Financial Data and Key Metrics Changes - The company reported free cash flow generation of over $240 million for the quarter, translating to an annualized free cash flow yield of approximately 45% [7][21] - Adjusted EBITDA for the quarter was approximately $530 million, with levered free cash flow of about $242 million [18] - Capital expenditures were $208 million, which was notably better than forecasted due to improved drilling and completion costs [18] Business Line Data and Key Metrics Changes - The company achieved record production of 258,000 barrels of oil equivalent per day [11] - The Eagle Ford development saw a 10% savings in drilling, completions, and facilities costs compared to 2024 [11] Market Data and Key Metrics Changes - Approximately 60% of the company's 2025 oil and natural gas production is hedged at a significant premium to current market pricing [12] - The company maintains a net leverage of 1.5 times, within its publicly stated range of one to 1.5 times [19] Company Strategy and Development Direction - The company emphasizes flexibility in capital allocation, focusing on maximizing free cash flow and returns based on commodity price movements [9][22] - The strategy includes maintaining a low decline and less capital-intensive business model, which allows for durable free cash flow generation [10][22] - The company has closed approximately $90 million in accretive asset sales in 2025 to streamline its portfolio [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform during periods of volatility, highlighting a consistent strategy over the past decade [9][22] - The current market environment is viewed as an opportunity for the company to capitalize on potential acquisitions and enhance its portfolio [14][66] Other Important Information - The company announced a dividend of $0.12 per share and has repurchased approximately $30 million worth of stock year-to-date [20] - The transition to a single class of common shares has simplified the corporate structure, increasing investor accessibility [20][70] Q&A Session Summary Question: Current commodity price environment and capital allocation - Management indicated that capital allocation is focused on returns, with flexibility to adjust based on market conditions [24][26] Question: Expectations for oil volumes and CapEx - Oil production is expected to increase quarter over quarter, with Q2 anticipated to be the highest capital quarter for the year [30] Question: Status of the joint venture - The joint venture has no ongoing capital commitments, allowing for maximum flexibility [35] Question: Role of hedges in decision-making - Hedges are viewed as a separate asset, protecting the balance sheet but not influencing drilling decisions [41][42] Question: Allocating free cash flow between buybacks and debt reduction - The balance sheet and fixed dividend remain top priorities, with buybacks considered opportunistically [43] Question: Market conditions and M&A opportunities - The company is always in the market looking for value and can act quickly on opportunities [50][66] Question: Operating costs and LOE impacts - Operating costs are expected to be highest in Q1 due to winter weather, aligning with expectations [74] Question: Ridgemar acquisition oil mix - The Ridgemar assets are expected to contribute to an increase in oil cut over the year [78] Question: Benefits of eliminating the Up C structure - The simplification of the corporate structure is seen as a value add, streamlining reporting and enhancing investor accessibility [82][70]
Crescent Energy Co(CRGY) - 2025 Q1 - Earnings Call Transcript