Group 1 - The article discusses the analysis of oil and gas companies, specifically Crescent Energy, focusing on identifying undervalued companies in the sector [1] - The formation of Crescent Energy involved a partnership with KKR, emphasizing the cyclical nature of the oil and gas industry and the importance of patience and experience in navigating it [2] Group 2 - The article highlights the credentials of John Goff, Chairman of Crescent Energy, noting his background as a retired CPA and his educational qualifications [2]

Group 1 - Crescent Energy (CRGY) closed at $8.50, reflecting a +1.07% change from the previous day, outperforming the S&P 500's gain of 0.44% [1] - Over the past month, Crescent Energy's shares declined by 15.39%, underperforming the Oils-Energy sector's gain of 3.62% and the S&P 500's gain of 4.03% [1] Group 2 - The upcoming earnings release for Crescent Energy is anticipated to show an EPS of $0.32, indicating a 17.95% decline year-over-year, while revenue is expected to reach $900.88 million, up 20.94% from the prior year [2] - For the fiscal year, earnings are projected at $1.53 per share and revenue at $3.63 billion, reflecting changes of -14.04% and +23.8% respectively from the previous year [3] Group 3 - Recent analyst estimate revisions for Crescent Energy suggest a direct correlation with stock price performance, indicating potential optimism about the business outlook [4] - The Zacks Rank system, which incorporates estimate changes, currently ranks Crescent Energy at 3 (Hold), with a 6.29% decline in the Zacks Consensus EPS estimate over the past month [5] Group 4 - Crescent Energy is currently trading at a Forward P/E ratio of 5.51, which is significantly lower than the industry average Forward P/E of 20.16 [6] - The Alternative Energy - Other industry, part of the Oils-Energy sector, holds a Zacks Industry Rank of 180, placing it in the bottom 28% of over 250 industries [6]

[Financial & Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Crescent Energy reported a strong second quarter of 2025, achieving record production of 263 MBoe/d and generating significant cash flow, successfully reducing costs, executing accretive transactions, repaying debt, and returning capital to shareholders, leading to an enhanced full-year outlook Q2 2025 Financial and Operational Metrics | Metric | Q2 2025 Value | | :--- | :--- | | Average Production | 263 MBoe/d | | Oil Production | 108 Mbo/d | | Net Income | $162 million | | Adjusted Net Income | $110 million | | Adjusted EBITDAX | $514 million | | Operating Cash Flow | $499 million | | Levered Free Cash Flow | $171 million | | Capital Expenditures | $265 million | - Key operational and strategic achievements in Q2 2025 include: - Improved drilling, completion, and facilities (DC&F) costs by approximately **15%** in South Texas and the Uinta compared to 2024 - Repaid approximately **$200 million** of debt using excess free cash flow - Repurchased approximately **$28 million** of shares at an average price of **$7.88** - Simplified corporate structure by eliminating the Up-C structure[6](index=6&type=chunk) [Strategic Activities](index=2&type=section&id=Strategic%20Activities) During the quarter, Crescent continued its portfolio optimization strategy by closing a $72 million minerals acquisition and divesting approximately $110 million in non-core assets year-to-date, while maintaining its shareholder return program through a quarterly dividend and opportunistic share repurchases [Acquisitions and Divestitures](index=2&type=section&id=Acquisitions%20and%20Divestitures) Crescent closed a $72 million accretive minerals acquisition to scale its existing portfolio, with year-to-date divestitures of non-core assets reaching $110 million, including the sale of non-operated assets in the Permian and Eagle Ford basins, as part of a larger $250 million divestiture pipeline - On July 31, 2025, Crescent closed an accretive acquisition of complementary minerals assets for approximately **$72 million**[7](index=7&type=chunk) - Year-to-date, the company has divested approximately **$110 million** of non-core assets, including: - **$83 million** from non-operated Permian Basin assets (closed April 22, 2025) - **$22 million** from non-operated Eagle Ford Basin assets (closed July 30, 2025)[8](index=8&type=chunk) [Shareholder Return](index=2&type=section&id=Shareholder%20Return) The company declared a Q2 2025 cash dividend of $0.12 per share, and additionally repurchased $28 million of its Class A common stock at a weighted average price of $7.88 per share, leaving approximately $86 million available under its $150 million share repurchase program - The Board of Directors approved a Q2 2025 cash dividend of **$0.12 per share**, payable on September 2, 2025[11](index=11&type=chunk) - During Q2, the company repurchased approximately **$28 million** of shares, with **$86 million** remaining under the authorized **$150 million** Share Repurchase Program[12](index=12&type=chunk) [Enhanced 2025 Outlook](index=2&type=section&id=Enhanced%202025%20Outlook) Crescent has enhanced its full-year 2025 guidance, reducing its capital expenditure forecast by approximately 3% while maintaining production targets, and significantly improving the cash tax outlook to 0% of Adjusted EBITDAX, largely due to the new 'One Big Beautiful Bill Act' 2025 Full-Year Outlook Comparison | Metric | Prior 2025 Outlook | Current 2025 Outlook | Change vs. Midpoint | | :--- | :--- | :--- | :--- | | Total Production (MBoe/d) | 251 - 261 | 251 - 261 | 0% | | Capital Expenditures ($MM) | $925 - $1,025 | $910 - $990 | ($25 MM) / (~3%) | | Cash Taxes (% of Adj. EBITDAX) | 2.0% - 5.0% | 0% | (100%) | - The improved outlook reflects ongoing operational efficiencies, modest activity acceleration, and a more favorable tax outlook due to the 'One Big Beautiful Bill Act' (OBBBA) signed into law on July 4, 2025[9](index=9&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) The company's financial statements reflect significant year-over-year growth in production and revenue, driven by acquisitions and operational performance, with net income for Q2 2025 at $162.5 million, total assets at $9.86 billion, and strong operating cash flow of $836.1 million for the first six months of 2025 [Operational Summary](index=5&type=section&id=Crescent%20Operational%20Summary) In Q2 2025, total average daily production increased to 263 MBoe/d from 165 MBoe/d in Q2 2024, a 59% increase, and while realized prices for oil and NGLs before derivatives were lower year-over-year, operating expenses per Boe decreased from $19.61 to $16.31, demonstrating improved cost efficiency Operational Summary: Q2 2025 vs Q2 2024 | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Production (MBoe/d) | 263 | 165 | +59.4% | | Oil Production (MBbls/d) | 108 | 73 | +47.9% | | Realized Price ($/Boe, pre-hedges) | $35.96 | $41.27 | -12.9% | | Operating Expense ($/Boe) | $16.31 | $19.61 | -16.8% | [Income Statement](index=6&type=section&id=Crescent%20Condensed%20Consolidated%20Income%20Statement) For Q2 2025, Crescent reported total revenues of $898.0 million, up from $653.3 million in Q2 2024, driven by higher production volumes, with net income attributable to Crescent Energy at $153.2 million ($0.61 per basic share), a significant increase from $37.5 million ($0.34 per basic share) in the prior-year quarter, aided by a large gain on derivatives Condensed Consolidated Income Statement (Thousands) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenues | $897,983 | $653,283 | | Income from Operations | $79,635 | $119,384 | | Net Income | $162,498 | $70,205 | | Net Income Attributable to Crescent | $153,221 | $37,547 | | EPS (Class A, basic) | $0.61 | $0.34 | [Balance Sheet](index=7&type=section&id=Crescent%20Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2025, Crescent's total assets stood at $9.86 billion, up from $9.16 billion at year-end 2024, with total liabilities increasing to $5.36 billion from $4.79 billion, primarily due to a rise in long-term debt to $3.37 billion, while total equity grew to $4.50 billion, strengthened by the elimination of redeemable noncontrolling interests following the corporate simplification Condensed Consolidated Balance Sheet (Thousands) | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $753,271 | $788,088 | | Property, Plant and Equipment, net | $8,980,400 | $8,145,054 | | **Total Assets** | **$9,856,686** | **$9,160,649** | | Total Current Liabilities | $851,595 | $827,363 | | Long-term Debt | $3,373,595 | $3,049,255 | | **Total Liabilities** | **$5,357,962** | **$4,792,689** | | **Total Equity** | **$4,498,724** | **$3,139,631** | [Cash Flow Statement](index=9&type=section&id=Crescent%20Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2025, net cash from operating activities was $836.1 million, a significant increase from $470.7 million in the same period of 2024, with net cash used in investing activities at $1.27 billion, primarily for property acquisitions and development, and financing activities providing $213.4 million in net cash Condensed Consolidated Cash Flow Statement (Thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $836,080 | $470,696 | | Net cash used in investing activities | ($1,269,111) | ($286,562) | | Net cash provided by (used in) financing activities | $213,380 | $594,461 | [Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) The company provides reconciliations for key non-GAAP metrics used by management and investors to evaluate performance, with Q2 2025 Adjusted EBITDAX at $513.9 million, Levered Free Cash Flow at $170.9 million, Adjusted Net Income at $110.3 million, and a Net LTM Leverage ratio of 1.5x as of June 30, 2025 [Adjusted EBITDAX and Levered Free Cash Flow](index=10&type=section&id=Adjusted%20EBITDAX%20and%20Levered%20Free%20Cash%20Flow) Adjusted EBITDAX for Q2 2025 was $513.9 million, up from $319.8 million in Q2 2024, and after accounting for interest, taxes, and capital expenditures, the company generated $170.9 million in Levered Free Cash Flow for the quarter, compared to $146.9 million in the prior-year period Adjusted EBITDAX and Levered Free Cash Flow Reconciliation (Thousands) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $162,498 | $70,205 | | **Adjusted EBITDAX (non-GAAP)** | **$513,854** | **$319,774** | | **Levered Free Cash Flow (non-GAAP)** | **$170,875** | **$146,933** | [Adjusted Net Income](index=12&type=section&id=Adjusted%20Net%20Income) Adjusted Net Income, which excludes items like unrealized derivative gains/losses and non-cash compensation, was $110.3 million ($0.43 per share) for Q2 2025, representing a significant increase from the $56.2 million ($0.31 per share) reported in Q2 2024 Adjusted Net Income Reconciliation (Thousands) | (in thousands, except EPS) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $162,498 | $70,205 | | **Adjusted Net Income (non-GAAP)** | **$110,255** | **$56,155** | | **Adjusted EPS** | **$0.43** | **$0.31** | [Net LTM Leverage](index=13&type=section&id=Net%20LTM%20Leverage) As of June 30, 2025, Crescent's Net LTM Leverage ratio, calculated as net debt divided by LTM Adjusted EBITDAX under its credit agreement, was 1.5x, based on net debt of $3.37 billion and LTM Adjusted EBITDAX of $2.28 billion Net LTM Leverage Calculation (Millions) | (in millions) | June 30, 2025 | | :--- | :--- | | Net Debt | $3,371 | | LTM Adjusted EBITDAX for Leverage Ratio | $2,284 | | **Net LTM Leverage** | **1.5x** |

Group 1 - Crescent Energy Company (NYSE:CRGY) is identified as a stock with high upside potential, with Alyeska Investment Group L.P. increasing its stake by 452.3% during the first quarter, acquiring 1,298,155 shares worth $17,817,000 [1] - The debt-free acquisition of Vital Energy positions Crescent Energy among the top ten independent companies in its market, with potential net output estimated at 397 Mboe per day, including 258 Mboe per day from Crescent Energy [2] - Crescent Energy is targeting key regions such as the Permian Basin, Eagle Ford Basin, and Uinta Basin, which will provide investors with stable production and financial solidity [2] Group 2 - Crescent Energy Company, based in Texas, focuses on exploring and producing crude oil, natural gas, and natural gas liquids, having been founded in 2011 [4] - The collaboration with Sable Offshore (SOC) is expected to yield immediate cost savings of $90 million to $100 million, along with long-term synergies of $150 million to $215 million annually, indicating a positive outlook for Crescent Energy [3]

Industry Overview - The energy sector is experiencing a potential transformation due to slowing demand growth for certain energy products and a shift away from fossil fuels by investors, leading companies to cut exploration budgets [1][2] - Geopolitical conflicts in major fossil fuel regions, such as the Middle East and Venezuela, are exacerbating the situation, with analysts focusing on mid-size energy companies that may emerge as significant players [2] Company Highlights: Crescent Energy - Crescent Energy, with a market capitalization of over $2 billion, is focused on sustainable cash flow generation through high-quality reservoirs and disciplined capital efficiency [3][4] - The company reported a second-quarter earnings beat, exceeding EPS estimates by $0.20 and generating revenue that surpassed predictions by nearly $30 million, driven by record production of 263 kboe/d [4] - Crescent achieved $171 million in free cash flow for the latest quarter while reducing operational costs at its largest mines [5] - The firm is strategically positioned in the nutrient-rich Permian Basin, benefiting from favorable regulations, and has seen a decrease in short interest by over 7% in the last month [6] Company Highlights: Matador Resources - Matador Resources, with a market cap under $6 billion, focuses on upstream operations in the Permian Basin and has seen a 31% year-over-year production increase [7][8] - The company has achieved record free cash flow and increased its full-year guidance, alongside cost reductions that contributed to a nearly 5% stock gain over the past six months [8] - Matador is expanding its midstream operations, with its San Mateo operation achieving 99% uptime in the last quarter, and analysts rate the stock as a Buy with a consensus price target suggesting about 43% upside potential [9] Company Highlights: Northern Oil and Gas - Northern Oil and Gas operates in the Williston Basin and reported a strong second quarter with a 26% year-over-year revenue growth and $126 million in free cash flow [11][12] - The company has increased its net wells in process by 70% sequentially and closed on approximately 2,600 net acres, indicating rapid expansion [12] - Six out of eleven analysts view Northern Oil and Gas shares as a Buy, with potential upside of 49% based on price estimates [13]

Group 1 - Crescent Energy (CRGY) shares increased by 5.8% to $8.7, following a period of 12% loss over the past four weeks, indicating a significant recovery in the stock price [1] - The surge in stock price is attributed to favorable commodity prices and Crescent Energy's strong operational presence in Texas and the Rockies, particularly in the Eagle Ford and Uinta Basins, which offer stable production and growth opportunities [2] - The company holds 145,000 net acres in the Uinta Basin and has a large inventory of low-risk undeveloped acres, which, combined with low production costs, is expected to enhance profitability [2] Group 2 - Crescent Energy is projected to report quarterly earnings of $0.30 per share, reflecting a year-over-year decline of 23.1%, while revenues are expected to reach $900.88 million, a 20.9% increase from the previous year [3] - The consensus EPS estimate for Crescent Energy has been revised down by 37% over the last 30 days, indicating a negative trend in earnings estimate revisions, which typically does not lead to price appreciation [4] - Crescent Energy currently holds a Zacks Rank of 3 (Hold), similar to Constellation Energy Corporation (CEG), which also experienced a 6.4% increase in its stock price [5][6]

Core Insights - The surge in global electricity usage, particularly from data centers, has driven strong demand for oil and gas, benefiting companies like Crescent Energy (CRGY) and SM Energy (SM) [1][9] - Both CRGY and SM are prominent upstream oil and gas exploration and production companies, with operations in the Uinta basin of Utah and other regions, focusing on strategic acquisitions and optimized drilling technologies [2][3] Financial Performance - Crescent Energy closed June 2025 with $7 million in cash and long-term debt of $3.38 billion, while SM Energy reported $102 million in cash and long-term debt of $2.71 billion [5] - SM Energy experienced a 40.1% year-over-year increase in operating cash flow in the first half of 2025, while Crescent recorded a stronger 77.6% surge [6] - SM's production rose 32% year-over-year in Q2 2025, leading to a 25% revenue growth, while Crescent reported a 59.4% increase in daily sales volumes, resulting in a 37.5% revenue increase to $898 million [8] Growth Strategies - Strategic acquisitions are crucial for both companies, with SM Energy's $2 billion Uinta Basin acquisitions and Crescent's $3.1 billion acquisition of Vital Energy expected to enhance production and revenue [7][9] - The natural gas market's growth outlook remains a strong tailwind for both companies, with the U.S. Energy Information Administration projecting an increase in natural gas spot prices in late 2025 and throughout 2026 [10] Valuation and Efficiency - SM Energy is trading at a forward earnings multiple of 5.25, which is lower than Crescent Energy's 6.66, indicating a more attractive valuation for SM [20] - A comparative analysis shows that SM Energy has a better Return on Equity (ROE) than Crescent Energy, suggesting greater efficiency in generating profits from its equity base [21] Investment Considerations - Both companies have high long-term debt burdens, which could pose risks despite their growth prospects [23] - Crescent's aggressive acquisition strategy offers scalability and revenue upside, while SM Energy's stronger valuation metrics and liquidity make it a more compelling choice for risk-conscious investors [24]

Core Insights - A lower interest rate environment is expected to stimulate economic activity, boosting oil demand and prices, while also reducing borrowing costs for shale explorers like Crescent Energy [1] - The U.S. Federal Reserve is anticipated to cut interest rates, with over 80% market consensus for a cut in September [1] - However, a simple rate cut may not reverse the downward trend in oil prices, as projected by the EIA, which estimates Brent crude oil prices to decline from $71 per barrel in July to an average of $58 per barrel in Q4 2025 and around $50 per barrel in early 2026 [2][10] Oil Price Forecast - The decline in oil prices is largely driven by increased oil inventory builds following OPEC+ members' decision to accelerate production increases, which is independent of U.S. interest rate movements [3] - Geopolitical factors, such as U.S. pressure on India to reduce oil purchases from Russia, combined with global trade uncertainties, could significantly hurt U.S. oil demand, further impacting oil prices and revenues for companies like Crescent Energy [4] Company Performance - Crescent Energy's shares have increased by 32.6% over the past year, outperforming the industry growth of 12.8% [9] - Other U.S. shale explorers, including Chevron and Exxon Mobil, are also vulnerable to declining oil prices, with Chevron's Q2 2025 earnings dropping 40% year-over-year due to lower oil prices [5][6] - Exxon Mobil has seen a notable decline in year-to-date earnings as of June 2025, attributed to weak crude prices [6] Valuation and Earnings Outlook - Crescent Energy is currently trading at a forward 12-month earnings multiple of 6.66, significantly lower than the industry average of 21.26 [11] - The Zacks Consensus Estimate for Crescent Energy's near-term earnings has improved over the past 60 days [12] - Crescent Energy currently holds a Zacks Rank 3 (Hold) [13]

Core Viewpoint - Crescent Energy Company (CRGY) is acquiring Vital Energy, Inc. (VTLE) in an all-stock transaction valued at $3.1 billion, including Vital's net debt, which will enhance CRGY's access to key oil and gas producing basins in the U.S. [1] Deal Terms and Shareholder Impact - Vital Energy shareholders will receive 1.9062 shares of Crescent Class A common stock for each share of Vital common stock they own, with expected annual synergies of $90-$100 million [2] - The combined entity will be managed by a team with extensive operating and investing experience, aimed at increasing value creation and long-term growth [2] Free Cash Flow-Focused Operating Strategy - Crescent Energy will focus on lower drilling activity to prioritize higher free cash flow generation, which is expected to improve shareholder returns and support higher dividends [3] - The company plans to divest non-core assets worth $1 billion to strengthen its balance sheet, consolidating a strong asset base in the Eagle Ford, Permian, and Uinta Basins with over 10 years of high-quality inventory [3] Future Strategic Focus - The acquisition is expected to be completed by year-end 2025, with Crescent shareholders holding approximately 77% of the combined company and Vital shareholders owning 23% [4] - Post-merger, CRGY will focus on assets in the Eagle Ford, Permian, and Uinta Basins, potentially considering divestitures of assets outside these areas [4]

Summary of Crescent Energy Co (CRGY) M&A Conference Call Company and Industry - **Company**: Crescent Energy Co (CRGY) - **Acquisition Target**: Vital Energy - **Industry**: Independent oil and gas exploration and production Key Points and Arguments 1. **Acquisition Announcement**: Crescent Energy has signed a definitive agreement to acquire Vital Energy in an all-stock transaction, creating a top 10 independent operator with a path to an investment-grade rating [4][9][20] 2. **Transaction Value**: The combined company will have an enterprise value of approximately $9 billion and a free cash flow generation capacity comparable to its new top 10 peers [9][12] 3. **Shareholder Impact**: Vital shareholders will receive 1.9062 shares of Crescent common stock for each share of Vital common stock, resulting in Vital shareholders owning approximately 23% of the combined company [8][9] 4. **Financial Metrics**: The acquisition is expected to generate more than 20% accretion to five-year free cash flow per share and more than 10% accretion to net asset value per share [6][9] 5. **Divestiture Pipeline**: Crescent is increasing its noncore divestiture pipeline to $1 billion, which is expected to enhance its investment-grade balance sheet and support its return of capital program [4][13][20] 6. **Operational Efficiency**: The transaction is expected to deliver $90 million to $100 million in immediate annual savings, with a five-year present value of expected synergies estimated at approximately $350 million [10][11] 7. **Future Growth Potential**: The combined company will have access to over $60 billion of asset acquisition potential surrounding its pro forma footprint, significantly expanding Crescent's growth opportunities [7][9][20] 8. **Production Capacity**: The combined company will produce nearly 400,000 barrels of oil equivalent per day and hold nearly $13 billion of total proved SEC reserves [9][10] 9. **Debt Management**: Crescent expects to maintain its current leverage of 1.5 times and has $1.5 billion of liquidity, with no financing requirements associated with the transaction [13][34] 10. **Dividend Policy**: Crescent will maintain its fixed $0.12 per share quarterly dividend, which offers a compelling yield compared to peers [12][20] Additional Important Content 1. **Integration Strategy**: Crescent plans to integrate Vital's assets into its existing portfolio while reducing activity to enhance free cash flow and returns [6][19][40] 2. **Market Positioning**: The acquisition is expected to catalyze a step change in Crescent's market position, with attractive tailwinds from increased investor interest and potential ratings uplift [9][20] 3. **Commitment to Shareholders**: The management emphasized a consistent strategy focused on free cash flow, maintaining a strong balance sheet, and returning capital to shareholders [12][19] 4. **Operational Philosophy**: Crescent's approach involves high grading capital allocation and taking a measured approach to development, ensuring that only the best projects are pursued [40][42] 5. **Long-term Vision**: The management expressed confidence in their ability to maximize the value of the transaction for investors and highlighted their track record of successful acquisitions [11][14][15]