Core Viewpoint - Civitas Resources, Inc is under investigation for potential securities fraud and unlawful business practices following disappointing financial results and significant management changes [1][2]. Financial Performance - On February 24, 2025, Civitas reported its financial results for Q4 and full year 2024, revealing that both revenue and non-GAAP EPS fell short of consensus estimates [2]. - The company's stock price dropped by $8.95 per share, or 18.15%, closing at $40.35 per share on February 25, 2025, in response to the financial results announcement [3]. Management Changes - Civitas announced a 10% reduction in its workforce across all levels [2]. - The company terminated its Chief Operating Officer Hodge Walker and Chief Transformation Officer Jerome Kelly, effective immediately [2].

Financial Data and Key Metrics Changes - Full year production for 2024 was above plan, exceeding original guidance for capital and operating costs [9] - Free cash flow for the year was approximately $1.3 billion, with over 70% returned to shareholders through dividends and share repurchases [15] - The company targets a net debt of $4.5 billion by the end of 2025, representing an $800 million reduction from year-end 2024 [26] Business Line Data and Key Metrics Changes - Midland Basin well costs decreased by 15%, daily drilling footage increased nearly 20%, and daily completion throughput rose by 50% [10] - The company achieved record-setting four-mile laterals in the DJ Basin, representing the highest 180-day cumulative oil producers in Colorado [13] Market Data and Key Metrics Changes - The company plans to invest $1.8 billion to $1.9 billion in 2025, approximately 5% lower than the previous year, reflecting well cost savings [19] - The first quarter of 2025 is expected to be the low point for production, primarily due to natural declines in the DJ Basin [20] Company Strategy and Development Direction - The strategic priorities for 2025 include maximizing free cash flow, prioritizing debt reduction, returning cash to shareholders, and leading in ESG initiatives [16] - The company aims to maintain a level loading of capital investments in 2025, which is expected to deliver full-year oil production of 150,000 barrels per day [18] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of a low-cost structure as the first line of defense against oil price volatility [112] - The company is focused on achieving a sustainable free cash flow and meeting its leverage reduction goals while returning capital to shareholders [31] Other Important Information - The company announced a $300 million asset sales target for 2025, likely from the DJ Basin, to offset the purchase price of a recent acquisition [12] - A 10% reduction in workforce was implemented to streamline operations and enhance margins [24] Q&A Session Summary Question: Shift in capital allocation strategy - Management explained that the decision to prioritize debt reduction over stock buybacks was made to build a long-term sustainable business amid market volatility [37] Question: Production ramp-up and divestiture impact - Management indicated that the first quarter would see a drop in production, but an active plan is in place to ramp up production in subsequent quarters [40] Question: Details on the bolt-on deal in the Midland - The acquired locations are expected to be developed starting later in 2025 and into 2026, with good returns anticipated [46] Question: Future M&A versus cash return - Management stated that the top priority is achieving the net debt target, with any additional capital returns being opportunistic [49] Question: Inventory status in the Wolfcamp D - The Wolfcamp D is included in the 1,200 location count, with plans to allocate more capital towards its development in 2025 [60] Question: Delaware Basin opportunities - Management expressed optimism about the Delaware Basin, with plans to increase capital allocation to this area [68] Question: Infrastructure and midstream issues - Management confirmed that they have managed to minimize impacts from third-party processing issues and feel confident about infrastructure going forward [72] Question: Future cash taxes and AMT - Cash tax guidance for the year is set at $10 million to $30 million, with no anticipated impact from the alternative minimum tax until oil prices reach around $80 per barrel [101] Question: Growth potential with improved commodity prices - Management indicated a willingness to increase activity if the macro environment becomes more favorable, while still focusing on balance sheet targets [106] Question: Oil price volatility outlook - Management acknowledged significant volatility in oil prices and emphasized maintaining a low-cost structure as a defense strategy [112]

Deeper, More Durable CIVI 4Q24 Results and 2025 Outlook February 2025 Forward-Looking Statements and Disclosures Forward-Looking Statements and Cautionary Statements Certain statements in this presentation concerning future opportunities for Civitas, future financial performance and condition, guidance, and any other statements regarding Civitas' future expectations, beliefs, plans, objectives, financial conditions, returns to stockholders, assumptions, or future events or performance that are not historica ...

Core Insights - Civitas Resources reported $1.29 billion in revenue for Q4 2024, a year-over-year increase of 14.7% [1] - The EPS for the same period was $1.78, down from $3.20 a year ago, indicating a decline in profitability [1] - Revenue fell short of the Zacks Consensus Estimate by -1.17%, while EPS also missed expectations by -8.72% [1] Financial Performance Metrics - Average daily sales volumes for crude oil were 164 thousand barrels, slightly above the analyst estimate of 163.96 thousand barrels [4] - Average daily sales volumes for natural gas liquids were 90 thousand barrels, exceeding the estimate of 88.45 thousand barrels [4] - Average daily sales volumes for natural gas were 595 million cubic feet, below the estimate of 602.07 million cubic feet [4] - Average sales price for natural gas (excluding derivatives) was $1.14 per Mcf, lower than the $1.27 estimate [4] - Average sales price for natural gas liquids (excluding derivatives) was $21.47 per Bbl, above the $20.27 estimate [4] - Average sales price for crude oil (excluding derivatives) was $69.96 per Bbl, slightly higher than the $69.45 estimate [4] Stock Performance - Civitas shares have returned -4.1% over the past month, compared to a -0.5% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Civitas Resources (CIVI) came out with quarterly earnings of $1.78 per share, missing the Zacks Consensus Estimate of $1.95 per share. This compares to earnings of $3.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -8.72%. A quarter ago, it was expected that this oil and gas company would post earnings of $1.86 per share when it actually produced earnings of $1.99, delivering a surprise of 6.99%.Over the last four quarters, ...

Operational Risks and Challenges - The company acknowledges various risks that could impact its operations, including severe weather conditions and geopolitical factors, which may lead to material differences in actual results compared to expectations [15]. - The company is exploring new geographic areas, which presents unforeseen operational challenges that need to be managed effectively [15]. - The company may incur substantial losses and face liability claims as a result of crude oil and natural gas operations, with potential inadequacy of insurance coverage [68]. - The company faces risks related to commodity price declines, which could adversely affect financial condition and results of operations [68]. - The company’s production is not fully hedged, exposing it to fluctuations in crude oil, natural gas, and NGL prices [68]. Technology and Development - The company utilizes 3-D seismic data for more accurate subsurface interpretation, enhancing exploration and development efforts [17]. - The company is actively engaged in the development of new technologies and techniques, such as horizontal drilling and hydraulic fracturing, to enhance production capabilities [32]. - The company intends to pursue further development through horizontal drilling, which can be operationally challenging and costly [68]. - The company has proved undeveloped reserves that are expected to be recovered from new wells on undrilled acreage, with a development plan indicating drilling within five years [51]. Financial and Market Position - In 2024, three purchasers represented a combined total of 35% of the company's revenue, with Purchaser A accounting for 15%, Purchaser B for 10%, and Purchaser C for 10% [127]. - The company is party to agreements requiring minimum volume commitments for crude oil, natural gas, and NGL, with deficiency payments for any shortfalls in delivering minimum gross volume commitments [128]. - The company periodically enters into commodity derivative contracts to mitigate exposure to adverse market changes in commodity prices, indexed to NYMEX WTI and HH prices [126]. - The crude oil and natural gas industry is highly competitive, with substantial competition in acquiring desirable leasehold acreage and producing properties [129]. Regulatory Compliance and Environmental Impact - The company is subject to various federal, state, and local regulations affecting crude oil and natural gas production, which can impact operational costs and profitability [145]. - The Colorado Oil and Gas Conservation Commission (COGCC) was renamed to the Energy & Carbon Management Commission (ECMC) in May 2023, which may impose new operational requirements [147]. - The company is subject to stringent federal, state, and local laws and regulations governing public and occupational safety, which may result in substantial penalties for noncompliance [164]. - The Clean Air Act and state regulations impose monitoring and reporting requirements, potentially delaying project development due to the need for air permits [166]. - The EPA's final rule requires the phase-out of routine flaring of natural gas from new oil wells and mandates leak monitoring at all well sites and compressor stations [167]. - Colorado's AQCC regulations require oil and gas operators to capture 98% of produced natural gas by December 31, 2026, prohibiting routine venting and flaring [174]. - The AQCC's new rule mandates a 20% reduction in GHG levels by 2030 for 18 of Colorado's highest emitting manufacturers, including those in the oil and gas sector [173]. - The company must comply with additional hydraulic fracturing regulations that could increase operational costs and cause delays [177]. - The Dodd-Frank Act imposes capital and margin requirements on swap dealers and major swap participants, affecting the derivatives market [163]. - Changes in FERC policies may adversely affect the availability and reliability of transportation services on interstate pipelines, impacting revenue from natural gas sales [162]. - The company faces increased regulatory scrutiny regarding methane emissions, with new requirements for leak detection and repair [167]. - Compliance with air pollution control and permitting requirements has the potential to significantly increase development costs and project timelines [175]. - Colorado Senate Bill 19-181 grants local governments greater control over oil and gas facility siting, potentially increasing operational costs and impacting profitability [187]. - New Mexico proposed regulations in November 2023 require the reuse of produced water from the oil and gas industry, with finalization expected in 2025 [191]. - The Inflation Reduction Act introduces a Waste Emissions Charge starting at $900 per ton for methane emissions, increasing to $1,500 by 2026, which could raise operating costs for the oil and gas industry [201]. - The ECMC has implemented new regulations that could significantly increase well costs and extend the time required to obtain drilling permits in Colorado [189]. - The EPA's GHG emissions reporting rule requires monitoring and reporting of greenhouse gases from oil and gas production sources, impacting compliance costs [200]. - New regulations in Texas and New Mexico require more frequent reporting of injection volume and pressure data in areas of seismicity, affecting operational procedures [181]. - The Comprehensive Environmental Response, Compensation and Liability Act imposes liability for hazardous substance releases, which could affect the company's financial standing [192]. - The Resource Conservation and Recovery Act regulates hazardous waste management, with potential reclassification of oil and gas exploration wastes as hazardous, increasing compliance costs [193]. - Recent pipeline safety regulations require comprehensive spill response plans and increased penalties for violations, impacting operational risk management [198]. - Local regulations may impose stricter requirements than state laws, leading to increased costs and delays in securing permits for new wells [188]. Workforce and Safety - As of December 31, 2024, the company had 655 full-time employees and is committed to attracting and retaining qualified personnel [134]. - The Total Recordable Incident Rate (TRIR) for 2024 was 0.25, which is below the industry average, highlighting the company's commitment to safety [136]. - The company offers a comprehensive benefits package, including a 401(k) plan with company match, medical, dental, and vision insurance, and various wellness programs [139]. - Approximately 27% of the total workforce are women, and 20% are members of a minority group as of December 31, 2024 [144]. - The company is committed to maintaining a diverse and inclusive workforce, requiring annual unconscious bias training for all employees [141]. - The board composition includes 33% women and 22% members of a minority group as of December 31, 2024 [143]. - The company invests in leadership training and professional development programs to support employee growth and retention [140]. Environmental Goals and Initiatives - The company is committed to achieving carbon neutrality by balancing greenhouse gas emissions through certified carbon credits and renewable energy certificates [20]. - The U.S. aims to achieve at least a 50% reduction in GHG emissions relative to 2005 levels by 2030 as part of its commitment to the Paris Agreement [204]. - Colorado's GHG emissions reduction goal requires a 20% reduction by 2030 compared to 2015 levels for 18 of its highest emitting manufacturers [205]. - The $1 trillion infrastructure package includes climate-focused spending initiatives for climate resilience and clean energy investments [204]. - The Inflation Reduction Act provides significant funding for low-carbon energy production methods and carbon capture technologies [204]. - The EPA's new rule redefining "waters of the U.S." could impact oil and gas operations, with ongoing litigation creating uncertainty [207]. - The Endangered Species Act may impose restrictions on land use for oil and gas development if new species are designated as endangered [212]. - The Oil Pollution Act establishes strict liability for oil spills, requiring responsible parties to prepare oil spill response plans [215]. - The National Environmental Policy Act requires federal evaluations of projects that may significantly impact the environment, potentially delaying oil and gas development [214]. - The Corps' Nationwide Permit 12 has been revised to lessen the burden on the energy industry, but its future remains uncertain due to ongoing legal challenges [210]. Reporting and Transparency - The company is required to file various reports with the SEC, which are publicly available for review [216].

Financial Performance - Net income for Q4 2024 was $151 million, with an adjusted net income of $171 million, while full year net income reached $839 million, adjusted net income at $842 million[2]. - Net income for Q4 2024 was $151,109 thousand, a decrease of 50% compared to $302,867 thousand in Q4 2023[15]. - Adjusted Net Income for the twelve months ended December 31, 2024, was $842,334,000, with an Adjusted Net Income per diluted share of $8.49[21]. - Adjusted EBITDAX for the three months ended December 31, 2024, was $895,226,000, while for the twelve months it was $3,651,621,000[24]. Cash Flow and Investments - Operating cash flow for Q4 2024 was $858 million, totaling $2.865 billion for the full year[2]. - Total cash provided by operating activities for the twelve months ended December 31, 2024, was $2,865,228 thousand, up from $2,238,760 thousand in 2023, representing a 28% increase[15]. - Net cash used in investing activities for the twelve months ended December 31, 2024, was $2,671,882 thousand, down from $5,243,155 thousand in 2023[15]. - The company reported a net cash provided by financing activities of $(557,622) thousand in Q4 2024, compared to $934,491 thousand in Q4 2023[15]. Sales and Production - Sales volumes increased by 1% sequentially to 352 MBoe/d in Q4 2024, with oil volumes rising 3% to 164 MBbl/d[4]. - Average daily crude oil sales volume for Q4 2024 was 164 MBbl/d, a 64% increase from 100 MBbl/d in Q4 2023[18]. - Average daily natural gas sales volume for Q4 2024 was 595 MMcf/d, up from 366 MMcf/d in Q4 2023, marking a 63% increase[18]. - The company acquired 179,348 MBoe of reserves during the year, while production was 126,135 MBoe[29]. Capital Expenditures - Capital expenditures for Q4 2024 were $278 million, consistent with plans, and total capital expenditures for the year were $1.933 billion[5]. - Capital expenditures for drilling and completion activities totaled $1,932,635,000 for the twelve months ended December 31, 2024[27]. Shareholder Returns - The company returned over $920 million to shareholders in 2024, including $494 million in dividends and $427 million in share repurchases[10]. - Long-term debt was reduced by $350 million in Q4 2024, and the company repurchased nearly 3.5% of its outstanding shares[6]. Reserves and Assets - Proved reserves increased by 14% to 798 million barrels of oil equivalent, primarily due to the acquisition of Vencer Energy[10]. - Total proved reserves as of December 31, 2024, increased to 797,724 MBoe, up from 697,799 MBoe as of December 31, 2023[29]. - The company’s total proved properties increased to $12,609,318 thousand in 2024 from $10,399,027 thousand in 2023, a growth of 21%[17]. - Total assets as of December 31, 2024, were $14,944,120 thousand, compared to $14,097,319 thousand in 2023, reflecting a 6% increase[17]. Stockholder Equity - Total stockholders' equity increased to $6,628,746 thousand in 2024 from $6,181,321 thousand in 2023, a rise of 7%[17]. Ratings and Outlook - The company received upgrades on its long-term issuer rating from Fitch Ratings to BB+ and from S&P Global to a positive outlook[10].

Wall Street analysts forecast that Civitas Resources (CIVI) will report quarterly earnings of $1.95 per share in its upcoming release, pointing to a year-over-year decline of 39.1%. It is anticipated that revenues will amount to $1.31 billion, exhibiting an increase of 15.9% compared to the year-ago quarter.The consensus EPS estimate for the quarter has been revised 6% higher over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their ini ...

Wall Street expects a year-over-year decline in earnings on higher revenues when Civitas Resources (CIVI) reports results for the quarter ended December 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 24, 2025, might help the stock move higher if these key numbers are better ...

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis ...