Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen, and welcome to Vital Energy, Inc., First Quarter 2023 Earnings Conference Call. My name is Abby, and I will be your operator for today. At this time, all participants are in a listen-only mode.

We will be conducting a question-and-answer session after the financial and operations report.

As a reminder, this conference is being recorded for replay purposes.

my introduce now is it pleasure Mr. to And Relations. Hagood, Vice Investor President, Ron

You may proceed, sir.

Ronald Hagood

good morning. and you, Thank

Joining are Chief Bryan as Lemmerman, Hill, me Executive President, additional Senior Chief today Vice management Vice Jason members Pigott, of President team. as and Operations; Financial our Katie and Officer; well President Officer;

Private be making provisions During goals, our assumptions and variety control. expectations, be These Litigation which covered the of including harbor forward-looking Securities to safe by today's are the of reasons, of these call, results we those Act statements, of forecasts differ are statements. beyond many may a will forward-looking XXXX. describing beliefs, Reform intended our for statements Actual from

GAAP presentation presentation financial release accessed first are the website we press issued results and press in we release measures addition, and can be to will non-GAAP to In included and detailing reference XXXX. The for operating at be making our yesterday, quarter www.vitalenergy.com. financial our financial Reconciliations on measures.

I'll call over Pigott, Executive Jason now turn Chief the President Officer. and to

Mikell Pigott

Good you today. outstanding for had Energy first joining for Ron. morning, thank the Vital results everyone, quarter. us Thanks, and

our we Our seeing hit impacts and our and Howard production, positive consistent frac that wells been cutting-edge mitigated, impacts both County in have digital of base production are delivering multiyear from technologies improving implementation are are new wells.

of XX% pumps. operated wells our submersible Today, by are

pumps inflationary freezing of e-fleet, due guidance, last efficiencies our artificial came short a and frac to some intelligence pressures weather by also and larger the optimize year. experienced a on to of market. combination differentiates this better-than-anticipated and of end believe basis we the us an at cessation wells using driven hourly are in of the low We holiday in Capital our the from

acquisition, free cash was program two years of high-quality flow crews Driftwood nearly front to the is of accretive the the released. continuing we and eight and expect year, completions acquisitions disciplined achieved our We scale neutrality now to recently of our for quarter closed loaded have the cash frac flow crew inventory. additional our build our for positive While that this year remainder with run to add

We with package Upton acreage in new four-well on are our completed being currently County. active the first

executed these on moving years. our from production areas, and created testing growing As have of zones comes value acquired increased [XX%] last we by strategy, four areas rigs our our we the over the new have new we that have to inventory. now production

per our emissions results resulted I'm a also efforts very XXXX greenhouse advance proud reduction methane organization. goals COX sets gas for Scope us more emissions well of to the to last tremendous goal both of XX,XXX both These emissions This metric our in achievement to highlight tons XXXX Scope XXXX achieving X our represent results. These and up reduce for emissions the to X achievement and year. aggressive emissions combination BOE. X

has strategy to value Energy right shareholders. the for Vital our create long-term

profitably manner. We executing inventory extremely discipline capital sustainable high-quality exercising in a well develop to are our today,

emissions. cash We leverage, accretive continuing lower flow, and through on scale are reducing acquisitions focused to free building generating

pass over Hill Katie now call the operational will highlights. I to for

Katie Hill

faster in These about was our We better several oil solutions and was operations. including driven lower XX% midpoint production efficiency above Total production This higher executed uptime by the of and to our than are wells production well increasing guidance new anticipated, base X% you, new Jason. Thank was drivers aimed at offset the digital result related to very and the positive production peak reaching first advanced midpoint. production of wells. across downtime and operational than application quarter. initiatives completion activity factors,

and We that downtime. teams artificial use in-house lift of operations, artificial and identify compression accelerating and key services bringing have created on intelligence. adoption which associated inefficiencies reduce allows lift we us proactively optimizing to specialized and example, artificial For focus AI operations, compression to

We are lift run artificial performance. run This a to up X% increase time lift time, submersible has and base able culture performance optimize gas real of in XX% time in point supported directly to adjust pump production in and a remotely impacting increase now efficiency. technological innovation

with in Another the and significant to achieve to peak has to By our oil been production contributor results recent dewatering upgrade wells. upsizing County are of able we system, water production equipment rates. program accelerate to Howard new partners higher working our

and completions quickly, pumps can sales. larger more offset addition, oil dewater wells to In by production returning base impacted

a last We have winterization the been able quarters program. from through proactive over weather two reduce to impact the operational

included Our during freeze off downtime. of limited associated production and management proactive colder ahead fluid months, winter operational standards temperatures, dramatically

our addition to in completion In operations. expectations, efficiencies gain continue we to outperforming production

In well packages ahead the of maintaining primary new time electric successfully our crew fleet. the an we new bringing completion to implemented cycle and first converted We quarter, online efficiencies process, two schedule.

four As late midpoint the at full-year wells we of a range. while year of plan result this to line capital now this additional in turn an remaining our performance,

Lease anticipated on operating a basis were expenses than quarter. lower BOE this

LOE While We diluted and remainder water production higher per for BOE of these savings unit believe variable will LOE disposal, expenses by an increased maintaining environment. the was production increasing fixed at per the BOE production $X.XX hold with about year. average costs in

intensity detection greenhouse facilities by monitoring in technology, enhanced emission primarily application targets achieved we intensity and retrofit for non-venting These the and program. driven with our XXXX. continuous of reductions pneumatics were mentioned, Jason methane the As gas XXXX of

gross are monitoring and our maintain inspecting production, cover In regularly to XXXX, of our emissions expanding XX% our operated commitment to we approximately we operated oil continuous every site.

our active further emissions. field even drilling our of reduce including electrification will and conversions and rigs fleet pneumatic electric frac Additional operations,

by our deployment great our a and continuing track across This towards quarter, with in routine technology the of field. work making associated expect flaring and of XXXX. routine we record has from advancing team on XXXX reducing target flaring first our eliminating further we we operational baseline delivered operations. reduced flaring XX% are lower our as In to the this Similarly, progress XXXX, XXXX new

Bryan call for I'll now hand update. financial to a the over

Bryan Lemmerman

Energy's cash the in first Katie. operational the results Katie year, We're first coupled in of better the quarter, production driven by to much Vital success, at breakeven Thank essentially excellent investments. gains with and mentioned flow beginning were financial than the due lower-than-expected investments. anticipated disciplined quarter capital you, the free

expect a and free been year, remainder For positive. be date; cash the the of capital, has degree to Determining commodity to flow we which have strong be of in factors confidence which will we production, price. today; high

by will towards prices rise return free commodity to if generated the debt significantly. reduce to direct cash commodity at cash prices some use and shareholders We business current the flow of

bonus excluding other were $X.XX which inflationary XXXX waiting one-time expenses expenses BOE transaction the timing were associated first quarter expenses, accounting and than in of paid to for Cost XXXX expenses, year, to higher last benefits out compensation XXXX LTIP of line with the and were and BOE. than and accruals lower of our per plans. guidance per the drivers retention both than Primarily related forecasted G&A $X.XX

We executing expect to G&A, around Vital is financially. XXXX, for expenses, the year, in in of and excluding great average is both Energy per line balance LTIP transaction which off to $X.XX start the well with operationally a and BOE historical levels.

on the As remain year, of reducing end will the strong we flow liquidity. free generate debt focused through and maintaining cash we

base by was RBL bank our and capital group were spring strength process, reaffirmed. and our during our commitments redetermination recognized structure the of borrowing Lastly, our

the to will it I operator over turn questions. for that, With

Operator

Derrick question our We Thank you. Stifel. [Operator take Instructions] with first will from Whitfield

line Your is open.

Derrick Whitfield

all Thanks. quarter. on Good a and morning, congrats solid

the firm be For focus book, acceleration a wanted degree two response? your driving your there my higher Perhaps outperforming separating and expectations? the on to your operational production frame the With outperformance new to your the base the just help I well well in first appears EURs very place simply base you separately, of performance. two, your if question, rerate And quarters or could on performance. is new strong in is

Mikell Pigott

part let answer that. of I'll the Katie first

Katie Hill

this Good morning, Derrick, is Katie.

lot couple we being think about last that is the years. performance, base of technology working of production been when I our on a application over the by that we've driven think of

to seeing think of as Howard a gains, realize lift starting those in lot used primary pumps that areas we've type. particularly I in our We're electric submersible we're where County.

base the you new faster of dewatering with been hit is wells that of some have mentioned. but including with the by primarily wells, which So wells, wedge frac, that also

As for the online turn in over of back that Jason, middle but well our to of new about the we're probably wells think few year. performance, I'll bringing we quite a

we So we'll for and of our half new excited be performance weeks. XXXX of wells have the in online the about few are next QX, see those over to coming

Mikell Pigott

we're performance, of the core for the again, say, back to I'd Howard Yes. County.

of get ore up ESP. being we time through like the of faster also real always production that we've right? in is to a I volumes have wells reduced highlight online. That's to start they're an X% And brought we flow high So technology. there more the mentioned, our on They're more that those they're we about up the confidence What's run downtime. great cleaning once system. those, to when annuity, technology why that out XX% the are of is kind due are Again,

from we're we place. the we it four So excited can't this required the to the It's to today. in cultural making get the underscore been I takes in change where to and get technology about buy-in and put point, years are build the us

Derrick Whitfield

TIL line efficiency of the contribution through the be what the follow-up, to assume That's I shift and side the How great, midpoint much And my and wanted raise experiencing moment? versus CapEx. the you year as the would that's Jason. count market? raising it safe is for is you two without the only capital the to to improvement self-help to at market have site over allowing capital And of the of you're gains

Katie Hill

We year, of this frac bit efficiency those around our to from and We're full-year in deployed was year. able additional electric capital benefiting starting plan. bit from competitive to and acceleration which bring starting plan end time, That what the of actually us expectations. the the keeping four in guidance, in to year is but than to improve from wells early we'll So little activity both. benefiting maintain for pull pricing of is market end QX addition a January, we're more think little the also cycle a I we've us midpoint of of wells allowing in fleet again are towards been XXXX the the on in

XXXX inflation experiencing is into end on a little XXXX planned of and have that. a market the bit X% below We

from we're both. So benefiting

Mikell Pigott

Yes.

The good. quarter really performance first was

our can be. spot efficient is crew as Our e-fleet not as

up so And again, the just almost e-fleet, that picking a day. on stage a we're we're now

of pulling one the that's forward. count So the TIL things that's

Derrick Whitfield

Great. for time. your Thanks

Operator

turn remarks. will call the back Hagood to I Ron now for And closing

Ronald Hagood

and in you this appreciate this thank concludes us today's Vital Energy, interest We morning. for Well, your call. joining

Operator

your call, this conference we you And thank today's and ladies and concludes gentlemen, for participation.

You may now disconnect.

Vital Energy (VTLE) 10 May 232023 Q1 Earnings call transcript