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)

[Second Quarter 2025 Overview](index=1&type=section&id=Second%20Quarter%202025%20Overview) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Vitesse Energy reported strong Q2 2025 results, highlighted by significant production increase, a legal settlement, and continued shareholder returns Key Financial and Operational Metrics | Metric | Value | | :--- | :--- | | Net Income | $24.7 million | | Adjusted Net Income | $18.4 million | | Adjusted EBITDA | $61.1 million | | Cash Flow from Operations | $66.0 million | | Free Cash Flow | $21.9 million | | Production | 18,950 Boe/day (65% oil) | | Total Debt | $106.0 million | | Net Debt to Adjusted EBITDA Ratio | 0.43x | - The company resolved a legal dispute with a key operator, resulting in a **one-time cash payment of $24 million** and new arrangements for gas production sales starting July 1, 2025[5](index=5&type=chunk)[6](index=6&type=chunk) - A quarterly cash dividend of **$0.5625 per common share** was declared, scheduled to be paid on September 30, 2025[4](index=4&type=chunk)[5](index=5&type=chunk) [Management Comments](index=1&type=section&id=Management%20Comments) Management emphasized successful Lucero asset integration, lawsuit settlement, and strategic use of free cash flow for debt reduction and hedging - CEO Bob Gerrity highlighted key achievements in Q2: full integration of Lucero assets, successful lawsuit settlement, selective capital investment, and using free cash flow for debt reduction[3](index=3&type=chunk) - The company took advantage of increased oil prices to add hedges for 2025 and 2026 at levels that support the dividend[3](index=3&type=chunk) [Financial and Operating Performance](index=2&type=section&id=Financial%20and%20Operating%20Performance) [Financial and Operating Results](index=2&type=section&id=Financial%20and%20Operating%20Results) Q2 2025 production significantly increased due to the Lucero acquisition, contributing to higher total revenue and net income - Production averaged **18,950 Boe/day**, a **27% sequential increase**, mainly driven by the Lucero acquisition, with oil constituting **65% of production**[8](index=8&type=chunk) - A litigation settlement resulted in a **one-time cash payment of $24 million**, which was recorded in the consolidated statements of operations[6](index=6&type=chunk) Financial Metrics (Q2 2025 vs Q2 2024) | Financial Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue ($ millions) | $81.8 | $66.6 | +23% | | Daily Production (Boe/day) | 18,950 | 13,504 | +40% | | Avg. Realized Oil Price (per Bbl) | $59.50 | $74.63 | -20% | | Avg. Realized Gas Price (per Mcf) | $4.17 | $1.11 | +276% | | G&A Expense ($ millions) | $0.3 | $4.7 | -93% | - General and administrative expenses were significantly lower at **$0.3 million**, or **$0.18 per Boe**, due to the offset of approximately **$7.1 million** in previously expensed litigation costs[10](index=10&type=chunk) [Liquidity and Capital Expenditures](index=2&type=section&id=Liquidity%20and%20Capital%20Expenditures) Vitesse maintained strong liquidity as of June 30, 2025, with substantial credit facility availability and strategic capital investments Liquidity and Capital Expenditures (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Cash | $2.0 million | | Revolving Credit Facility Borrowings | $106.0 million | | Total Liquidity | $146.0 million | | Q2 Development Capital Expenditures | $35.6 million | | Q2 Acquisition Costs | $0.1 million | [Operations Update](index=3&type=section&id=Operations%20Update) By Q2 2025 end, Vitesse held interests in a substantial portfolio of drilling, completion, and permitted development projects - As of June 30, 2025, the Company had an interest in **282 gross (7.9 net) wells** that were drilling or in completion[12](index=12&type=chunk) - The company also held interests in another **418 gross (15.1 net) locations** that were permitted for development[12](index=12&type=chunk) [Commodity Hedging](index=5&type=section&id=Commodity%20Hedging) Vitesse strategically hedged a significant portion of its expected oil and natural gas production to enhance cash flow predictability and support its dividend - Based on 2025 guidance, Vitesse has hedged approximately **71% of its remaining 2025 oil production** at a weighted average price of **$69.83/Bbl**[17](index=17&type=chunk) - Approximately **49% of remaining 2025 natural gas production** is hedged at a weighted average floor price of **$3.73/MMBtu**[17](index=17&type=chunk) Commodity Hedging Positions | Instrument | Settlement Period | Volume Hedged | Weighted Average Price | | :--- | :--- | :--- | :--- | | WTI Crude Oil Swaps | Q3 2025 - Q4 2026 | 2,016,504 Bbls | ~$67.60/Bbl | | Henry Hub Gas Collars | Q3 2025 - Q1 2027 | 7,456,000 MMbtu | Floor ~$3.75 / Ceiling ~$5.20 | [Outlook and Corporate Information](index=3&type=section&id=Outlook%20and%20Corporate%20Information) [2025 Annual Guidance](index=3&type=section&id=2025%20Annual%20Guidance) Vitesse reiterated its full-year 2025 guidance for annual production and total capital expenditures 2025 Annual Guidance | Guidance Metric | 2025 Range | | :--- | :--- | | Annual Production (Boe/day) | 15,000 - 17,000 | | Oil as % of Production | 64% - 68% | | Total Capital Expenditures ($ millions) | $80 - $110 | [Conference Call and Investor Events](index=6&type=section&id=Conference%20Call%20and%20Investor%20Events) The company scheduled an earnings conference call and management participation in two investor conferences for August 2025 - An earnings conference call is scheduled for **Tuesday, August 5, 2025, at 11:00 a.m. Eastern Time**[21](index=21&type=chunk)[22](index=22&type=chunk) - Management will participate in the **EnerCom Denver Energy Conference** on August 18-19 and the **Midwest IDEAS Conference** on August 27[27](index=27&type=chunk) [Financial Statements and Non-GAAP Reconciliations](index=9&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, Vitesse reported increased total revenues, operating income, and a significant rise in net income year-over-year Condensed Consolidated Statements of Operations (Three Months Ended June 30) | Income Statement (Three Months Ended June 30) | 2025 ($ thousands) | 2024 ($ thousands) | | :--- | :--- | :--- | | Total Revenue | $81,755 | $66,598 | | Total Operating Expenses | $63,099 | $49,784 | | Operating Income | $18,656 | $16,814 | | Net Income | $24,659 | $10,928 | | Net Income per Share (Diluted) | $0.60 | $0.33 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Vitesse's balance sheet showed increased total assets, decreased total liabilities, and higher total equity Condensed Consolidated Balance Sheets | Balance Sheet | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | $67,977 | $50,911 | | Total Assets | $951,504 | $810,893 | | Revolving Credit Facility | $106,000 | $117,000 | | Total Liabilities | $279,629 | $310,559 | | Total Equity | $671,875 | $500,334 | [Non-GAAP Financial Measures and Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) The company provided reconciliations for key non-GAAP metrics for Q2 2025, including Adjusted Net Income, Adjusted EBITDA, and Free Cash Flow Non-GAAP Financial Metrics (Q2 2025) | Non-GAAP Metric | Value | | :--- | :--- | | Adjusted Net Income | $18,421 thousand | | Adjusted EBITDA | $61,132 thousand | | Free Cash Flow | $21,904 thousand | | Net Debt | $104,038 thousand | | Net Debt to Adjusted EBITDA Ratio | 0.43x | - Adjusted EBITDA for the quarter includes a **$24 million benefit** from the resolution of a legal dispute with a key operator[42](index=42&type=chunk)

Core Viewpoint - The market has shown declining interest in oil stocks over the past year, with Devon Energy, Diamondback Energy, and Vitesse Energy experiencing stock price declines, yet they now offer attractive dividend yields and price-to-free cash flow multiples [1]. Group 1: Market Sentiment and Oil Prices - The oil price environment has been volatile, particularly following geopolitical events such as Israel's attack on Iran, which caused a spike in oil prices [3]. - Prior to this spike, oil prices were trading in the low-to-mid $60 per barrel range, with negative sentiment driven by slower economic growth and OPEC's decision to increase production [5]. - The negative sentiment towards oil intensified after spring events, prompting companies to adjust their capital expenditures [7]. Group 2: Company Responses to Market Conditions - Vitesse Energy implemented a 32% cut in planned capital expenditures to preserve returns and maintain financial flexibility amid commodity price volatility [7]. - Diamondback Energy reduced its planned capital expenditures for 2025 from a range of $3.8 billion to $4.2 billion down to $3.4 billion to $3.8 billion [7]. - Devon Energy has not made specific adjustments but is monitoring the macro environment and retains flexibility in its capital programs [8]. Group 3: Hedging Strategies - Following the recent oil price spike, there was a significant increase in hedging activities among oil companies, with independent oil companies likely taking advantage of the price surge [9]. - All three companies have integrated hedging into their capital allocation strategies to ensure returns to investors through dividends and share buybacks [11]. - Vitesse had 61% of its remaining oil production hedged at an average price of $70.75 per barrel as of March [13]. - Diamondback has downside protection in place at $55 per barrel, allowing for upside exposure above this price [14]. - Devon Energy had over 25% of its expected 2025 oil production hedged, projecting significant free cash flow at various oil price levels [16]. Group 4: Dividend Security and Investment Opportunities - Diamondback and Devon Energy's dividends appear secure, with potential for increased discretionary dividends, share buybacks, or debt repayment [18]. - The hedging strategies employed by these companies enhance the security of their dividend payouts, providing passive income investors with confidence in their investments [18].

Financial Data and Key Metrics Changes - For Q1 2025, production averaged just under 15,000 barrels of oil equivalent per day, marking a 16% increase from Q4 2024 [9][12] - EBITDA for the quarter was $39.9 million, adjusted net income was $8 million, and GAAP net income was $2.7 million [12] - Total debt at the end of Q1 was $117 million, with a net debt to adjusted annualized EBITDA ratio of 0.7 times [13] - The company revised its 2025 production guidance to a range of 15,000 to 17,000 barrels per day, with an anticipated oil cut of 64% to 68% [13][14] Business Line Data and Key Metrics Changes - The company has 25 net wells in its development pipeline, including 9.5 net wells currently drilling or completing and 15.5 net locations permitted for development [9] - Approximately 61% of oil production is hedged at a weighted average price of $70.75 per barrel for the remainder of 2025 [10] Market Data and Key Metrics Changes - The company has chosen to defer the completion of 1.9 net wells due to recent commodity price volatility [10] - The company did not proceed with $20 million in acquisitions planned for early April due to market conditions [10] Company Strategy and Development Direction - The acquisition of Lucero is seen as a significant step, providing additional decision-making ability and control over capital spending [6][7] - The company aims to invest capital at the highest rates of return possible, allowing for capital returns to shareholders through all market cycles [7] - The board reaffirmed the dividend at an annual rate of $2.25 per share, reflecting confidence in the business model [8] Management's Comments on Operating Environment and Future Outlook - Management expressed a commitment to maintaining financial flexibility in response to commodity price volatility [13][14] - The company is actively monitoring market conditions and is prepared to adjust its strategy based on the performance of commodity prices [20][21] - Management noted that they are seeing more inquiries from companies under stress, indicating potential acquisition opportunities [45][46] Other Important Information - The company has hedged over 2,500 barrels per day and 12,700 MMBtu per day of its 2026 oil and natural gas production at approximately $67 per barrel [10] - G&A expenses increased due to the Lucero acquisition and litigation costs, with a projected run rate of around $4 per BOE [55] Q&A Session Summary Question: Guidance details and factors affecting production range - Management indicated that the timing of well completions and potential acquisitions are key factors influencing the production range [17][19] Question: Capital allocation and buyback considerations - Management emphasized a focus on maintaining the fixed dividend and balancing share buybacks with reinvestment in assets [23][25][27] Question: Lucero acquisition performance and synergies - The integration of Lucero assets is proceeding as expected, with potential synergies being explored [34] Question: Operator behavior and AFE quality - Management noted no significant changes in AFE quality, with a trend towards longer laterals being observed [41][42] Question: Potential acquisition opportunities in a down market - Management is actively looking at other basins and is prepared to take advantage of acquisition opportunities if commodity prices decline [46] Question: CapEx range and acquisition budget - The CapEx range allows flexibility for attractive acquisitions, with $10 million currently underwritten for base case acquisitions [49][50] Question: G&A expenses and litigation costs - G&A expenses are expected to run at about $4 per BOE, with additional litigation costs anticipated in the second quarter [55][58]