Core Insights - Precision Drilling Corporation reported its first quarter results for 2025, highlighting a decrease in revenue and adjusted EBITDA compared to the same period in 2024, while maintaining a commitment to shareholder returns and debt reduction [2][8][18]. Financial Highlights - Revenue for Q1 2025 was $496 million, down 6% from $528 million in Q1 2024 [8][13]. - Adjusted EBITDA decreased to $137 million from $143 million year-over-year, reflecting a 3.9% decline [8][13]. - Net earnings attributable to shareholders were $35 million, or $2.52 per share, compared to $37 million, or $2.53 per share in the previous year [8][13][18]. - Cash provided by operations was $63 million, enabling the company to repurchase $31 million in shares and reduce debt by $17 million [8][18][27]. Operational Highlights - Canadian drilling activity averaged 74 active rigs, slightly up from 73 in 2024, while U.S. activity averaged 30 rigs, down from 38 [6][14]. - Revenue per utilization day in Canada was $35,601, consistent with the previous year, while U.S. revenue per utilization day was $33,157, a 0.9% increase [8][14]. - Service rig operating hours decreased by 10% due to project deferrals and an earlier spring breakup [8][15]. Strategic Initiatives - The company has reduced its 2025 capital budget to $200 million from the previously announced $225 million, reflecting a cautious approach amid market uncertainty [9][26]. - Precision aims to allocate 35% to 45% of free cash flow before debt repayments to share buybacks, with a commitment to repaying at least $100 million of debt in 2025 [8][27]. - The company is focused on maximizing free cash flow through disciplined capital deployment and strict cost management [20][27]. Industry Outlook - Near-term expectations for global energy demand growth are tempered by geopolitical events, but long-term fundamentals remain positive due to economic growth and increasing demand from emerging economies [21][22]. - In Canada, the operationalization of the Trans Mountain pipeline and LNG Canada is expected to support drilling activity [22][23]. - The U.S. is anticipated to see increased natural gas drilling activity due to significant LNG export capacity expansion [24][25].

Core Viewpoint - Chevron and ExxonMobil are focusing on the Permian Basin as a key source of cash flow, but they are diverging in their strategies and execution [1] Group 1: Importance of Permian Basin - U.S. crude oil production is projected to reach 13.5 million barrels per day (bpd) in 2025 and 13.6 million bpd in 2026, largely driven by the Permian Basin [2] - The Permian Basin is expected to grow by 290,000 bpd in 2025 and an additional 170,000 bpd in 2026, accounting for nearly half of the nation's oil supply [2] Group 2: Company Developments - Chevron holds 1.78 million net acres in the Delaware and Midland sub-basins, with an average daily output of 405,000 barrels of oil, 251,000 barrels of NGLs, and 1.6 billion cubic feet of natural gas in 2024 [3] - Chevron aims to reach 1 million barrels of oil-equivalent per day (BOE/d) by 2025, producing 992,000 BOE/d in Q4 2024 [4] - ExxonMobil's Permian production averaged 1.185 million BOE/d in 2024, up 570,000 from the previous year, and plans to double that to 2.3 million BOE/d by 2030 [5] Group 3: Strategy and Differentiation - Chevron employs a disciplined capital allocation model, focusing on cost control and asset returns, while also utilizing joint ventures and royalty interests [6] - ExxonMobil is focusing on scale and integration through acquisitions, with the $63 billion buyout of Pioneer Natural Resources significantly boosting its output [6] Group 4: Stock Performance and Valuation - Chevron has outperformed ExxonMobil over the past six months, despite both facing trade-related uncertainties [7] - Chevron's valuation is attractive, trading at an EV/EBITDA multiple of 5.55, compared to ExxonMobil, indicating better value for cash flow-focused investors [10] Group 5: Earnings Forecasts - Chevron's earnings are projected to decline by 2.9% in 2025 but rebound by 23.1% in 2026, while ExxonMobil is expected to see a 10.5% decline this year, with a 21.1% recovery anticipated in 2026 [9][11] - The near-term outlook for ExxonMobil remains uncertain due to integration costs and inflationary pressures [11] Group 6: Comparative Analysis - Chevron is currently better positioned than ExxonMobil, combining consistent execution with financial discipline and a clear path toward production goals [13]

Financial Data and Key Metrics Changes - HighPeak Energy achieved a 10% year-over-year increase in production, surpassing initial expectations of flat production volumes for 2024 [8] - The company reduced its lease operating expenses by 17% on a BOE basis, despite adding new acreage [10] - Absolute debt was decreased by $120 million during 2024, with an additional $30 million planned for repayment at the end of March 2025 [10][11] - The value of proved reserves increased by 17% compared to the prior year, despite lower SEC guideline commodity prices [15] Business Line Data and Key Metrics Changes - The company reported a 29% increase in proved reserves year-over-year, including a 36% increase in proved developed reserves [18] - HighPeak's reserve replacement rate was noted at 345%, with significant extensions and positive revisions [20] Market Data and Key Metrics Changes - Production averaged over 50,000 BOEs per day in the fourth quarter, with a strong start in the first quarter of 2025 averaging over 52,000 barrels a day [14] - The company anticipates a capital budget approximately 20% lower than in 2024, while maintaining production levels [12][34] Company Strategy and Development Direction - HighPeak aims to maintain capital discipline and improve corporate efficiency, focusing on flat production volumes with reduced capital expenditures [12][28] - The company plans to continue its two-rig development program while strategically delineating the Middle Spraberry zone [28][29] - Infrastructure projects are prioritized in the first half of 2025 to enhance operational flexibility and efficiency [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial position, highlighting the potential for significant cash interest expense savings through a transition to a more traditional capital structure [38][39] - The company is positioned for sustainable long-term success, with a focus on operational efficiency and shareholder-friendly initiatives [42][43] Other Important Information - HighPeak's 2024 EBITDA was roughly flat year-over-year, despite lower average oil prices [15] - The company has a long runway of high-value inventory, with approximately 15 years of locations in core formations [42] Q&A Session Summary Question: How many middle Spraberry wells are planned for 2025? - Management anticipates drilling two to three additional middle Spraberry wells in 2025, primarily in the Flat Top area [50][52] Question: How do infrastructure improvements impact oil movement? - Infrastructure enhancements have improved flexibility in handling gas volumes, which indirectly supports oil movement by capturing and selling gas [58][60] Question: How does the infrastructure build-out support corporate efficiency goals? - The infrastructure supports operational efficiency by reducing both OpEx and CapEx, allowing for better control over drilling and completion costs [64][66] Question: How does the company weigh reducing debt versus buying back shares? - Management indicated that reducing borrowing costs could significantly enhance free cash flow, allowing for rapid debt repayment while maintaining flexibility for future capital needs [75][78]

Financial Data and Key Metrics Changes - In Q4 2024, adjusted EBITDA was reported at $237 million, with distributable cash flow of $155 million and free cash flow of $32 million [16] - For the full year 2024, adjusted EBITDA reached $971 million, representing a 16% year-over-year increase, and an 18% increase when normalizing for November impacts [11][19] - Capital expenditures for 2024 totaled $265 million, which was approximately $15 million below the midpoint of the guidance range [11][19] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated adjusted EBITDA of $150 million in Q4, up 3% year-over-year but down 14% sequentially due to negative Waha prices [16][17] - The Pipeline Transportation segment reported adjusted EBITDA of $92 million, up nearly 9% year-over-year, driven by volume growth and contributions from EPIC Crude [18] Market Data and Key Metrics Changes - Average gas processed volumes for 2024 were 1.64 billion cubic feet per day, up 13% year-over-year [10] - The average gas daily price at Waha was negative $1.4 per MMBtu for the first half of November, impacting volumes and margins [16][17] Company Strategy and Development Direction - The company aims for a 10% compound annual growth rate (CAGR) in EBITDA over the next five years, focusing on both organic growth and strategic M&A opportunities [26][40] - Kinetic is positioned to capitalize on the growing demand for natural gas and liquids, with significant growth expected in the Permian Basin and Gulf Coast [12][13] - The company is exploring a large-scale gas-fired power generation facility to manage electricity costs and capitalize on natural gas price volatility [14][80] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was transformational, with significant M&A activity and organic growth, particularly in the Delaware Basin [6][9] - The company has implemented new risk measures to prevent operational headwinds experienced in November and expects a strong rebound in operational performance [10][17] - Management expressed confidence in achieving a 15% growth in adjusted EBITDA for 2025, with key assumptions including a 20% growth in gas processed volumes [19][21] Other Important Information - The company increased its cash dividend by 4%, marking the first return of capital to shareholders since its merger [9] - Kinetic's leverage ratio improved to 3.4 times, down 0.6 times year-over-year, reflecting disciplined capital management [19][24] Q&A Session Summary Question: What infrastructure is needed to achieve the 10% EBITDA CAGR? - Management indicated that they are seeing outsized market share performance and have structural changes that will create incremental EBITDA opportunities [26][27] Question: Are there still M&A opportunities in 2025? - Management confirmed that opportunities remain, but they maintain a high bar for attractiveness in potential transactions [32][33] Question: What are the expectations for producer customer activity in 2025? - Management noted robust activity levels across both Northern and Southern Delaware, with significant drilling capital being allocated to New Mexico [45][46] Question: How does the company manage risks associated with pipeline maintenance? - Management acknowledged the regular seasonal maintenance and emphasized the importance of having incremental length for Gulf Coast capacity to mitigate risks [51][54] Question: Can you clarify the economic contribution of the Barilla Draw acquisition? - Management stated that the initial phase involves gas gathering services, with processing expected to ramp up later in the decade, contributing to margin expansion [98] Question: What is the timeline for the power generation project? - Management indicated that if the project reaches FID this year, it could be operational by the end of 2027, with potential for further projects in New Mexico [100][102]