
Second-Quarter 2025 Highlights CEO Jason Pigott emphasized cost reduction, asset optimization, and capital discipline to enhance returns, highlighting progress in streamlining operations and strengthening the balance sheet CEO Statement CEO Jason Pigott highlighted the company's focus on cost reduction, asset optimization, and industry leadership in well design to enhance returns and strengthen the balance sheet - Ongoing efforts to lower costs and optimize assets to enhance returns3 - Substantial progress in sustainably reducing operating, personnel, and corporate costs3 - Leading the industry in optimized well designs, including J-Hook and horseshoe wells3 - Commitment to capital and cost discipline for sustainable Adjusted Free Cash Flow3 Second-Quarter 2025 Financial and Operations Summary Vital Energy reported a net loss of $582.6 million due to impairment and tax allowance, while Adjusted Net Income was $76.1 million Financial Results Vital Energy reported a net loss of $582.6 million and Adjusted Net Income of $76.1 million, impacted by significant non-cash impairment and tax allowance Q2 2025 Financial Highlights | Metric | Q2 2025 Value | | :-------------------------------- | :-------------- | | Net Loss | $(582.6) million | | Net Loss per diluted share | $(15.43) | | Adjusted Net Income | $76.1 million | | Adjusted Net Income per diluted share | $2.02 | | Cash flow from operating activities | $252.3 million | | Consolidated EBITDAX | $338.1 million | | Adjusted Free Cash Flow | $36.1 million | - Non-cash pre-tax impairment loss on oil and gas properties totaled $427.0 million, driven by a decline in SEC mandated oil price calculation46 - Valuation allowance against federal net deferred tax asset amounted to $237.9 million56 Production Total production averaged 137,864 BOE/d and oil production 62,140 BO/d, within guidance despite minor weather and curtailment impacts Q2 2025 Production Metrics | Metric | Q2 2025 Value | Guidance Range | | :-------------------- | :-------------- | :-------------------- | | Total Production | 137.9 MBOE/d | 133.0-139.0 MBOE/d | | Oil Production | 62.1 MBO/d | 61.0-65.0 MBO/d | - Production negatively impacted by 780 BOE/d (500 BO/d oil) due to weather and temporary curtailments7 - Commenced production from the company's first two J-Hook wells4 Capital Investments Total capital investments reached $257 million, exceeding guidance due to $13 million in drilling overruns and $11 million in accelerated development, primarily in drilling and completions Q2 2025 Capital Investments | Metric | Q2 2025 Value | Guidance Range | | :------------------------------------------------ | :-------------- | :-------------------- | | Total Capital Investments (excl. non-budgeted) | $257.0 million | $215-$245 million | - Capital investments included $13 million for drilling cost overruns and $11 million to accelerate development activity into the second quarter8 - Second quarter investments included $216 million in drilling and completions, $27 million in infrastructure, $8 million in other capitalized costs, and $6 million in land, exploration, and data-related costs8 Operating Expenses Lease Operating Expenses (LOE) were $107.8 million, 6% below guidance midpoint, driven by lower costs on acquired assets and optimization in Midland and Delaware basins Q2 2025 Operating Expenses | Metric | Q2 2025 Value | Guidance Range | | :-------------------- | :-------------- | :-------------------- | | Lease Operating Expense | $107.8 million | $112-$118 million | - LOE was 6% lower than the midpoint of guidance9 - Driven by lower costs on recently acquired Point Energy assets and ongoing cost optimization in the Midland and Delaware basins, including reduced field power generation and chemicals costs9 G&A Expenses Total General and Administrative (G&A) expenses were $23.8 million, 7% below guidance midpoint, reflecting continued efforts to reduce employee and professional costs Q2 2025 G&A Expenses | Metric | Q2 2025 Value | Guidance Range | | :-------------------------------- | :-------------- | :-------------------- | | Total General and Administrative | $23.8 million | $24.6-$26.7 million | - G&A expenses were 7% below the midpoint of guidance9 - Company continued to reduce employee and professional costs9 Adjusted Free Cash Flow and Net Debt Adjusted Free Cash Flow was $36 million, with expense reductions offsetting drilling outspend, while Net Debt increased by $8 million due to operating asset changes Q2 2025 Adjusted Free Cash Flow and Net Debt | Metric | Q2 2025 Value | | :---------------------- | :-------------- | | Adjusted Free Cash Flow | $36 million | | Net Debt Change | Increased by $8 million | - Sustainable expense reductions largely offsetting drilling outspend10 - Net Debt increased due to a $41 million decrease in net changes in operating assets and liabilities10 Liquidity As of June 30, 2025, the company had $745 million outstanding on its $1.4 billion credit facility and $30 million in cash and cash equivalents Q2 2025 Liquidity Position | Metric | Value (as of June 30, 2025) | | :-------------------------------- | :-------------------------- | | Senior Secured Credit Facility Outstanding | $745 million | | Senior Secured Credit Facility Capacity | $1.4 billion | | Cash and Cash Equivalents | $30 million | 2025 Outlook The company anticipates increased production from 38 new wells in late Q3/early Q4, narrowing full-year guidance for total and oil production Production Outlook Production volumes are expected to increase from 38 wells completed in late Q3/early Q4, with full-year guidance narrowed to 136.5-139.5 MBOE/d total production - Planned completion of 38 wells in late third quarter/early fourth quarter is expected to meaningfully increase production volumes11 Full-Year 2025 Production Guidance (Narrowed) | Metric | Full-Year 2025 Guidance | | :-------------------- | :---------------------- | | Total production | 136.5-139.5 MBOE/d | | Oil production | 63.3-65.3 MBO/d | Capital Investments Outlook Q3 2025 capital investment expectations reduced by $25 million to $235-$265 million due to Q2 acceleration, narrowing full-year guidance to $850-$900 million - Reduced expectations for third quarter investments by $25 million to $235-$265 million, partly reflecting accelerated capital into Q212 - Full-year 2025 capital expectations were narrowed to $850-$900 million14 - Guidance for the fourth quarter is unchanged14 Operating Expenses Outlook Recent operating expense improvements are expected to be sustainable, with Q3 LOE projected at $109-$115 million and Q4 at $107-$113 million - The company expects recent improvements in operating expenses to be sustainable14 2025 Operating Expense Outlook | Metric | Q3 2025 Expectation | Q4 2025 Expectation | | :---------------------- | :-------------------- | :-------------------- | | Lease operating expenses | $109-$115 million | $107-$113 million | G&A Expenses Outlook Following a 10% headcount reduction, G&A expenses are expected to sustainably decline by approximately 12% from Q2 2025 to $20.0-$22.0 million in Q3 and Q4 - Reduced combined employee and contractor headcount by approximately 10% in June, resulting in sustainably lower G&A expense15 2025 G&A Expenses Outlook | Metric | Q3 2025 Expectation | Q4 2025 Expectation | | :---------------------------------------------------------------- | :-------------------- | :-------------------- | | Total G&A (approx. 12% decline from Q2 2025) | $20.0-$22.0 million | $20.0-$22.0 million | Non-core Divestitures In July 2025, Vital Energy sold 3,800 net non-core acres for $6.5 million, with year-to-date non-core asset sales totaling $27 million and no production impact - Closed on the sale of approximately 3,800 net acres in Crane and Upton counties for $6.5 million in July 202516 - The sale included five inventory locations in the Barnett formation with no impact to production16 - Year-to-date, Vital Energy has closed on non-core asset sales totaling $27 million16 Adjusted Free Cash Flow and Net Debt Outlook Full-year 2025 Adjusted Free Cash Flow is projected at $305 million, with Net Debt expected to reduce by approximately $310 million through H1, Q3, and Q4 reductions - For full-year 2025, the company expects to generate approximately $305 million of Adjusted Free Cash Flow at ~$67 per barrel WTI, inclusive of hedging proceeds17 - Expects to reduce Net Debt by approximately $310 million for full-year 202517 2025 Net Debt Reduction Outlook | Period | Net Debt Reduction Expectation | | :-------------------- | :----------------------------- | | Through H1 2025 | $125 million | | Q3 2025 | Approximately $25 million | | Q4 2025 | Approximately $160 million | Third-Quarter 2025 Guidance Q3 2025 guidance forecasts total production of 128.0-134.0 MBOE/d and capital investments of $235-$265 million Production and Capital Investments Guidance Q3 2025 guidance projects total production at 128.0-134.0 MBOE/d and capital investments, excluding non-budgeted acquisitions, at $235-$265 million Q3 2025 Production and Capital Investments Guidance | Metric | 3Q-25E Guidance | | :------------------------------------------------ | :-------------- | | Total production (MBOE/d) | 128.0 - 134.0 | | Oil production (MBO/d) | 58.0 - 62.0 | | Capital investments, excluding non-budgeted acquisitions ($ MM) | $235 - $265 | Revenue and Expense Guidance Q3 2025 guidance details sales price realizations, net settlements from commodity derivatives, and key expenses including LOE at $109-$115 million and G&A at $16.9-$18.4 million Q3 2025 Revenue and Expense Guidance | Metric | 3Q-25E Guidance | | :---------------------------------------------------------------- | :-------------- | | Average sales price realizations (excluding derivatives): | | | Oil (% of WTI) | 101% | | NGL (% of WTI) | 21% | | Natural gas (% of Henry Hub) | 23% | | Net settlements received (paid) for matured commodity derivatives ($ MM): | | | Oil | $11 | | NGL | $5 | | Natural gas | $20 | | Selected average costs & expenses: | | | Lease operating expenses ($ MM) | $109 - $115 | | Production and ad valorem taxes (% of sales revenues) | 6.40% | | Oil transportation and marketing expenses ($ MM) | $10.7 - $11.7 | | Gas gathering, processing and transportation expenses ($ MM) | $5.5 - $6.5 | | General and administrative (excluding LTIP and transaction expenses, $ MM) | $16.9 - $18.4 | | General and administrative (LTIP cash, $ MM) | $0.4 - $0.5 | | General and administrative (LTIP non-cash, $ MM) | $2.7 - $3.1 | | Depletion, depreciation and amortization ($ MM) | $168 - $178 | Company Information This section provides details on Vital Energy's upcoming conference call and an overview of the company's core business operations in the Permian Basin Conference Call Details Vital Energy will host a conference call on August 7, 2025, at 7:30 a.m. CT to discuss Q2 2025 results, with webcast access available online - Conference call planned for 7:30 a.m. CT, Thursday, August 7, 2025121 - Webcast available through the company's website at www.vitalenergy.com under "Investor Relations | News & Presentations | Upcoming Events"121 About Vital Energy Vital Energy, Inc. is an independent energy company based in Tulsa, Oklahoma, focused on oil and natural gas properties in the Permian Basin - Vital Energy, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma21 - Business strategy focuses on the acquisition, exploration, and development of oil and natural gas properties in the Permian Basin of West Texas21 Legal Disclosures This section outlines the company's forward-looking statements and disclaimers regarding non-GAAP financial measures, emphasizing inherent risks and limitations Forward-Looking Statements Forward-looking statements are based on current beliefs, subject to risks including commodity price volatility, economic conditions, and regulatory changes, with no obligation for updates - All statements addressing future activities, including assumptions, plans, expectations, and beliefs, are considered forward-looking statements23 - Statements are not guarantees of future performance and involve risks, assumptions, and uncertainties, including commodity price volatility, economic conditions, and regulatory changes2325 - Vital Energy disclaims any obligation to correct, update, or revise any forward-looking statement, except as required by applicable law25 Non-GAAP Financial Measures Disclaimer The press release includes non-GAAP financial measures useful to management but not GAAP replacements, and forward-looking non-GAAP measures are not reconciled due to forecasting difficulties - Includes non-GAAP financial measures such as Adjusted Free Cash Flow, Adjusted Net Income, Net Debt, and Consolidated EBITDAX26 - Such measures are useful for investors but should not replace financial measures in accordance with GAAP26 - No reconciliations of forward-looking non-GAAP measures to GAAP are available without unreasonable efforts due to inherent forecasting difficulty41 Selected Operating Data This section presents detailed sales volumes, average sales prices (with and without derivatives), and selected average costs and expenses per BOE sold for Q2 2025 and 2024 Operating Data Table This section details sales volumes, average sales prices (with and without derivatives), and selected average costs and expenses per BOE sold for Q2 2025 and 2024 Selected Operating Data | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales volumes: | | | | | | Oil (MBbl) | 5,655 | 5,388 | 11,495 | 10,715 | | NGL (MBbl) | 3,573 | 3,173 | 7,057 | 6,107 | | Natural gas (MMcf) | 19,908 | 19,264 | 39,650 | 37,798 | | Oil equivalent (MBOE) | 12,546 | 11,771 | 25,160 | 23,121 | | Average daily oil equivalent sales volumes (BOE/d) | 137,864 | 129,356 | 139,005 | 127,038 | | Average daily oil sales volumes (Bbl/d) | 62,140 | 59,209 | 63,509 | 58,872 | | Average sales prices (excluding derivatives): | | | | | | Oil ($/Bbl) | $64.65 | $81.97 | $68.55 | $80.03 | | NGL ($/Bbl) | $14.29 | $12.57 | $15.98 | $14.24 | | Natural gas ($/Mcf) | $0.53 | $(0.28) | $0.96 | $0.34 | | Average sales price ($/BOE) | $34.06 | $40.45 | $37.31 | $41.40 | | Average sales prices (with commodity derivatives): | | | | | | Oil ($/Bbl) | $74.12 | $76.90 | $74.96 | $75.93 | | NGL ($/Bbl) | $14.93 | $12.33 | $16.00 | $14.05 | | Natural gas ($/Mcf) | $1.73 | $0.70 | $1.62 | $1.05 | | Average sales price ($/BOE) | $40.40 | $39.66 | $41.29 | $40.61 | | Selected average costs and expenses per BOE sold: | | | | | | Lease operating expenses ($/BOE) | $8.59 | $9.66 | $8.40 | $9.49 | | Production and ad valorem taxes ($/BOE) | $2.10 | $2.30 | $2.37 | $2.50 | | Oil transportation and marketing expenses ($/BOE) | $0.85 | $1.04 | $0.83 | $0.95 | | Gas gathering, processing and transportation expenses ($/BOE) | $0.43 | $0.43 | $0.48 | $0.32 | | General and administrative (excl. LTIP and transaction expenses) ($/BOE) | $1.68 | $1.67 | $1.62 | $1.89 | | Total selected operating expenses ($/BOE) | $13.65 | $15.10 | $13.70 | $15.15 | | Depletion, depreciation and amortization ($/BOE) | $14.86 | $14.81 | $14.96 | $14.72 | Consolidated Financial Statements This section presents Vital Energy's consolidated balance sheets, statements of operations, and cash flows for the periods ended June 30, 2025, and 2024 Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $5.10 billion from $5.88 billion, driven by reduced oil and gas properties and deferred income taxes, while equity also declined Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Assets | | | | Total current assets ($) | $430,430 | $466,556 | | Oil and natural gas properties, net ($) | $4,396,943 | $4,863,632 | | Deferred income taxes ($) | $3,396 | $239,685 | | Total assets ($) | $5,100,451 | $5,878,946 | | Liabilities | | | | Total current liabilities ($) | $545,503 | $601,139 | | Long-term debt, net ($) | $2,321,294 | $2,454,242 | | Total liabilities ($) | $2,994,873 | $3,178,375 | | Stockholders' Equity | | | | Total stockholders' equity ($) | $2,105,578 | $2,700,571 | Consolidated Statements of Operations Q2 2025 saw a net loss of $582.6 million, a significant decline from Q2 2024 net income, due to lower revenues, a $427.0 million impairment, and $239.2 million income tax expense Consolidated Statements of Operations (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenues ($) | $429,627 | $476,371 | $941,807 | $958,710 | | Total costs and expenses ($) | $794,286 | $358,572 | $1,320,606 | $703,604 | | Impairment expense ($) | $427,046 | — | $585,287 | — | | Operating income (loss) ($) | $(363,404) | $117,835 | $(377,434) | $255,272 | | Gain (loss) on derivatives, net ($) | $68,993 | $7,658 | $113,164 | $(144,489) | | Interest expense ($) | $(49,854) | $(40,690) | $(100,234) | $(84,111) | | Income tax benefit (expense) ($) | $(239,170) | $(10,409) | $(238,121) | $5,340 | | Net income (loss) ($) | $(582,572) | $36,702 | $(601,409) | $(29,429) | | Net income (loss) per diluted share ($) | $(15.43) | $0.98 | $(15.97) | $(0.84) | Consolidated Statements of Cash Flows Q2 2025 net cash from operating activities decreased to $252.3 million, while net cash used in investing activities increased, and financing activities improved significantly Consolidated Statements of Cash Flows (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities ($) | $252,341 | $338,401 | $603,326 | $496,991 | | Net cash provided by (used in) investing activities ($) | $(259,301) | $(226,671) | $(471,423) | $(432,335) | | Net cash provided by (used in) financing activities ($) | $8,505 | $(478,491) | $(141,888) | $(22,153) | | Net increase (decrease) in cash and cash equivalents ($) | $1,545 | $(366,761) | $(9,985) | $42,503 | | Cash and cash equivalents, end of period ($) | $30,194 | $56,564 | $30,194 | $56,564 | - Key adjustments to reconcile net income (loss) to operating cash flow include $427.0 million impairment expense and $238.1 million deferred income tax expense in Q2 202538 Supplemental Reconciliations of GAAP to Non-GAAP Financial Measures This section provides reconciliations for non-GAAP financial measures including Adjusted Free Cash Flow, Adjusted Net Income, Consolidated EBITDAX, and Net Debt Adjusted Free Cash Flow Adjusted Free Cash Flow (non-GAAP) is defined as net cash from operating activities, adjusted for operating assets/liabilities and transaction expenses, less capital investments - Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities (GAAP) before net changes in operating assets and liabilities and transaction expenses related to non-budgeted acquisitions, less capital investments, excluding non-budgeted acquisition costs40 Adjusted Free Cash Flow Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities ($) | $252,341 | $338,401 | $603,326 | $496,991 | | Less: Net changes in operating assets and liabilities ($) | $(40,774) | $83,712 | $(6,953) | $(18,614) | | Total capital investments, excluding non-budgeted acquisition costs ($) | $257,025 | $210,010 | $509,696 | $427,910 | | Adjusted Free Cash Flow (non-GAAP) ($) | $36,090 | $44,694 | $100,583 | $88,042 | Adjusted Net Income Adjusted Net Income (non-GAAP) is calculated by adjusting GAAP net income for items like mark-to-market on derivatives, impairment expense, and income taxes - Adjusted Net Income is defined as net income or loss (GAAP) plus adjustments for mark-to-market on derivatives, premiums paid or received for commodity derivatives that matured during the period, organizational restructuring expenses, impairment expense, gains or losses on disposal of assets, income taxes, other non-recurring income and expenses and adjusted income tax expense44 Adjusted Net Income Reconciliation (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) ($) | $(582,572) | $36,702 | $(601,409) | $(29,429) | | Plus: Impairment expense ($) | $427,046 | — | $585,287 | — | | Plus: Income tax (benefit) expense ($) | $239,170 | $10,409 | $238,121 | $(5,340) | | Adjusted Net Income (non-GAAP) ($) | $76,113 | $54,967 | $165,627 | $123,048 | | Adjusted Net Income per common share (Diluted) ($) | $2.02 | $1.46 | $4.39 | $3.30 | Consolidated EBITDAX Consolidated EBITDAX (non-GAAP) is defined in the Senior Secured Credit Facility as net income adjusted for various non-cash and non-operating items, used for performance measurement and covenant compliance - Consolidated EBITDAX is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as net income or loss (GAAP) plus adjustments for share-settled equity-based compensation, depletion, depreciation and amortization, impairment expense, organizational restructuring expenses, gains or losses on disposal of assets, mark-to-market on derivatives, accretion expense, interest expense, income taxes and other non-recurring income and expenses47 - Used by investors to measure operating performance without regard to items that can vary substantially from company to company depending upon accounting methods, the book value of assets, capital structure and the method by which assets were acquired50 Consolidated EBITDAX Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) ($) | $(582,572) | $36,702 | $(601,409) | $(29,429) | | Plus: Depletion, depreciation and amortization ($) | $186,424 | $174,298 | $376,324 | $340,405 | | Plus: Impairment expense ($) | $427,046 | — | $585,287 | — | | Plus: Interest expense ($) | $49,854 | $40,690 | $100,234 | $84,111 | | Plus: Income tax (benefit) expense ($) | $239,170 | $10,409 | $238,121 | $(5,340) | | Consolidated EBITDAX (non-GAAP) ($) | $338,069 | $290,429 | $697,748 | $591,761 | Net Debt Net Debt (non-GAAP) is defined as long-term debt plus outstanding letters of credit, less capped cash and cash equivalents, used for financial leverage assessment - Net Debt is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as the face value of long-term debt plus any outstanding letters of credit, less cash and cash equivalents, where cash and cash equivalents are capped at $100 million when there are borrowings on the Senior Secured Credit Facility52 Net Debt Calculation (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Total long-term debt ($) | $2,345,578 | $2,480,578 | | Less: cash and cash equivalents ($) | $30,194 | $40,179 | | Net Debt (non-GAAP) ($) | $2,315,384 | $2,440,399 | Net Debt to Consolidated EBITDAX Net Debt to Consolidated EBITDAX is a non-GAAP measure defined in the Senior Secured Credit Facility, used by management for performance evaluation and covenant compliance - Net Debt to Consolidated EBITDAX is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as Net Debt divided by Consolidated EBITDAX for the previous four quarters, which requires various treatment of asset transaction impacts54 - Used by the Company's management for various purposes, including as a measure of operating performance, in presentations to its board of directors and as a basis for strategic planning and forecasting54 Investor Contact This section provides essential contact information for investor relations inquiries Investor Contact Information This section provides contact information for investor relations inquiries - Investor Contact: Ron Hagood55 - Phone: 918.858.550455 - Email: ir@vitalenergy.com55