VTLE - Earnings call transcript Q4 2024

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Operator

Good day, ladies and gentlemen, and welcome to Vital Energy, Inc.'s Fourth Quarter 2024 Earnings Conference Call. My name is Jericho, and I'll 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. Ron Hagood, Vice President, Investor Relations.

sir. proceed, may You

Ron Hagood

good and morning. you, Thank

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

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

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

yesterday In addition, presentation can Press accessed Reconciliations included measures. measures release at we financial be are www.vitalenergy.com. at our be issued will in the to and afternoon. non-GAAP GAAP release financial reference and to press website making we presentation

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

Mikell Pigott

joining results possible results Energy thank like our and Vital taking would again last us. assets morning, relentless over our are without not review. outstanding delivered the would Prior there areas to the X pursuit you quality Good your to years. to improve I of The quarter. have for X this questions, been

results; XXXX our fourth inventory efficiency how additions and will our First, quarter enhance forward. second, significant they going capital our

flow. outlook, Third, on generating our combines which disciplined XXXX free investments focus and cash a

debt reduce maintain strong a will we and how Finally, balance sheet.

guidance had and operating exceeded strong about that were year and end by this results Energy total talk oil Consistent quarter. top performance financial driven Vital the both with all XXXX, Let's of in the fourth production. quarter. results our for production

production interest This This from by September. a net than Energy strong increased little we quarter. from million benefited carried to about interest on last our guidance. our Point impacted due investments some bolt-on were D&C that acquired developed the $XX primarily working acquisitions and a production during increased Capital the and higher package. We assets was from capital

continue our of make We significant progress, reducing are delivering Point sustainable per This on guidance outperformed was full $X.XX operating results. first operating with we LOE to cost our the costs X%, properties. by our happy and at We BOE. quarter very our acquired assets,

capture were projects to will little LOE and to but deferred together expected around first cost both bring efficiencies $X.XX Some a our quarters BOE. per average higher, are quarter

to reduce LOE free continue below per track We as beat XXXX. of performance flow. delivered adjusted EBITDAX we on to the by BOE Financial $X and strong be end expectations cash

the quarter. resulting into first Some timing paydown debt are the shifting nuances

$XX a acquisition closing in in related receivable acquisitions. increase million the accounts Specifically, million to of and Point non-budgeted the $XX

was million be net to year-end down expect approximately total levels, debt January below $XX XQ $XXX debt paydown we million. and already

early oil-weighted Since Now XXX XXXX, locations, talk in and have significant inventory about our We current let representing me more our XX by positive than inventory. total pace. of our move development drilling have than oil-weighted approximately years at more XX%. we increased the now

drill lateral targets to a increases additional cost provide some provided little that additions drilling were the I'll delineation inventory on related and sustainable and efficiencies. deeper Recent changes deeper these of length color.

lateral average year. XX,XXX last the increase XX% First, over of is feet, our inventory a length now

changes price extended we and reducing have we to inventory average XX%. total, future WTI footage as have even our out improving of oil life. inventory our barrel approximately lateral the per increased approximately In by instrumental $XX developable These quality been our in breakeven

capital current our levels our ability more into of to price and maintain This makes resilient the well efficiency future. supports wells

C, and we in significant drilled the the D Next, deeper wells inventory horizons. Barnett. Wolfcamp derisked in XX XXXX, we In the Wolfcamp

time. long The in confidence put XX,XXX locations a productivity allowing inventory us lateral additional those C Wolfcamp the feet, wells the us D than an the and the us gave in to to Wolfcamp understanding first of giving had lateral formations, more add tests the These length Barnett, D. in robust formations average newer of for Wolfcamp

Third, wellbores extend Inventory stranded wells enhance XXX barrel access now lengths, operational into X,XXX-foot shaped $XX successfully of wells breakevens XX,XXX-foot Horseshoe-shaped consists well, to WTI. have $XX and X convert and resources used have lateral new we approximately by returns. competencies X improving per that to

later breakevens step, barrel XX,XXX-foot that taking wells wells on wells. now to X drilling We'll are wells first We with this around WTI. be opportunity into wells by XXX our straight to the those around X per J-shaped $XX convert wells, concept package XX,XXX-foot reducing J-shaped in convert XXXX drilling approximately another XX

would with Utilizing have estimate we to been XX,XXX-foot per X,XXX-foot that shaped we have way WTI well drill horseshoe-shaped about project, we novel of breakeven acquired which the in Basin will to A begin the laterals. X-mile section stranded $XX around developed our We wellbores that have wells drilling. are barrel. of and designs, through XX average combined a is an heart Midland leasing we

million pay We for paid the that amount. an we'll in with Xx wells X additional have and to estimated approximately the well for an carry, per $X.X these where area section acquired million $XX operators consistently

added to XXX we further delineation. additional in the that XXX the in currently wells addition identified can wells In inventory, we future have have an be with

more to details XXXX on turning outlook. our Now

including per deliver XXX,XXX oil to of per equivalent barrels XX,XXX oil day, day. to barrels to XXX,XXX XX,XXX We of expect

full XXXX X,XXX Our production XXXX year less barrels expectation per outlook. than initial oil our about day is

as turn-in-line timing County our as of year. delays online package the completions to These of wells, delays is production development and for pushed XXXX due the later on underperformance included until program. defer late came that a will which out in This Upton in of and drilling packages a few inventory focused in wells in future tests the well delineating

non-budgeted investments, flow million to million. to adjusted $XXX million deliver expect capital we $XXX $XXX at $XX oil. prices, our of Total commodity excluding free be are Current to expected acquisitions, plan cash approximately

extend capital completing the improvement net in plan optimize and grade Basin of laterals the to amount XXXX capital drive and our to XXXX continued efficiency versus costs, in to shifting is less lateral Efforts feet have Delaware expected high to in significant to invest more our a capital same as XXXX. XXXX. expecting We development while

is our flow on existing and our Our cash investors. optimizing today focus squarely for assets maximizing

large-scale line morning. we As acquisitions allocate all substantially again deemphasize will a for open now flow the you for net result, Thanks potential and debt. this can our free reduce joining cash us questions. to Operator,

Operator

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

Neal Dingmann

the here, results My as appear first good, of I couple be to Energy but Point looking just least really team, this than was the thinking specifically just and better, discuss I you you, to wondering, early I'm straight you're call things, was I to the -- doing jumping about results if would the -- you're what not your a drive activity question how all maybe expecting. prior seen upside? you've versus and at early results I'm at it, could just estimates that slides Katie,

Mikell Pigott

over to that turn I'll Katie. Neal,

Katie Hill

areas love but integration Neal, on we We're we few has downtime base early, outperforming There's been asset. the were that the wells. this a smooth. seeing really better-than-expected

than are coming early of expected. stronger wells new the online Some

that's to able going and costs some already We've efficiency seeing drive LOE capital some are been 'XX. of to the carry into down

QX, said, initial about our So like really outperforming performance in expectations. the you excited

Neal Dingmann

Awesome.

sort the secondly, -- just delineation were recent you just just Upton of Upton you issues? mentioned, you just limited would something expectations. can then there might prepared wells, your It around And just remarks just be of little as seemed potential activity. well into a this bit few you And Okay. well County in call Jason, also under the little the I'm wondering, an got bit what area? to isolated discuss a the a

Mikell Pigott

and Yes, actually took what drill on thank our program a were has of newer formations. location. well there. Lower Spraberry These related Wolfcamp wells. It's to primary County Upton part you. just issues fostered wells us The year. the Barnett out this We were The core are to A

We wells data we edge incorporate kind test wanted of want wells. east them they where have with west. operator offset test move these strong as these these were play, just not and into These zones to And as the the had to would -- development was of as we are before performance And we full traded great. liked. an we we

in zones in that year, each the we right challenge The quarter. Wolfcamp these highlighted. last We online multiple guidance. as was Wolfcamp XX wells drilled C, other is tests coming B Barnett, done were and outperforming We've our gave we production

up. when dip wells on time production highlighted. it efficiencies And see year. We'll We'll go and come in you'll through the throughout production the back. little these grow to disappointing what just in And a capital earlier year, our a grow is takes catch program to we've continue then that little are

you us. think no if of But business, part targets, added that of we had lot the unfortunate, any just a in Basin area highlighted No, these to successes. we in wells And unfortunate deeper but but impacts. XXX other areas time to morning Point for complete the they're of the taken are plans primarily that year. into this account moving Delaware inventory other focused that Rigs then of and those this all Midland our wells on has we

Neal Dingmann

XXX slide upside, that was locations, impacted what that That to XXX that's going I not shows ask now.

Mikell Pigott

they're sir, it. adjusted No, for

Operator

the from of from comes Zach JPMorgan. question next line Our Parham

Zachary Parham

for little wells on the give you more bit a you where those those zones Really added that sit? color detail the just areas the just talked you zone about locations? locations in deeper and looking In XXX Can inventory slide, a earlier. on us more geographic

Mikell Pigott

Yes.

the our these on that inform Slide some of we've deck, used we the tests done to add So of all in that were them. or I'd tests to X decisions say highlight

able different well good talked So really length, are B, to among zones, is about we've these economics that in areas. those team as us additions how sprinkled the kind areas deeper drill of really Wolfcamp And the formations. evenly enhances they're gotten because longer helps in lateral that, the again, we've those results which say I'd C, laterals, from

Zachary Parham

County And core a at then follow-up, low added you some acreage cost. very Midland in my

million You location. $X.X mentioned per

in bit all these that a to drilling acreage of? some opportunity You along of something your you horseshoe Is stranded areas? blocks in than core kind peers. more single-section take to little add of the Do of could advantage see an laterals seem potentially be set further all you

Mikell Pigott

we there's team wells, mean XX,XXX-foot when types focused I where of that things the wells really on we we is things focused Yes, position that this this. very year. and our to it's acreage is are white and A&D, XX,XXX-foot can X there's something like think next space on, of only make --

The leases that. team expiring job because come did are of the times, these opportunities flexible. and being of great a lot things A like

because here soon. we going through be to December, pretty So bought it and few we're in a this jumped we hoops drilling

normal a it at move the what to XX,XXX-foot wells. just us because schedule operator them -- then have more for a over for being they and $X able X,XXX-foot work would make On you're we paid being much well again, us wells. economics just Diamondback per So into this We release, million. the pay you're than taking

So does I with of create rig schedules thinking team the incremental really like able value a great and to be things to this. flexible incorporate be think box job to our outside

Operator

next of the question comes from America. from line of Bank Hungness Our Noah

Noah Hungness

was budget? wondering question, first see last we If think that I impact do XX my than For tariffs. these the on what on have more CapEx steel would just your kind tariffs of months, impact you of

Katie Hill

little out really through If a and see into out exposure bit it that's extends less the on we OCTG, most we tariffs. to secured 'XX, potential contracted. of have We're 'XX most where

for probably opportunity there's very start through the those pass year. providers to costs, that but exposure think of of this little to some some service I

Noah Hungness

then And you debt tree deals of that between moving versus guys the do we And about about the forward paydown acquisitions more done? my if debt how these second up? think should how you. for could think we Got decision pop have question, small paydown

Mikell Pigott

#X debt the strategy. We're be mile, It this opportunities like thing. X takes focused we're us of I think, going off on -- to entirely get paydown that to as

at cost But pay to opportunity we're have per a in those really wells relatively this trying do $XX bring we'll when year. an day. So debt to every cash flow free of low down put to you our all substantially well, breakeven

lateral And X% equal the then XX,XXX-foot thing in X,XXX we're a feet addition, that a at a When lateral to the only go XX,XXX-foot just is lateral it really lateral I other extensions. improvement well think, looking takes, to cost. we from

extra X,XXX going $X breakeven reduce more. or you're an when by feet, So you

of that's our we quality And our the that of So average improve of inventory, are do you're improve When team what have is increase look stack quality of lateral at that to ways those push how long you of the well length quality we real we the can the inventory. our inventory focus of in our improve length is a this take seeing inventory our length inventory. and inventory. and the from to

Operator

the from Our Abbott of next John line comes from question Wolfe Research.

John Abbott

so when is were really think or drilling year. new some actually testing about you and about new there. zones Just program curious, drilling some your your this new aimed areas much new your it's zones And program program, -- how potential? you testing drilling When Upton in towards of you

my And in question is talked XXX think terms those? second upside these progression then a How about derisking do like of about as locations. follow-up you've the you time

Katie Hill

the the early really 'XX appraisal between year of we dedicated Midland. when Very our we high-return, of going of towards John, the the the Southern in half and a confidence 'XX In of at have in the capital high locations. rest mix is program, Delaware look the asset, Point capital or little the our bulk risk year, is opportunities. to second

done job inventory We've proving couple and last good of the a years, this over co-development in mode. are out really stage at

at rush delineate to the those. locations XXX look in we're mentioned, we not that upside a you As

Those are in zones. deep

confidence We high them. have in

the direct have we've direct offset, control. subsurface that XXX added of Some that

way have or the 'XX. of a and not work in we portion outlook opportunity an 'XX our So to really in that through deliberately, substantial it's

So I into to that kind effort would think the pull that there's of core. multiyear take it start to a XXX

John Abbott

second for oil? I half question squeeze to year. for I mean, by really exit Any be can would the up the year appreciate rate year-end in one this catch I in this it. what quick If of plan you just there. idea other

Mikell Pigott

this I -- think profile We're of kind is going be. the is the where V-shape. we expect to year to production a shape of

year. of we'll of So the little the then up at bit have lull a of and ramp midyear kind end

Operator

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

Ron Hagood

Energy, for our your interest concludes appreciate much very in for and call our you Thank call. us Vital joining We morning. this this

Operator

This call. you concludes joining. for Thank today's

You may now disconnect.

Vital Energy (VTLE) 20 Feb 252024 Q4 Earnings call transcript