VTLE - Earnings call 3 2023 | Vital Energy, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Vital Energy, Inc.

Third Quarter 2023 Earnings Conference Call. My name is Desiree, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

It is now my pleasure to introduce Mr. Investor president, Vice Hagood, Relations. Ron

sir. You may proceed,

Ron Hagood

Thank you, good morning. and

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

Reform those assumptions safe call, today's Litigation are Private be by the including intended provisions be beliefs, of goals, Securities statements. These making to of During our forward-looking expectations, harbor the will statements, we XXXX. describing Act forecasts and covered

actual results from differ our which may a variety these for Our are forward-looking of control. of statements reasons, many beyond

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

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

Mikell Pigott

joining morning, Thanks, everyone, Good today. Ron. you and for us thank

third the and the in exceptional were year. results throughout our of quarter execution Our continuation a outstanding were

are accretive and We of $XX These the record increase announced million are free quarter, we and the cash free a our acquisitions, inventory. X acquisitions on aspects making We third X year. total levels. flow cash also scale, strategy. In add of all high-value flow production to delivering for company of generated achieved

leverage capital coming below investments in our demonstrate reducing guidance improvements, to efficiency capital continue ratio. We and on

the are the that integrated what Forge successfully are earlier and properties completing operators have We those year we achieved. previous Driftwood on and properties acquired wells this outperforming

cost seeing production standards opportunities upgrading progress making reductions operations we Additionally, our to enhancement. and for base future and synergies, are

execute XXXX, plan our ability close on XXXX September. we we in that confidence have high out in communicated the we for As to

creating acquisitions enhance technologies proven through have applying of production. expertise operational proprietary base record value by to our and integrating and We a track

about flow Free expected our XXXX. To hedged have end will our reduce absolute around reduce X.Xx of to production. cash ensure and to oil XX% be debt of decrease cash by risk XXXX allocated ratio the and flow, we leverage

Report is Risk Today, and Resilience first and fourth This Sustainability updating XXXX we also the Report, released as our company's Vital our report sustainability company's the and matters. progress sustainability the inaugural Energy. performance related and on Climate

Methane these have XXXX targets company XX%, levels; the we, achieved by to reduced will emissions third, you In first reports, achieve schedule; from one, of AAA of methane and see second, by greenhouse X the X XXXX baseline years Low that earned Rating, scope X ahead this X rating. environmental XX% gas emissions both TrustWell's

is Energy ever been. Vital now stronger than it's

Our build scale, inventory and us sheet yield to beyond. depth, sustainable position value flow cash strength balance and in XXXX free

Katie I and integrating our to acquisitions. will Driftwood turn details performance additional now the over for operational success the and strong our on call Forge

Katie Hill

share excited and increasing you, quarter our how the for the Thank including down our about properties, and going I'd details I Forge address and the efficiency like successful and still above operating Today, I'm beyond we along increased driving make doing improving Everybody Jason. compliment year capital successful. congratulate organization they progress. entire integration integrate work and and to costs, also full with fourth energized assets, of to will production. Driftwood these acquisitions guidance. To in start, is to assets these are the to X are

capture record creative returns. enhance ways rapidly to to of and track synergies We onboarding our have a finding

new of operations, exception. Forge on drilling all a and deals packages, perspective now Driftwood Forge, DUCs development Our are and have managing acquired turned-in-lines. phases completing From new we on executed no

execution well been outperforming XX%, costs we from our encouraging. by teams. already extremely excellent from been have drilling these nearly work operational The and and development planning is production wells through operator the and process from the has results reduced have successful historical previous by completion All XX% results

It Driftwood similar is asset. the a on story

X the operator. previous the were completed from DUCs have acquired We that

of and outperforming through lift, previous X%. design seeing results We by gains application wells in are first production oil our the resulted frac these artificial from has which

soon we'll cost work and first drill the have identify efficiencies, Energy Vital design like the and will Forge reductions on We wells, significant asset. just we to

hardware We X also optimization deployed months. effort platform, applying and technology from necessary the to to our begin look next that results see production we over

Operationally, and for have already routes we implementing optimized our operators. best practices are lift

wells XX XX team Our the now for to owners. average handling X an is previous per versus of operator

a assets. expenses vital meaningful operating impact In faster operating a scaled also for deployment of the addition to across when allows these on energy platform, this

Forge Approximately XX% on ESP. base production by the of asset produced is

are building the digital our on to increase run the the infrastructure the see onto incorporate these that data same to out in platform, we in Midland wells X% able in field experienced for We production our currently we time potential have base and be Basin.

Turning to costs. service

chain We seeing this a group. They and absorbed of of due had to in certain big supply industry, have ahead capital deflation us keeping great year consistently the this inflationary part pressures outperformed are our we work last our areas some the year expenditure by in year.

price average. seeing goods when OCTG, comparing it the in to muted our XX% positive year. this we about last tend particular, buy to X out OCTG months an deflationary This year, tubular us to reduction year's are but hitting we the our approximate X from impact in or kept peaks to last current needs. also Today, extreme meet tubular costs

XX% factored into pricing services, savings and are XXXX of are have saw our $XXX decrease million where locked XXXX. significant our been of costs For second contracting we for for earlier benefits within budget range One in. in These saw crew, since year. some to $XXX million X/X place completions our this simulation about we a

September, timing oil being in again the price communicated strong asset also Fourth in related capital adjustments. the what was On we X production updated for QX all adjustments across reflected reflect purchase to closing for acquisitions. to quarter total and capital and than front, our recent performance base earlier-than-estimated production date lower guidance we guidance and

also and dates. closing production year to our to In outperformance the execution high production in closing, outlook our third full continuing earlier higher incorporate the the deliver quarter, We teams fourth performance. are expectations in increased quarter

successfully properties production to are new integrating increase We existing our lower assets and and our costs. optimizing

I'll to now Bryan. turn call the over

Bryan Lemmerman

XXXX, other down X facilitate future acquisitions flow cash year to Vital deleveraging have our flow to in Katie. made the X in generate progress close remain scale our we free generating These early our you, closed, substantial spending has and of grow announced disciplined billion, expected ability cash transactions. We significantly November. which overall totaling with debt. furthering Energy Thank to free pay as through and strengthening in transactions capital X to structure, grow sustainable $X.X this accretive

We combined a us had transactions debt we a our debt of thoughtful flexibility. that equity. issuances, When balance finance how equity using sheet and this approach public easy-to-understand resulted provides recent and with split in significant has simple, to these a balanced

all until we of of simple Henry's $X discharge will XXXX transactions, facility debt credit more XXXX, billion closing have conversion notes. and the no Upon the secured of notes of to common maturities structure common and unsecured capital liquidity the a of stock, than stock, preferred stock and

generating debt and We free absolute cash expense. reduce to interest are flow on laser-focused

above long-term expected XXXX We well XX% oil of crude. are price production we average of about our have the at feel prices hedged

unsecured the well balance, RBL pay notes $XXX are interest costs, currently of callable. are to since We even million we that reduce positioned after down have we

cash less in $XXX next targeting the approximately ratio are or of generate to months million a expect over year-end XXXX. and We free flow leverage XX X.Xx by

comments. I some turn for call final the will now back Jason to

Mikell Pigott

operational for Energy want efforts In strength. position with team our all their thank to XXXX this Vital of and integrate enter closing, the I in we Thank assets outperformance, you. will acquire X year. Combined a to

now Operator, the may open for you questions. call

Operator

with one of Derrick Instructions] the Whitfield question [Operator Stifel. from have We line comes

Derrick Whitfield

solid quarter. another on Congrats

light between question, Could For reiterating the of and on previous XXXX your my on that production I year? wanted throughout first with shed understanding the you the activity expectations profile shape the outlook, metrics. focus basins your your output to you're some

Mikell Pigott

really the this for at for point. changed next again, really it's Yes, not we've -- guidance year,

basins. is opportunities I between I team really And in assets the think on that there's new think the on of the one highlighted. working development the things the optimizing X we is outperformance

there's working going we're again, to opportunities be but in it. future, think the So through I there

thing key week. We to Henry be Tall close should closing City this on going closed. They're Maple these and the be getting us, For transactions relatively is soon.

as we'll So little and Kyle of optimize of turn in we're of a closed, very profile those next And for continue reminder, this to the coming on to excited a guidance I'll have year. we've once to But got Again, I'll do give we big on about that. him for that. Glasscock. you it bit over curve. the it he turn can western the over package kind shape

Kyle Coldiron

Yes.

Delaware the can you investment materials, basin as side very the our in see compelling. is in of opportunity the So

how February that, and capital we of as we we plan we'll these when can of to there 'XX. we out integrate But figuring kind a so are kind around certainly be of area. where with out deploy come update to we looking full said, as that we Jason And on out more assets optimize and come in

Now diversified the and side the both Permian we oil in profile the Midland past. and base, the a that -- Delaware can asset we basin. than seeing of have We're essentially have we flatter a across the invest

-- peak But seen 'XX about, years. talked in package XQ to of 'XX. in that's going than coming [ It's in ultimately, past profile Glasscock flatter and view peak ultimately online large ] XQ and we a kind we've XQ as of of XX-well we As ultimately in 'XX. XQ have it's the we've

Mikell Pigott

scale like rigs benefit in X one than running, or there's X you you That's -- of the of got we -- the when the X rigs. had profile production is have more rigs running when volatility

the something about is volatility profile. that's we achieve less in that scale, as we're So excited production

Derrick Whitfield

then your That's your should in -- then more great. share of could of say, first thoughts to in quarter the to Delaware your the specifically the outperformance on versus could benefit I of I speak your legacy initial upside relative ask an And well wells? assessment? some additional of or the for to areas you quarter, drivers more with broad broadly of you experience initial And completion, the

Katie Hill

already belt. -- Katie, few reduction we've couple Just this with the really Delaware. the capital our last over XX% with first We've to months got strong of is a achieved under a Forge remind in Derrick, months the the asset start

capital find ability So to efficiencies. our continue to really to excited see

stable We've the have and to more next the gain have go as and quarter been a that year I on some we a the services services scale able that think of efficiency fact for able to market program, this contract. XXXX we're use under lot plan we to side. already

excited to program really able Delaware. that apply to So in be

the uptime in opportunity a a and on Basin compression. in see a Midland also we that about the will in a success great XX% digital with think improvement uptime application technology achieving seen have lot of improvement We've in we on couple the I Delaware from about as the platform. and deployed X% And of well. lot sort as getting pieces ESPs, assets the of of of That's and top here these next go closed think probably about we're expectation to software that. excited But on then mid-'XX get weeks there. a building in first hardware

Kyle Coldiron

I essentially you Derrick, our also of successful question integration I X, heard Slide a about think asked acquisitions. recent

ultimately production very the profile with kind that high is Looking tight taking results, we with we're there think for I completion impact we've you a the fluid of the that here. see big on results, wells that pumped that of cluster and believe we of with those since high well hit at versus definitely -- combination seeing been of assets involved that think a over and those we've to proppant designed We intensity completion, what spacing. legacy intensity, has wells can the the

our team other The really and strategy. operations artificial is thing lift our

and it We've seeing an we're on aggressive in 'XX a work us assets. and we in these drawdown work have on that Howard for employ here for We seen it these profile new County, strategy us wells. also

Slide So we seeing think that X. that outperformance this also to we're contributes on

Operator

over call There are you. further no back questions turn the I Mr. to at Hagood, time. this

Ron Hagood

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

Operator

call. conference today's concludes This

disconnect. now may You

Vital Energy (VTLE) 3 Nov 232023 Q3 Earnings call transcript