CRGY - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, greetings, and welcome to the Crescent Energy Q2 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reid Gallagher. Please go ahead.

Reid Gallagher

Good morning, and thank you for joining Crescent's Second Quarter 2024 Conference Call.

will CEO, today CFO, Rockecharlie; remarks Kendall. Brandi prepared come David from and Our

Officer, and available Todd President Accounting Chief Our Falk; Clay will of our Rynd, also Q&A. be during Investments, Vice Executive

of from and factors contain our may differ business geopolitical results expressed statements forward-looking the laws. and Today's that commodity implied actual in the to price to call securities risks projections federal subject conflict, other may including or statements cause strategies other statements disclosures. those within and meaning uncertainties, our and are global These volatility, these other

We forward-looking call. have to no obligation update statements after any today's

today's discussion addition, financial regarding non-GAAP measures. In include may disclosure

For comparable available press reconciliation the release historical please to our and measures most GAAP website. earnings a on directly non-GAAP reference of financial measure, our XX-Q

I over CEO, to With turn it our that, David. will

David Rockecharlie

Good you morning, us. joining and for thank

to and another over have eager We go quarter get to great started. today, we're

details, few this hope to Before want begin into get a call. take the you with we I I away points key from

our significant attractive invested cash our strong returns on business flow capital. results, generating continues First, and to produce standalone

guidance our standalone increasing the expectations continues second as for efficiencies capital production and improving are We our time this for capture to team development spend the program. in year for

our we SilverBow Second, on transformative Resources. closed of acquisition

to We our and merger elected are original new in our almost proposition in ahead. grateful and go-forward to for consideration the the their approve our belief to order the Crescent SilverBow in voted shareholders participate trust company, from value equity unanimously shareholders, highlighting who take

the assets on personnel growth-through-acquisition the our forward a represents on we accretive our and step identified. synergies company largest Eagle the business, and one new are Today, premier combination we've integrating focused complementary with delivering This Ford. rapidly of and significant for positions in major creating another

a free flow stability our to overall generation. production combines and proven inventory low-decline of base long-life, enhance a cash production of assets locations drive which profile, advantaged substantial deep business and of SilverBow The development

and tripling going And finally, the we've positioned. to strategy in on size flow, cash of profitable better investing forward. Crescent And X last both our confident over growth I'm in Through has disciplined executing the continue never been ability our our operations, production years. delivered of business

a assets, investors potential portfolio a of uniquely and through established accretive, business. free with which large-cap scaled a change cash value combines operator Crescent of a record business. of SilverBow capital a transaction growth and we and The track offers balanced represents must-own growth proposition stability We mid-cap of Crescent capabilities a as with M&A. a have substantial compelling disciplined believe mid-cap with a for allocation company, discipline, proven value framework our high-quality and demonstrated returns-driven the step the significant flow

we getting are in Ford, Today, the we started. and leading just have Eagle a position

bit I highlights, detail, our will quick beginning in things those Following with second standalone a more discuss now quarter results.

solid free quarter, this execution. performance EBITDA beating again driven consensus We expectations both had operational strong cash financial flow by on and

Our ongoing with production in impressive improvements team to another of continues capital costs. quarter our outperformance deliver results alongside

have increased we year the the outperformance for Crescent consistent full standalone capital team, with expected quarter business execution quarter's consecutive from guidance the this production With lower our expenditures. and for second

flow and we've Eagle for efficiency, momentum more Ford, the build and production capital. increase capital to delivering In continued cash less

practices field, forward by prior operator average able to we double roughly Western over by fall, industry assets accomplish to of the demonstrating improvements look assets best we been with bringing to the production the further and We've the the date. acquired. We taking well per the Eagle are to results this quality seen well since last sustained acquired seeing meaningful Ford and productivity the we to in

to million in $XXX the since million Western with across uplift relative our synergies to Eagle active field. by of purchase roughly cash significant Ford initiatives captured acquisitions combined improved a the well addition of price $XX driven In flow performance, number we've annual

operations of more field is This First XX% where the combined blending and foremost management and successful our to significant introduction investors. execution, cash our oil simul-frac campaign with have costs capital the have versus active and incremental flow underwriting. efficient generated by improved up for well

in going invested We We've our expected capital Eagle to see forward. to to our with the also investment continue solid intend returns performance multiple area to this time begun Chalk Chalk development the production Lower to Ford, our from early Xx Western Ford capital results in Austin benchmark. and Eagle of with allocate Austin in generally exceed line

of opportunities, hurdles benefits immediately cash returns NAV it share, of profile. and improved was extended it closing excess strategic opportunities increased and operating two, is substantial in synergy enhanced per flow most business. accretive market also scale, the of compelling the acquisition significant transformative This point the an we've for to inventory life but in our Moving our returns and seen one credit the SilverBow to with with provides acquisition. only number capabilities, cash-on-cash Not investment

This largest is inventory portfolio with transaction schedule, a broader and of of and underway. deep, supports compelling We that positions returns as were firmly the SilverBow acquisition one ahead the a in alongside long-life Eagle close low-decline, the of ConocoPhillips EOG able integration high-quality to Ford through well Crescent and cycles. operators production

our from value combined we increased business asset about talented overlap, and and synergies accomplish our opportunities with needle-moving what ability operational a very as in working and organizations base and We're are we see scale high-quality our incredible the we together. for significant future optimistic both company, create our people investors. the confident of for can incremental With to

roughly great of capturing cost through offering improved end our ahead in also of target made a successful bond the million high capital towards SilverBow and in expectations our relative the synergy of of expectations, to or strong exceeding May, or business with results for second announced generate performance quarter. has combination SilverBow's standalone. announced continued X/X line since closing we to We've $XX already strides our

our efficient operations free value safe, combining and growth-through-acquisition returns-driven flow-focused our to well investing. with together, we is positioned Coming believe cash delivering strategy, business continue meaningful from

we X Eagle X rigs the with business of combined to the the Ford rigs run in year forward, Looking and across Uinta. one in for expect remainder the the

are term. allocation of for in still benefits to capital and operational we with profile. few we and business next consistent plans capture But near combined capital realizing synergies Crescent's integration the of remain largely cost days early and expect the standalone asset over We both the quarters the as SilverBow's operating begin the expect to

from expertise and execute the and future acquisitions. has investing asset existing our and growth-through-acquisition forward value are Crescent looking required on we more operational to our base delivering strategy, to

of one history. recent largest currently, in pipelines And our of We the M&A are opportunity a proven have growth-through-acquisition company. we

The and scale, in Eagle and performance there. the we operating the has the better creation particular, of value positioned see most balance investment-grade our increased as valuable and business. for XXXX been further remains Ford, beyond. accretive a Crescent's solid of our and in proposition over sheet, remainder opportunity we financial never being industry-leading and value clearer With continue strong towards one we've never been growth fragmented and meaningful basins U.S., goal of

Brandi? on turn provide quarter. the more call detail the that, With to Brandi over to I'll

Brandi Kendall

first of of flow, $XXX savings capital less cash million levered the Thanks, quarter, of David. EBITDA quarter performance cash flow. We $XXX during with for XXX,XXX adjusted date. and significant $XXX than day oil quarter per Crescent's barrels free with to on million results expenditures of strong generating had our built million the production forecast and standalone equivalent in meaningful

and and We on at strong invested which target wells our track generating the brought operated the Ford are in Xx Uinta, capital are operated commodity online of wells results initial X gross Eagle exceed X in returns to prices. our current gross all of

to outlook remainder Turning the of our for XXXX.

mentioned, per we day, year barrels to time second capital while the oil to million equivalents $XXX David year increased for to million. improving guidance our As XXX,XXX of guidance $XXX standalone production to XXX,XXX this full

pro beyond. We full the XXXX guidance also SilverBow business. for closing we This half our of of today's and X our strength contribution reflects expect of substantial business cash highlights and guidance At months commodity generate XXXX free the acquisition. for in combined flow updated prices, the forma released to second SilverBow combined

our David a successful notes In mentioned SilverBow's refinance execute on conjunction to to an our SilverBow balance structure and sheet we strength $X positioning were about our already ensure maintain our offering to upside credit to strategy. to facility And enhance we our profile. credit existing acquisition, with thoughtful capital growth as outstanding. debt billion of secured continue of flexibility our we also significant portion liquidity and our

increased of and scale by of Today, recent with look as further of capital Fitch. we the corporate the positions Crescent our upgrade asset targeted by maturities are and for leverage our profile forward, highlighted ratings combined within believe near-term business no we cost threshold improvements X.Xx

certainty provides a of share another excluding dividend announced shareholders Alongside the million our total date. program. earnings framework, our shareholder active last share tool of our X%, of simplicity $XXX as our to night, return continue buyback the recently We've authorization peer-leading under XX% enhanced buyback to which attractive framework. And per $X.XX with to yield share around impact we and exercised an repurchases view in we of

over turn David. With that, I'll back the to call

David Rockecharlie

Brandi. you, Thank

a Before wrap to this reiterate we want quarter. up, key I few takeaways from

guidance year First, second our time with and to we've improved standalone the less production for this capital. outperform, continues increased business for

inventory profile our long-life, cash low-decline investors. asset production flow significant advantaged combining generating for drilling Our high-return and is

now our for shareholders proposition the significant and for all opportunity with enhances with value. Second, investors. significant incremental of Crescent and the Ford provides current value in positions has synergies one largest of the combination our future SilverBow benefits to and Crescent meaningfully Eagle

great just And lastly, we are in and are getting we position, a started.

of would business one, returns enhanced free ratings; combined risk here, proud management capital dividend the sheet, strong with we investing of flow, we our a capital; through number three, two, BB line including and number number accomplished a on deliver presence we what and number company are our framework; goal a got M&A; at to achieving size. establishing number how balance credit and operating do: accretive cash transformed IPO we've in We of peer-leading said four, markets our and done five, strong maintained expertise

enhancing value We continuing business our to our remain and generating on for shareholders. focused execute,

on unique do. going investing will We to of combination and doing continue and required execute what said have strategy, the to exactly we're growth-through-acquisition we operating our we've expertise

with capital high-quality the We operator getting the substantial combined with company Eagle disciplined believe of is Crescent growth sector. We a E&P scaled, proposition Crescent returns-driven we're leading mid-cap free balanced offers just a a uniquely Crescent through we've in for positioned portfolio assets. value been second cash never in compelling is and great framework, and a better business, largest our is M&A. a Ford. generate The started. future accretive, allocation flow

for With that, I'll Q&A. open it Operator? up

Operator

Truist [Operator Neal Instructions] question Securities. with from is first Dingmann The

Neal Dingmann

comments? And results. efficiency what in business? there I guess of looking you sort now I'd really future Is those love in on it that going Brandi just continued that hear nice the plan efficiencies what look the my on David, hear sort any that to X. you're team, includes are show around David, Eagle Eagle that the just you at Ford efficiency I'd SilverBow going at forward. when the as legacy thoughts question question of Ford is your be future my that to and thinking D&C area, your Slide would about first -- gains of add. is how trajectory combination love -- just to in it future

David Rockecharlie

for the thanks Neal, Hey, question. Yes.

continue lot opportunity And a I get We one of SilverBow that week companies. a hear X Ford really to we in to we of synergies people what bring year. was synergies better executed both question integration. best We've do. just to as your significant hopefully, but completed we a from last closed But at tried ago. that high-level think together is to it at Eagle to expect spend I were things, of we've planning transaction. We, an see would for acquisition able count talking, from time the last the didn't specifically, the the we on for I the

personnel. So footprint, the gotten we've of company's just taking combined started advantage expertise,

Ford, and to together. I be optimistic and in I we're but actual seen, the opportunity expertise completion also where we're across performing us. execution the So from base improving the bringing but improvement in we're And practices very think for particular, drilling both significant but remains both the both point, about in we combined think knowledge very see that well history of then this Eagle at

doing, both what different were were we we also We some good were at areas ways. we both where good in had but

I And that think so improve. bring tell very about continuing would when you, optimistic I all together, you just to we're

Neal Dingmann

a then really And just debt on shareholder just plan hear. to maybe lot return. would for focus to follow-up my Great know I to continue you that on be, repayment. of all Brandi,

opportunistic the basis? the a combine also multiple trade you it repurchases, do now share given like low how looks wondering, Just how on incredibly shares

Brandi Kendall

question. for it's Thanks Brandi. Neal, the

the be see million stock base pointed you intrinsic today. when think value. But authorization And look dividend priorities balance is to significantly as us out, on So opportunistically I it continue use $XXX and to sheet. the the we the remaining have do to you'll our disconnected

tool forward. going So look that opportunistic we'll continue use to to

Operator

next Rezvan KeyBanc The with is question from Markets. Capital Tim

Timothy Rezvan

were I thought comments David, your prepared interesting.

put there started. but Eagle And position M&A Ford, talking clues talked out You just couple activity. in interesting your the getting a of then pipeline about the large of leading you're you about

the going first? right believe presents again? to a need comments. Just trying ready near-term So deal in Or if future, organization is you're now to quarters the understand to couple the integration of transact those you itself or do of

David Rockecharlie

the we specifically, when market a history integrating Eagle long them. has simply, something the we'll Very you and done Yes. of ready making we've have go had feel we've And think itself. integration correctly like Thanks also the read to well. acquisitions times done for that more Ford and I multiple in presents us be But for question. been

So and the strategy. us one also quickly continue to relatively for allow large is go expect this making and capturing It's sure to transaction. being a M&A both This the synergies prepared things and able on be focus opportunistically well. on important to but us happen an to execute we transition integration to

at to market. we well integration So to we're look about I where prepared feel well we to and We're think make the continue this are. also prepared happen, great

Timothy Rezvan

presentation, I or And as wanted X.Xx. my ask need great. kind to of think In just number Xx. I how That's was the thoughts or rapidly below are what the maybe to pace about Okay. get then I you curious leverage. the follow-up, was down to your on

to selling, that portfolio related transact anything portfolio that, example, might the above would today? equity consider for then the likely where the in well there And is minerals you is

Brandi Kendall

Brandi, it's start, I'll a from standpoint. balance sheet Tim. Hey,

overall, good we're where SilverBow, still at debt. ability to We think successful with X.Xx. We've X that our sheet balance I of sits in today. to X.X. So we the our forma term quarter feel out exited been the within really Pro target

from balance and where good. range XX. maturities So Again, sheet we feel overall the sit, to XX they

to allows Xx Our pro handful generates it to pass of just forma as continued be to delever amount it us relates and divestiture to over maybe I'll business of hedger, target cash we've significant potential flow, next a to active closer Clay opportunities. which an the the quarters.

John Rynd

Hey, to the Tim. business investor Listen, we'd like in say acquisition and that we're both business. the

seen time last worth you've value us particularly XX assets, we assets, sees the so that And can't noncore And assets we've that $XXX we the of capture. think over buyer do divest million sold and over months. when opportunistically

and a a where value, is to core capturing I what be into tape. tough there's to to portfolio think, So us over assets continue certainly, think do. look way the time, market where you that We're But in there's opportunity. not see we streamline seller value, I of [indiscernible] that

Operator

Oliver question Huang comes with TPH & from The Co. next

Hsu-Lei Huang

start and a positive set, wells any remarks, I about on days. But bit of you to speak all will a encouraging way detail able hoping the shown your have as first to that The Western XX what that forward. might little year-over-year it's wanted XX talk on off year small or more over done rate from few updated wells the change this online in your Granted next you've a their look quantify to be the allocation initial number seen had the wells. And Just of that might we early since going was in to sample earlier garnering months, you in acreage. pretty in results looked Chalk. Austin be slides, on capital here kind a especially mentioned step-up horizon SilverBow initial takeaways David, of see level it to prepared just of but the

John Rynd

that. take I Hey, Clay. Oliver, can it's

continuing allocate think good to we're I analyzed with Ford, and encouraging consistent about results I Eagle gives there. it, Early which good think capital consistency you've Lower us about it. So to right? feel our and the excited are

as strong, position place Western results particular, in in heels SilverBow, certainly sits where be the reservoir combined across characteristics the horizon. very the you've also but strong a noted And Ford you the seen are Eagle on the of

So the us you'll allocate I to think chalk capital see prudently it. continue be to thoughtful about and

And as excited there's be we a we go a would program certainly But that continue there. it. think and -- piece opportunity real into XXXX capital and of firm there, to up it be

Hsu-Lei Huang

the sort better you're guess, any Makes about Okay. efficiencies of in the just versus much expect pace to pretty already and this envisioned meaningful being, well we in the wanted talking revised well are forecasting And Eagle for times. these of contemplated? morning year? acceleration driving follow-up kind that Should a I sense. Or that already in to start the drive Ford? counts the embedded of maybe savings just And was initial on at simul-frac this lower the confirm that of cost cycle

Brandi Kendall

Brandi. it's Oliver,

year savings, Crescent So year part also in of standpoint, for the seeing these capital but the some of yes, forma a back lot driver the the from guidance efficiency guide from improvement the that's the in pro D&C full really captured the a business. for what and service was for of standalone then cost the both we're deflation

Operator

question next The with Scialla Stephens. from Michael is

Michael Scialla

Slide I just want to XX. go back to

SilverBow of were already front the deal. capital most up achieved you anticipating of You've right cost savings those with

here, next to take can you Is to wondering up there forecasting number $XX ratings million anything the months you there? do the Brandi, that that were that upgrade. else potential Just the XX you from mentioned savings for over

Brandi Kendall

question. good Mike, Hey,

the answer movement. from But our more an execution not time I'm for continued right, behalf to is agencies. ultimately ratings additional going rating I of just and think and the business, -- think I on speak

improving us. corporate Fitch about talked rating their I on

So of BB- some have yield, then we cost the from corporate and lot our But to now the will, you the with captured the a low-hanging agencies. of capital. ratings high of X contributed if fruit, also we RBL improved

Michael Scialla

that you've in $X.XX free that's cap Great. you Slide your also to on about your showing talk then other which assumptions and based $XX in something market X-year think ask the had wanted flow XX% about now above before, of I forecast? oil I Can X-year on And forecast cash of gas. embedded XX, right presentation but some a

Brandi Kendall

is this forward. of Brandi really Mike, guidance Yes. kind again. existing our just straightforward carried It's

business current on as a costs to flow. prices service our lot lot across relates us commodity maintenance which use the the forma cost business that of gives flow, generate how cash of But pro does operating taking flexibility So special But there. and ultimately the in know, we cash program forecast right, as you just it a nothing ultimately inputs.

Operator

question Freeman from is next with Raymond The John James.

John Freeman

Mike marketing with was quickly how pricing XX, When SilverBow? efforts. the on Is realized? slide same -- And some pretty to just original one there, guidance better here that have so, seen relevant looking the historically referring at the with that you that can if nice uplift area that be on don't have your all all is synergy that uplift, SilverBow improvement of that in Slide from we marketing pricing kind

Brandi Kendall

Brandi. it's John, Hey,

week than David's relevant. I reiterate comment would closing. So say out earlier, we're from a definitely Probably less

to on identify additional not synergies to capture including, or update right, So of next expect we're now, talk whether able all that be would we lot quarter, broader synergies areas or able about a not here. but you to can right

John Freeman

lower $XXX position? on Got pretty of characterize of of on the that? some foot? your the cost that's that of last foot than foot. per relatively to edge on Do get consistent kind Can is Is kind footprint $XXX me then range leading is that? updated your some tight like have operations for above it. Or to just you a And meaningfully follow-up materially across you that that the like kind a a the

David Rockecharlie

kind The undertake we of completion it's all drilling the John, and easiest activities is answer Hey, that are Yes. similar. pretty David.

huge there's So not change. a

other a some in or the existing efficiencies pad is more because like though that. areas, of wells on get able things because of say would we're I number to What or facilities of

pretty you work we'd and that synergy which also easiest range, So probably number is is in but now part we're definitely to answer, tight of continue to general, that to the the the know improve begin we're that ways looking able side. on let for

John Freeman

Great. Nice quarter.

Brandi Kendall

Thanks, John.

Operator

no I to Rockecharlie over closing Ladies now comments. further for the conference gentlemen, would questions, and are as there David hand

David Rockecharlie

the see Great. joining we today well, what Thank us continued opportunity business And is you for again going and support. doing all the forward. hopefully, for came significant is through and

work, next So quarter. to look again all to we're talking back forward Thank and to going to get you. you

Operator

Energy Thank Crescent your you. The conference has now for of Thank concluded. you participation.

lines. disconnect may your You now

Crescent Energy (CRGY) 6 Aug 242024 Q2 Earnings call transcript