USEG - Earnings call 2 2023 | U.S. Energy Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to U.S. Energy Corp.'s Second Quarter 2023 Results Conference Call. At this time, all lines are in a listen-only mode. [Operator Instructions] This call is being recorded on Monday, August 14, 2023. I would now like to turn the conference over to Mason McGuire. ahead. go Please

Mason McGuire

our and Corp's operator, Smith, everyone. to overview Welcome Chief company's discuss Thank outlook. strategic Quarter good XXXX Energy of an provide Second Officer, Ryan results Results U.S. and Executive the you, will morning, operating Conference our Call.

presentation including turn due the materials, that Except Exchange described risks that, to in in GAAP would from disclosed to our the and required significantly and be Actual non-GAAP available release, forward-looking discussion Chief are of Mark no as of expectations. X and full operating conference our the reconciliation to differ earnings and available non-GAAP by presentation. undertake press about risks reports Securities please section Commission. note with statements. we accompanying provide XXXX. may Further, financial obligation those for Investor the various the projected Zajac, Our ended latest a measurements website future of statements Today's uncertainties, call. Ryan financial June filed review periodic are forward-looking This call financial may law, summarizing detailed Financial Smith. Relations With press A with may during in to release business over this in like the measures results. U.S. the financial to call quarterly release and Officer, at I today's months XX, our www.usnrg.com. results Energy will statements the more together issued a results contain forward-looking update

Ryan Smith

this of our an to and the joining strategic as to on share some provide you I'm quarter, outlook. everyone, today. well for pleased you thank morning, as Good strong highlights from update with us

day, net production our quarter reflect total over the per of production accounted of resiliency of daily a Energy. XXXX. our Our of achieved We our Notably, XX% oil team in second production. XX% oil the consistency under equivalent just same here marking barrels increase at U.S. X,XXX quarter and for results dedication,

I'm highlight particularly to proud our management. achievements in cost substantial

$X.X representing came $XX.XX second expenses underscores compared continued against and flows through XX% operating This BOE, to or to costs. operational million, and in backdrop per XXXX. service to of lease achieved commitment of efficiency significant reduction Our impressive quarter at the increased rates, was our XX% reduction, including the respectively, everything, a elevated which

Energy We improving Corp. both cap stronger outlook. other believe stands and from a pricing and U.S. industry oil continue that gas-producing in out to macro this backdrop dynamics companies micro of

production dollars require flow profile, assets to and our cash effectively current capital. returns us Our minimal leading to a steady to maintain allowing predictable allocate capital to maximize on

approach making Our us market weather landscape. to to navigate us evolving opportunities, on and fluctuations the capitalize energy prepared well also allows

focus resource underscores all U.S. commitment value drive at which Operational sustainable creation. Energy efficiency, to responsible of and Our management, discipline balance remains sheet clear. our

forward, favorable conditions we leveraging to deliver As and move shareholder and remain we our market dedicated capitalizing returns. continued on to these growth strengths

of shareholder the the bolstered share repurchase second through these initiatives, our we initiation $X the adoption during further returns our program. quarter, In of million program

of to repurchase positive returns witnessed is the most market. Ultimately, the mid-quarter, greater pleased that no in began X% results, share shares we only mandate is the outstanding different. shareholder allocate While we program the highest-return are and that repurchased X/X with we to our response of generate program projects capital our than and our our

is see as to return will high marketplace repayment. current continue to to repurchase the of by the to company's end, opportunity plan company's The that I'm the pursue. consistent at the continued I a as we and and steady shares and dividend our program through we share To accelerate repurchase halting debt the levels announce in of acceleration repurchase something capital pleased of program reallocating valuation our of

set of second summary, increased that in advantage cash the that and for us to were help commodity These was prices of earlier made while flow. positive allocation take will high-margin achievements generate positioning growth capital In stage in exceptional decisions steady, year. cost terms results production, the the of control our quarter initiatives

an Our profile, continued common capital allocation opportunistically to strategy our our emphasizes attractive capital our commitment and efficiently. maintaining stock leverage repurchasing utilizing equity

can Our our that increasing equity By bolstered unlock goal to our shareholders. for shareholder all of returns continue believe expanding to our assets return and with operating the of initiatives, remains scale by areas. our acquisition scale our we align core we greater

on leadership second of provide like Now, will KPMG, that, wonderful financial would energy Mark Mark With addition Financial the detailed results to finance, introduce update a the for to to and experience team brings our a has a quarter. Zajac, Officer, who years I new Chief I'll primarily to at team. been it and turn as over Mark. in our many partner our

Mark Zajac

everyone. Hello, Ryan. you, Thank

amounted last financial the for Total for from quarter decrease a million, into of Let's in same year. to important the oil quarter primarily XX% to the realized the relative delve last year. $XX.X $X to note sales approximately this prices. the period details second in realized the that event to quarter million was gas pricing reflecting It's and a of This XXXX. quarter's was decline attributed reduction most significant

we on Sales the in of of realized our focus XX% oil seen the oil in XXXX. though the continued have revenue environment demonstrating improved from optimizing third quarter, Looking experienced contributed our see production pricing forward, assets. our prices don't the we total quarter third we quarter, for

quarter of to $X.X expense necessary This and the programs. workover acquired lease BOE, quarter completion the the in attributed approximately for an assets reduction be of reduction equivalent indicating to second operating integration Our XXXX. of successful costs to impressive XX% per was $XX.XX can second the million, per-unit compared

for the quarter reflecting $XXX,XXX second last million, period Severance year. totaled XXXX decline valorem same ad taxes $X.X the in and approximately of from a

to or second XXXX approximately per and As a the Form sales X% million, of expenses primarily natural $X $XX.XX million, Cash, was of oil for in quarter the the administrative filing or in taxes these BOE, for prior compared $X.X XX-K. the approximately quarter. the per percentage of increase during This revenue, part gas to period. our and to related accounted early of total attributed BOE, the general fees incurred professional reached second $XX.XX quarter roughly

our million a net The per of second net with reported of $X million performance. to in $X.X loss in $X.XX or $X.X XXXX. quarter reported $XXX,XXX financial of or breakeven This diluted the per share quarter effectively of XXXX. contrasts Turning loss company a share second or of the income or

of in decline from in period the year, prior the prices in the by last adjusted excluding the Our compared $X.X most notably stood commodity period. the EBITDA, to $XXX,XXX hedges, million same impact XXXX at of quarter second influenced

touch balance Let's briefly sheet. on our

credit As of debt of facility $X million on of the the million. company June XXXX, XX, credit an held available revolving with outstanding line $XX

position $X.X our cash stood Additionally, million. at

we our your conditions. and our lines. participation We and the in we're our financial conclusion, this confident with resulted leading results. operating in feel excellence I'm a circumstances strategic navigate that ability have each standard In to performance Thank would to to the and under normal in to interim meet to high remain our believe you market given annual goals our ability reported for accuracy, results and quarter outstanding pleased ensure pricing the headwinds charge committed morning. of reporting that are time

ready We questions. to your Thank are now take you.

Operator

at Hutton. Instructions] EF [Operator First Tim from Moore question comes

Timothy Moore

for ROI. better on the share accelerating suspending buyback dividend the move Good and

think was brilliant. I that quite

to Great his a Mark bit love only impact maybe decision. weeks. maybe Mark I'd focus little make of XX But I background. bit what think his You might there. can better Can or on it's just a so far -- share you can been hear KPMG you learned? out, enhance given a starting more more insights know maybe

Mark Zajac

Yes. for weeks. undertaken been has Tim, the the bit last a Thanks, XX question. Quite in

great assessing field. M&A opportunities the Mason It's Improving working the a or silos, be with as operations Look or ahead relationships Looking Ryan. team, opportunities at a team individuals and it processes of and a us. experience, really all tighter well. future, to great with building of financial our forward lots whether the and forming of and people, been in across functional opportunity

Timothy Moore

think about How could increase the quarter quarter do production? a you think the production? helpful, WTI That's are the third second you just a small up sequential third Obviously, Mark. higher-level do from maybe for you prices into on quarter oil. But Great. And see question.

Ryan Smith

this Tim, Ryan. is Thanks

through now. mean I close not I'm pretty to right quarter, Third halfway going to now. to we're increase guide an back

saw where comfortable course pretty to this those, consistently as like we're asset of well base, It rating up time, quarter. et X%-ish, the at, run increases think just as run over the ends we of kind we're like X%-ish decreases I pretty year. the the unfortunately, leads cetera, sometimes

expect the where a I kind expect we've So I wouldn't been. significant this of would maintain of ballpark step-up. to

Timothy Moore

expense? just consistent. $XX.X it's think even -- pretty forward? But good And Ryan I'm fairly million think in trying that's going think should Do even And it of darn cash drive That get some peers cash operating forward. operating G&A be about makes will leverage better I Mark, you and we maybe locked consistent, is better if to of off the G&A going think some than incremental that maybe, sense. scale now? pretty you to margins probably how

Ryan Smith

I was know number stock in, in I was -- is there number. number, but an I think think mean, which all I Yes. that in all-in that some all

been in as SEC since it's et that I been run consistently pretty up popped our So the larger at filings, it's exercised growth, we our [Indiscernible] cetera. just kind continually cash January G&A, items a onetime bunch 'XX. of of that transaction the And rate of been think it's did we have company,

the are of smooth behind operation where we've and of where finally our that unexpected all spend. the kind or one think point can items hit some us onetime out of I most to the of we

He I for to now. are will then this team And one. Mark, his not answer on good very but and

mentioned, those savings which this professional where Q most services, past and the annual on and and filings, quarter. silos quarterly K there, really kind focusing of he experienced specific you already getting specific costs and we've buckets see smooth As down

quarter, so to the it quarter, on third might show we catch-all. rate that up current XX-plus savings the I the stuff expect move those on we've fourth be us lot forward, quarter absolutely So I the think lot soon. G&A, be of percent as cash our there's not for expect I of room probably relatively statement. of A a But run whole improvement beginning income basis, realizing implemented kind to on in during a a

Timothy Moore

mean, I wonderful that's Great. hear. to very

the profitability XX%, If you and nice flow. can through would cash be to the close flow anywhere that get for operating

gears I'm smaller So mean, shifting of I in prices, to curious, the the are you months know a at What few from I you targets? in come twice you terms targets are kind on else Or with maybe asking And last again, your bit the some bottleneck And reasonable the maybe that the Ryan, of growth what private maybe that? public they are but is of an valued near would down how side valuations inorganic more just Have acquisition something stock. reasonable? in end, deals. are getting seeing more doing source make there the term? your guys valuation? delay is seeing

Ryan Smith

Yes.

-- So more I first and I I the if under I'm little weather. apologize that guess raspy, question part sound a of --

part much, asking of still the has do question, much, lines, the deal down and way first the The what we lot transactions We prices all to to million larger where that. And $X see $XX flow of million than up a gone? the much the see?

it, of the ago, the a out left. think they've lot sold have those X have market, sellers and between in and XX weaker-handed lot months of a the folks last I been call of but --

sellers I to willingness the what dropped. has take think is now, see definitely I the equity

out I that marking any had don't it's the be kind capital. value very guys you big There to for books your marking there's And public good where to there that think access next the I really equities see as buyers is question, that between have goes guys of do and valuation. said, your on to who bottlenecks? daily. I are a discrepancy, think private their deals

line rates knows, significantly. X% see now. most source, The I necessarily is of depending people's within aren't gone on bottleneck capital capital The ranges right markets companies. open there And energy pretty as biggest for X%. have it gets equity facilities, that's when everybody to And expensive. top up reason, credit borrowing out size, your The around

balance of give sheet. XX% this That's U.S. cost over-levered, And it you deal of M&A capital a think on. ahead necessarily out for just hypothetical we're that to make XX% to know I an around that I to into of farm deal right? think with I structuring a need away the And just us to what it's kind something So not in get is don't Energy don't think you incremental It's you the time focused come do. see sure bottleneck. creative of something going

Timothy Moore

to helpful, question, really next. and That's Good. turn one follow-up last over Ryan, I'll whoever's it just

you that for be to can -- for of overly leverage, to an leverage might are maybe related what Just you it maybe But talking debt lever. remind don't ideal comfort? X.X like we debt makes that? EBITDA your maybe it X.X, something Is to sense us acquisition, want net max

Ryan Smith

If the mature right? I'll wells. forma, of mean -- profile I the intended my guess, that Yes. buying are little on ideal or -- here pro something a we asset a pun I bet bit no a profile, right? little hedge is on more conventional

we go flexibility to to buy I be strip, exposed hedging unconventional if and while an think a we little package. stuff, and the probably have more

that hedge out. type asset us see you think of I

Timothy Moore

it Great. operator. questions. I'll for I this. that's back to And my turn really it the appreciate over

Operator

Instructions] appear be questions. Thank to no further There [Operator you.

You may proceed.

Ryan Smith

U.S. This Smith, appreciate in is further again you I and calling Energy. there's Energy. interest with U.S. for Ryan questions, thank your Thank in you. no If continued

Operator

this and ask we concludes that call you conference gentlemen, for thank We and your disconnect you for lines. your participating, today. please Ladies

U.S. Energy (USEG) 14 Aug 232023 Q2 Earnings call transcript