Crescent Energy Co(US:CRGY)2024-03-05 19:43Financial Performance and Key Metrics - The company delivered strong financial performance in 2023, raising guidance midyear and exceeding increased expectations, particularly in production, capital expenditures (CapEx), and free cash flow [2][21][37] - The company reported an average production of approximately 165,000 barrels of oil equivalent per day, generating $276 million of adjusted EBITDA and $102 million of levered free cash flow in the fourth quarter [37][38] - Capital expenditures for the fourth quarter were $134 million, positioning the company well for 2024 [16] Business Line Performance - The company executed two accretive acquisitions in the Western Eagle Ford, totaling $850 million, which significantly increased production and reserves [8][17] - The company achieved a 60% increase in well performance with 15% lower costs since taking over operations in September [11][12] - The company expects production growth of 6% in 2024, with a target of 155,000 to 160,000 barrels of oil equivalents per day [17] Market Data and Key Metrics - The company has layered on additional hedges to protect against gas market volatility, with approximately 50% of production hedged [20] - The company has significantly improved its trading liquidity, nearly doubling its public float, which enhances market presence [7][19] Company Strategy and Industry Competition - The company is focused on a growth-through-acquisition strategy, targeting assets that fit its portfolio at attractive valuations [9][33] - The company aims to become an investment-grade company over time, emphasizing financial discipline and shareholder value [13] - The company is committed to a peer-leading return of capital strategy, transitioning to a fixed quarterly dividend and authorizing up to $150 million for share buybacks [18][19] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about 2024, highlighting strong free cash flow generation and operational efficiencies [25][36] - The company is focused on maintaining a steady business model, avoiding production growth through aggressive drilling, and instead prioritizing returns [45][61] - Management noted a 27% reduction in scope one greenhouse gas emissions and received a Gold Standard pathway rating for methane emissions [14][26] Other Important Information - The company has a robust pipeline of M&A opportunities, positioning it well for operational value creation and growth [33][39] - The company is committed to environmental stewardship, with significant improvements in emissions measurement and reduction [15][35] Q&A Session Summary Question: How does the company view capital allocation with respect to opportunistic buybacks and M&A? - Management stated that capital allocation priorities remain unchanged, focusing on dividends and balance sheet strength while pursuing return-generating opportunities [55] Question: What operational synergies have been observed post-acquisition? - Management highlighted improvements in drilling and completion efficiencies, with faster drilling and better completion techniques leading to enhanced performance [56][57] Question: What is the outlook for production growth in the Uinta Basin? - Management expressed confidence in continued production growth in the Uinta Basin, driven by improved operational techniques and a focus on capital allocation [80][82]