Crescent Energy Company (NYSE:CRGY) Q4 2024 Earnings Conference Call February 27, 2025 11:00 AM ET Company Participants Reid Gallagher - Investor Relations David Rockecharlie - Chief Executive Officer Brandi Kendall - Chief Financial Officer Clay Rynd - Executive Vice President-Investments Conference Call Participants Oliver Huang - TPH Neal Dingmann - Truist Securities Tim Rezvan - KeyBanc Capital Marketing Michael Scialla - Stephens John Abbott - Wolfe Research Michael Furrow - Pickering Energy John Freem ...

FY 2024 Earnings Presentation February 2025 Disclaimer The information in this presentation relates to Crescent Energy Company (the "Company," "Crescent," "we," "us," "our" or "CRGY") and contains information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this ...

Core Viewpoint - Crescent Energy (CRGY) reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.26 per share, but slightly down from $0.58 per share a year ago, indicating an earnings surprise of 115.38% [1][2] Financial Performance - The company posted revenues of $875.29 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.75%, compared to $657.73 million in the same quarter last year [2] - Over the last four quarters, Crescent Energy has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Crescent Energy shares have declined approximately 6.3% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The stock's immediate price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.54, with expected revenues of $959.19 million, and for the current fiscal year, the EPS estimate is $2.21 on revenues of $3.88 billion [7] - The estimate revisions trend for Crescent Energy is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Alternative Energy - Other industry, to which Crescent Energy belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Reserves and Production - As of December 31, 2024, the company had 709.3 net MMBoe of proved reserves, with approximately 63% being liquids, reflecting a Standardized Measure of $5.7 billion[80]. - The company’s net proved reserves in the Eagle Ford are 497.2 MMBoe, with production of 38,708 MBoe in 2024[100]. - The company’s net proved reserves in the Rockies are 113.8 MMBoe, with production of 21,479 MBoe in 2024[100]. - As of December 31, 2024, net proved reserves include 297,690 MBbls of oil, 1,595,059 MMcf of natural gas, and 145,716 MBbls of NGLs, totaling 709,251 MBoe, representing a 29.3% increase from 2023[104]. - Average daily production increased to 201 MBoe/d in 2024, up from 149 MBoe/d in 2023, with total production reaching 73,637 MBoe[114]. - The company added 76.5 MMBoe of reserves in place during 2024, primarily due to the SilverBow Merger and the Central Eagle Ford Acquisition[110]. - The company operates a total of 15,540 productive wells as of December 31, 2024, with a working interest of 56%[115]. - The company drilled 297 productive development wells in 2024, an increase of 22.8% from 242 in 2023[122]. Financial Performance - For the year ended December 31, 2024, the company produced 201 net MBoe/d and generated a net loss of $137.7 million, alongside $1,223.1 million in net cash provided by operating activities and $1,598.3 million of Adjusted EBITDAX[80]. - The total revenues for the year ended December 31, 2024, were $2,930,919 thousand, an increase of 23% compared to $2,382,602 thousand in 2023[533]. - Oil revenues reached $2,130,418 thousand, up from $1,750,961 thousand in 2023, reflecting a growth of 22%[533]. - The company reported a net income (loss) from operations of $218,462 thousand, a decrease of 33% from $324,740 thousand in 2023[533]. - Crescent Energy reported a net loss of $137.68 million for the current period, compared to a net income of $321.99 million in the previous period[534]. - The net income attributable to Crescent Energy was $(114.61) million, with a basic and diluted loss per share of $(0.88) compared to earnings of $1.02 and $2.20 in the prior periods[534]. - The company experienced a significant increase in retained earnings, reaching $1.63 billion as of December 31, 2023, up from $720.02 million in 2021[537]. - Crescent Energy's total equity increased to $1.73 billion by the end of 2023, reflecting a growth from $862.29 million in 2022[537]. Cash Flow and Investments - Cash flows from operating activities increased to $1.223 billion in 2024, compared to $935.769 million in 2023, indicating improved operational efficiency[543]. - Crescent Energy's net cash used in investing activities was $1.198 billion in 2024, a decrease from $1.399 billion in 2023, reflecting a more disciplined investment approach[543]. - The company made acquisitions of oil and natural gas properties totaling $558.600 million in 2024, down from $849.254 million in 2023, suggesting a strategic shift in acquisition strategy[543]. - Proceeds from the issuance of Senior Notes increased to $2,074.625 million in 2024 from $984.625 million in 2023, reflecting a significant growth[546]. - The company’s cash and cash equivalents surged to $132,818 thousand in 2024, compared to $2,974 thousand in 2023, indicating a significant increase[528]. Debt and Liabilities - Long-term debt rose significantly to $3,049,255 thousand in 2024, up from $1,694,375 thousand in 2023, representing an increase of 80%[531]. - The total liabilities increased to $4,792,689 thousand in 2024, up from $3,167,617 thousand in 2023, which is a rise of 51%[531]. - Revolving Credit Facility borrowings rose to $3,168.3 million in 2024 from $2,283.8 million in 2023, indicating increased leverage[546]. Regulatory and Environmental Factors - The company is subject to extensive federal, state, and local regulations that can impact operational costs and profitability[143]. - Environmental regulations impose stringent requirements on drilling, production, and waste disposal, which could significantly impact operating costs if they become more stringent[162]. - The EPA's new methane emissions regulations may impose substantial compliance costs and fines for non-compliance[173]. - The company may face increased scrutiny from FERC regarding agreements with affiliated pipelines, which could affect transportation service agreements[156]. - The National Environmental Policy Act requires environmental assessments for major federal actions, which may delay permitting and increase costs for the company[190]. Market and Competitive Landscape - The company faces intense competition in the oil and natural gas industry, competing with larger companies that have greater resources[129]. - The company is exposed to market risk from adverse changes in commodity prices and interest rates, which can significantly impact cash flows[499]. - The company does not believe the loss of any single customer would materially impact its operating results due to the fungibility of oil, natural gas, and NGLs[507]. Employee and Community Engagement - The company employs approximately 987 employees as of December 31, 2024, with no collective bargaining agreements in place[136]. - The company is committed to community engagement and recognizes the link between local communities and business success[142].

Production and Financial Performance - Crescent Energy reported a record fourth quarter production of 255 MBoe/d, with 38% oil and 56% liquids[5]. - For the full year 2024, Crescent reported $1.6 billion in Adjusted EBITDAX and $1.2 billion in Operating Cash Flow, with an average production of 201 MBoe/d, a greater than 30% increase year-over-year[6]. - The company forecasts approximately 30% year-over-year production growth for 2025, with total production guidance of 254 - 264 MBoe/d[7][8]. - Total revenues for Q4 2024 reached $875.3 million, a 33.1% increase from $657.7 million in Q4 2023[19]. - Net income for 2024 was a loss of $137.683 million, a significant decrease from a profit of $321.991 million in 2023[24]. - Net cash provided by operating activities increased to $1.223 billion in 2024, up from $935.769 million in 2023, reflecting improved operational efficiency[24]. - Adjusted EBITDAX for 2024 was $1.598 billion, compared to $1.022 billion in 2023, indicating a 56% year-over-year increase[30]. - Levered Free Cash Flow for 2024 was $630.168 million, up from $310.204 million in 2023, representing a 103% increase[30]. Cash Flow and Liquidity - The company generated $1.2 billion in Operating Cash Flow and $630 million in Levered Free Cash Flow for the fourth quarter[6]. - Cash and cash equivalents rose to $132.8 million in 2024, compared to $2.97 million in 2023, indicating improved liquidity[20]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $240.908 million in 2024, compared to $8.729 million in 2023[24]. - Net cash provided by operating activities for Q4 2024 was $384,434,000, up from $322,869,000 in Q4 2023, representing a 19.1% increase[32]. - Levered Free Cash Flow for Q4 2024 was $259,422,000, compared to $102,451,000 in Q4 2023, indicating a significant increase of 153.5%[32]. Expenses and Liabilities - The company’s total expenses for Q4 2024 were $902.8 million, up from $689.1 million in Q4 2023, marking a 31.0% increase[19]. - Long-term debt increased to $3.05 billion in 2024, compared to $1.69 billion in 2023, reflecting a significant rise in leverage[22]. - The company reported a depreciation, depletion, and amortization expense of $949.480 million in 2024, up from $675.782 million in 2023[24]. - The company’s total liabilities reached $4.79 billion in 2024, compared to $3.17 billion in 2023, indicating increased financial obligations[22]. Shareholder Returns and Dividends - Crescent's Board approved a cash dividend of $0.12 per share for the fourth quarter of 2024, payable on March 26, 2025[9]. - The company utilized approximately 20% of its authorized Share Repurchase Program at a weighted average share price of $10.07 during 2024[10]. - Adjusted Dividends Paid for Q4 2024 totaled $27,396,000, compared to $21,919,000 in Q4 2023, marking an increase of 24.5%[42]. M&A Activity - Crescent executed over $3 billion in accretive M&A transactions in the Eagle Ford region during 2024[5]. General and Administrative Expenses - General and administrative expenses for Q4 2024 were $86,687,000, compared to $34,683,000 in Q4 2023, showing an increase of 149.2%[38]. - Adjusted Recurring Cash G&A for the year ended December 31, 2024, was $92,820,000, up from $82,512,000 in 2023, reflecting a 12.8% increase[38].

Core Insights - Crescent Energy (CRGY) is expected to report quarterly earnings of $0.26 per share, reflecting a year-over-year decline of 55.2% [1] - Revenue is anticipated to reach $890.87 million, which represents a 35.5% increase compared to the same quarter last year [1] Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised downward by 1.2%, indicating a collective reassessment by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions to the stock, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3] Key Metrics Forecast - Analysts project 'Average daily net sales volumes - Natural Gas' to be 650.90 million cubic feet, up from 386 million cubic feet in the previous year [5] - The consensus for 'Average daily net sales volumes - Oil' is 99.69 million barrels, compared to 71 million barrels reported in the same quarter last year [5] - 'Average daily net sales volumes - Natural gas liquids' are forecasted to reach 46.00 million barrels, an increase from 30 million barrels in the prior year [6] Stock Performance - Over the past month, Crescent Energy shares have declined by 10.2%, while the Zacks S&P 500 composite has decreased by 1.8% [7] - Crescent Energy holds a Zacks Rank 2 (Buy), suggesting it is likely to outperform the overall market in the near future [7]

Core Viewpoint - Crescent Energy (CRGY) has experienced a significant decline of 10.8% over the past four weeks, but it is now positioned for a potential trend reversal as it enters oversold territory, with analysts predicting better earnings than previously estimated [1]. Group 1: Stock Performance and Technical Indicators - CRGY's Relative Strength Index (RSI) reading is at 29.73, indicating that the heavy selling pressure may be exhausting, suggesting a possible bounce back towards equilibrium in supply and demand [5]. - Stocks oscillate between overbought and oversold conditions, and the RSI serves as a quick tool to identify potential price reversals [3]. Group 2: Earnings Estimates and Analyst Consensus - There has been a strong consensus among sell-side analysts to raise earnings estimates for CRGY, with a 14.5% increase in the consensus EPS estimate over the last 30 days [6]. - An upward trend in earnings estimate revisions typically correlates with price appreciation in the near term [6]. Group 3: Zacks Rank and Investment Potential - CRGY holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7].

Core Viewpoint - Crescent Energy (CRGY) is positioned to continue its earnings-beat streak, having surpassed earnings estimates significantly in recent quarters [1][2]. Earnings Performance - In the most recent quarter, Crescent Energy reported earnings of $0.39 per share, exceeding the expected $0.28 per share by 39.29% [2]. - For the previous quarter, the company reported $0.31 per share against an expectation of $0.26 per share, resulting in a surprise of 19.23% [2]. Earnings Estimates and Predictions - Recent estimates for Crescent Energy have been revised upwards, indicating a positive outlook for the company's near-term earnings potential [3]. - The Zacks Earnings ESP for Crescent Energy is currently +9.09%, suggesting analysts are optimistic about the upcoming earnings report [6]. Zacks Rank and Earnings ESP - Crescent Energy holds a Zacks Rank of 2 (Buy), which, when combined with a positive Earnings ESP, indicates a strong likelihood of another earnings beat [6]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced positive surprises nearly 70% of the time [4]. Importance of Earnings ESP - The Earnings ESP metric is crucial for predicting earnings performance, as it compares the Most Accurate Estimate to the Zacks Consensus Estimate [5]. - A negative Earnings ESP does not necessarily indicate an earnings miss, as many companies can still beat consensus estimates despite a negative value [7].

Core Viewpoint - Crescent Energy's stock performance and upcoming earnings report are critical for investors, with expectations of a significant decline in EPS but an increase in revenue compared to the previous year [2][5]. Group 1: Stock Performance - Crescent Energy's stock closed at $15.45, reflecting a -1.21% change from the previous day, underperforming the S&P 500's 0.53% gain [1]. - Over the past month, Crescent Energy's stock has increased by 7.05%, outperforming the Oils-Energy sector's gain of 5.88% and the S&P 500's gain of 1.24% [1]. Group 2: Earnings Expectations - The anticipated EPS for Crescent Energy is $0.31, indicating a 46.55% decrease compared to the same quarter last year [2]. - Revenue is expected to reach $891.2 million, representing a 35.5% increase from the year-ago quarter [2]. Group 3: Analyst Projections - Recent shifts in analyst projections for Crescent Energy should be monitored, as they reflect short-term business trends and can indicate optimism about the company's outlook [3]. - Positive estimate revisions are seen as a favorable sign for the company's business prospects [3]. Group 4: Zacks Rank and Valuation - Crescent Energy currently holds a Zacks Rank of 2 (Buy), with a 24.01% rise in the Zacks Consensus EPS estimate over the past month [5]. - The company is trading at a Forward P/E ratio of 7.1, significantly lower than the industry average of 20.27, indicating a valuation discount [6]. Group 5: Industry Context - The Alternative Energy - Other industry, part of the Oils-Energy sector, has a Zacks Industry Rank of 38, placing it in the top 16% of over 250 industries [6]. - The Zacks Industry Rank suggests that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7].

Group 1 - Crescent Energy (CRGY) is currently outperforming its Oils-Energy peers with a year-to-date performance of approximately 10.6%, compared to the sector average of 9.5% [4] - Crescent Energy is ranked 7 in the Zacks Sector Rank among 248 companies in the Oils-Energy group, indicating a strong position within the sector [2] - The Zacks Rank for Crescent Energy is 2 (Buy), reflecting a positive earnings outlook and strong analyst sentiment, with a 46.7% increase in the consensus estimate for full-year earnings over the past 90 days [3][4] Group 2 - Crescent Energy is part of the Alternative Energy - Other industry, which has seen an average gain of 86.9% this year, indicating that CRGY is slightly underperforming its industry [6] - Kodiak Gas Services (KGS) is another notable stock in the Oils-Energy sector, with a year-to-date return of 19.6% and a Zacks Rank of 1 (Strong Buy) [5] - The Oil and Gas - Mechanical and Equipment industry, to which Kodiak Gas Services belongs, has experienced a year-to-date increase of 16.9% [6]