Vital Energy, Inc. (NYSE: VTLE) ("Vital Energy" or the "Company")
today reported second-quarter 2024 financial and operating results.
Supplemental slides have been posted to the Company's website and
can be found at www.vitalenergy.com. A conference call and webcast
is planned for 7:30 a.m. CT, Thursday, August 8, 2024.
Participation details can be found within this release.
Second-Quarter 2024
Highlights
- Delivered Company-record quarterly total and oil production,
producing 129.4 thousand barrels of oil equivalent per day
("MBOE/d") and 59.2 thousand barrels of oil per day ("MBO/d"),
respectively
- Reported capital investments of $210.0 million, excluding
non-budgeted acquisitions and leasehold expenditures
- Reported net income of $36.7 million, Adjusted Net Income1 of
$55.0 million and cash flows from operating activities of $338.4
million
- Generated Consolidated EBITDAX1 of $290.4 million and Adjusted
Free Cash Flow1 of $44.7 million
- Successfully executed three horseshoe wells in Upton County and
organically added ~120 long-lateral horseshoe wells to the
Company's development inventory while eliminating 84 short-lateral
locations
- Announced the acquisition of the assets of Point Energy
Partners ("Point") in July, which is expected to add approximately
15.5 MBOE/d of production and 68 gross oil-weighted locations at
closing
- Increased the Company's 2025 oil hedges to 15.4 million barrels
at approximately $75 per barrel WTI
"Our team continues to deliver strong results as
our optimized development strategy enhances well productivity on
acquired properties," stated Jason Pigott, President and Chief
Executive Officer. "In addition to achieving record quarterly
production, we are organically adding low-breakeven inventory
locations across our leasehold as we successfully implement the
technology to drill long-lateral horseshoe wells. Combined with our
strategic acquisition of the assets of Point, we have increased our
inventory of estimated sub-$50 per barrel WTI breakeven inventory
to 395 locations."
"We remain committed to maintaining a strong
capital structure," continued Mr. Pigott. "In conjunction with our
highly accretive acquisition of the assets of Point, we
substantially increased our hedge position to underpin our cash
flows and support debt reduction. Our recent acquisitions have
significantly expanded the scale of our Permian Basin position and
we are focused on building value through increasing well
productivity, lowering costs and organically adding high-return
inventory to maximize cash flow generation."
1Non-GAAP financial measure; please see
supplemental reconciliations of GAAP to non-GAAP financial measures
at the end of this release.
Second-Quarter 2024 Financial and
Operations Summary
Financial Results. The Company reported net income
of $36.7 million, or $0.98 per diluted share, and Adjusted Net
Income of $55.0 million, or $1.46 per adjusted diluted share. Cash
flows from operating activities were $338.4 million and
Consolidated EBITDAX was $290.4 million.
Production. Vital Energy's second quarter total
and oil production set Company records, averaging 129,356 BOE/d and
59,209 BO/d, respectively. Both total and oil production volumes
benefited from well packages that were turned-in-line ("TIL")
during the quarter commencing production earlier than anticipated.
Additionally, oil production from 15 TIL's in Howard County
outperformed the Company's productivity expectations.
Capital Investments. Total capital investments,
excluding non-budgeted acquisitions and leasehold expenditures,
were $210 million. The Company TIL'd 27 wells, operating four
drilling rigs and two completions crews. Investments included $171
million for drilling and completions, $27 million in infrastructure
investments (including Vital Midstream Services), $7 million in
other capitalized costs and $5 million in land, exploration and
data related costs.
Operating Expenses. Lease operating expenses
("LOE") during the period were $9.66 per BOE. Higher than expected
LOE was primarily driven by workover activity, chemical treating
and water expense on properties acquired in late 2023 in the
Delaware Basin. The Company shut-in 25 high-cost wells during the
period and exited the quarter at a full-Company LOE rate of
approximately $8.95 per BOE.
General and Administrative Expenses. General and
administrative expenses totaled $2.00 per BOE for second-quarter
2024. General and administrative expenses, excluding long-term
incentive plan ("LTIP") and transaction expenses were $1.67 per
BOE. Cash LTIP expenses were $0.03 per BOE and reflected the
decrease in Vital Energy's common stock price during the second
quarter. Non-cash LTIP expenses were $0.30 per BOE.
Liquidity. At June 30, 2024, the Company had $90
million drawn on its $1.35 billion senior secured credit facility
and cash and cash equivalents of $56 million.
Upon closing of the previously announced
acquisition of the assets of Point, the elected commitment on the
Company's senior secured credit facility will be expanded to $1.5
billion.
Oil-Weighted Inventory
Vital Energy continues to organically increase its
high-return development inventory, demonstrating the ability to
utilize horseshoe drilling technology across its leasehold. During
the quarter, the Company converted 84 short-lateral locations to 42
long-lateral horseshoe locations, 30 of which breakeven below an
estimated $50 per barrel WTI. Additionally, the Company organically
added 77 new long-lateral horseshoe locations on its existing
acreage position with an estimated average breakeven of
approximately $57 per barrel WTI.
In July 2024, the Company announced the signing of
a definitive agreement to acquire the assets of Point. Upon
closing, the transaction is expected to add 68 gross inventory
locations with an estimated average breakeven oil price of $47 per
barrel WTI.
Following closing of the Point acquisition, Vital
Energy will have added approximately 100 new locations to its
oil-weighted inventory in 2024, increasing total inventory to
approximately 885 high-return locations, net of development
activity through the first half of 2024. At current activity
levels, this represents more than a decade of drilling inventory
with an estimated average breakeven of less than $55 per barrel
WTI.
2024 Outlook
Production. The Company increased its full-year
2024 total production guidance to 127.0 - 131.0 MBOE/d (from 116.5
- 121.5 MBOE/d), including volumes in the fourth quarter associated
with the Point acquisition. Full-year 2024 oil production was
raised to 59.0 - 61.0 MBO/d (from 55.0 - 59.0 MBO/d), including
volumes in the fourth quarter associated with the Point
acquisition.
Capital Investments. Full-year 2024 capital
investments guidance was adjusted to $820 - $870 million (from $750
- $850 million), including capital in the fourth quarter associated
with the Point acquisition.
Operating Expenses. LOE for the second half of
2024 is expected to average approximately $9.15 per BOE, with third
quarter LOE expected to be approximately $8.95 per BOE. LOE in the
fourth quarter is expected to be approximately $9.35 per BOE,
including operating expenses associated with the Point acquisition.
Higher-than-expected workover activity on recently acquired acreage
is offsetting recent reductions in water handling and chemical
treating.
Second-Half 2024 Guidance
During the third quarter of 2024, Vital Energy
plans to operate four drilling rigs and two completions crews, and
TIL 16 wells. Upon closing of the Point acquisition, which is
anticipated to occur at the end of the third quarter, the Company
expects to operate five drilling rigs and 1.2 completions crews.
The table below reflects the Company's guidance for production and
capital investments for the second half of 2024.
|
3Q-24E |
|
4Q-24E |
Total production
(MBOE/d) |
121.0 - 127.0 |
|
134.0 - 140.0 |
Oil production
(MBO/d) |
55.0 - 58.0 |
|
65.0 - 68.0 |
Capital investments, excluding non-budgeted acquisitions ($
MM) |
$215 - $240 |
|
$175 - $200 |
|
|
|
|
The table below reflects the Company's guidance
for select revenue and expense items for third-quarter 2024.
|
3Q-24E |
Average sales price realizations (excluding derivatives): |
|
Oil (% of WTI) |
102% |
NGL (% of WTI) |
16% |
Natural gas (% of Henry Hub) |
(5)% |
|
|
Net settlements received (paid) for matured commodity derivatives
($ MM): |
|
Oil |
$9 |
NGL |
$0 |
Natural gas |
$17 |
|
|
Selected average costs & expenses: |
|
Lease operating expenses ($/BOE) |
$8.95 |
Production and ad valorem taxes (% of oil, NGL and natural gas
sales revenues) |
6.10% |
Oil transportation and marketing expenses ($/BOE) |
$1.05 |
Gas gathering, processing and transportation expenses ($/BOE) |
$0.45 |
General and administrative expenses (excluding LTIP and transaction
expenses, $/BOE) |
$1.85 |
General and administrative expenses (LTIP cash, $/BOE) |
$0.10 |
General and administrative expenses (LTIP non-cash, $/BOE) |
$0.30 |
Depletion, depreciation and amortization ($/BOE) |
$15.00 |
|
|
Conference Call Details
Vital Energy plans to host a conference call at
7:30 a.m. CT on Thursday, August 8, 2024, to discuss its
second-quarter 2024 financial and operating results and
management's outlook. Supplemental slides will be posted to the
Company's website. Interested parties are invited to listen to the
call via the Company's website at www.vitalenergy.com, under the
tab for "Investor Relations | News & Presentations | Upcoming
Events." Portfolio managers and analysts who would like to
participate should dial 800.715.9871, using conference code
8366349. A replay will be available following the call via the
website.
About Vital Energy
Vital Energy, Inc. is an independent energy
company with headquarters in Tulsa, Oklahoma. Vital Energy's
business strategy is focused on the acquisition, exploration and
development of oil and natural gas properties in the Permian Basin
of West Texas.
Additional information about Vital Energy may be
found on its website at www.vitalenergy.com.
Forward-Looking Statements This
press release and any oral statements made regarding the contents
of this release, including in the conference call referenced
herein, contain forward-looking statements as defined under Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements,
other than statements of historical facts, that address activities
that Vital Energy assumes, plans, expects, believes, intends,
projects, indicates, enables, transforms, estimates or anticipates
(and other similar expressions) will, should or may occur in the
future are forward-looking statements. The forward-looking
statements are based on management’s current belief, based on
currently available information, as to the outcome and timing of
future events. Such statements are not guarantees of future
performance and involve risks, assumptions and uncertainties.
General risks relating to Vital Energy include,
but are not limited to, continuing and worsening inflationary
pressures and associated changes in monetary policy that may cause
costs to rise; changes in domestic and global production, supply
and demand for commodities, including as a result of actions by the
Organization of Petroleum Exporting Countries and other producing
countries ("OPEC+") and the Russian-Ukrainian or Israeli-Hamas
military conflicts, the decline in prices of oil, natural gas
liquids and natural gas and the related impact to financial
statements as a result of asset impairments and revisions to
reserve estimates, reduced demand due to shifting market perception
towards the oil and gas industry; competition in the oil and gas
industry; the ability of the Company to execute its strategies,
including its ability to successfully identify and consummate
strategic acquisitions at purchase prices that are accretive to its
financial results and to successfully integrate acquired
businesses, assets and properties and its ability to successfully
execute on its strategy to enhance well productivity, including by
drilling long-lateral horseshoe wells, pipeline transportation and
storage constraints in the Permian Basin, the effects and duration
of the outbreak of disease, and any related government policies and
actions, long-term performance of wells, drilling and operating
risks, the possibility of production curtailment, the impact of new
laws and regulations, including those regarding the use of
hydraulic fracturing, and under the Inflation Reduction Act (the
"IRA"), including those related to climate change, the impact of
legislation or regulatory initiatives intended to address induced
seismicity on our ability to conduct our operations; uncertainties
in estimating reserves and production results; hedging activities,
tariffs on steel, the impacts of severe weather, including the
freezing of wells and pipelines in the Permian Basin due to cold
weather, technological innovations and scientific developments,
physical and transition risks associated with climate change,
increased attention to ESG and sustainability-related matters,
risks related to our public statements with respect to such matters
that may be subject to heightened scrutiny from public and
governmental authorities related to the risk of potential
"greenwashing," i.e., misleading information or false claims
overstating potential sustainability-related benefits, risks
regarding potentially conflicting anti-ESG initiatives from certain
U.S. state or other governments, possible impacts of litigation and
regulations, the impact of the Company's transactions, if any, with
its securities from time to time, the impact of new environmental,
health and safety requirements applicable to the Company's business
activities, the possibility of the elimination of federal income
tax deductions for oil and gas exploration and development and
imposition of any additional taxes under the IRA or otherwise, and
other factors, including those and other risks described in its
Annual Report on Form 10-K for the year ended December 31, 2023
(the "2023 Annual Report"), Quarterly Report on Form 10-Q for the
quarter ended March 31, 2024 and those set forth from time to time
in other filings with the Securities and Exchange Commission
("SEC"). These documents are available through Vital Energy's
website at www.vitalenergy.com under the tab "Investor Relations"
or through the SEC's Electronic Data Gathering and Analysis
Retrieval System at www.sec.gov. Any of these factors could cause
Vital Energy's actual results and plans to differ materially from
those in the forward-looking statements. Therefore, Vital Energy
can give no assurance that its future results will be as estimated.
Any forward-looking statement speaks only as of the date on which
such statement is made. Vital Energy does not intend to, and
disclaims any obligation to, correct, update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
This press release and any accompanying
disclosures include financial measures that are not in accordance
with generally accepted accounting principles ("GAAP"), such as
Adjusted Free Cash Flow, Adjusted Net Income and Consolidated
EBITDAX. While management believes that such measures are useful
for investors, they should not be used as a replacement for
financial measures that are in accordance with GAAP. For a
reconciliation of such non-GAAP financial measures to the nearest
comparable measure in accordance with GAAP, please see the
supplemental financial information at the end of this press
release. Unless otherwise specified, references to "average sales
price" refer to average sales price excluding the effects of the
Company's derivative transactions.
All amounts, dollars and percentages presented in
this press release are rounded and therefore approximate.
|
Vital Energy, Inc. Selected operating
data |
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
(unaudited) |
|
(unaudited) |
Sales volumes: |
|
|
|
|
|
|
|
Oil (MBbl) |
|
5,388 |
|
|
|
4,037 |
|
|
|
10,715 |
|
|
|
7,504 |
|
NGL (MBbl) |
|
3,173 |
|
|
|
2,050 |
|
|
|
6,107 |
|
|
|
3,899 |
|
Natural gas (MMcf) |
|
19,264 |
|
|
|
12,638 |
|
|
|
37,798 |
|
|
|
24,167 |
|
Oil equivalent (MBOE)(1)(2) |
|
11,771 |
|
|
|
8,193 |
|
|
|
23,121 |
|
|
|
15,430 |
|
Average daily oil equivalent sales volumes (BOE/d)(2) |
|
129,356 |
|
|
|
90,030 |
|
|
|
127,038 |
|
|
|
85,250 |
|
Average daily oil sales volumes (Bbl/d)(2) |
|
59,209 |
|
|
|
44,360 |
|
|
|
58,872 |
|
|
|
41,457 |
|
Average sales prices(2): |
|
|
|
|
|
|
|
Oil ($/Bbl)(3) |
$ |
81.97 |
|
|
$ |
74.09 |
|
|
$ |
80.03 |
|
|
$ |
75.41 |
|
NGL ($/Bbl)(3) |
$ |
12.57 |
|
|
$ |
12.63 |
|
|
$ |
14.24 |
|
|
$ |
15.11 |
|
Natural gas ($/Mcf)(3) |
$ |
(0.28 |
) |
|
$ |
0.71 |
|
|
$ |
0.34 |
|
|
$ |
1.12 |
|
Average sales price ($/BOE)(3) |
$ |
40.45 |
|
|
$ |
40.76 |
|
|
$ |
41.40 |
|
|
$ |
42.24 |
|
Oil, with commodity derivatives ($/Bbl)(4) |
$ |
76.90 |
|
|
$ |
74.43 |
|
|
$ |
75.93 |
|
|
$ |
75.53 |
|
NGL, with commodity derivatives ($/Bbl)(4) |
$ |
12.33 |
|
|
$ |
12.63 |
|
|
$ |
14.05 |
|
|
$ |
15.11 |
|
Natural gas, with commodity derivatives ($/Mcf)(4) |
$ |
0.70 |
|
|
$ |
1.45 |
|
|
$ |
1.05 |
|
|
$ |
1.45 |
|
Average sales price, with commodity derivatives ($/BOE)(4) |
$ |
39.66 |
|
|
$ |
42.07 |
|
|
$ |
40.61 |
|
|
$ |
42.82 |
|
Selected average costs and expenses per BOE sold(2): |
|
|
|
|
|
|
|
Lease operating expenses |
$ |
9.66 |
|
|
$ |
7.05 |
|
|
$ |
9.49 |
|
|
$ |
6.99 |
|
Production and ad valorem taxes |
|
2.30 |
|
|
|
2.64 |
|
|
|
2.50 |
|
|
|
2.73 |
|
Oil transportation and marketing expenses |
|
1.04 |
|
|
|
1.30 |
|
|
|
0.95 |
|
|
|
1.40 |
|
Gas gathering, processing and transportation expenses |
|
0.43 |
|
|
|
— |
|
|
|
0.32 |
|
|
|
— |
|
General and administrative (excluding LTIP and transaction
expenses) |
|
1.67 |
|
|
|
1.88 |
|
|
|
1.89 |
|
|
|
2.42 |
|
Total selected operating expenses |
$ |
15.10 |
|
|
$ |
12.87 |
|
|
$ |
15.15 |
|
|
$ |
13.54 |
|
General and administrative (LTIP): |
|
|
|
|
|
|
|
LTIP cash |
$ |
0.03 |
|
|
$ |
0.16 |
|
|
$ |
0.10 |
|
|
$ |
0.15 |
|
LTIP non-cash |
$ |
0.30 |
|
|
$ |
0.32 |
|
|
$ |
0.29 |
|
|
$ |
0.32 |
|
General and administrative (transaction expenses) |
$ |
— |
|
|
$ |
(0.11 |
) |
|
$ |
0.02 |
|
|
$ |
— |
|
Depletion, depreciation and amortization |
$ |
14.81 |
|
|
$ |
12.61 |
|
|
$ |
14.72 |
|
|
$ |
12.32 |
|
_________________________________________________
(1) |
BOE is calculated using a conversion rate of six Mcf per one
Bbl. |
(2) |
The numbers presented are calculated based on actual amounts and
may not recalculate using the rounded numbers presented in the
table above. |
(3) |
Price reflects the average of actual sales prices received when
control passes to the purchaser/customer adjusted for quality,
certain transportation fees, geographical differentials, marketing
bonuses or deductions and other factors affecting the price
received at the delivery point. |
(4) |
Price reflects the after-effects of the Company's commodity
derivative transactions on its average sales prices. The Company's
calculation of such after-effects includes settlements of matured
commodity derivatives during the respective periods. |
|
|
Vital Energy, Inc. Consolidated balance
sheets |
|
(in thousands, except share data) |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
(unaudited) |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
56,564 |
|
|
$ |
14,061 |
|
Accounts receivable, net |
|
|
225,111 |
|
|
|
238,773 |
|
Derivatives |
|
|
4,495 |
|
|
|
99,336 |
|
Other current assets |
|
|
26,356 |
|
|
|
18,749 |
|
Total current assets |
|
|
312,526 |
|
|
|
370,919 |
|
Property and equipment: |
|
|
|
|
Oil and natural gas properties, full cost method: |
|
|
|
|
Evaluated properties |
|
|
12,317,485 |
|
|
|
11,799,155 |
|
Unevaluated properties not being depleted |
|
|
193,845 |
|
|
|
195,457 |
|
Less: accumulated depletion and impairment |
|
|
(8,094,808 |
) |
|
|
(7,764,697 |
) |
Oil and natural gas properties, net |
|
|
4,416,522 |
|
|
|
4,229,915 |
|
Midstream and other fixed assets, net |
|
|
131,200 |
|
|
|
130,293 |
|
Property and equipment, net |
|
|
4,547,722 |
|
|
|
4,360,208 |
|
Derivatives |
|
|
36,375 |
|
|
|
51,071 |
|
Operating lease right-of-use assets |
|
|
139,037 |
|
|
|
144,900 |
|
Deferred income taxes |
|
|
196,413 |
|
|
|
188,836 |
|
Other noncurrent assets, net |
|
|
31,135 |
|
|
|
33,647 |
|
Total assets |
|
$ |
5,263,208 |
|
|
$ |
5,149,581 |
|
Liabilities and stockholders' equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
153,117 |
|
|
$ |
159,892 |
|
Accrued capital expenditures |
|
|
91,064 |
|
|
|
91,937 |
|
Undistributed revenue and royalties |
|
|
219,292 |
|
|
|
194,307 |
|
Derivatives |
|
|
16,537 |
|
|
|
— |
|
Operating lease liabilities |
|
|
78,672 |
|
|
|
70,651 |
|
Other current liabilities |
|
|
58,738 |
|
|
|
78,802 |
|
Total current liabilities |
|
|
617,420 |
|
|
|
595,589 |
|
Long-term debt, net |
|
|
1,662,263 |
|
|
|
1,609,424 |
|
Derivatives |
|
|
152 |
|
|
|
— |
|
Asset retirement obligations |
|
|
84,149 |
|
|
|
81,680 |
|
Operating lease liabilities |
|
|
56,947 |
|
|
|
71,343 |
|
Other noncurrent liabilities |
|
|
6,379 |
|
|
|
6,288 |
|
Total liabilities |
|
|
2,427,310 |
|
|
|
2,364,324 |
|
Commitments and contingencies |
|
|
|
|
Stockholders' equity: |
|
|
|
|
Preferred stock, $0.01 par value, 50,000,000 shares authorized, and
zero and 595,104 issued and outstanding as of June 30, 2024 and
December 31, 2023, respectively |
|
|
— |
|
|
|
6 |
|
Common stock, $0.01 par value, 80,000,000 shares authorized, and
38,164,905 and 35,413,551 issued and outstanding as of June 30,
2024 and December 31, 2023, respectively |
|
|
382 |
|
|
|
354 |
|
Additional paid-in capital |
|
|
3,814,475 |
|
|
|
3,733,775 |
|
Accumulated deficit |
|
|
(978,959 |
) |
|
|
(948,878 |
) |
Total stockholders' equity |
|
|
2,835,898 |
|
|
|
2,785,257 |
|
Total liabilities and stockholders' equity |
|
$ |
5,263,208 |
|
|
$ |
5,149,581 |
|
|
|
|
|
|
|
|
|
|
Vital Energy, Inc. Consolidated statements
of operations |
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands, except per share data) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
Oil sales |
|
$ |
441,667 |
|
|
$ |
299,085 |
|
|
$ |
857,451 |
|
|
$ |
565,816 |
|
NGL sales |
|
|
39,870 |
|
|
|
25,887 |
|
|
|
86,945 |
|
|
|
58,893 |
|
Natural gas sales |
|
|
(5,371 |
) |
|
|
8,952 |
|
|
|
12,874 |
|
|
|
27,026 |
|
Sales of purchased oil |
|
|
— |
|
|
|
338 |
|
|
|
— |
|
|
|
14,189 |
|
Other operating revenues |
|
|
205 |
|
|
|
800 |
|
|
|
1,440 |
|
|
|
1,645 |
|
Total revenues |
|
|
476,371 |
|
|
|
335,062 |
|
|
|
958,710 |
|
|
|
667,569 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Lease operating expenses |
|
|
113,742 |
|
|
|
57,718 |
|
|
|
219,470 |
|
|
|
107,899 |
|
Production and ad valorem taxes |
|
|
27,079 |
|
|
|
21,607 |
|
|
|
57,693 |
|
|
|
42,138 |
|
Oil transportation and marketing expenses |
|
|
12,199 |
|
|
|
10,681 |
|
|
|
22,032 |
|
|
|
21,596 |
|
Gas gathering, processing and transportation expenses |
|
|
5,088 |
|
|
|
— |
|
|
|
7,464 |
|
|
|
— |
|
Costs of purchased oil |
|
|
— |
|
|
|
588 |
|
|
|
— |
|
|
|
14,755 |
|
General and administrative |
|
|
23,573 |
|
|
|
18,482 |
|
|
|
52,929 |
|
|
|
44,412 |
|
Depletion, depreciation and amortization |
|
|
174,298 |
|
|
|
103,340 |
|
|
|
340,405 |
|
|
|
190,119 |
|
Other operating expenses, net |
|
|
2,593 |
|
|
|
1,351 |
|
|
|
3,611 |
|
|
|
2,835 |
|
Total costs and expenses |
|
|
358,572 |
|
|
|
213,767 |
|
|
|
703,604 |
|
|
|
423,754 |
|
Gain on disposal of assets, net |
|
|
36 |
|
|
|
154 |
|
|
|
166 |
|
|
|
391 |
|
Operating income |
|
|
117,835 |
|
|
|
121,449 |
|
|
|
255,272 |
|
|
|
244,206 |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
Gain (loss) on derivatives, net |
|
|
7,658 |
|
|
|
(18,044 |
) |
|
|
(144,489 |
) |
|
|
2,446 |
|
Interest expense |
|
|
(40,690 |
) |
|
|
(31,529 |
) |
|
|
(84,111 |
) |
|
|
(60,083 |
) |
Loss on extinguishment of debt, net |
|
|
(40,301 |
) |
|
|
— |
|
|
|
(66,115 |
) |
|
|
— |
|
Other income, net |
|
|
2,609 |
|
|
|
1,104 |
|
|
|
4,674 |
|
|
|
1,958 |
|
Total non-operating expense, net |
|
|
(70,724 |
) |
|
|
(48,469 |
) |
|
|
(290,041 |
) |
|
|
(55,679 |
) |
Income (loss) before income taxes |
|
|
47,111 |
|
|
|
72,980 |
|
|
|
(34,769 |
) |
|
|
188,527 |
|
Income tax benefit (expense) |
|
|
(10,409 |
) |
|
|
221,831 |
|
|
|
5,340 |
|
|
|
220,224 |
|
Net income (loss) |
|
|
36,702 |
|
|
|
294,811 |
|
|
|
(29,429 |
) |
|
|
408,751 |
|
Preferred stock dividends |
|
|
(303 |
) |
|
|
— |
|
|
|
(652 |
) |
|
|
— |
|
Net income (loss) available to common stockholders |
|
$ |
36,399 |
|
|
$ |
294,811 |
|
|
$ |
(30,081 |
) |
|
$ |
408,751 |
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.00 |
|
|
$ |
16.35 |
|
|
$ |
(0.84 |
) |
|
$ |
23.71 |
|
Diluted |
|
$ |
0.98 |
|
|
$ |
16.30 |
|
|
$ |
(0.84 |
) |
|
$ |
23.60 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
36,381 |
|
|
|
18,031 |
|
|
|
35,973 |
|
|
|
17,236 |
|
Diluted |
|
|
37,605 |
|
|
|
18,085 |
|
|
|
35,973 |
|
|
|
17,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vital Energy, Inc. Consolidated statements
of cash flows |
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
36,702 |
|
|
$ |
294,811 |
|
|
$ |
(29,429 |
) |
|
$ |
408,751 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Share-settled equity-based compensation, net |
|
|
3,934 |
|
|
|
2,893 |
|
|
|
7,435 |
|
|
|
5,465 |
|
Depletion, depreciation and amortization |
|
|
174,298 |
|
|
|
103,340 |
|
|
|
340,405 |
|
|
|
190,119 |
|
Mark-to-market on derivatives: |
|
|
|
|
|
|
|
|
(Gain) loss on derivatives, net |
|
|
(7,658 |
) |
|
|
18,044 |
|
|
|
144,489 |
|
|
|
(2,446 |
) |
Settlements received (paid) for matured derivatives, net |
|
|
(9,262 |
) |
|
|
10,783 |
|
|
|
(18,262 |
) |
|
|
8,440 |
|
Loss on extinguishment of debt, net |
|
|
40,301 |
|
|
|
— |
|
|
|
66,115 |
|
|
|
— |
|
Deferred income tax (benefit) expense |
|
|
9,347 |
|
|
|
(222,334 |
) |
|
|
(7,577 |
) |
|
|
(222,058 |
) |
Other, net |
|
|
7,027 |
|
|
|
2,609 |
|
|
|
12,429 |
|
|
|
4,756 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
65,137 |
|
|
|
3,399 |
|
|
|
13,662 |
|
|
|
17,360 |
|
Other current assets |
|
|
(1,961 |
) |
|
|
(766 |
) |
|
|
(7,607 |
) |
|
|
(8,230 |
) |
Other noncurrent assets, net |
|
|
1,906 |
|
|
|
(755 |
) |
|
|
1,549 |
|
|
|
1,590 |
|
Accounts payable and accrued liabilities |
|
|
(7,803 |
) |
|
|
(6,742 |
) |
|
|
(16,867 |
) |
|
|
(17,435 |
) |
Undistributed revenue and royalties |
|
|
29,133 |
|
|
|
13,672 |
|
|
|
16,268 |
|
|
|
1,847 |
|
Other current liabilities |
|
|
964 |
|
|
|
30,003 |
|
|
|
(20,383 |
) |
|
|
(18,647 |
) |
Other noncurrent liabilities |
|
|
(3,664 |
) |
|
|
(69 |
) |
|
|
(5,236 |
) |
|
|
(4,499 |
) |
Net cash provided by operating activities |
|
|
338,401 |
|
|
|
248,888 |
|
|
|
496,991 |
|
|
|
365,013 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisitions of oil and natural gas properties, net |
|
|
(299 |
) |
|
|
(526,985 |
) |
|
|
(4,679 |
) |
|
|
(526,985 |
) |
Capital expenditures: |
|
|
|
|
|
|
|
|
Oil and natural gas properties |
|
|
(222,334 |
) |
|
|
(144,181 |
) |
|
|
(417,706 |
) |
|
|
(309,223 |
) |
Midstream and other fixed assets |
|
|
(4,093 |
) |
|
|
(4,128 |
) |
|
|
(9,178 |
) |
|
|
(6,899 |
) |
Proceeds from dispositions of capital assets, net of selling
costs |
|
|
55 |
|
|
|
77 |
|
|
|
180 |
|
|
|
2,252 |
|
Other, net |
|
|
— |
|
|
|
— |
|
|
|
(952 |
) |
|
|
2,035 |
|
Net cash used in investing activities |
|
|
(226,671 |
) |
|
|
(675,217 |
) |
|
|
(432,335 |
) |
|
|
(838,820 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Borrowings on Senior Secured Credit Facility |
|
|
275,000 |
|
|
|
500,000 |
|
|
|
405,000 |
|
|
|
595,000 |
|
Payments on Senior Secured Credit Facility |
|
|
(450,000 |
) |
|
|
(45,000 |
) |
|
|
(450,000 |
) |
|
|
(90,000 |
) |
Issuance of senior unsecured notes |
|
|
201,500 |
|
|
|
— |
|
|
|
1,001,500 |
|
|
|
— |
|
Extinguishment of debt |
|
|
(498,696 |
) |
|
|
— |
|
|
|
(952,214 |
) |
|
|
— |
|
Stock exchanged for tax withholding |
|
|
(9 |
) |
|
|
(385 |
) |
|
|
(3,420 |
) |
|
|
(2,844 |
) |
Payments for debt issuance costs |
|
|
(4,564 |
) |
|
|
— |
|
|
|
(20,285 |
) |
|
|
— |
|
Other, net |
|
|
(1,722 |
) |
|
|
(596 |
) |
|
|
(2,734 |
) |
|
|
(1,088 |
) |
Net cash (used in) provided by financing activities |
|
|
(478,491 |
) |
|
|
454,019 |
|
|
|
(22,153 |
) |
|
|
501,068 |
|
Net (decrease) increase in cash and cash equivalents |
|
|
(366,761 |
) |
|
|
27,690 |
|
|
|
42,503 |
|
|
|
27,261 |
|
Cash and cash equivalents, beginning of period |
|
|
423,325 |
|
|
|
44,006 |
|
|
|
14,061 |
|
|
|
44,435 |
|
Cash and cash equivalents, end of period |
|
$ |
56,564 |
|
|
$ |
71,696 |
|
|
$ |
56,564 |
|
|
$ |
71,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vital Energy, Inc. Supplemental
reconciliations of GAAP to non-GAAP financial
measures |
|
Non-GAAP financial measures
The non-GAAP financial measures of Adjusted Free
Cash Flow, Adjusted Net Income and Consolidated EBITDAX, as defined
by the Company, may not be comparable to similarly titled measures
used by other companies. Furthermore, these non-GAAP financial
measures should not be considered in isolation or as a substitute
for GAAP measures of liquidity or financial performance, but rather
should be considered in conjunction with GAAP measures, such as net
income or loss, operating income or loss or cash flows from
operating activities.
Adjusted Free Cash Flow
Adjusted Free Cash Flow is a non-GAAP financial
measure that the Company defines as net cash provided by operating
activities (GAAP) before net changes in operating assets and
liabilities and transaction expenses related to non-budgeted
acquisitions, less capital investments, excluding non-budgeted
acquisition costs. Management believes Adjusted Free Cash Flow is
useful to management and investors in evaluating operating trends
in its business that are affected by production, commodity prices,
operating costs and other related factors. There are significant
limitations to the use of Adjusted Free Cash Flow as a measure of
performance, including the lack of comparability due to the
different methods of calculating Adjusted Free Cash Flow reported
by different companies.
The following table presents a reconciliation of
net cash provided by operating activities (GAAP) to Adjusted Free
Cash Flow (non-GAAP) for the periods presented:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
|
|
|
|
|
|
|
(in thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
Net cash provided by operating activities |
|
$ |
338,401 |
|
|
$ |
248,888 |
|
|
$ |
496,991 |
|
|
$ |
365,013 |
|
Less: |
|
|
|
|
|
|
|
|
Net changes in operating assets and liabilities |
|
|
83,712 |
|
|
|
38,742 |
|
|
|
(18,614 |
) |
|
|
(28,014 |
) |
General and administrative (transaction expenses) |
|
|
(15 |
) |
|
|
861 |
|
|
|
(347 |
) |
|
|
— |
|
Cash flows from operating activities before net changes in
operating assets and liabilities and transaction expenses related
to non-budgeted acquisitions |
|
|
254,704 |
|
|
|
209,285 |
|
|
|
515,952 |
|
|
|
393,027 |
|
Less capital investments, excluding non-budgeted acquisition
costs: |
|
|
|
|
|
|
|
|
Oil and natural gas properties(1) |
|
|
205,521 |
|
|
|
144,350 |
|
|
|
418,786 |
|
|
|
328,464 |
|
Midstream and other fixed assets(1) |
|
|
4,489 |
|
|
|
4,239 |
|
|
|
9,124 |
|
|
|
7,769 |
|
Total capital investments, excluding non-budgeted acquisition
costs |
|
|
210,010 |
|
|
|
148,589 |
|
|
|
427,910 |
|
|
|
336,233 |
|
Adjusted Free Cash Flow (non-GAAP) |
|
$ |
44,694 |
|
|
$ |
60,696 |
|
|
$ |
88,042 |
|
|
$ |
56,794 |
|
_________________________________________________
(1) |
Includes capitalized share-settled equity-based compensation and
asset retirement costs. |
|
|
Adjusted Net Income
Adjusted Net Income is a non-GAAP financial
measure that the Company defines as net income or loss (GAAP) plus
adjustments for mark-to-market on derivatives, premiums paid or
received for commodity derivatives that matured during the period,
organizational restructuring expenses, impairment expense, gains or
losses on disposal of assets, income taxes, other non-recurring
income and expenses and adjusted income tax expense. Management
believes Adjusted Net Income helps investors in the oil and natural
gas industry to measure and compare the Company's performance to
other oil and natural gas companies by excluding from the
calculation items that can vary significantly from company to
company depending upon accounting methods, the book value of assets
and other non-operational factors.
The following table presents a reconciliation of
net income (loss) (GAAP) to Adjusted Net Income (non-GAAP) for the
periods presented:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands, except per share data) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
Net income (loss) |
|
$ |
36,702 |
|
|
$ |
294,811 |
|
|
$ |
(29,429 |
) |
|
$ |
408,751 |
|
Plus: |
|
|
|
|
|
|
|
|
Mark-to-market on derivatives: |
|
|
|
|
|
|
|
|
(Gain) loss on derivatives, net |
|
|
(7,658 |
) |
|
|
18,044 |
|
|
|
144,489 |
|
|
|
(2,446 |
) |
Settlements received (paid) for matured derivatives, net |
|
|
(9,262 |
) |
|
|
10,783 |
|
|
|
(18,262 |
) |
|
|
9,020 |
|
Settlements received for contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,455 |
|
Gain on disposal of assets, net |
|
|
(36 |
) |
|
|
(154 |
) |
|
|
(166 |
) |
|
|
(391 |
) |
Loss on extinguishment of debt, net |
|
|
40,301 |
|
|
|
— |
|
|
|
66,115 |
|
|
|
— |
|
Income tax (benefit) expense |
|
|
10,409 |
|
|
|
(221,831 |
) |
|
|
(5,340 |
) |
|
|
(220,224 |
) |
General and administrative (transaction expenses) |
|
|
15 |
|
|
|
(861 |
) |
|
|
347 |
|
|
|
— |
|
Adjusted income before adjusted income tax expense |
|
|
70,471 |
|
|
|
100,792 |
|
|
|
157,754 |
|
|
|
196,165 |
|
Adjusted income tax expense(1) |
|
|
(15,504 |
) |
|
|
(22,174 |
) |
|
|
(34,706 |
) |
|
|
(43,156 |
) |
Adjusted Net Income (non-GAAP) |
|
$ |
54,967 |
|
|
$ |
78,618 |
|
|
$ |
123,048 |
|
|
$ |
153,009 |
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.00 |
|
|
$ |
16.35 |
|
|
$ |
(0.84 |
) |
|
$ |
23.71 |
|
Diluted |
|
$ |
0.98 |
|
|
$ |
16.30 |
|
|
$ |
(0.84 |
) |
|
$ |
23.60 |
|
Adjusted Net Income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.51 |
|
|
$ |
4.36 |
|
|
$ |
3.42 |
|
|
$ |
8.88 |
|
Diluted |
|
$ |
1.46 |
|
|
$ |
4.35 |
|
|
$ |
3.42 |
|
|
$ |
8.83 |
|
Adjusted diluted |
|
$ |
1.46 |
|
|
$ |
4.35 |
|
|
$ |
3.30 |
|
|
$ |
8.83 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
36,381 |
|
|
|
18,031 |
|
|
|
35,973 |
|
|
|
17,236 |
|
Diluted |
|
|
37,605 |
|
|
|
18,085 |
|
|
|
35,973 |
|
|
|
17,319 |
|
Adjusted diluted |
|
|
37,605 |
|
|
|
18,085 |
|
|
|
37,264 |
|
|
|
17,319 |
|
_________________________________________________
(1) |
Adjusted income tax expense is calculated by applying a statutory
tax rate of 22% for each of the periods ended June 30, 2024
and 2023. |
|
|
Consolidated EBITDAX
Consolidated EBITDAX is a non-GAAP financial
measure defined in the Company's Senior Secured Credit Facility as
net income or loss (GAAP) plus adjustments for share-settled
equity-based compensation, depletion, depreciation and
amortization, impairment expense, organizational restructuring
expenses, gains or losses on disposal of assets, mark-to-market on
derivatives, accretion expense, interest expense, income taxes and
other non-recurring income and expenses. Consolidated EBITDAX
provides no information regarding a company's capital structure,
borrowings, interest costs, capital expenditures, working capital
movement or tax position. Consolidated EBITDAX does not represent
funds available for future discretionary use because it excludes
funds required for debt service, capital expenditures, working
capital, income taxes, franchise taxes and other commitments and
obligations. However, management believes Consolidated EBITDAX is
useful to an investor because this measure:
- is used by investors in the oil and natural gas industry to
measure a company's operating performance without regard to items
that can vary substantially from company to company depending upon
accounting methods, the book value of assets, capital structure and
the method by which assets were acquired, among other factors;
- helps investors to more meaningfully evaluate and compare the
results of the Company's operations from period to period by
removing the effect of the Company's capital structure from the
Company's operating structure; and
- is used by management for various purposes, including (i) as a
measure of operating performance, (ii) as a measure of compliance
under the Senior Secured Credit Facility, (iii) in presentations to
the board of directors and (iv) as a basis for strategic planning
and forecasting.
There are significant limitations to the use of
Consolidated EBITDAX as a measure of performance, including the
inability to analyze the effect of certain recurring and
non-recurring items that materially affect the Company's net income
or loss and the lack of comparability of results of operations to
different companies due to the different methods of calculating
Consolidated EBITDAX, or similarly titled measures, reported by
different companies. The Company is subject to financial covenants
under the Senior Secured Credit Facility, one of which establishes
a maximum permitted ratio of Net Debt, as defined in the Senior
Secured Credit Facility, to Consolidated EBITDAX. See Note 7 in the
2023 Annual Report for additional discussion of the financial
covenants under the Senior Secured Credit Facility. Additional
information on Consolidated EBITDAX can be found in the Company's
Eleventh Amendment to the Senior Secured Credit Facility, as filed
with the SEC on September 13, 2023.
The following table presents a reconciliation of
net income (loss) (GAAP) to Consolidated EBITDAX (non-GAAP) for the
periods presented:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands) |
|
2024 |
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
Net income (loss) |
|
$ |
36,702 |
|
|
$ |
294,811 |
|
|
$ |
(29,429 |
) |
|
$ |
408,751 |
|
Plus: |
|
|
|
|
|
|
|
|
Share-settled equity-based compensation, net |
|
|
3,934 |
|
|
|
2,893 |
|
|
|
7,435 |
|
|
|
5,465 |
|
Depletion, depreciation and amortization |
|
|
174,298 |
|
|
|
103,340 |
|
|
|
340,405 |
|
|
|
190,119 |
|
Gain on disposal of assets, net |
|
|
(36 |
) |
|
|
(154 |
) |
|
|
(166 |
) |
|
|
(391 |
) |
Mark-to-market on derivatives: |
|
|
|
|
|
|
|
|
(Gain) loss on derivatives, net |
|
|
(7,658 |
) |
|
|
18,044 |
|
|
|
144,489 |
|
|
|
(2,446 |
) |
Settlements received (paid) for matured derivatives, net |
|
|
(9,262 |
) |
|
|
10,783 |
|
|
|
(18,262 |
) |
|
|
9,020 |
|
Settlements received for contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,455 |
|
Accretion expense |
|
|
1,036 |
|
|
|
903 |
|
|
|
2,056 |
|
|
|
1,802 |
|
Interest expense |
|
|
40,690 |
|
|
|
31,529 |
|
|
|
84,111 |
|
|
|
60,083 |
|
Loss extinguishment of debt, net |
|
|
40,301 |
|
|
|
— |
|
|
|
66,115 |
|
|
|
— |
|
Income tax (benefit) expense |
|
|
10,409 |
|
|
|
(221,831 |
) |
|
|
(5,340 |
) |
|
|
(220,224 |
) |
General and administrative (transaction expenses) |
|
|
15 |
|
|
|
(861 |
) |
|
|
347 |
|
|
|
— |
|
Consolidated EBITDAX (non-GAAP) |
|
$ |
290,429 |
|
|
$ |
239,457 |
|
|
$ |
591,761 |
|
|
$ |
453,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of
net cash provided by operating activities (GAAP) to Consolidated
EBITDAX (non-GAAP) for the periods presented:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
Net cash provided by operating activities |
|
$ |
338,401 |
|
|
$ |
248,888 |
|
|
$ |
496,991 |
|
|
$ |
365,013 |
|
Plus: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
40,690 |
|
|
|
31,529 |
|
|
|
84,111 |
|
|
|
60,083 |
|
Current income tax expense |
|
|
1,062 |
|
|
|
503 |
|
|
|
2,237 |
|
|
|
1,834 |
|
Net changes in operating assets and liabilities |
|
|
(83,712 |
) |
|
|
(38,742 |
) |
|
|
18,614 |
|
|
|
28,014 |
|
General and administrative (transaction expenses) |
|
|
15 |
|
|
|
(861 |
) |
|
|
347 |
|
|
|
— |
|
Settlements received for contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
|
|
1,455 |
|
Other, net |
|
|
(6,027 |
) |
|
|
(1,860 |
) |
|
|
(10,539 |
) |
|
|
(2,765 |
) |
Consolidated EBITDAX (non-GAAP) |
|
$ |
290,429 |
|
|
$ |
239,457 |
|
|
$ |
591,761 |
|
|
$ |
453,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Contact: Ron Hagood
918.858.5504 ir@vitalenergy.com
Vital Energy (NYSE:VTLE)
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