Vitesse Energy(US:VTS)2025-05-05 20:11PART I FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) Q1 2025 unaudited financials reflect total assets of $975.2 million, net income of $2.7 million, and reduced operating cash flow Condensed Consolidated Balance Sheets Balance sheets show total assets at $975.2 million and equity at $667.7 million, primarily from the Lucero acquisition | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $975,236 | $810,893 | | Total current assets | $70,448 | $50,911 | | Total oil and gas properties | $895,244 | $751,976 | | Total Liabilities | $307,546 | $310,559 | | Revolving credit facility | $117,000 | $117,000 | | Total Equity | $667,690 | $500,334 | - Total assets increased by approximately $164.3 million, primarily driven by a $143.3 million increase in oil and gas properties, largely due to the Lucero acquisition22 - Total equity increased by $167.4 million, reflecting the issuance of common stock for the Lucero acquisition and net income for the period, partially offset by dividends2226 Condensed Consolidated Statements of Operations Statements of operations show a return to profitability with $2.7 million net income and an 8.1% increase in total revenue | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue (in thousands) | $66,171 | $61,193 | | Operating Income (in thousands) | $5,380 | $13,079 | | Commodity derivative (loss), net (in thousands) | ($172) | ($13,824) | | Net Income (Loss) (in thousands) | $2,668 | ($2,186) | | Net income (loss) per share – basic | $0.08 | ($0.07) | | Net income (loss) per share – diluted | $0.08 | ($0.07) | - The company returned to profitability with a net income of $2.7 million in Q1 2025, compared to a net loss of $2.2 million in Q1 2024, primarily due to a significant reduction in net commodity derivative losses from $13.8 million to just $0.2 million24 - Total revenue increased by 8.1% year-over-year, driven by higher natural gas revenue and overall production volumes24 Condensed Consolidated Statements of Cash Flows Cash flow statements indicate a 55.6% decrease in operating cash flow to $17.5 million, offset by financing activities | Cash Flow Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from Operating Activities (in thousands) | $17,489 | $39,419 | | Net cash from Investing Activities (in thousands) | ($30,374) | ($32,213) | | Net cash from Financing Activities (in thousands) | $14,413 | ($6,381) | | Net Increase in Cash (in thousands) | $1,528 | $825 | - Net cash from operating activities decreased by 55.6% year-over-year, falling to $17.5 million from $39.4 million28 - Financing activities provided a net cash inflow of $14.4 million, primarily due to $49.8 million in cash acquired from the Lucero Acquisition, which offset $26.0 million in dividend payments28 Notes to Condensed Consolidated Financial Statements Notes detail the company's oil and gas focus, Lucero acquisition, credit facility, and dividend declaration - The company's business is focused on acquiring and developing oil and gas properties, primarily non-operated working and royalty interests in the Williston Basin (Bakken and Three Forks formations)30 - On March 7, 2025, Vitesse acquired Lucero Energy Corp. in an all-stock transaction, issuing 8,169,839 shares of common stock, accounted for as a business combination with assets and liabilities recorded at fair values58 Preliminary Purchase Price Allocation for Lucero Acquisition (in thousands) | Category | Amount | | :--- | :--- | | Arrangement consideration | $194,279 | | Assets Acquired | | | Cash and cash equivalents | $49,846 | | Proved oil and gas properties | $150,395 | | Total assets acquired | $206,594 | | Liabilities Assumed | | | Total liabilities assumed | $12,315 | | Net Assets Acquired | $194,279 | - The Revolving Credit Facility's borrowing base was increased to $315 million and elected commitments rose to $250 million in conjunction with the Lucero Acquisition, with $117.0 million outstanding as of March 31, 202572 - On May 1, 2025, the Board declared a quarterly cash dividend of $0.5625 per share, payable on June 30, 2025116 Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights the Lucero acquisition, Q1 2025 production and revenue growth, $2.7 million net income, and liquidity Executive Overview Executive overview outlines the company's strategy, key Q1 2025 financial and operational highlights, and the Lucero acquisition - The company's strategy focuses on creating stockholder value through acquiring, developing, and producing oil and gas assets, maintaining a strong balance sheet, and paying a meaningful dividend118 Q1 2025 Financial and Operating Highlights | Metric | Value | | :--- | :--- | | Quarterly Dividend | $0.5625 per share | | Production | 14,971 Boe/d (68% oil) | | Total Revenue | $66.2 million | | Net Income | $2.7 million | | Cash Flow from Operations | $17.5 million | | Capital Investment | $30.4 million | | Total Debt (as of March 31, 2025) | $117.0 million | - A key event in the quarter was the closing of the all-stock acquisition of Lucero Energy Corp. for a total consideration of $194.3 million121 Results of Operations Results of operations show 8% revenue growth from production, higher G&A from acquisition costs, and reduced derivative losses Comparison of Operating Results (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue ($ thousands) | $66,171 | $61,193 | 8% | | Daily Production (Boe/d) | 14,971 | 12,557 | 19% | | Avg. Realized Price/Boe (pre-hedging) | $49.11 | $53.55 | (8%) | | Lease Operating Expense/Boe | $10.28 | $10.32 | 0% | | G&A Expense/Boe | $9.00 | $4.70 | 91% | | DD&A/Boe | $19.72 | $20.61 | (4%) | - The 8% increase in total revenue was driven by an 18% rise in production volumes, partially offset by an 8% decrease in average realized prices per Boe142 - General and administrative expenses increased by 126% to $12.1 million, primarily due to $4.6 million in transaction costs related to the Lucero Acquisition148 - The net commodity derivative loss was significantly reduced to $0.2 million from $13.8 million in the prior-year quarter, mainly due to relatively flat oil prices in Q1 2025 compared to rising prices in Q1 2024153154 Liquidity and Capital Resources Liquidity and capital resources detail $4.5 million cash, $133 million available credit, and decreased operating cash flow - As of March 31, 2025, the company had $4.5 million in cash and $133.0 million available under its Revolving Credit Facility161 - The working capital deficit narrowed to $26.2 million from $49.4 million at year-end 2024, due to an increase in revenue receivables and a decrease in accrued capital expenditures163 - Cash flow from operations decreased 56% to $17.5 million in Q1 2025 from $39.4 million in Q1 2024164 - Total capital expenditures for Q1 2025 were $30.4 million, including development and acquisition activities175 Quantitative and Qualitative Disclosures About Market Risk The company manages commodity price and interest rate risks through hedging programs and monitors the impact of market fluctuations - The company's primary market risk exposure is from the volatility of oil and natural gas prices, which it manages through a derivative hedging program185186 - A hypothetical $1 increase or decrease in the NYMEX WTI strip price would change the fair value of the company's open oil commodity derivative positions by approximately $2.6 million as of March 31, 2025189 - The company is exposed to interest rate risk through its floating-rate Revolving Credit Facility, where a 1% change in the average interest rate would result in an approximate $0.3 million change in quarterly interest expense190 Controls and Procedures Disclosure controls were effective as of March 31, 2025, with Lucero excluded from internal control over financial reporting assessment - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025191 - The assessment of internal controls over financial reporting as of March 31, 2025, excluded Lucero, which was acquired on March 7, 2025, permissible under SEC guidance for up to 12 months post-acquisition192193 - Other than incorporating Lucero's controls, there were no changes in internal control over financial reporting during the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, internal controls194 PART II OTHER INFORMATION Legal Proceedings The company is involved in ordinary legal proceedings, including a lawsuit over revenue deductions, with no material adverse effect expected - The company is the plaintiff in a lawsuit against an operator in North Dakota regarding improper post-production cost deductions from revenue payments, with the trial scheduled for June 2025196 - Management believes that current legal proceedings, in aggregate, will not materially and adversely affect the company's business, financial condition, or results of operations195 Risk Factors No material changes to risk factors, except for a new risk concerning potential adverse effects from new trade policies and tariffs - A new risk factor has been added regarding potential new trade policies and tariffs, such as the announced 10% baseline tariff on imports, which could increase operating costs and adversely affect the business199 - Other than the newly added risk factor, there have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024198 Unregistered Sales of Equity Securities and Use of Proceeds No common stock repurchases occurred in Q1 2025, with $59.8 million remaining available under the stock repurchase program - The company did not repurchase any shares of its common stock during the three months ended March 31, 2025201202 - As of March 31, 2025, approximately $59.8 million remained available for repurchases under the company's approved Stock Repurchase Program202 Other Information No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the three months ended March 31, 2025205