Vitesse Energy (VTS) Conference Summary Company Overview - Vitesse Energy focuses on providing a high fixed dividend yield, currently at 9%, and has increased its dividend twice since going public in 2023 [3][32] - The company has a unique strategy that prioritizes dividend support over oil and gas production [2][16] Key Financial Metrics - Vitesse has made nearly 200 acquisitions, with a significant focus on maintaining and increasing dividends [3] - The recent acquisition of Lucero for $195 million was financed entirely with equity and was accretive to all key financial metrics, reducing debt to about half of EBITDA [4] - The company has a cash position of $50 million post-acquisition, allowing for further financial flexibility [4] Resource Development and Strategy - 80% of Vitesse's resources remain undeveloped, with plans to convert these into cash flow over the next 30 years [3] - The company employs a non-operated approach, allowing it to benefit from the efficiencies of larger operators while maintaining a market cap of $1 billion [15] - Vitesse has interests in over 7,500 wells across more than 30 operators, making it comparable to a mutual fund for the Bakken [14] Operational Insights - The average well spacing in the Bakken has decreased from 1,000 feet in 2014 to 700 feet in 2025, improving oil recovery [10] - Drilling and completion costs have declined by 26% from 2014 levels, now averaging $716 per lateral foot [11] - Production from Bakken wells has increased by 75% since 2014, averaging 21 BOE per lateral foot [12] Risk Management - Vitesse has a conservative leverage policy, aiming to keep leverage below one times EBITDA [25] - The company hedges its oil production, with 70% hedged at just under $70 per barrel for 2025 [30] - A proprietary data system, Luminous, enhances investment decisions and operational efficiency [25][26] Shareholder Alignment - Management and the board own over 25% of the company's shares, aligning their interests with those of shareholders [7] - The company emphasizes accountability in capital allocation, ensuring investments maximize free cash flow [18] Market Position and Future Outlook - Vitesse is well-positioned to benefit from ongoing improvements in drilling technology and cost efficiencies in the Bakken [32] - The company is exploring various acquisition opportunities and has established partnerships to finance larger deals [23] Conclusion - Vitesse Energy presents a compelling investment opportunity with a strong focus on dividends, risk management, and operational efficiency in the Bakken region [32]

Core Viewpoint - Vitesse Energy (VTS) is experiencing solid improvements in earnings estimates, which may lead to continued short-term price momentum for the stock [1][2]. Earnings Estimate Revisions - The trend in estimate revisions reflects growing analyst optimism regarding Vitesse Energy's earnings prospects, which is expected to positively impact its stock price [2]. - For the current quarter, Vitesse is projected to earn $0.07 per share, indicating a year-over-year decline of 70.8%. However, the Zacks Consensus Estimate has increased by 30% due to one upward revision [5]. - For the full year, the earnings estimate is $0.60 per share, representing a 44.4% decrease from the previous year. The consensus estimate has risen by 88.89% over the past month, with one upward revision and no negative revisions [6][7]. Zacks Rank - Vitesse Energy currently holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates, which historically correlates with stock outperformance [3][8]. - Stocks with Zacks Rank 1 and 2 have shown significant outperformance compared to the S&P 500 [8]. Stock Performance - Vitesse shares have increased by 6% over the past four weeks, suggesting investor confidence in the company's earnings growth prospects [9].

Core Insights - Crude oil futures have decreased by 20.74% year-over-year but have increased by 51.85% over the last five years, indicating a volatile yet upward trend in the long term [1] Industry Summary - The energy sector continues to show resilience, with many companies generating significant cash flow in favorable business conditions while also returning capital to shareholders [1]

Core Insights - The article emphasizes the importance of identifying resilient and undervalued companies across various sectors, with a particular focus on the Energy sector due to its strategic significance [1] Group 1: Investment Strategy - The company advocates for disciplined analysis, downside protection, and long-term thinking in a volatile market [1] Group 2: Sector Focus - The Energy sector is highlighted as a key area of interest due to its transitional importance, although the company remains open to opportunities in any industry with strong fundamentals [1]

Financial Data and Key Metrics Changes - In Q2 2025, adjusted EBITDA was $61.1 million, adjusted net income was $18.4 million, and GAAP net income was $24.7 million, all including the impact of a legal settlement [12][13] - Cash capital expenditures (CapEx) for the quarter were $35.7 million, primarily organic, funded within operating cash flows, with excess cash used to reduce debt [13] - Total debt decreased to $106 million, resulting in a net debt to adjusted annualized EBITDA ratio of 0.4 times [13] Business Line Data and Key Metrics Changes - Production averaged just under 19,000 barrels of oil equivalent (BOE) per day in Q2, a 27% increase from Q1, bringing year-to-date production to just under 17,000 BOE per day [9][12] - The company has 23 net wells in its development pipeline, with 7.9 net wells either drilling or completing and 15.1 net locations permitted for development [9] Market Data and Key Metrics Changes - Approximately 71% of remaining 2025 oil production is hedged at a weighted average price of $69.83 per barrel, with nearly half of the remaining natural gas production hedged with collars at a weighted average floor of $3.73 and ceiling of $5.85 per MMBtu [10][11] - For 2026, over 3,300 barrels per day and 12,700 MMBtu per day of production are hedged at $66.43 per barrel and through a costless collar of $3.72 by $4.99 per MMBtu [11] Company Strategy and Development Direction - The company is focused on selective capital investment while generating excess free cash flow to reduce debt, with a strategy that includes organic drilling and potential acquisitions that meet strict return hurdles [6][7] - The Board declared a third-quarter dividend at an annual rate of $2.25 per share, indicating a commitment to maintaining shareholder returns [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to perform in a subdued oil price market while being prepared for price increases [5] - The company maintained its annual production guidance for 2025 in the range of 15,000 to 17,000 BOE per day, anticipating an oil cut of 64% to 68% [14] Other Important Information - A one-time cash payment of $24 million was received from a legal settlement, recorded as revenue and to offset litigation costs [10] - The company has seen improved general and administrative (G&A) costs, with expectations for further declines as production scales up [35] Q&A Session Summary Question: Production expectations for the remainder of the year - Management maintained guidance, noting strong Q2 performance but some wells were turned down sooner than expected, leading to cautious optimism for the second half [18][20][22] Question: Update on acquisition pipeline - Management indicated robust activity in organic development but noted that no acquisitions have met their return hurdles yet, remaining optimistic about future opportunities [23][25] Question: Chances of hitting the low end of guidance - Management stated minimal chances of hitting the low end of guidance, emphasizing strong momentum going into the second half [29][30][31] Question: Cost structure and G&A run rate - Management acknowledged increased LOE costs due to operational adjustments post-acquisition and projected a decline in G&A costs as production scales up [32][34][35] Question: Implications of taking gas in kind - Management expects better terms under new gas contracts compared to historical costs, projecting improvements in cash flow [36][37] Question: Activity levels post-Chevron acquisition of Hess - Management speculated that Chevron's acquisition could lead to increased activity in the Bakken, based on their previous performance in other regions [44][45] Question: Opportunities in Bakken - Management highlighted ongoing improvements in capital efficiency and production capabilities in the Bakken, indicating a positive outlook for future operations [46][47]

Vitesse Asset & Strategy - Vitesse's asset base is heavily weighted towards undeveloped locations, comprising over 80% of its total assets[6,22] - The company focuses on non-operated working and mineral interests, primarily in the Bakken oil field in North Dakota[8] - Vitesse aims to maintain a Net Debt / Adjusted EBITDA ratio of less than 10x, demonstrating prudent risk management[7,23] - Vitesse has interests in 7,507 productive wells (223 net wells) with an average working interest of 3.6% per working interest well[11] Financial Performance & Capital Allocation - Vitesse estimates 2025 net production to be between 15000 and 17000 MBoe/d, with oil weighting between 64% and 68%[10] - The company's 1P PV-10 is valued at $806 million, while the PDP PV-10 is $609 million[10] - Vitesse offers a fixed dividend of $0.5625 per share quarterly[7,22] - The company has an approved $60 million share repurchase program[7] Operational Efficiency & Data Management - Vitesse estimates there are >200 remaining net undeveloped locations across its asset, of which 38.4 were Proved Undeveloped as of December 31, 2024[11] - Vitesse utilizes a proprietary data system called Luminis for data modeling and asset management[15,16,18]

Core Insights - Vitesse Energy reported strong Q2 2025 earnings, significantly boosted by a one-time $24 million litigation settlement, with $16.9 million recognized as revenue [1][6] - The company achieved operational improvements aligned with its strategy, although the one-off gain affects the perception of progress [1] Financial Performance - Q2 2025 Non-GAAP diluted EPS was $0.18, exceeding the estimate of $0.15 [2] - GAAP diluted EPS reached $0.60, an 81.8% increase from $0.33 in Q2 2024 [2] - GAAP revenue was $81.8 million, a 23.0% increase from $66.6 million in Q2 2024 and above the estimate of $71.5 million [2] Business Model and Strategy - Vitesse Energy operates as a non-operated investor in oil and natural gas wells, allowing it to spread risk and reduce costs [3] - The company focuses on acquiring non-operated interests in key shale plays and managing commodity price risk through hedging [4] Operational Highlights - Production averaged 18,950 barrels of oil equivalent per day, a 40% increase year-over-year and a 27% increase from the previous quarter [5] - The integration of Lucero Energy assets contributed significantly to operational growth [5] Risk Management - Vitesse expanded its hedging program, with 71% of 2025 oil production and 49% of natural gas output hedged at favorable rates [7] - Realized price for hedged oil was $64.21 per barrel, compared to $59.50 for unhedged volumes [7] Cost Management - Lease operating expenses rose 60% year-over-year to $19.6 million due to higher output [8] - Despite rising costs, net debt decreased to $104 million, improving the net debt to adjusted EBITDA ratio to 0.43x [8] Dividend Policy - The company declared a quarterly dividend of $0.5625 per share, maintaining an annualized rate of $2.25 per share [9] - Free cash flow for the quarter was reported at $21.9 million, supporting the dividend policy [9] Future Guidance - Management reaffirmed full-year production guidance of 15,000 to 17,000 barrels of oil equivalent per day [10] - Capital expenditures are projected between $80 million and $110 million, allowing for opportunistic acquisitions [10] Monitoring Areas - Investors will focus on underlying operational trends post one-time gains and the evolution of normalized costs as acquisitions are integrated [11]

Financial Performance - Vitesse Energy reported revenue of $81.76 million for the quarter ended June 2025, reflecting a year-over-year increase of 22.8% [1] - The earnings per share (EPS) for the quarter was $0.60, compared to $0.35 in the same quarter last year, indicating significant growth [1] - The reported revenue exceeded the Zacks Consensus Estimate of $72.02 million by 13.52%, while the EPS surprised by 757.14% against the consensus estimate of $0.07 [1] Key Metrics - Total production per day was 18,950.00 BOE/D, surpassing the average estimate of 17,702.50 BOE/D from two analysts [4] - Average realized price for natural gas was $4.17 per thousand cubic feet, significantly higher than the estimated $2.4 per thousand cubic feet [4] - Average realized price for oil was $64.21, compared to the estimated $55.8 [4] - Revenue from natural gas reached $15.14 million, exceeding the average estimate of $7.81 million, representing a year-over-year increase of 512.9% [4] - Revenue from oil was $66.61 million, slightly above the average estimate of $64.21 million, marking a year-over-year change of 3.9% [4] Stock Performance - Shares of Vitesse have remained unchanged over the past month, while the Zacks S&P 500 composite increased by 0.6% [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]

Company Performance - Vitesse Energy reported quarterly earnings of $0.6 per share, significantly exceeding the Zacks Consensus Estimate of $0.07 per share, and up from $0.35 per share a year ago, representing an earnings surprise of +757.14% [1] - The company posted revenues of $81.76 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 13.52%, compared to $66.6 million in the same quarter last year [2] - Over the last four quarters, Vitesse has surpassed consensus EPS estimates two times and topped consensus revenue estimates twice [2] Market Performance - Vitesse shares have declined approximately 7.4% since the beginning of the year, while the S&P 500 has gained 6.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $64.72 million, and for the current fiscal year, it is $0.26 on revenues of $267.82 million [7] Industry Outlook - The Oil and Gas - Exploration and Production - United States industry, to which Vitesse belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Vitesse's stock performance [5]

PART I FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Vitesse Energy's unaudited condensed consolidated financial statements as of June 30, 2025, show total assets at **$951.5 million** driven by the Lucero acquisition, with six-month net income surging to **$27.3 million** from **$8.7 million** due to derivative gains and a litigation settlement, and operating cash flow increasing to **$83.5 million** Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $67,977 | $50,911 | | **Total oil and gas properties, net** | $873,734 | $751,976 | | **Total assets** | **$951,504** | **$810,893** | | **Total current liabilities** | $71,770 | $100,329 | | **Revolving credit facility** | $106,000 | $117,000 | | **Total liabilities** | **$279,629** | **$310,559** | | **Total equity** | **$671,875** | **$500,334** | Condensed Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | $81,755 | $66,598 | $147,925 | $127,792 | | **Operating Income** | $18,656 | $16,814 | $24,034 | $29,893 | | **Commodity derivative gain (loss), net** | $18,451 | $379 | $18,279 | $(13,445) | | **Net Income** | **$24,659** | **$10,928** | **$27,327** | **$8,742** | | **Net income per common share – diluted** | **$0.60** | **$0.33** | **$0.72** | **$0.27** | Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash from Operating Activities** | $83,505 | $74,580 | | **Net cash from Investing Activities** | $(66,118) | $(69,876) | | **Net cash from Financing Activities** | $(18,392) | $(5,135) | | **Net decrease in cash** | $(1,005) | $(431) | - On March 7, 2025, the Company completed the acquisition of Lucero Energy Corp., issuing **8,169,839 shares** of common stock as consideration, valued at approximately **$194.3 million**; the acquisition is accounted for as a business combination, and the purchase price allocation is still preliminary[63](index=63&type=chunk)[64](index=64&type=chunk) - The company resolved litigation with Hess, receiving a one-time cash payment of **$24 million** in Q2 2025, recorded as a **$3.3 million** increase to oil revenue, a **$13.6 million** increase to gas revenue, and a **$7.1 million** reduction to general and administrative expenses[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **23%** year-over-year revenue growth in Q2 2025 to a **40%** increase in production volumes, primarily from the Lucero acquisition, which offset a **13%** decrease in realized commodity prices, with net income significantly boosted by a **$24 million** litigation settlement and an **$18.5 million** commodity derivative gain, while maintaining strong liquidity with **$144.0 million** available under its revolving credit facility and investing **$66.1 million** in capital expenditures [Executive Overview and Business Strategy](index=34&type=section&id=Executive%20Overview%20and%20Business%20Strategy) The company's strategy focuses on acquiring and developing oil and gas assets, primarily in the Williston Basin, to generate returns and distribute dividends, with Q2 2025 highlights including **18,950 BOE/day** production, **$24.7 million** net income, and a **$0.5625** per share quarterly dividend, incorporating Lucero Energy's operations post-acquisition - The company's business strategy is centered on creating stockholder value through the acquisition, development, and production of oil and gas assets, with a focus on the Bakken and Three Forks formations in the Williston Basin[126](index=126&type=chunk) Q2 2025 Financial and Operating Highlights | Metric | Value | | :--- | :--- | | **Production** | 18,950 BOE/day | | **Total Revenue** | $81.8 million | | **Net Income** | $24.7 million | | **Cash Flow from Operations** | $66.0 million | | **Capital Investment** | $35.7 million | | **Quarterly Dividend** | $0.5625 per share | | **Total Debt (at June 30, 2025)** | $106.0 million | [Results of Operations](index=39&type=section&id=Results%20of%20Operations) For Q2 2025, total revenue increased **23%** to **$81.8 million** due to a **40%** production volume increase from the Lucero acquisition, despite a **20%** drop in realized oil prices, while general and administrative expenses fell **93%** due to a **$7.1 million** legal settlement reimbursement, and for the six-month period, revenue grew **16%** to **$147.9 million**, with net income surging to **$27.3 million** from **$8.7 million** aided by the settlement and a significant derivative swing Comparison of Three Months Ended June 30, 2025 and 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $81.8M | $66.6M | 23% | | **Combined Volumes (MBoe)** | 1,724 | 1,229 | 40% | | **Avg. Realized Price/Boe (pre-hedge)** | $47.41 | $54.20 | (13%) | | **Lease Operating Expense/Boe** | $11.38 | $9.99 | 14% | | **General & Admin Expense** | $0.3M | $4.7M | (93%) | | **Commodity Derivative Gain, Net** | $18.5M | $0.4M | * | Comparison of Six Months Ended June 30, 2025 and 2024 | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $147.9M | $127.8M | 16% | | **Combined Volumes (MBoe)** | 3,072 | 2,371 | 30% | | **Avg. Realized Price/Boe (pre-hedge)** | $48.16 | $53.89 | (11%) | | **General & Admin Expense** | $12.4M | $10.1M | 23% | | **Commodity Derivative Gain (Loss), Net** | $18.3M | $(13.4M) | 236% | - The significant decrease in General and Administrative expense in Q2 2025 was primarily due to a **$7.1 million** reimbursement of litigation costs from a legal settlement; excluding this and Lucero transaction costs, G&A per BOE decreased due to higher production volumes[158](index=158&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had **$2.0 million** in cash and **$144.0 million** available under its revolving credit facility, ensuring sufficient liquidity for the next twelve months, with the working capital deficit improving to **$3.8 million** from **$49.4 million** at year-end 2024 due to paying down accrued capital expenditures, while generating **$83.5 million** in operating cash flow and investing **$66.1 million** in capital expenditures during the first six months of 2025 - At June 30, 2025, the company had **$2.0 million** in cash and **$144.0 million** available under its Revolving Credit Facility; management expects these sources, along with operating cash flow, to be sufficient to fund material cash requirements for the next twelve months[192](index=192&type=chunk) Cash Flow Summary for Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $83,505 | $74,580 | | Net cash from investing activities | $(66,118) | $(69,876) | | Net cash from financing activities | $(18,392) | $(5,135) | - The working capital deficit improved from **$49.4 million** at Dec 31, 2024, to **$3.8 million** at June 30, 2025, primarily due to a **$28.5 million** decrease in accounts payable and accrued liabilities from paying down accrued oil and gas development costs[194](index=194&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to commodity price and interest rate risks, mitigating commodity price volatility through derivative contracts to hedge anticipated production, where a hypothetical **$1** change in NYMEX WTI strip price would impact the net commodity derivative position by approximately **$2.5 million**, and a **1%** change in interest rates on its floating-rate revolving credit facility would impact annual interest expense by approximately **$1.2 million** - The company's primary market risk is commodity price volatility for oil and natural gas; it utilizes derivative contracts to reduce this exposure and achieve more predictable cash flow[216](index=216&type=chunk)[217](index=217&type=chunk) - A hypothetical **$1** increase or decrease in the NYMEX WTI strip price would change the fair value of the company's net commodity derivative position by approximately **$2.5 million** as of June 30, 2025[220](index=220&type=chunk) - The company is exposed to interest rate risk via its floating-rate Revolving Credit Facility; a **1%** change in the average interest rate would result in an approximate **$0.6 million** change in interest expense for the six-month period[221](index=221&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with the assessment of internal control over financial reporting excluding the recently acquired Lucero business, which accounted for approximately **22%** of total assets, and no other material changes to internal controls were reported - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[222](index=222&type=chunk) - Management's assessment of internal control over financial reporting as of June 30, 2025, excluded the recently acquired Lucero business, acquired on March 7, 2025, which represented **22%** of total assets and **12%** of total revenue for the six-month period[223](index=223&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company resolved a previously disclosed dispute with Hess regarding post-production revenue deductions, receiving a one-time cash payment of **$24 million** as part of the settlement effective May 28, 2025, and does not believe any other pending legal proceedings will materially affect its business - The company settled a legal dispute with Hess concerning post-production revenue deductions; the settlement, effective May 28, 2025, included a one-time cash payment of **$24 million** to Vitesse[227](index=227&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors disclosed in the company's 2024 Annual Report on Form 10-K, except for a newly detailed risk concerning the potential adverse effects of tariffs and other trade measures on operations, costs, and business - A new risk factor was disclosed regarding the potential adverse impact of U.S. government tariffs and other trade measures, which could increase operational costs and affect the business[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a board-authorized stock repurchase program for up to **$60 million** of its common stock, under which no shares were repurchased during the three months ended June 30, 2025, leaving approximately **$59.8 million** authorized for repurchase - The company did not repurchase any of its common stock during the three months ended June 30, 2025; approximately **$59.8 million** remains available for repurchase under the existing program[233](index=233&type=chunk)[235](index=235&type=chunk) [Other Items (Items 3, 4, 5, 6)](index=54&type=section&id=Other%20Items) The company reported no defaults upon senior securities (Item 3) or mine safety disclosures (Item 4), and no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements (Item 5), with Item 6 listing the exhibits filed with the report - No defaults upon senior securities or mine safety disclosures were reported for the period[236](index=236&type=chunk)[237](index=237&type=chunk) - No director or officer of the company adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[238](index=238&type=chunk)