's great. Thank you for the color on that. Then just my second question. With the earnings release, you announced an upsize and extended share repurchase authorization to $400 million. Just kind of curious how Crescent prioritizes shareholder return between the base dividend, shareholder returns, and debt reduction in 2026. Thank you.

Speaker #4: So just kind of curious how Crescent prioritizes shareholder return between the base dividend , shareholder returns and debt reduction in 2026 ? Thank you

Brandi Kendall: Hey, Jared, it's Brandi. I would say no change to kind of key cap allocation priorities. The balance sheet and the base dividend are top. We're prioritizing deleveraging while also retaining the flexibility, where we kind of talked about of all the above return to capital program. Again, I think in the immediate term, it's all about balance sheet. The increase in the buyback, so does allow us to be opportunistic. It allows us to move the needle with the authorization program if the stock is significantly dislocated.

Speaker #2: Brandi, I would say no change to key cap allocation priorities. The balance sheet and the base dividend are top. We're prioritizing deleveraging while also retaining the flexibility.

Speaker #2: We kind of talked about all the above return of capital program . But again , I think in the immediate term it's all about balance sheet .

Speaker #2: The increase in the buyback though does allow us to be opportunistic and allows us to move the needle with the authorization program . If the stock is significantly dislocated

Speaker #4: Thanks for taking my questions

Mike Scialla: Thanks for taking my questions.

Jarrod Giroue: Thanks for taking my questions.

Speaker #3: The next question is from Jonathan Mardini from KeyBanc Capital Markets. Please go ahead.

Operator: The next question is from Jonathan Mardini from KeyBanc Capital Markets. Please go ahead.

Speaker #8: Good morning . Thank you for taking our questions . Just just given the capacity or the ability for minerals companies to run at higher leverage ratios , does the latest spotlighting of Crescent royalties change the way you think about leverage over time , or would you target that one and a half times ratio at the minerals level ?

David Brown: Good morning, thank you for taking our questions. Just given the capacity or the ability for minerals companies to run at higher leverage ratios, does the latest spotlighting of Crescent Royalties change the way you think about leverage over time? Would you target that one and a half times ratio at the minerals level? Just how we should think about leverage on a consolidated basis trending through this year?

Jonathan Mardini: Good morning, thank you for taking our questions. Just given the capacity or the ability for minerals companies to run at higher leverage ratios, does the latest spotlighting of Crescent Royalties change the way you think about leverage over time? Would you target that one and a half times ratio at the minerals level? Just how we should think about leverage on a consolidated basis trending through this year?

Speaker #8: Just how we should think about leverage on a consolidated basis ? Trending through this year

Speaker #2: Good question. I would say no fundamental change to how we think about leverage across the broader business. Long-term target continues to be one times.

Brandi Kendall: Good question. I would say no fundamental change is how we think about leverage across the broader business. Long-term target continues to be 1 time. We do believe that we were pretty conservative financing these latest minerals acquisitions. Right, we expect to be below 1.5 times by year-end. There's clearly just significant asset coverage, just given where this asset class trades relative to that leverage target.

Speaker #2: We do believe that we were pretty conservative financing these latest minerals acquisitions , right ? We expect to be below one and a half times by year end .

Speaker #2: And then there's clearly just significant asset coverage, just given where this asset class trades relative to that leverage target.

Speaker #8: Okay . Appreciate the the details . And just moving to upstream on your on your ego for asset slide . You show laterals in the in your central and southern regions increasing by about 2000ft compared to 2025 .

David Brown: Okay, appreciate the details. Just moving to upstream, on your, on your Eagle Ford asset slide, you show laterals in the, in your central and southern regions increasing by about 2,000 feet compared to 2025. Can you just talk about what's driving this expected step up and maybe how we should expect this to impact D&C cost per foot, in 2026?

Jonathan Mardini: Okay, appreciate the details. Just moving to upstream, on your, on your Eagle Ford asset slide, you show laterals in the, in your central and southern regions increasing by about 2,000 feet compared to 2025. Can you just talk about what's driving this expected step up and maybe how we should expect this to impact D&C cost per foot, in 2026?

Speaker #8: Could you just talk about what's driving this expected step up and maybe how we should expect this to impact DNC cost per foot in 2026 ?

Speaker #1: Jonathan , this is Clay . I'm happy to start . And then I'll turn it to Joey . You know , I think part of that is , as we've talked about our ability to kind of build scale in the Eagle , Ford has given us a huge opportunity to continue to drive capital efficiency by extending laterals , asset swap , joint ventures , you know , just blocking and tackling in terms of putting the position together and giving ourselves the best shot at capital efficiency .

[Company Representative] (Crescent Energy): Jonathan, this is Clay. I'm happy to start, and then I'll turn it to Joey. You know, I think part of that is, as we've talked about, our ability to kind of build scale in the Eagle Ford has given us this huge opportunity to continue to drive capital efficiency by extending laterals, asset swap, joint ventures, you know, just blocking and tackling in terms of putting the position together and giving ourselves the best shot at capital efficiency. Turn to Joey to also advise.

Clay Rynd: Jonathan, this is Clay. I'm happy to start, and then I'll turn it to Joey. You know, I think part of that is, as we've talked about, our ability to kind of build scale in the Eagle Ford has given us this huge opportunity to continue to drive capital efficiency by extending laterals, asset swap, joint ventures, you know, just blocking and tackling in terms of putting the position together and giving ourselves the best shot at capital efficiency. Turn to Joey to also advise.

Speaker #1: But turned to Joey to also , yeah , yeah , Jonathan , obviously , one of the simplest ways to become more efficient is to drill longer laterals .

David Rockecharlie: Yeah, Jonathan, obviously, one of the simplest ways to become more efficient is to drill longer laterals. It's really as simple as that. You know, I also point to the fact that we're increasing the pad sizes as well, which allows us to increase the percentage of simulfrac. You know, we'll be up to 70% of our pads, and South Texas region will be on simulfrac. Those two things combined really push our capital efficiency higher and higher. It's all good things happening.

Speaker #1: So it's it's really as simple as that . But you know , I also point to the fact that we're increasing the pad sizes as well , which allows us to increase the percentage of sonatrach and we'll be up to 70% of our pads in South Texas regional by ensemble frack .

Speaker #1: So those two things combined really push our capital efficiency higher and higher. So it's all good things happening.

Speaker #8: Okay. I appreciate the context. I'll leave it there.

David Brown: Okay, I appreciate the context. I'll leave it there.

Jonathan Mardini: Okay, I appreciate the context. I'll leave it there.

Speaker #3: The next question is from John Abbott from Wolfe Research . Please go ahead .

Operator: The next question is from John Abbott, from Wolfe Research. Please go ahead.

Speaker #9: Hey, good morning, and thank you for taking our questions. I'll just jump to the window for a minute. For a moment here.

John Abbott: Hey, good morning, and thank you for taking our questions. Yeah, I'll just jump to the Uinta for a moment here. I mean, part of your program this year is sort of delineating the other zones in that area. When you think about that asset, how do you think about the optionality of the Uinta at this point in time? It is not as a significant part of your portfolio as in the past.

Speaker #9: I mean , part of your program this year is sort of delineating the other zones in that area . When you think about that asset , how do you think about the optionality of the winter at this point in time ?

Speaker #9: That is not as it is , not as significant a part of your portfolio as in the past

Speaker #6: Yeah . Hey , John , it's David . Great question . I say a couple of things just to hit optionality . You know , immediately and succinctly , entirely HBP entirely in our control how we want to handle it .

David Rockecharlie: Yeah. Hey, John, it's David. Great question. I'd say a couple of things, just to hit optionality, you know, immediately and succinctly, entirely HVP, entirely in our control, how we want to handle it. That's just a fantastic, you know, asset to have. It's obviously intentional on our part as well as part of our strategy. We feel really good about two things in that area. We can deliver really strong returns in a, what I'll call, you know, normalized oil market. We're making great returns there in phase Uinta Butte now. Just the resource potential there is incredible. You know, we've seen our offset operators continue to expand that opportunity.

Speaker #6: So that's just a fantastic asset to have . It's obviously intentional on our part as well as part of our strategy . So we feel really good about two things in that area .

Speaker #6: We can we can deliver really returns in a what I'll normalized oil market . We're making great returns there in face now and then just the resource potential .

Speaker #6: There is incredible . You know , we've seen our offset operators continue to expand that opportunity . We entered there at below PDP value .

David Rockecharlie: We entered there at below PDP value. We feel great about what I'll call just methodically going through the opportunity and expanding that over time. As Joey said, the ability operationally to just go at the pace you wanna go just provides tremendous optionality. We think of it as more or less a 1 rig area for us, and just slow and steady, continued expansion of the opportunity is what we expect.

Speaker #6: So we feel great about what I'll call just methodically going through the opportunity . And expanding that over time . And as Joey said , the ability operationally to to just go at the pace you want to go , just provides tremendous optionality .

Speaker #6: But we think of it as more or less a one rig area for us . And just slow and steady continued expansion of the opportunity is what we expect

Speaker #1: Appreciate it .

John Abbott: Appreciate it. The follow-up question's really on maintenance CapEx and long-term oil. You know, based off your current plans, I guess, you exit the year with 1 rig maybe in the Permian. Let's say maintenance CapEx long term, I was talking to Brandi about last night, is $1.3 to $1.4 billion long term. Well, maybe about 130,000 barrels per day. I guess my question is, if we do see a more constructive environment, you know, in the second half of this year, and as we sort of look out to 2027, 2028, could you decide to plateau at a higher level? Is 1 rig in the Permian really where you want to be?

Speaker #9: And then my follow up question is really on maintenance , CapEx and long term oil . You know , based off your current plans , I guess you could exit the year with one rig , maybe in the Permian .

Speaker #9: You know, let's say maintenance CapEx long term—I was talking to Brandi about it last night—is $1.3 to $1.4 billion long term.

Speaker #9: Well , maybe about 130,000 barrels per day . I guess my question is , is if we do see a more constructive environment in the second half of this year , and as we sort of look out to 2027 , 28 , could you could you decide to plateau at a higher level , or is one rig in the Permian really where you want to be , or could you or could you decide , hey , if we have a more constructive environment , let's just be a little bit higher than 130 long term

John Abbott: Could you decide, hey, if we have a more constructive environment, let's just be a little bit higher than 130 long term?

Speaker #6: Yeah . Hey John , it's David again . I'm happy to take that . Long story short is we feel really good about what I'll call running the business at at a target reinvestment rate .

David Rockecharlie: Yeah. Hey, John, it's David again. I'm happy to take that. Long story short, is we feel really good about what I'll call running the business at a target reinvestment rate, and we've done that all the time. Our key goal is returns and free cash flow. Yes, back to your topic of optionality, we've got the ability to do more everywhere, which means not that we're gonna do more everywhere, but we can allocate our development activity to the best return. If oil development is higher returning, you will see us allocating more capital towards oil and vice versa. As you've seen, the gas market strengthen, we've had more allocation there. I think it'll be purely a function of rate of return.

Speaker #6: And we've done that all the time . Our key goal is returns and free cash flow . So , yes , back to your topic of optionality .

Speaker #6: We've got the ability to do more everywhere , which means not that we're going to do more everywhere , but we can allocate our development activity to the best returns .

Speaker #6: So if oil development is higher returning , you will see us allocating more capital towards oil and vice versa . As you've seen , the gas market strengthen , we've had more allocation there .

Speaker #6: So I think it'll be purely a function of rate of return . And then we actually have oil opportunity in the Eagle Ford and the Uinta and Permian .

David Rockecharlie: We actually have oil opportunity in the Eagle Ford, the Uinta, and the Permian. I think we could do it anywhere, but yes, you're correctly pointing out that we've got good optionality in the Permian.

Speaker #6: So I think we could do it anywhere . But but yes , your correctly pointing out that we've got good optionality in the Permian .

Speaker #9: Appreciate it . Thank you very much for taking our questions .

John Abbott: Appreciate it. Thank you very much for taking our questions.

Speaker #6: Thanks , John

David Rockecharlie: Yeah, thanks, John.

Speaker #3: The next question is from Lloyd Baron from Jefferies . Please go ahead

Operator: The next question is from Lloyd Byrne from Jefferies. Please go ahead.

Speaker #10: Hey .

Lloyd Byrne: Hey. Good morning, David, Brandi, team. Congrats on all the progress. Can I just go back and get a couple clarifications? I don't know if it was Joey that was talking about costs. Another way to kind of ask it, is there an optimal scale for you guys going forward? I'm just thinking about in the Permian or the Uinta. You've done such a good job in the Eagle Ford with scale.

Speaker #11: Good morning . David Brandi , team , congrats on all the progress . Can I just go back and get a . Couple clarifications ?

Speaker #11: I don't know if it was Joey that was talking about costs, but another way to kind of ask it: Is there an optimal scale for you guys going forward?

Speaker #11: And I'm just thinking about in the Permian or the Uinta done such a good job in the Eagle Ford with scale

David Rockecharlie: This is David. I'll give you a sort of simple response and then give you maybe a little more context strategically. What we're seeing is that we've got the scale we need to continue to drive value within the current business around operations. We see tremendous upside in continuing to drive efficiencies across these assets. In particular, as you know, the newest assets in the company are some recent, you know, call it 12 to 18 months ago, Eagle Ford acquisitions and then the entry into the Permian. We feel like we've got plenty of scale there to continue to drive value. However, we think this industry, through cycle, presents significant opportunity for our business strategy to grow through acquisition opportunistically.

Speaker #6: This is David. I'll give you a sort of simple response, and then give you maybe a little more context. Strategically, what we're seeing is that we've got the scale we need to continue to drive value within the current business around operations.

Speaker #6: We see tremendous upside in continuing to drive efficiencies across these assets . And in particular , as you know , the newest assets in the company are are some recent call it 12 to 18 months ago , Eagle Ford acquisitions .

Speaker #6: And then the entry into the Permian . So we feel like we've got plenty of scale there to continue to drive value . However , we think this industry through cycle presents significant opportunity for our business strategy to grow through acquisition opportunistically .

Speaker #6: And so we also see significant scale potential beyond what we already have . In particular in the Eagle Ford and the Permian . And so I think that's what we're looking for .

David Rockecharlie: We also see significant scale potential beyond what we already have, in particular, in the Eagle Ford and the Permian. I think that's what we're looking for. Those acquisitions are all gonna stand on their own, and they're gonna be because we think the value is right, because we think we're ready to do them, and we see an ability to do what we do, which is buy assets and make them better. I think we would tell you we've got the scale we need today to drive significant value on our existing footprint.

Speaker #6: But those acquisitions are all going to stand on their own , and they're going to be because we think the value is right , because we think we're ready to do them .

Speaker #6: And we see an ability to do what we do , which is buy assets and make them better . I think we would tell you we've got the scale we need today to to drive significant value on our existing footprint

Speaker #11: Okay . That makes sense . And then let me come back to Utland a little bit and I know you're it's a nice steady growth going forward , but are there any bottlenecks at this point take away rail permitting .

Lloyd Byrne: Okay. That makes sense. Then let me come back to Uinta a little bit, and I know it's a nice, steady growth going forward, but are there any bottlenecks at this point? Takeaway, rail, permitting. Could you grow it faster if you wanted to? I guess is my question.

Speaker #11: Could you grow it faster if you wanted to ? I guess my question .

Speaker #2: Lloyd , I'll start so we could grow it faster if we wanted . I think we've always thought about this asset as kind of a one rig asset .

John Abbott: Hey, Lloyd, I'll start. We, we could grow it faster if we wanted. I think we've always thought about this asset as kind of a one-rig asset. The basin has really transformed over the last couple of years, given rail, given kind of de-bottlenecking on the gas side of things. I would say no constraints from an oil or gas midstream perspective.

Brandi Kendall: Hey, Lloyd, I'll start. We, we could grow it faster if we wanted. I think we've always thought about this asset as kind of a one-rig asset. The basin has really transformed over the last couple of years, given rail, given kind of de-bottlenecking on the gas side of things. I would say no constraints from an oil or gas midstream perspective.

Speaker #2: But the basin has really transformed over the last couple of years . Given rail , given kind of debottlenecking on the gas side of things .

Speaker #2: So I would say no constraints from an oil or gas midstream perspective

Speaker #11: Okay, that makes sense. Thank you.

Lloyd Byrne: Okay. That makes sense. Thank you.

Speaker #6: All right. Thanks a lot.

David Rockecharlie: Thanks a lot.

Speaker #10: There are no

Operator: There are no further questions at this time. I would like to turn the floor back over to David Rockecharlie for closing comments.

Speaker #3: There are no further questions at this time. I would like to turn the floor back over to David Rockecharlie for closing comments.

Operator: There are no further questions at this time. I would like to turn the floor back over to David Rockecharlie for closing comments.

Speaker #6: Perfect . Thank you all again . We really appreciate again the opportunity every quarter to to share how we're doing and and hopefully the key takeaways all came through , which is based business , high performing with a lot of momentum .

David Rockecharlie: Perfect. Thank you all again. We really appreciate again the opportunity every quarter to share how we're doing, and hopefully, the key takeaways all came through, which is base business, high performing with a lot of momentum. We completely transformed the portfolio last year into a much more focused and scaled business. We think the company has a tremendous amount of catalysts both on the existing assets, but also one of the things we really are highlighting this quarter is the opportunity in our minerals business in that segment. We'll continue to keep you updated as we move forward. Again, thank you for the support.

Speaker #6: We completely transformed the portfolio last year into a much more focused and scaled business . And again , we think the company has a tremendous amount of catalysts both on on the existing assets but also one of the things we really are highlighting this quarter is the opportunity in our minerals business , and that segment .

Speaker #6: So we'll continue to keep you updated as we move forward . And again , thank you for the support

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

Q4 2025 Crescent Energy Co Earnings Call

Request a DemoDemo

CRGY

Crescent Energy

Earnings