Financial Performance - The company reported net production of approximately 140,000 barrels of oil equivalent per day and $50 million of levered free cash flow for Q2 2023, exceeding expectations [5][21] - EBITDA for the quarter was $225 million, reflecting higher production and an increase in oil cut to 46% from 43% in the previous quarter [21][31] - The company raised its full-year production outlook to 146,000 barrels of oil equivalent per day at the midpoint, while capital expenditures decreased by 10% to $600 million at the midpoint [21][22] Operational Updates - The company achieved a 10% reduction in drilling and completion costs per foot compared to 2022 levels, contributing to improved capital efficiencies [21] - Strong well performance and cost reductions were noted, particularly in the Eagle Ford region, where cycle times improved by as much as 20% [6][21] - The company is well-positioned to benefit from a softening service market, which may lead to further cost efficiencies [22] Strategic Developments - The acquisition of Western Eagle Ford assets was completed, enhancing the company's scale and operational position [7][20] - The company executed a Class A share conversion, increasing public float from 29% to 45%, aimed at improving market awareness and research coverage [9][40] - Following the acquisition and share conversion, the company received a ratings upgrade from S&P and was added to the BB high-yield index, positively impacting liquidity and future capital costs [10][41] Market and Competitive Landscape - The company remains focused on value-accretive opportunities in the upstream A&D market, particularly in Texas and the Rockies [23] - The company views the recent acquisition as an attractive way to add cash flow and reinvestment opportunities, especially in light of steep production declines in some Permian transactions [24] Management Commentary - Management expressed confidence in navigating current energy market dynamics and highlighted the importance of maintaining a strong balance sheet while pursuing growth [4][8] - The company aims to achieve investment-grade status by increasing scale in a financially prudent manner [27] - Management noted that the integration process of the new acquisition is still early, but they expect to maintain a 2- to 3-rig maintenance program across key regions in 2024 [37] Other Important Information - The company announced a second-quarter cash dividend of $0.12 per share, representing a 4% annualized yield, which compares favorably to peers [43] - The company maintains a net leverage ratio below 1.5x and approximately $800 million of liquidity, with a long-term target of 1.0x net debt to EBITDA [11][42] Q&A Session Summary Question: Well productivity and operational differences - Management noted that the increase in oil cut from 43% to 46% was driven by the development program in both basins [31] Question: Corporate structure simplification - Management indicated ongoing efforts to simplify the corporate structure as the company scales, with further consolidation expected [35][36] Question: 2024 production and CapEx outlook - Management expects a capital program of $600 million to $700 million for 2024, with production anticipated to be around 150,000 barrels per day [37]
Crescent Energy Co(CRGY) - 2023 Q2 - Earnings Call Transcript