Earnings call transcript Q4 2022

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Operator

Greetings. Welcome to Vitesse Energy Full-Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded.

the to turn of Messier, now Relations. Investor will conference Ben over Director I you. Thank

begin. may You

Ben Messier

Good you company. and results after as be morning, the thank our for an conference Vitesse’s discussing We independent, call the first market full-year publicly released and closed. traded financial Today, XXXX. will for we operating joining yesterday the

coming filed Investor our Form and can our with SEC You the website access earnings Relations release days. in the will on be our XX-K

Investor presentation new the We website. have a also on posted

I’m CFO, joined with morning Vitesse’s Chairman our President; and Gerrity; here this CEO, Brian Dave Bob Cree; and Macosko.

Our to our executive and follows: questions. After Bob our will assets prepared then Dave and for you our Bob, will Vitesse capital call our remarks, of the give regarding After operations, financial guidance. strategy. and remarks agenda answer XXXX is review results and return Brian the available will today’s of provide XXXX of overview as conclusion team will opening an be

Before could by release. earnings update may be risks risks safe today, we harbor Reform forward-looking of that subject include including questions, among our as others, include, any laws. be our applicable materially we Securities by Those statements. described forward-looking securities different disclaim cause in these to that the actual your the meaning results begin, are remarks except Private obligation contemplated matters control forward-looking from some the forward-looking required statements the advised be may statements, these expectations We have to of These that to let’s to Litigation our within language. and the answers Please uncertainties, Act. cover statements which are our beyond

EBITDA, the that measures, to may non-GAAP GAAP financial release net to measures EBITDA Reconciliations be measures free of we conference discuss and closest the issued call, in earnings including we During flow. cash debt can found our these adjusted certain adjusted yesterday.

and our turn Bob call over CEO, will Gerrity. I that, to the Chairman With

Bob Gerrity

VTS XX. and U.S. interest on the capital for Inc. three is Exchange January on thanks began wells and as by everyone, operators. Good Ben. ticker financial participating. oil to trading through non-operator, Energy, in drilled a on focused Stock Vitesse owning York the New morning, Thanks, gas stockholders Vitesse its returning under

this approved strategy, first we declared share share a As to million of of cash paid of the return $X.XX of $XX dividend part XXXX, quarterly capital be also and a repurchase in quarter program. per

have team Jefferies Vitesse. shares outstanding a of with own members the management combined alignment of of and XX% We with the shareholders management, strong as our other Vitesse the collectively Board, approximately

deep flow Our asset provides locations. inventory significant existing includes and drilling cash a of economic

Our our capital with through to return paying allocation quarterly shareholders dividend. the strategy our capital of starts

opportunities, Next, our organic returns-based by other acquiring acquisitions. near-term followed on CapEx and hierarchy focuses development asset

debt cash repurchases allocated flow to share be remaining or repayment. Finally, will

we for Jefferies company from to public grateful are forward and today, We excited XXXX their look financial and future to as to are run success. Vitesse our support independent an to

Cree, I it operations. President, now our our over Brian to hand discuss to

Brian Cree

Thanks, Bob.

predecessor XXXX start January included earnings acquisition Vitesse of only with our the results XXXX, effects Oil Energy and release from the results me XX, that our concurrent spin-off Jefferies. our and on in noting made include reflect the of Vitesse by Let LLC not LLC do financial of operating the

beginning Vitesse included and presentation though on However, acquired as the was data provides Oil of investor our XXXX. financial forma the website operating pro at

although acres, assets Williston River combined Powder in also primarily XX,XXX and Basin, the we in the Basins. net approximately The include assets own DJ

XX operated wells in by We have producing over financial over X,XXX operators. leading interest

our operators XX, as XX been addition, wells development we In completing had December XXXX. that we permitted for are had net drilling, or of by

Today, and the the which the is XX% the of acreage, a rigs testament our of of to rigs acreage basin. the XX% actively running quality drilling drill on acreage. to Vitesse diversification Vitesse's XX% Williston in Historically, on are across its

million. Oil encouraged During of The Vitesse Energy and combined to potential been completion $XX hot over inflation just Vitesses CapEx productive and has a and for by drilling been cost control our topic. wells. costs We've had drill XXXX, operators' discipline

to increase slightly XXXX, costs within stated incorporated guidance. is our CapEx expect We in which annual

experienced With count rig Williston, basins. we have remaining in the the modest as active same other cost inflation not the more

over I'll time, Thanks for Dave and for XXXX. financial your to Macosko, CFO, now highlights it turn to our review our

David Macosko

to again the a include the summary our January XX. give XXXX QX spin-off of due year-end until that Jefferies quick from that results will XXXX. of remind I'll not financial want include operations Vitesse acquisition Brian. once during Vitesse's performance Oil LLC Vitesses Thanks, of to occurred and I only when you Energy occurring on

was million. $XXX.X XXXX higher Our increase net was by primarily was gas year prices. for and and a over oil substantial This the income driven

$XXX less XXXX. Our in XXXX up was and XXXX, EBITDA flow million is XX% cash free day. Adjusted an totaling adjustments defined adding flow drilling $XXX of XX,XXX equivalent was per of working generated and from completion Free production CapEx. back as from XXXX, X% flow over of barrels oil increase capital cash cash we million, operations

in our oil above the taking realized per consideration of we to our revenues impact Mcf. gas price reported were as XXXX $XX per reporter, Vitesse's from the and barrel why and gas of realized oil Hub. into natural hedging NGLs, a dropped includes which approximately After is natural two-stream hedging, natural And before prices Henry impact realized $X barrel. revenue gas $XX prices per

G&A existing costs increased a gathering and completion saw $X $XX was capital wells. million for spending levels Vitesse as the approximately year. on for and to as basis transportation compared Production we many expense, Capital including Cash of workovers XXXX more on XXXX maintenance spent Boe Energy operators spin-related allocate included per X% near drilling million costs. to on

XXXX, end million. entered cash. new base ratio into revolver as was $XX EBITDA XXXX, and drawn the million of revolving XX, X.XXx the credit spin-off we a $XXX date, $XX on with On At had of million a borrowing adjusted net we to debt our our of January facility

hedging hedged a at X.X approximately These front, to ensuring prices. barrels the weighted price of in increases are and at dividend average XXXX protect million oil price a XXXX barrel. we average to in weighted exposure while stockholders' in our hedges hedged have $XX.XX XXX,XXX help return intended per of $XX.XX some On the barrels

We to monitor add prices will appropriate the time. oil continue and opportunistically hedges at

Now with and annual production, are daily we percentage of guidance, respect XXXX to for oil currently guidance including providing CapEx. the

oil quarter-to-quarter vary on online XXXX based range wells our matters other gas natural note equivalent as oil for XX,XXX barrels a production that XX% will day and production. percentage may expected new XX% per arise. to oil Please coming Our to our and weather, XX,XXX a with of of from from operational production can cut that

million $XX XXXX. We to our total of CapEx expect in $XX million the range be for to

I'll that, Q&A. to over operator turn With for call the the

Operator

Thank you. Instructions] proceed. Our [Operator question ISI. Evercore is first Please Stephen from Richardson with

Stephen Richardson

investors other first a little I differentiate if is little M&A about seeing Brian, Bob companies you how call, this could talk, familiar the yourself then with? to how some effect, if you perhaps bit about outlook. a bit was wondering and morning. of talk could and environment your to what maybe you're non-op evaluate you relative this considering that and public you M&A good Hi, plan the in the And

Bob Gerrity

Stephen. Thanks,

Bob. is this So

to that about the year, we've us. So last far had flow same very year, which deal this had encouraging we is

last return. has Our in highest same level at of our is rate year as about the which come organic drilling

by So that. we're encouraged

On Again, flowing. the not we are larger we purchasers look transactions, M&A at everything. of

are have, happy we the base. with our We that resource undeveloped and asset our both

have I that But walked have to Now of to that into be the to you lot we're door. going substantial special. deals public, to we have have do pretty a gotten it's a tell deal,

will going a our at to that to about just we do $XXX We deal we've grow. powder we fresh not everything. revolver use, of could look are but got Again, million on

Stephen Richardson

a minerals market dimensions, you do one Bob, obviously, Great. than I – follow-up, been as a – non-op. and more mineral hot of mean a and quite Maybe little pretty some more clearly, you expensive own has bit could bit the the

owning you how those also past? may come So approach how strategies you just and of packages packages about minerals. you’ve partnership or in on not PDP maybe pertains to types perhaps and it the as talk would Can done that bidding packages that have it

Bob Gerrity

or seek Yes, minerals We that’s out don’t a terrific question. royalties.

of actually of our some the is tell I for fair will that market pretty And would minerals have entertaining them, right, right we’re now amount sell but we you’re We minerals. a you hot. a where package

we So maximize our to economics. always look

actively just would So we’re we certain sell not looking for and points, minerals at minerals. some actually

Stephen Richardson

Great. luck. much. very of Thanks Best

Bob Gerrity

Thanks, Stephen.

Operator

proceed. Please Our from Donovan Northland Schafer Markets. with question next Capital is

Donovan Schafer

congratulations Thanks see Hey, million buybacks. did your Board questions, happy indicated but in the spin-off. $XX for approved much also pretty dividend approve I’m for the and filings also on completing $X that, the that to to guys. before the see taking nice the

fronts. those kudos So on

sort the I dividend came get think I better want When though, a it come of the of a investors the very sustainability it it, dividend XX% face overall of up. question, handle out, a stocks the first the you on because was do guys dividend. So high like attractive and looks get like to sense just

like it’s XX% now. So

a look looks still to a look was the But price in somehow. from barrel. But was XXXX, that’s it oil the oil of effectively, year-over-year So they hedges, XXXX pretty increase with driven attractive. XXXX at lot it okay, exceptional people And XXXX performance course, course, increases. your price like by think, of $XX

maybe on make the as face wasn’t a more it XXXX exceptional representative maybe it of it So sort of that looks year. and as it

be it But great. would

context if I kind numbers, the in – at make that sustainability of the going XXXX guys think to could that. you when bit you of forward how look how at of people dividend how to sort the sense that square XXXX, of talk level through a XXXX, and that like of just look those

Bob Gerrity

Don. a the for Thanks lot Absolutely. question,

the to allocation our have thing I’ll is presentation. first framework do we The on capital that refer returns-based slide

dividend-paying We are company. a

we pay The make is dividend. first to capital a allocation

figure allocate rest companies we first. to pay capital, they pay out dividend So after where their how of it other may the the

and to remember, management management the company this of management, Vitesse XX% by is the of and got of Jefferies. You owned

is dividends, acquisitions. need So make any constructed to and other we company like those we that don’t so this

We’re have. comfortable with the we assets that

last I a statement in well, that, think net oil our similar far for low very We’re and levered. hedges the with year. This of is, And got price. your $XX oil so we it’s price year, year where that

that dividend. with very we will are dividend. be And to supportive to look comfortable of we deal current any that So make we our

Donovan Schafer

the that’s on when sort helpful. curious, got that. kind kind That’s payout you’re basis, the front there ratio, payout of And center you the a going to you’ve of of and then dividend-paying are a Okay. ratio, – then putting what of is that return framework On and sort a a forward, is targeting? you and looking normalized dividend a of there at on focus want kind like being topic, forefront really of company at shareholder just if

So cash free on I $XXX cash flow. trailing million of a XX%, flow, the free trailing it’s think,

So of they’ll years, fast direction payout were in thinking, of of flow north make meaningfully just forward for that higher move Then out several sense kind to we it like okay, a about investors that? a million. think for whack where how if cash us the $XXX does had a of get sort back of or to start free XX% do you

Bob Gerrity

every question. much pretty fair fair a Very Absolutely question. allocate capital We day.

$XX business our between anywhere same much and $XXX, the So it’s thing. pretty plan

share we You $XX million dividend do capital substantial CapEx, or the that got allocate to we amount to can with a remember have maintenance of a buybacks.

look public have company, we we these strong It’s in to number. specific we not dividend. adjust But see and love again, the a upwards will the So to reiterate, why reason the prices dividend market. we the if continue do we’re to a

Donovan Schafer

this then effective terms getting folded smaller And for in might but that XX. just double an question, My an Vitesse I Okay. equity a bit everything piece of is equity just structured. is kind in a worked of think, checking with, out that of I of sort an January the just of the be Oil way understanding is is a deal, here. LLC, has housekeeping it’s date sort of like

just price like becomes first folded that associated incremental share come purchase into spend the with the that up not cash in it counts? the quarter, So will some some there’s it’s

I comments And this prolonged restricted about tied think, to something management about owning a vesting that. like is or also then that’s the of comparable of, on based units – that’s kind sort stock on into a XX% a

going management factor Inc. XX Vitesse going make forward – sure management, we equity shares calling want the just the to roughly share to XX% I impact, been that terms in of want the So Oil counts. plus ownership, right I’ve about see I’m ballpark if in there. million in when

Bob Gerrity

answer to good Brian Cree Yes. Again, Donovan, very I’ll that. ask questions.

Brian Cree

million shares was there on that. It’s since XX includes is is outstanding track Thanks, that Donovan. of that right there. outstanding. kind for And at shares of question acquisition. that XX.X Yes, done just what part, the diluted address of kind be of then now, your the are spin-off, Vitesse on thinking the of incremental fully that to will you’re as Oil, It’s we’re the issued no common the Oil time million roughly Vitesse right shares

Donovan Schafer

then it’s the really I a XX that’s think be word, including like to you and shares. guys course, gets dilution, Jefferies you management of gets can Jefferies that part sake – ownership, – but about And what like organized, of for of other how Okay. of what dirty structured just this and all is that, and sort the stuff XX% to million the from this that’s

Brian Cree

management and remaining of units Jefferies restricted all the of our team both It’s right. exactly That’s stock team. management those

Donovan Schafer

I ask want questions, back with – always a million line check And I because operator. Okay, check with step but so I fantastic. can I’ll to in then the want to

there waiting the are ask questions operator, other in queue? people to Just

Operator

You can keep that.

Donovan Schafer

Okay. to about I winter want weather. talk

So winter pretty was some as impacted brutal other definitely December, non-op well. operating production and in some the – levels. I about Bakken, talked the specifically, companies

But results and You XXXX like the forward modeling sense? for exceptional breaking sort quarter. as going much an reported full seem that about of in XXXX did out of general, fourth in year kind guys just

of XXXX XX even Does would production from kind just tough color the about of we from how environment and think improvement so winter sort Dakota, a just fourth that it’s to this And in as And any investments of year? drive on make that getting year. in kind growth, quarter the a sense to other without an expect of it "normal" winter cold. of North having think –

Brian Cree

and Brian. been weather public else in a is can winter at just we’ve since this happened mean, crack January that the in even jump this we’re of winter XXXX we right? we occurred December impacts. happens. this And since I Williston. from one perspective, there this But take major every different, and been in year storms doing November had But two that look, yes, Williston. we’ve last in were is I Don, April, year – And I’ll our year, here. cold year, and mean, anyone saw pretty the it’s though

it It varies every year. seen by So we’ve month.

that experience, into because that point to consideration projections try would our we is annual I think I that key The we’ve you given. guidance that of our take to into

just just us the know we and none again, into basis a for we winter So put do expected on to go-forward count that And going best and weather. what’s of don’t take to our we are that guidance. meteorologists. estimates happen, try can We

Donovan Schafer

come natural kind of lot. and And have on okay. I looking the theme gas prices of guidance, the counts rig Bakken the Okay, know a at down and a

– down to the So don’t basin, on assumption can Bakken I’m expecting kind rig guidance if from assumptions the levels? is you into increasing count, the outlook of rig But much is the know as oil it’s rig maybe that we’re weighted, not the you that built those as there’s a slow just expectation just in being expecting stable you’re activity kind side. gas relevant likely rig much but count? XXXX. are if declining in what and in slightly clarify guys for for more oil the I instance, in What activity count of

Brian Cree

that. today, there’s this I’ll is again, Currently, shot rigs Brian. running in of take the basin. first a at off XX NDIC, the So based

asset. mentioned those As are earlier, XX on rigs our of I running

low of to months last over anywhere and of count. how CapEx basis. that’s five four, range million we rig it upper has model of to a the same assumes kind ranged XXs $XX million rig the on XXs, from kind The that projection Our the count of $XX go-forward

allocate But We don’t want jump place if organic funds count to earlier, we the our XXs that. CapEx, expect does, to or Bob that the as the our to. into after rig mentioned dividend it anything like is first

welcome would we that CapEx see developed be organic to certainly assets. Love count. higher to So producing rig

guidance but million production. we to our $XX our of annual or – $XX model in in So don’t that million

Donovan Schafer

I around of two about then have and think And actually maintenance that. how to CapEx questions Okay. kind

outlook, you inflation. million cost $XX about million, got for the talked So $XX some to the we and

So accounting see cost there first – talked be guess before of are still you inflation? I the one you being CapEx we is even would Do million as maintenance still for a $XX level. around

up the you’re So you of because activity. you But have not you are to to allow – $XX budget that it rigs the goes controlling all and possibility to pace the million have for or this something a be belief a average, that still driving is CapEx. growth your million sort versus looking the maintenance from standpoint more going of – view would at on overall, of north $XX the

Brian Cree

the to as I that we don’t in tried we’ve so again, see massive think into take We’ve inflation inflation mentioned, And seen occurring I far. consideration XXXX.

discussed anywhere organic $XX other from as expectations maintenance as So a And that we’ve reflects before, about the we the acquired. the feel that that million to that, $XX of a of then that part is talked there’s which for – is million. development near-term component remember And we’ve opportunity like XXXX. that, is that CapEx, CapEx ranges we’ve still $XX million that our

know it. is strategy. really, and make million. to last count how acquisition know model range don’t But $XX exactly spent to $XX kind we of we our range million the Typically, what $XX – rig acquisitions CapEx our year, into. to trying think in what about factors acquire more then is we between million over So organic be. that We will the million going We $XX don’t be,

find the near-term ourselves development So go rate the flexibility just really on Donovan take we those. we’ll of if kind give pull and opportunities, that why trigger range, high return, do ahead we attractive that’s is some to of that

Bob Gerrity

Bob. This Yes. is

remember need Bakken more refracs efficient. seeing what’s to capital refracs are and in happening about you thing is the very Another we’re

think dollar will actually getting continue, trend. So than we We each of trend and more production that that’s spend. we’re exciting very out a

seeing a very amount three-mile are beneficial greater also those to laterals capital from a standpoint, We’re of efficiency again, us.

spend will amount that, our And XXXX. in get the we in of same production. year So scenario generally XXXX, is happened dream to that every that’s believe and what and money continue more

Donovan Schafer

and Okay. then topic, for the reported same And XXXX results. just on the

you’re $XX free So the CapEx, which drilling including and flow cash calculation, million. the for completion organic was

a what to LLC. as close that’s maintenance include and doesn’t noted, you Vitesse as I that you’ve Oil the talked about So know CapEx

you to that that or for bumps million you on XXXX. million that, maybe $XX.X acquisitions if maybe right include But in almost So something. the exclude money $XX do the

So I’m just curious, is generating this investors. same reflecting around returns kind framework that of to

the $XX because include $XX.X conceptually, free falls then So and into bucket. on to the icing that get I of return CapEx you’re doing you’re not sort million, cake of type that’s your expenditure. you thinking as growth, incremental a right of of or and the Am investors sort much CapEx maintenance – opportunistic flow a And because million free not out move more cash that flow about way? including drive kind drive because to to cash not it’s tracking your the this that maintenance and

David Macosko

at spending. in near level cash XXXX. but the obviously, of is going this reason Donovan, about in included, discretionary there, we that, $XX.X When $XX.X we And our million in look CapEx as that free that in acquisition small we that think didn’t maintenance saw we flow, include some million the forward, Dave. have nothing we Yes. the

Donovan Schafer

this actually, with to benefit year-over-year basis. to see on we last and be think – on reserves. of that go-forward I’ll this because large want ask in very I It’s kind then be great And great. increase in about as don’t the the dynamic looking a but dividend one my I squeeze increase not will from Okay, prices. question, will reserves the there’s reserves, they’re talked hedging in does the oil much more,

of so a really month, a historical use month it’s has what pricing the forth. the And they have been XX-month more – as just there’s trailing reserve engineers But front of nice so and first auditors, increase. matter

forma of And for PV-XX deck historically, any the you $X.X you under didn’t your limited look LLC billion. shows And pro you so puts while I because were the at your Vitesse Oil pass-through a you then taxes. entity, were north so Jefferies pay the partnership, if on and website,

PV-XX same. And standardized in effectively end up the and so your measure being your

on be Form cash But to go-forward we’re a if impact tax reserves. a you and the trying did numbers, at and a If a accounting on pro that basis, registration like gave the that haircut taxes. I XX% on paying forma for statement XXXX Oil at the that look the knowing look about XX, taxes will filings, you Vitesse

to on even the take assume of about of applied I if about a XX% that still XXXX little proportionately and you at the a measure right the that, that same at same apply that put bit reserves, numbers, the So $X $X sort would put just maybe to standardized way billion. north billion – of

in to want just check broad a I So there. pretty logic broadly sense, my

sense the numbers. know about? I should for does glaring like I that make terms of should tax something a there rate reserve like is thing XXXX blindly in is missing XX% – ballpark? sort about which cash there the the haircut it percent the XX% it Just some Like XX-ish tax say you’d Or am or that of was cash impact, in

David Macosko

ballpark. income. right And remember, get take But a goes of against of that look to XX% if XX% Don, run more from I’d our XX% that will up, I the rate is that reduce taxable we our if in tax IDCs it rate more XX% at on you’re to to effective that. the CapEx think reasonable. haircut the

Donovan Schafer

that’s all the of kind checks all Vitesse Okay. community. Well,

I’ll offline, the So good others appreciate take it. a sense, in I’m and any guys. quarter questions the go congratulations on I spin, and to

David Macosko

Thank you, Donovan.

Operator

question-and-answer of session. Bob back comments. end over to closing I to the turn would conference for reached like We the have our

Bob Gerrity

you Vitesse. have and Ben. everybody to We them to answer in thank want any reach And Bye-bye. I please out questions, much. you for interest love thank to their if very

Operator

today’s conclude will Thank you. conference. This

your time, your may lines You disconnect for thank and you this participation. at

Vitesse Energy (VTS) 14 Feb 232022 Q4 Earnings call transcript