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Crescent Energy Co(CRGY) - 2023 Q1 - Earnings Call Transcript
CRGYCrescent Energy Co(CRGY)2023-05-11 17:59
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Financial Data and Key Metrics Changes - For Q1 2023, the company produced 137 MBoe per day and generated 232millionofadjustedEBITDAX,withproductionslightlyimpactedbyminordowntimeduetowinterweather[22]−Thecompanyrealized150232 million of adjusted EBITDAX, with production slightly impacted by minor downtime due to winter weather [22] - The company realized 150% of benchmark prices for gas due to exceptionally high West Coast gas realizations, positively impacting revenue despite higher operating expenses [22] - Adjusted operating expenses averaged 16.57 per BOE for the quarter, which is above initial guidance, but overall costs were offset by higher realized prices [23] Business Line Data and Key Metrics Changes - The acquisition of Western Eagle Ford assets adds approximately 20,000 BOE per day of production, enhancing the company's operational control and scale in the Eagle Ford region [6][21] - The company invested 202millioninQ12023,drilling15andbringingonline18grossoperatedwellsacrosstheUSandEagleFord,reflectingahigherlevelofactivitythaninitiallyexpected[23]MarketDataandKeyMetricsChanges−Thecompanyexpectstheacquisitionmarkettobeactivein2023,particularlyintheEagleFord,whichremainsfragmentedandoffersopportunitiesformeaningfulscale[8]−Thecompanyisroughly60202 million in Q1 2023, drilling 15 and bringing online 18 gross operated wells across the US and Eagle Ford, reflecting a higher level of activity than initially expected [23] Market Data and Key Metrics Changes - The company expects the acquisition market to be active in 2023, particularly in the Eagle Ford, which remains fragmented and offers opportunities for meaningful scale [8] - The company is roughly 60% hedged for the remainder of 2023, protecting expected returns on invested capital [25] Company Strategy and Development Direction - The acquisition strategy focuses on acquiring proven assets with meaningful reinvestment opportunities at a discount to PDP value, enhancing the company's scale and operational control [28] - The company emphasizes a disciplined capital allocation strategy, prioritizing returns to shareholders while maintaining a strong balance sheet [9][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the base business performance and the ability to pursue attractive M&A opportunities due to strong cash flows and a solid balance sheet [27] - The company remains focused on value creation for investors and is optimistic about future growth opportunities in the Eagle Ford and other regions [68] Other Important Information - The company announced a cash dividend of 0.12 per share, consistent with its strategy to distribute 10% of EBITDA to shareholders [44] - The company does not expect the recent acquisition to materially change its cash tax outlook for 2023 and 2024 [45] Q&A Session Summary Question: Was the higher liquids content a driving factor in the acquisition? - The company noted that while the exposure to liquids was favorable, it was not the primary driving factor for the deal [33] Question: Will the acquisition drive more activity in the near term? - The company confirmed that it will continue current activity levels on both the acquired asset and existing operations [36] Question: What is the company's view on resource expansion? - Management indicated that resource expansion opportunities exist beyond the Lower Eagle Ford, particularly in the Austin Chalk and Upper Eagle Ford formations [37] Question: Will the dividend level remain consistent throughout the year? - The company intends to maintain the current dividend level throughout the year, with updates provided after the acquisition closes [46][47] Question: How does the company view the current market for acquisitions? - Management expressed optimism about the acquisition market, noting a full pipeline of opportunities despite recent volatility [63]