Crescent Energy Co(CRGY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Crescent Energy Company reported approximately $535 million of adjusted EBITDA and$259 million in levered free cash flow for Q4 2024, with capital expenditures of $221 million, better than forecast [29][30] - The company generated approximately$260 million of free cash flow for the quarter, exceeding Wall Street expectations [12][29] - The company exited the year with net leverage of 1.4 times, within the publicly stated range of 1 to 1.5 times [30] Business Line Data and Key Metrics Changes - In Q4, Crescent Energy brought online 15 growth operated wells in the Eagle Ford and five in the Uinta, all generating strong initial results [30] - The company reported significant improvements in operating costs, with Q4 operating expenses close to $11.50 per BOE [46] Market Data and Key Metrics Changes - The company expects production in 2025 to be between 254,000 to 264,000 barrels of oil equivalent per day, with capital expenditures projected at$925 million to $1.025 billion [24] - The company noted that oil realizations improved from the low nineties to the mid-nineties due to better marketing strategies and synergy capture [45] Company Strategy and Development Direction - Crescent Energy aims to maximize free cash flow generation and returns for investors through a flexible operational plan that includes both oil and gas weighted development [9][22] - The company plans to run four to five rigs in 2025, focusing on capitalizing on recent natural gas pricing tailwinds [24] - The company is committed to disciplined growth through acquisitions, having completed five transactions totaling over$3 billion in 2024 [21][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on future opportunities, emphasizing a disciplined approach to capital allocation and operational efficiency [10][25] - The management team highlighted that 2024 was a transformational year, with expectations for continued outperformance in 2025 [33][34] Other Important Information - Crescent Energy announced a dividend of $0.12 per share, contributing to an attractive 4$250 million for potential divestitures [28][64] Q&A Session Summary Question: Insights on 2025 capital allocation - Management indicated that the capital allocation for 2025 will focus on maximizing returns across their operational portfolio, with a slight increase in gas drilling due to stronger gas prices [39][40] Question: Drivers behind improved OpEx and oil realizations - Management attributed the improved oil realizations to better marketing strategies and synergy capture, while the lower operating expenses were driven by operational improvements and one-off items [42][46] Question: Future growth and acquisition strategy - Management confirmed satisfaction with past acquisitions and indicated that while they see opportunities for growth, they will remain disciplined and focused on high-quality acquisitions [50][54] Question: Non-core asset divestiture opportunities - Management highlighted a $250 million pipeline for divestitures, indicating that there are larger opportunities available compared to the$50 million divested in 2024 [60][64] Question: Resource potential in Uinta - Management expressed excitement about the resource potential in the Uinta basin, indicating a cautious approach to capital allocation while gathering data [67][88] Question: Path to achieving investment grade status - Management stated that achieving investment grade status would likely require doubling the production base while maintaining strong financial metrics [79][80] Question: Timing of divestitures based on commodity prices - Management indicated that they will evaluate the timing of divestitures based on market conditions and the potential to streamline their portfolio [91][95]