Civitas Q2 Earnings and Revenues Miss Estimates, Both Fall Y/Y

Core Insights - Civitas Resources, Inc. (CIVI) reported second-quarter 2025 adjusted earnings per share of 99 cents, missing the Zacks Consensus Estimate of $1.12 and declining from the year-ago adjusted profit of $2.06 due to lower oil price realizations [1][2] Financial Performance - Revenues for Civitas in the second quarter were $1.1 billion, a 19.5% decrease from $1.3 billion in the previous year, and also missed the Zacks Consensus Estimate by 5.2%, primarily due to a decline in oil and natural gas sales volume [2] - The average sales volume for the second quarter fell 7.5% year over year to 317 thousand barrels of oil equivalent per day (Mboe/d), missing the Zacks Consensus Estimate of 324.4 Mboe/d [5] - The average sales price for oil was $63.87 per barrel, down 20% from $80 in the prior year, while the average realized natural gas price was $1 per thousand cubic feet, compared to 17 cents in the year-earlier period [6] Asset Management - Civitas signed agreements to sell non-core DJ Basin assets for $435 million, exceeding its full-year 2025 asset sale target and achieving a valuation of more than 4x estimated EBITDAX, with proceeds directed toward debt reduction [3] Capital Return Strategy - The company reinstated its capital return strategy, allocating 50% of free cash flow after the base dividend to share buybacks and the remaining 50% to annual debt reduction, with a share repurchase authorization raised to $750 million [4] Cost Management - Total operating expenses decreased to $887 million from $926 million in the previous year, mainly due to lower taxes and depreciation, despite a 24.4% year-over-year increase in lease operating expenses to $158 million [7] Cash Flow and Debt Position - Cash flow from operations totaled $298 million, with capital expenditure at $506 million, leading to adjusted free cash flow of $123 million [8] - As of June 30, the company had $69 million in cash and cash equivalents and long-term debt of $5.4 billion, reflecting a debt-to-capitalization of 44.2% [8] Future Guidance - Civitas maintained its full-year 2025 guidance, targeting an average sales volume of 327-338 Mboe/d for the third quarter, with oil output expected between 154 MBbls/d and 160 MBbls/d [9][10]