Vitesse Energy, Inc. (NYSE: VTS) (“we,” “our,” “Vitesse,” or the
“Company”) today announced the Company’s second quarter 2023
financial and operating results.
HIGHLIGHTS
- Net income of $9.6 million and $11.4 million of Adjusted Net
Income(1)
- Adjusted EBITDA(1) of $34.8 million
- Cash flow from operations of $39.0 million and Free Cash
Flow(1) of $16.1 million
- Production of 11,359 barrels of oil equivalent (“Boe”) per day
(67% oil)
- Total cash capital expenditures of $20.5 million, of which
$17.4 million were related to drilling and completion costs
- As previously announced, declared our third quarter cash
dividend of $0.50 per common share to be paid on September 29,
2023
- Total debt of $41.0 million as of June 30, 2023, a decrease
from $45.0 million on March 31, 2023 and from $53.0 million at the
time of the spin-off from Jefferies Financial Group Inc. on January
13, 2023 (the “Spin-Off”)
(1) Non-GAAP financial measure; see
reconciliation schedules at the end of this release
MANAGEMENT COMMENTS
Bob Gerrity, Vitesse’s Chairman and Chief Executive Officer
commented, “Vitesse performed as expected in the second quarter. As
a return of capital company, we paid our second quarter fixed
dividend in June and recently declared our third quarter cash
dividend.
“We continue to see attractive near-term drilling deal flow
which meets or exceeds our economic hurdles. This has allowed
Vitesse to be at the upper end of yearly capex guidance for the
first half of 2023.”
STOCKHOLDER RETURNS
In May 2023, Vitesse’s Board of Directors declared its second
quarter cash dividend for Vitesse’s common stock of $0.50 per share
for stockholders of record as of June 15, 2023, which was paid on
June 30, 2023.
In July 2023, Vitesse’s Board of Directors declared its third
quarter cash dividend for Vitesse’s common stock of $0.50 per share
for stockholders of record as of September 15, 2023, which will be
paid on September 29, 2023. Subject to Board approval, contractual
restrictions and applicable law, Vitesse currently intends to pay
quarterly dividends of $0.50 per share for the foreseeable
future.
FINANCIAL AND OPERATING RESULTS
Second quarter net income was $9.6 million and Adjusted Net
Income was $11.4 million. Adjusted EBITDA was $34.8 million. See
“Non-GAAP Financial Measures” below.
Oil and gas production for the second quarter of 2023 averaged
11,359 Boe per day, a decrease of 1% from the first quarter of
2023. For the six months ended June 30, 2023, oil and gas
production averaged 11,441 Boe per day. Oil represented 67% of
production and 94% of total revenue in the second quarter of 2023.
Total revenue, including the effects of our realized hedges, for
the second quarter of 2023 was $53.2 million.
Vitesse’s realized oil and natural gas prices before hedging
were $69.90 per Bbl and $1.41 per Mcf, respectively, during the
second quarter of 2023. Vitesse hedges a portion of its oil
production to reduce the impact of price volatility on its
financial results. In the second quarter, the Company had hedges
covering 50% of oil production and its realized oil price with
hedging was $72.18 per Bbl.
Lease operating expenses in the second quarter of 2023 were $9.3
million, or $9.01 per Boe, an increase of 3% on a per unit basis
compared to the first quarter of 2023. The higher lease operating
expense reflects quarterly variability related to workover
activity.
General and administrative (“G&A”) expenses for the second
quarter of 2023 totaled $4.5 million, or $4.32 per Boe, a decrease
of 59% on a per unit basis compared to the first quarter of 2023.
The decrease in G&A expense per Boe was primarily due to lower
non-recurring costs related to the Spin-Off. Excluding these
non-recurring costs, G&A expense in the second quarter was
$4.05 per Boe.
LIQUIDITY AND CAPITAL EXPENDITURES
As of June 30, 2023, Vitesse had $3.4 million in cash and $41.0
million of borrowings outstanding on its revolving credit facility.
Vitesse had total liquidity of $132.4 million as of June 30, 2023,
consisting of cash and committed borrowing availability under its
revolving credit facility. While the revolving credit facility has
elected commitments of $170 million, the borrowing base is $245
million.
During the quarter, Vitesse spent $17.4 million on development
capital expenditures and $3.1 million on acquisitions of oil and
gas properties.
OPERATIONS UPDATE
The Company owned a working interest in 278 gross (8.5 net)
wells that were either drilling or in the completion phase, and
another 432 gross (11.0 net) locations that had been permitted for
development at the end of the quarter.
In the second quarter, Vitesse consented to 97 gross (3.5 net)
well authorization for expenditures (“AFEs”), an increase on a net
basis over the first quarter of 2023. We also experienced an
increase in refrac and 3-mile lateral AFEs, which are included in
the previous figures.
2023 ANNUAL GUIDANCE
Vitesse reaffirms its previously issued 2023 annual guidance,
which is set forth below.
2023 Guidance
Annual Production (Boe per day)
10,800 - 11,800
Oil as a Percentage of Annual
Production
66% - 70%
Total Capital Expenditures ($ in
millions)
$60 - $80
SECOND QUARTER 2023 RESULTS
Vitesse Energy, LLC is the “predecessor” of Vitesse for
financial reporting purposes. As a result, unless otherwise
indicated, the 2022 financial and operating data presented in this
release are those of Vitesse Energy, LLC and do not include the
financial and operating data of Vitesse Oil, LLC, which was
acquired as part of the Spin-Off. The following table sets forth
selected financial and operating data for the periods
indicated.
QUARTER ENDED JUNE 30,
INCREASE
(DECREASE)
($ in thousands, except production and
per unit data)
2023
2022
AMOUNT
PERCENT
Financial and Operating
Results:
Revenue
Oil
$
48,733
$
64,640
$
(15,907
)
(25
%)
Natural gas
2,855
14,157
(11,302
)
(80
%)
Total revenue
$
51,588
$
78,797
$
(27,209
)
(35
%)
Operating Expenses
Lease operating expense
$
9,316
$
7,661
$
1,655
22
%
Production taxes
4,919
6,866
(1,947
)
(28
%)
General and administrative
4,461
3,633
828
23
%
Depletion, depreciation, amortization, and
accretion
18,748
14,994
3,754
25
%
Equity-based compensation
1,428
16,292
(14,864
)
(91
%)
Interest Expense
$
1,115
$
1,044
$
71
7
%
Commodity Derivative Gain (Loss),
Net
$
4,779
$
(11,558
)
$
16,337
141
%
Income Tax Expense
$
6,812
$
—
$
6,812
100
%
Production Data:
Oil (MBbls)
697
612
85
14
%
Natural gas (MMcf)
2,018
1,696
322
19
%
Combined volumes (MBoe)
1,034
894
140
16
%
Daily combined volumes (Boe/d)
11,359
9,828
1,531
16
%
Average Realized Prices before
Hedging:
Oil (per Bbl)
$
69.90
$
105.66
$
(35.76
)
(34
%)
Natural gas (per Mcf)
1.41
8.35
(6.94
)
(83
%)
Combined (per Boe)
49.91
88.10
(38.19
)
(43
%)
Average Realized Prices with
Hedging:
Oil (per Bbl)
$
72.18
$
77.40
$
(5.22
)
(7
%)
Natural gas (per Mcf)
1.41
8.35
(6.94
)
(83
%)
Combined (per Boe)
51.45
68.78
(17.33
)
(25
%)
Average Costs (per Boe):
Lease operating
$
9.01
$
8.57
$
0.44
5
%
Production taxes
4.76
7.68
(2.92
)
(38
%)
General and administrative
4.32
4.06
0.26
6
%
Depletion, depreciation, amortization, and
accretion
18.14
16.76
1.38
8
%
COMMODITY HEDGING
Vitesse hedges a portion of its expected annual oil production
volumes to increase the predictability and certainty of its cash
flow and to help maintain a strong financial position. Vitesse does
not currently have hedges in place on its expected natural gas
production volumes. The following table summarizes Vitesse’s open
oil commodity derivative swap contracts scheduled to settle after
June 30, 2023.
SETTLEMENT
PERIOD
OIL (barrels)
WEIGHTED AVERAGE PRICE
$
Swaps-Crude Oil
2023:
Q3
354,999
$
78.25
Q4
324,998
$
77.62
2024:
Q1
199,998
$
76.06
Q2
180,000
$
75.97
Q3
180,000
$
75.97
Q4
120,000
$
75.97
The following table presents Vitesse’s settlements on commodity
derivative instruments and unsettled gains and losses on open
commodity derivative instruments for the periods presented:
QUARTER ENDED JUNE 30,
(in thousands)
2023
2022
Realized gain (loss) on commodity
derivatives
$
1,595
$
(17,287
)
Unrealized gain on commodity
derivatives
3,184
5,729
Total commodity derivative gain (loss)
$
4,779
$
(11,558
)
Q2 2023 EARNINGS RELEASE CONFERENCE CALL
In conjunction with Vitesse’s release of its financial and
operating results, investors, analysts and other interested parties
are invited to listen to a conference call with management on
Tuesday, August 1, 2023 at 9:00 a.m. Eastern Time.
An updated corporate slide presentation that may be referenced
on the conference call will be posted prior to the conference call
on Vitesse’s website, www.vitesse-vts.com, in the “Investor
Relations” section of the site, under “News & Events,” sub-tab
“Presentations.”
Those wishing to listen to the conference call may do so via the
Company’s website or by phone as follows:
Website:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=4I39jJBq
Dial-In Number: 877-407-0778
(US/Canada) and 201-689-8565 (International)
Conference ID: 13740123 - Vitesse
Energy Second Quarter 2023 Earnings Call
Replay Dial-In Number: 877-660-6853
(US/Canada) 201-612-7415 (International)
Replay Access Code: 13740123 -
Replay will be available through August 8, 2023
UPCOMING INVESTOR EVENTS
Vitesse management will be participating in the following
upcoming investor events:
• EnerCom Denver Energy Conference - August 14-16, 2023.
• Midwest IDEAS Conference - Chicago - August 23-24, 2023.
Any investor presentations to be used for such events will be
posted prior to the events on Vitesse’s website,
www.vitesse-vts.com, in the “Investor Relations” section of the
site, under “News & Events,” sub-tab “Presentations.”
ABOUT VITESSE ENERGY, INC.
Vitesse Energy, Inc. is focused on returning capital to
stockholders through owning financial interests as a non-operator
in oil and gas wells drilled by leading US operators.
More information about Vitesse can be found at
www.vitesse-vts.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding
future events and future results that are subject to the safe
harbors created under the Securities Act of 1933 and the Securities
Exchange Act of 1934. All statements other than statements of
historical facts included in this release regarding Vitesse’s
financial position, operating and financial performance,
development pace and drilling inventory, business strategy,
dividend plans and practices, guidance, refracs and increased
lateral lengths, plans and objectives of management for future
operations, and industry conditions are forward-looking statements.
When used in this release, forward-looking statements are generally
accompanied by terms or phrases such as “estimate,” “project,”
“predict,” “believe,” “expect,” “continue,” “anticipate,” “target,”
“could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may”
or other words and similar expressions that convey the uncertainty
of future events or outcomes. Items contemplating or making
assumptions about actual or potential future production and sales,
market size, collaborations, and trends or operating results also
constitute such forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond
Vitesse’s control) that could cause actual results to differ
materially from those set forth in the forward-looking statements,
including the following: changes in oil and natural gas prices; the
pace of drilling and completions activity on Vitesse’s properties;
Vitesse’s ability to acquire additional development opportunities;
potential acquisition transactions; integration and benefits of
property acquisitions, or the effects of such acquisitions on
Vitesse’s cash position and levels of indebtedness; changes in
Vitesse’s reserves estimates or the value thereof; disruptions to
Vitesse’s business due to acquisitions and other significant
transactions; infrastructure constraints and related factors
affecting Vitesse’s properties; cost inflation or supply chain
disruption; ongoing legal disputes over and potential shutdown of
the Dakota Access Pipeline; the COVID-19 pandemic and its related
economic repercussions and effect on the oil and natural gas
industry; the impact of general economic or industry conditions,
nationally and/or in the communities in which Vitesse conducts
business, including central bank policy actions, bank failures and
associated liquidity risks; changes in the interest rate
environment, legislation or regulatory requirements; conditions of
the securities markets; Vitesse’s ability to raise or access
capital; cyber-related risks; changes in accounting principles,
policies or guidelines; and financial or political instability,
health-related epidemics, acts of war (including the armed conflict
in Ukraine) or terrorism, and other economic, competitive,
governmental, regulatory and technical factors affecting Vitesse’s
operations, products and prices. Additional information concerning
potential factors that could affect future results is included in
the section entitled “Item 1A. Risk Factors” and other sections of
Vitesse’s Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q, as updated from time to time in amendments
and subsequent reports filed with the SEC, which describe factors
that could cause Vitesse’s actual results to differ from those set
forth in the forward looking statements.
Vitesse has based these forward-looking statements on its
current expectations and assumptions about future events. While
management considers these expectations and assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond Vitesse’s control. Vitesse does not undertake
any duty to update or revise any forward-looking statements, except
as may be required by the federal securities laws.
FINANCIAL INFORMATION
VITESSE ENERGY, INC.
Condensed Consolidated
Statements of Operations (Unaudited)
FOR THE THREE MONTHS
ENDED
FOR THE SIX MONTHS
ENDED
JUNE 30,
JUNE 30,
(In thousands, except share and unit
data)
2023
2022
2023
2022
Revenue
Oil
$
48,733
$
64,640
$
99,219
$
117,122
Natural gas
2,855
14,157
10,330
26,655
Total revenue
51,588
78,797
109,549
143,777
Operating Expenses
Lease operating expense
9,316
7,661
18,397
14,159
Production taxes
4,919
6,866
10,174
11,976
General and administrative
4,461
3,633
15,323
6,507
Depletion, depreciation, amortization, and
accretion
18,748
14,994
37,220
29,176
Equity-based compensation
1,428
16,292
29,400
22,240
Total operating expenses
38,872
49,446
110,514
84,058
Operating Income (Loss)
12,716
29,351
(965
)
59,719
Other (Expense) Income
Commodity derivative gain (loss), net
4,779
(11,558
)
12,198
(48,376
)
Interest expense
(1,115
)
(1,044
)
(2,295
)
(1,754
)
Other income
52
3
50
6
Total other (expense) income
3,716
(12,599
)
9,953
(50,124
)
Income Before Income Taxes
$
16,432
$
16,752
$
8,988
$
9,595
Provision for Income Taxes
(6,812
)
—
(47,183
)
—
Net Income (Loss)
$
9,620
$
16,752
$
(38,195
)
$
9,595
Net income attributable to Predecessor
common unit holders
—
16,752
1,832
9,595
Net Income (Loss) Attributable to
Vitesse Energy, Inc.
$
9,620
$
—
$
(40,027
)
$
—
EPS
Weighted average common shares /
Predecessor common unit outstanding – basic
29,659,771
438,625,000
29,661,556
438,625,000
Weighted average common shares /
Predecessor common unit outstanding – diluted
33,077,824
438,625,000
29,661,556
438,625,000
Net income (loss) per common share /
Predecessor common unit – basic
$
0.29
$
0.04
$
(1.35
)
$
0.02
Net income (loss) per common share /
Predecessor common unit – diluted
$
0.29
$
0.04
$
(1.35
)
$
0.02
Net loss per Predecessor non-founder MIUs
classified as temporary equity–basic and diluted
$
—
$
—
VITESSE ENERGY, INC.
Condensed Consolidated Balance
Sheets (Unaudited)
JUNE 30,
DECEMBER 31,
(in thousands, except shares and
units)
2023
2022
Assets
Current Assets
Cash
$
3,360
$
10,007
Revenue receivable
26,400
41,393
Commodity derivatives
7,458
2,112
Prepaid expenses and other current
assets
2,587
841
Total current assets
39,805
54,353
Oil and Gas Properties-Using the
successful efforts method of accounting
Proved oil and gas properties
1,077,377
985,751
Less accumulated DD&A and
impairment
(419,866
)
(382,974
)
Total oil and gas properties
657,511
602,777
Other Property and Equipment—Net
84
114
Other Assets
Commodity derivatives
2,286
1,155
Other noncurrent assets
2,027
2,085
Total other assets
4,313
3,240
Total assets
$
701,713
$
660,484
Liabilities, Redeemable Units and
Equity
Current Liabilities
Accounts payable
$
13,169
$
7,207
Accrued liabilities
30,095
25,849
Commodity derivatives
56
3,439
Other current liabilities
57
184
Total current liabilities
43,377
36,679
Long-term Liabilities
Revolving credit facility
41,000
48,000
Deferred tax liability
49,113
—
Asset retirement obligations
7,494
6,823
Other noncurrent liabilities
2,975
—
Total liabilities
$
143,959
$
91,502
Commitments and Contingencies
Predecessor Redeemable Management
Incentive Units
—
4,559
Equity
Preferred stock, $0.01 par value,
5,000,000 shares authorized; 0 shares issued at June 30, 2023
—
—
Common stock, $0.01 par value, 95,000,000
shares authorized; 32,812,900 shares issued at June 30, 2023
328
—
Additional paid-in capital
597,453
—
Accumulated deficit
(40,027
)
—
Predecessor members' equity-common
units-450,000,000 units outstanding
—
564,423
Total equity
557,754
564,423
Total liabilities, redeemable units and
equity
$
701,713
$
660,484
NON-GAAP FINANCIAL MEASURES
Vitesse defines Adjusted Net Income as net income before (i)
non-cash gains and losses on unsettled derivative instruments, (ii)
non-cash unit-based compensation, and (iii) certain items we
consider non-routine in nature, including non-cash oil and natural
gas property impairments and material general and administrative
costs related to the Spin-Off; reduced by the estimated impact of
income tax expense.
Adjusted EBITDA is defined as net income before expenses for
interest, income taxes, depletion, depreciation, amortization and
accretion, and excludes non-cash unit-based compensation and
non-cash gains and losses on unsettled derivative instruments in
addition to certain items we consider non-routine in nature,
including non-cash oil and natural gas property impairments and
material general and administrative costs related to the
Spin-Off.
Vitesse defines Free Cash Flow as cash flow from operations,
adding back changes in operating assets and liabilities, less
development of oil and gas properties.
Management believes the use of these non-GAAP financial measures
provides useful information to investors to gain an overall
understanding of financial performance. Specifically, management
believes the non-GAAP financial measures included herein provide
useful information to both management and investors by excluding
certain items that management believes are not indicative of
Vitesse’s core operating results. In addition, these non-GAAP
financial measures are used by management for budgeting and
forecasting as well as subsequently measuring Vitesse’s
performance, and management believes it is providing investors with
financial measures that most closely align to its internal
measurement processes. A reconciliation of each of the non-GAAP
financial measures to the most directly comparable GAAP measure is
included below.
RECONCILIATION OF ADJUSTED NET
INCOME
FOR THE THREE MONTHS ENDED
JUNE 30,
(in thousands)
2023
Income Before Income Taxes
$
16,432
Add:
Impact of Selected Items:
Unrealized loss (gain) on derivative
instruments
(3,184
)
Equity-based compensation
1,428
Adjusted for non-routine items(1)
270
Adjusted Income Before Adjusted Income Tax
Expense
14,946
Adjusted Income Tax Expense(2)
(3,497
)
Adjusted Net Income (non-GAAP)
$
11,449
(1)
Our Adjusted Net Income calculation
excludes certain items we consider non-routine and non-recurring.
During the quarter ended June 30, 2023, adjustments for non-routine
items consisted of $270,000 of costs related to the Spin-Off.
(2)
The Company determined the income tax
impact on the “Adjusted Income Before Adjusted Income Tax Expense,”
using the relevant statutory tax rate of 23.4%.
RECONCILIATION OF ADJUSTED
EBITDA
FOR THE THREE MONTHS ENDED
JUNE 30,
(in thousands)
2023
Net income
$
9,620
Add:
Interest expense
1,115
Income taxes
6,812
Depletion, depreciation, amortization, and
accretion
18,748
Equity-based compensation
1,428
Unrealized loss (gain) on derivatives
(3,184
)
Adjusted for non-routine items(1)
270
Adjusted EBITDA
$
34,809
(1)
Our Adjusted EBITDA calculation excludes
certain items we consider non-routine and non-recurring. During the
quarter ended June 30, 2023, adjustments for non-routine items
consisted of $270,000 of costs related to the Spin-Off.
RECONCILIATION OF FREE CASH
FLOW
FOR THE THREE MONTHS ENDED
JUNE 30,
(in thousands)
2023
Net cash provided by operating
activities
$
39,030
Add back: changes in operating assets and
liabilities
(5,445
)
Cash flow from operations before changes
in operating assets and liabilities
33,585
Less: development of oil and gas
properties
(17,449
)
Free Cash Flow
$
16,136
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230731388516/en/
INVESTOR AND MEDIA CONTACT Ben Messier, CFA Director –
Investor Relations (720) 532-8232 benmessier@vitesse-vts.com
Vitesse Energy (NYSE:VTS)
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