Crescent Energy (CRGY) 10 Aug 232023 Q2 Earnings call transcript

Greetings, and welcome to Crescent Energy's Second Quarter 2023 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Emily Newport, Senior Vice President of Finance and Investor Relations. Thank you.

You may begin.

you Crescent's thank call. quarter and morning for second joining conference Good

Officer; and prepared from President, Kendall. CFO, Accounting come today will Todd Ben CEO, Chief Our during will and also our be remarks the Executive Rynd, Clay both David available Rockecharlie; Falk, and Vice Conner Q&A. Brandi

geopolitical securities strategies uncertainties, contain are subject statements these other projections may statements disclosures. including call other may results These volatility, other forward-looking cause business implied and within statements to those risks laws. and complex, the factors that Today's differ our and in meaning and expressed commodity-side global of our federal actual to or from

forward-looking have after today's obligation call. update We no any statements to

today's regarding addition, In may include discussion disclosure measures. non-GAAP financial

historical comparable financial most XX-Q non-GAAP the our available our reference of GAAP please earnings to directly press and release website. on measures a For measure, reconciliation

I'll With call David. to that, turn the over

Good us you for thank joining today. morning, and

results entering our energy that and quarter with the momentum current excited continue market strong markets. second today. you positioned achievements navigate uniquely share to public outstanding remains we're the Our to the since recent dynamics, created we've Crescent

efficiencies across on second performance results operational due our and Our to quarter development strong categories key estimates exceeded program. achieved

increasing to our us allows significantly execution successful Our cash full production year flow capital raise outlook, investment. and less with expectations

transaction position several and our Importantly, improving float operated of offering. to the through adding through Eagle and and we presence strategic scale closing Ford achieved accretive objectives notes since update, our capital our last opportunistic increased the markets Western

X strategic. discuss operational quarter and under me financial, themes: the Let key

First, results. let's cover financial our

per free on million efficiencies lower in capital touch flow. times improved XXX,XXX cycle outperformed of of more results realize optimized through quarter, We invested estimates detail. the to which than million completions, of expected I'll expectations levered production both in we and beating quarter cash continue as and coming approximately Our $XX barrels during equivalent of oil and net day $XXX of second with

us to relative reduction in allowing and per are efficiencies completion realize XX% drilling capital Improving levels. foot cost XXXX a to

of through million, above XX%. EBITDA ticking performance generated production higher also we and reflecting higher estimates, well Additionally, $XXX our oil to cut strong

Our to generating less the production raise To doing us we you more outlook. more give punchline, has less, capital. are with strong performance our with year-to-date allowed XXXX significantly

Our decreased the XXX,XXX of by revised at net increased guidance excluding barrels expenditures, equivalent production acquisitions, the $XXX oil to day while to XX% per capital midpoint, at midpoint. million

year, the current to the With cash at flow commodity our allocate significant we debt repayment to which and expect the to generate incurred majority of we for free CapEx year-to-date intend of remainder prices, the dividend.

Second, I'll on operations. provide update an

cycle D&C Ford, are as much We and in to capital which seeing drive as well continuing Eagle down strong efficiencies, sustainable costs. has improving decreased times reductions are performance, by cost XX%, the

past, touched of we costs, beginning Uinta, completion those beginning side, the to to our while to in reduced efficiencies our on at designs completion we're In capital. the the into on market, are realize translate service a see efficiencies, which And contracts, generate in we're our improving our further our well allow Today, return upside on to capture costs. capital deflationary lead productivity to well consistent would cash On which the softening improving see increasing top us of service we continue savings efficiencies to environment. could due in some more nature short-term benefit quickly capital and to the positioned to cost flow.

are Ford some assets closed early the and on strategic of touch safely Western Eagle the integrating we accomplishments. on I'll the assets Lastly, effectively our and acquisition recent into of In operations. our July,

non-operated the Eagle partner our our institutional given Ford assets a is a While anticipate we long-standing offsetting as operations. knowledge early, it in still our process, and smooth involvement from

keep to active with an market for past opportunities. scale we we this our pulse meaningful for We add existing and broadly, remain emphasis market more highly our Rockies. where on was quarter focused can A&D, the areas the on on Across continue footprint upstream the value-accretive Texas and across

existing in fragmented the acquirer Western which We and proven must an of emphasis to Eagle remains of basins. are a acquisition, we strategy reserves the operations all Like maintaining of meet advantage. most inventory competitive while we returns balance remains returns-driven in major long-life example opportunistic sheet. the framework assets transaction the areas Eagle opportunity accretion, cash-on-cash Ford, scale, and any our on growth with our The strong add a where excellent an our natural pursue have Ford and

we reinvestment competitive opportunities. market, continues where on on attractive buyers, allocation inventory transactions full our be cash production the recent in Permian an a way was other returns basis. steep will many to to to faced add Relative undeveloped assets value Across for real highly believe this see declines acquisition believe expected and we opportunities and flow cycle particular,

including accomplishments, and the markets balance Brandi? over turn activity Brandi, I'll our will on update recent discuss who call an recent sheet. capital strategic to

maintaining with and to conversion, made Thanks, and the public from XX% float a capital our to balance progress our and highly research which improved float, both and great increased markets David. We strong debt transaction market sheet. access our our was while equity coverage recent The capital the stated in markets to in strategic increase awareness. priorities Class line XX% A

a demand structure. incremental investors conversion believe step from key and our drive it represents We simplifying to expect towards that corporate passive

was A large distributed Importantly, managing institutional in the Class no experience existing shares equity to space. and there shareholders, public predominantly to were with investors dilution

The are associated to securities. shares obstructions trading Class A customary subject legal with restricted

and continue remains jointly entire ownership Goff, significant their XX% a the John hold in to in KKR the business. alongside do not participate long-term holder and directly Chairman, our conversion

the upgrade of we're Class Western impact high-yield Ford on Eagle a close BB of we our will a have of cost And capital. A the means acquisition positive Following completion and and the to added the index, S&P. ratings which liquidity conversion, we received from future

of earlier the Moody's received our year. and And this business that execution. pleased our are consistent strength upgrade from recognize the This the we we follows agencies

associated upgrade, the executed the with upsized cap-on a used note an revolver of offering $XXX acquisition. proceeds million with we borrowings our to repay portion Following

we remain becoming of prudent requires Over company, focused financially increasing a the long achieving our our which on goal an way. scale investment-grade in term,

an to balance Now update on provide the sheet.

Following and the cap-on Ford acquisition offering, and we LTM $XXX Eagle financial Western leverage the million maintained associated of close liquidity. an X.Xx strong of notes net estimated with million ratio position below approximately $XXX our

a with of net This million between of our is goal in basis more X.Xx leverage than X.Xx with and line on liquidity. $XXX remaining

our of further We for outlook with debt debt EBITDA. to in will us absolute allow net strong reduce expect to our line cash free leverage target X.Xx flow long-term

the $X our commitment base borrowing $X.X closing of acquisition, our Alongside amount. and reaffirmed leverage the billion electric billion

bank Our relationships navigate market strong critical recent in over volatility us the months. helping few last been have the banking in

for our developed invested returns consistent preserve forma Additionally, hedged capital. less practices, only balance Pro the we on approximately XXXX with and for closing announcement hedged the total the transaction today. added amount derivatives our XXXX X% of the by hedging XX% for XX% were than our the of to further reserves acquisition the and proved of hedged of

prices. long-term exposure to like commodity our continue to We

cash represents a dividend we the which of annualized share, per X% yield. Lastly, second $X.XX announced quarter

of value favorably compare part today. to Our continues offer investors key we return proposition remains to our group the shareholder a and peer

With that, turn call the over I'll back to David.

sets and balance for solid performance expect all and in Brandi, with XXXX up you significant summary, momentum. to XXXX, today. of us our dialing In year-to-date for you, Thank well the enter we thank

through continue the intend to cash business deliver and to ourselves we flow, what to forward, maintaining on of strength. have grow management flow, stable execute hold we to Going to long-term opportunistically done, we'll while our In financial our accretive principles cash so, continue do guiding always proven doing returns. risk strategy M&A

for the call With will that, we open up questions.

question Neal Truist Dingmann comes of line from first the with Securities. Our Instructions] [Operator

margins well My just Certainly, that nice first ramp it ramp the cut noticeable was on productivity a in we show. and oil question or is specifically. overall

talk wondering, went you that was area or Brandi, different for the Like Ford, was this Eagle drove over you anything maybe, could this? I you just wondering, in one operationally driven was there the other? Just more and over Dave,

both in Those the basins oily reservoirs. during We quarter. one were are running rig

as it XX% was XX% quarter. quarter program you oil this cut our driving from really So development the mentioned, right, last there to

about those of second know just bit, and more see hypothetical this but speak are? interesting -- that see. potential increase. was to the on COX Slide flow and I really the I what to when certainly, options and -- cash COX/CCUS-related the your to of to my potential the you just a will still just amount all I'm at cash when thinking wondering, upside. Great storage Okay. And about assets then XX, can mean, flow the just maybe pipeline looking

the seeing a there's operators to you It big I are upside. opportunities how mean, like it around partner? and is lot here, of potential looks

particular It's here, Clay. obvious around operators, it's know, the of hit and but there's think as Neal, activity, bigger I up you listen, here. it. in some you early out some of opportunity Yes, our enthusiasm clearly the

we I intention pipeline own, of a that So EOR we're that business it that was operate. to and just transporting Rockies currently capturing out COX. fields for and that selling putting sequestering is our the highlight conditional on think and We're it we

the we kind bring fair of forward. phases of molecule. cash and the the the we business here to flow, think us kind amount to of really move all for assets we're to the I positions moving set. combination focus specifically commercial mindset well of of the we're too say a infield opportunity capture kind investor early in we as but And plus us opportunity and of infrastructure on So And think

Bank Our next with question of comes John from of Abbott America. line the

for question is there, The first you David.

simplifying We shares did. shares sort to the latest further your the wanted Just on that of the thoughts B your corporate point kind time? in are liked What structure A you conversion latest of this into at thoughts.

from and Thanks, you. John, hear good Yes. to

is I public business we we've we whole as demonstrated think scale. do hopefully, opportunities we've simplify across that to what since the gone see

to know, in you core areas continued So grow acquisitions. in as our we've

a you think dual can that those shares over look we'll think fee B And demonstration that to the A into convert simplify recent further we structure time. up as I at shares class step

expect we've think this business I over impact structure take it at think we'll that. said always us you're continue to recognize to do consolidate it it's that. just Again, away valuable doesn't that of of And continue seeing the all, lot way and type do ways. steps is generally different goes a time, I you business we the that in So do to to but the

the and to gains about the how production, thoughts just but are sort you CapEx efficiency then for your follow-up And point kind still as mean of high-level question given this sort just at of look I during and you think early, of items it. XXXX those of here. that of what saw it's you in the sort Appreciate time? quarter, sorts

this. take I'll Brandi. John, it's

program just really we'd caveating business still I'll haven't to integration a $XXX X- forward. new or acquisition, that production the 'XX with roughly XXX still our But minus program. to process by expect Ford program start equates that we Uinta maintenance into be across day So and high a X-rig Eagle million and the our a it's plus and and at the capital still $XXX million early to level, finalized to a going the on

like the hand There for back to remarks. I'd queue. are no further closing David Rockecharlie questions in it to

Great. all company. joining the for for us Thank and supporting you again

can we've set do do. to to the we're to that continue continue we what on You and count said to strategy going us execute forward

and So updated quarter. you look next talk everybody forward to keeping to

you teleconference. for Ladies does your participation. and gentlemen, Thank this today's conclude

this at wonderful You and may lines your have disconnect time day. a