USEG - Earnings call transcript Q3 2024

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Operator

Good day, and welcome to the U.S. Energy Corporation Third Quarter 2024 Results Conference Call. [Operator Instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Mason McGuire, Vice President of Finance. Please go ahead.

Mason McGuire

good and operator, you, morning, everyone. Thank U.S. to Welcome Call. Energy Conference Corp.'s Quarter XXXX Third Results outlook; Financial Executive Ryan a and operating strategic our Smith, more discuss our Officer, company's provide our our Chief detailed will review an financial will Mark Officer, Zajac overview of of the and give Chief results. results

accompanying financial available The closed quarter ended the our yesterday, market a press the section website for together Energy issued of are press at XX, results XXXX. presentation release Investor Relations After www.usnrg.com. U.S. summarizing in release, with operating materials and our September

A the Today's may business reports filed discussion described may projected due no contain call forward-looking Except to Securities during from and the that financial as earnings significantly with various financial statements measures obligation in results may risks Exchange please conference about uncertainties, our Actual the release to latest our forward-looking available Commission. the statements update quarterly future in to in expectations. our periodic call. reconciliation we by those disclosed note and law, today's statements. Further, and differ non-GAAP measurements non-GAAP risks full including and required be are presentation. of GAAP undertake forward-looking this

to like the to that, With would I conference Ryan call turn over Smith.

Ryan Smith

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

recent dedication development reflect resilience the team These to our the momentum well and positive efforts. our business results. quarterly our Turning as as of from operational

tested with believe promising the to to show and industrial nonhydrocarbon evaluating concentrations our up X.X%. Montana target project, October. the independently plans we results Focusing helium to production have significant gas what We're on this late first made acquired of been which economically we our quarter currently progress of zones, are completion finalizing well in recently

zones where to XXXX throughout concentrations. helium year we early similar plan with a anticipate second ahead, the Looking aimed commence developments additional at similar we drilling well in

costs on in use our stands for as about driver represents also capital drilling below building move of step next project with but existing Energy came a these forward that this robust our decrease as U.S. to U.S. enthusiastic initial platform. expect initiative efficient a the its industrial remain program serves markets. our confident we own and only opportunity, value well Energy we towards capital as gas compelling Montana economically projected an while the highly heightened We a drilling not This relevance with Importantly, substantial positioning in foundational year. costs, and our

so Based base balance anticipate U.S. existing development drive in sheet. into realistic our level, on realized funded far, supported that economic is asset that capital will both with these the clear data can gathered for and expected economics. be plan at achievable of the to from infrastructure Energy's field we several and by a the This flow highly continue reasons our directly impacts advantageous positive spending to wells

to parameters the will confidently time the our also execute on base forecast asset our will XXXX not us only ahead, planned wells strategically but productive enable define Looking and our development further line. of production

is important production Lastly, in and vast lowest contrast, initiatives its environmental are from transaction of assets streams United industrial recent hydrocarbon-based background aspect our an I gas highlight assets helium the largely the strategic new Montana. in of helium Kevin of want majority to the footprint in the project U.S. as essential It's Dome one note gas our byproduct the of and to States that of extraction. country. the of as positioning Energy's this In kind a nonhydrocarbon-based natural

as our the to our provide and continue regular updates completion by We initial progress extremely results drilling well, on advance. we'll encouraged first from are and we

oil completed divestiture, our price We included for reached assets. a Turning over this across South the both quarter approximately day, improvement net Adjusting to the roughly per of in of per the XXXX. of the properties of quarters at effectiveness Texas a sale million. to purchase of Coast and dedication end production which oil and daily our our managed team underscores second $X.X X,XXX Texas for our third oil gas XXX the July the significant barrels the first legacy earlier of year. day, progress equivalent of successfully operations barrels sequential who and equivalent of and Gulf effects This flooding remediate East

the quarter, mix third the of and balanced remainder gas for NGLs. natural For accounted a oil our with of consisting production, total of XX%

majority out production As the advancing gas profile base be our the share repurchase and asset legacy of plan recently balance company's completing towards efficiently we the allocated industrial strong sheet close well, our maintaining supporting will XXXX, integrity. of capital our drilled

that Additionally, opportunities M&A we capitalize remain poised with organically to align gas generated growth on industrial strategy. our

Montana our our XXXX we into and disciplined legacy execution assets while sheet for that truly As these into capital make monetize head believe year deploying transformative will Energy. balance management. U.S. strategically efforts We continue a will we maintaining project XXXX, the to of

While Energy similar legacy evolving maintain and operational other capital, any to internally generating and scale cash to for economic asset we sales. With to production from steady strategically landscape. that us nondilutive from allows derived stands access allocate strong development in that flow minimal flow compared energy assets highly significant of returns. E&P energy project, capital apart deploying capital predictable a firmly project we're companies peers capital our development require of an that scalable cash today's generated maximum exceptionally alongside position U.S. to We both believe are course, in with requires development and

withstand At to the we remains responsible to that value complex the efficiency, and well commitment market sheet ever-evolving discipline us on energy opportunities and underscoring positions are our ensuring resource seize prepared steadfast navigate of sustainable approach U.S. fluctuations focus emerging our Our dynamics Energy, and balance management, operational creation. to industry.

growth to returns the approximately meaningful shareholders. favorable average company an our activity conviction price has our intensified to shares. repurchase repurchase share alongside capitalizing we on of X% to by core dedicated shares cash market for insider underscores the consistent available we and conditions stock drive our deliver flow. repurchasing one our are buying our third leveraging share, highest that ahead, quarter, representing repurchased per In program. look at current management date, at meaningful we and prudent announced To and As our outstanding continued of is return XXX,XXX of This previously $X.XX the our free opportunities executive and share valuations both strengths

sheet A and We debt quarter plan to continue to we balance strong is a top priority ended the X pleased this on we our move report U.S. credit forward. Energy, outstanding with always as I'm activity for facility.

of asset unchanged, capacity asset our our recent sales, solid despite company's remains the platform base. testament to underlying and Importantly, value borrowing foundation a

access recognition accretive actionable, sheets, that hurdles, growth and is listings United In public is U.S. opportunities non-hydrocarbon emerge. Energy exchange the company gains and growth-oriented balance in complex at as marketplace, of industrial this structures, deter scalable a confident The closing, uniquely by competitors the distinctive positioned forefront the equity Energy U.S. as constrained investors. institutional we position in and space further free our gas-focused that in highly limited a capital are majority will advantage of first-mover States. stressed true are from these

of will Now a provide Officer, the the I Mark Zajac, results quarter. introduce detailed would our financial update third like to Chief who on Financial

Mark Zajac

Hello, you, everyone. Thank Ryan.

third prior volumes in reduction XX% a for by period XXXX. key offset areas. It's to amounted production the operating the $X.X in approximately quarter's prices. financial last of million, gas year. severe Let's same realized details delve decrease reflecting in million attributed from events Total into recall for sales of the was that XX% to the and $X to weather partially several This quarter oil a in decline impacted quarter increase was by our important

demonstrates Texas in online, by production quarter's ability This bring the third production to early issues weather-related divestiture, quarter. South which our our offset back closed

of production total oil oil revenue for continuing our quarter Sales the from demonstrating focus our optimizing our XX% on assets. contributed

quarter per The LOE prior per to Our second the repair increase the with BOE quarter, third in versus consistent the quarter. expense million, approximately due lease $X to associated per third the is taxes was Severance in ad daily million, $X.X BOE costs totaled $X.X from $XX.XX approximately and events equivalent and operating quarter-to-quarter production volumes $XX.XX last BOE year. prior the decline same XXXX valorem in period in million of with reduction a weather for quarter for reflecting from divestitures.

As a the these during percentage sale revenue, gas quarter. total oil of approximately for and taxes X% accounted

we reflects decreased This to $X.X third when compared general Cash, lower million when expenses of and ago. same year have was as and our divest period Year-to-date, reduction cash helium to on period project. and of million and administrative same compensation XX% general XXXX from overhead focus a the of the of for $X.X decrease and a properties a variety compared costs XXXX. administrative expenses the quarter

to third quarter net net an revenue. third compared partially company reduced the offset reported loss of $X.X due performance. the when in in financial to by XXXX $X.X quarter XXXX, our a to improvement million Turning of of reduction significant operating The costs, a million of

general Our prior in reduction year, total quarter compared adjusted by of EBITDA stood last proceeds expense of $X.X same in from a third notably hedge cash, million most and the XXXX at influenced million in $X.X the to receipt and period. administrative the period

on briefly our Let's balance sheet. touch

pleased at in facility, ensure standard XX, our $X.X operating forward. we our with initiatives initiatives of support sheet and balance in on no position debt to performance In financial cash that credit are objective September million our demonstrate growth and way of to there results XXXX, is ability outstanding to confident As a a any are company's the may $XX excellence, that company's we maintains the going was full a support entertain stood conclusion, we able million. discipline process integrity. reporting and maintains our and high balance feel sheet My that our

Thank morning. participation you your for this

We to are take now questions. ready your

Operator

comes D. from Today's with Sobelson Jesse Capital. Instructions] question first [Operator Boral

Jesse Sobelson

Good to needs now that and the curious, can these of anticipated you and balance helium online then? to on between progress just investors happen you'll remind hear sheet. able what assets I'm great be bring to is what the

Ryan Smith

question. Good Yes.

as ultimately the plant the start selling get to helium, So then is a know, place process and to you you'll streams et processing ultimate goal cetera. in

take looking long the So range wide how a be a we laid this the we X originally gas at built. ultimately to it on drilled, to going to point, gathering It's a some lines there's pretty time and will for like plant what light sooner between line, than think somewhere through expectations wells probably walking that's feeding plant, it's get thought. of streams X

year. can we're chance full an sooner. So But kind right still moved to that have quarter commissioned line a that and delivered fourth next sales. of sticking over-under to little production now, think being significant the a next year cycle of up I there's X do to right on October that, plant now, at we're get early time based of on looking very

Jesse Sobelson

Awesome. things It pretty sounds going like are there. well

focus selling a question it In I be think open of gas the another guys ones. your on acquiring the pure-play mention still consideration to comments, M&A be that's to with continued additional are just over assets legacy what hold Or prepared longer things. on here appears the and both here new you assets specific angle a industrial gas you on expecting to of did follow-up And side and for oil me. Is the company? term? to M&A

Ryan Smith

Yes.

full and to gas for kind run of goal the So it this platform create ultimately is industrial stop.

again, range active. forward for assets, private et assets trade-off on still assets family deals a public type asset good M&A the and flow with it's the what public-private The on That I valuations secret, small that no dollar give very of at E&P in type view take, valuations. we these very small it's and smaller market pretty define industrial number X-year I'll is mid-cap value M&A can the cash the mean, I'll of million -- sub-XX get bigger ugly On I a E&Ps future term and redeploy trade Montana, at on, market, by or call tough disconnect. very to into said, near on smaller offices, if gas us. being done equity whether legacy funded cetera, least pull is the side,

advantageously think continue in to Montana. our see to gas ultimately us E&P continue expect I assets with sellers. E&P So noncore in and leaving you project that Montana see us I kind industrial that you our of to -- us pick will our to off continue

are platform We and -- all oil. the the to all think strong have. it's margins, et close assets cetera. the operations of to by It's like all Eventually, that we because has those I of covers message overhead, go, our now where just it E&P streamline it

I side, anymore. you what I'll should where going company hand of it type fitting make side acquisition be forward just front you model level think in call, have platform, whether or E&P the That's don't expanding public acquire looking we're assets is probably of the strides more acquire on us terms you see I the been this think at, kind not see In the the usually what more I assets hand. specific. at on us because aren't on gas smaller-scale go the infrastructure producer side the of stuff M&A do they that industrial

So ones summer repeating bit and legacy active E&P. that like-kind a in then further we're acquisitions definitely myself our the looking just at this we opportunistically made little to divesting

Operator

from John next our Johnson comes of And question Davenport Rice.

John Davenport

at points or on to the us line able concentrations either was line report if might on when be data helium some a on time might time a would I available additional reserve helium be? you give curious be

Ryan Smith

John. Yes,

we points, our a in complete first up of setting Right targets Montana is terms couple the economic. soon plant of here to most to will kind going we're as X able in well and to have phase weeks this feed that that think So now, gave operations of flow as from back. data possible. we going a Ultimately, back we're deemed the this we with up first be analyzed

pretty next year, very the out just big we put a of think Christmas update time. I the data at So first post always point, part the ops

you data can against think every more weeks, it be fulsome of do whenever going when multiple to something we just I incremental there. I get again. kind couple that's out of points

January, to on the the I whether content release flow cetera. early that have from it's zones more well we rate, public further sometimes this respective So December or that goes early of data et from think to completion data helium everything

our just reserve more the group hand doing side, that of on as third-party report data hand asset. kind we Ryder the they reserves get in then is And this is run Scott for

daily same they very to relatively reserve time, forthcoming the in I a mid-January working side. the now, I them early, and basis around come with be that probably order. on think short whether But expect we're very in on it's

Operator

next question Kurtz ]. from Investment our Tom Research from comes And [

Unknown Analyst

to full the plan, X follow up in have you mentioned, processing cycle, helium Can you you on or like plant wells, finished goes X October. everything

that the from guidance, may for can for you without us Looking EBITDA and the revenues next tell XX or months giving mean just what helium program.

Ryan Smith

Yes.

line, that time working is right, have that where good that, we want shake out on we're personally to get where to for I a think I fairly So on before on going at we see it. feel to we still an offtake agreement. get

Unknown Analyst

Okay.

want -- you So don't okay. to

Ryan Smith

conservative and but the see this isn't that. coming that in guidance plant, begins think give that number, I type we'll number a right? that's guidance use, after. number content, get we and on -- allocation I $X take that's this give a just or determined on on based this based And stalling I an of mean $X a because But capital little that rates, fairly and that requires assuming first one, I'm rate think ranges haven't the cycle I once million helium give plan to we plant down, the number we plant, size go it's there's a flow a time for think you yes, that, on the a run formal EBITDA line right a and million, think year. number kind fair of I zones of on accurate And yet. annual now, nitrogen-based first range. that's again, tightened that's And bit based on to full we formal next to all at

Unknown Analyst

And going well it. $X it on cost, down. that said drilled? you per million Is helium keeps well about Got still the

Ryan Smith

corner operations That's an lay a probably the our setting process it got be I $X.X was we first getting for, up drilled that sure to dollars make drilled, up land, there it in This just going to and this about think the sure good Cadillac that well AFE Undoubtedly, X around think very had right. well, drill. knew we XX-day -- right I most mandate there, the just first we literally drilled going make expensive this a cut wasn't million. first zones internal the one, was to of saving well was was a to

we see percent this XX-plus it's once down coming going that going our always realized forward, X.X. the I number, now power one. There's but more zones, start to think Going cost after we probably in X, singular upgrading significantly, that on with that we rig bit we come little little know a from first down little swag one a number a need

Unknown Analyst

And helium looks? outlook now? it a lot XXXX of look give Can kind pricing? of it. that look does and for the you helium What's how look contract of I or is see based, on you can pricing? where guys how primer you us Got into at a that but sort that know

Ryan Smith

question, way and kind is end the helium we with low we look Yes. on number agreements. Spot don't call it which and the of necessarily of you range. offtake the so it based but with the I to So on this $XXX producer $XXX deal right? the I modeled is No, broker Historically, I in the contracted middle has because much numbers at the has user. a and larger the gave broker apologize, manned end, have to best isn't a know what number, exact the see on great that based

price the middleman. seen get you're process so a the paying cut kind significantly here, on not end I'll improves because only there's You've and smart out because that broker many that you're the realizing say, couple of of which groups, users

the the of number that, see end what the into we is in low of low that. to we We model to end $XXX forecast type market. So of $XXX

I it the that to ask, that's we're type. keeping our significant what going in think range least especially at that we're -- on of range, who to low towards forecasting But But you there's to some there it of end an which in user, high range a end is now. have going varying kind seeing that number, going is depending comfortable going we're forecast upside do. to directly to that number There lower. the try bit mid-$XXX out have there's little higher, the

Unknown Analyst

oil more in numbers? The from One for the changed and be will it Or the PVXX, that quick a one. good. sounds much number? It XX-Q, me, has July gas new

Ryan Smith

It actual million. don't our little we will be It's right I around is number. million the corrected. that's got in the post I SEC wrong filing. filed $XX materials. give bit $XX pricing with think number reserve or take around sorry, in -- I'm where just now, It's a a

Unknown Analyst

Okay. that's to I big a was drop. going say

Ryan Smith

Yes.

Operator

this any question-and-answer over concludes gentlemen, turn conference and to remarks. session. I'd for the closing management Ladies the to like team back the

Ryan Smith

thank you. in working This and have Ryan doing is joining project new Smith. deck XXXX on with results we we're you market about coming and call. excited here. next We us. on updating our speaking the our look Thank a We that to big on have what We're we're and very forward on year the for and projects we the think we

Operator

call. We presentation. attending all you, today's Thank sir. concludes conference thank for today's This you

may and wonderful disconnect You a your now day. have lines,

U.S. Energy (USEG) 12 Nov 242024 Q3 Earnings call transcript