Vital Energy Reports Third-Quarter 2024 Financial and Operating Results
TULSA, OK, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Vital Energy, Inc. (NYSE:VTLE) ("Vital Energy" or the "Company") today reported third-quarter 2024 financial and operating results. Strong performance year-to-date also allowed the Company to increase its fourth-quarter and full-year 2024 production outlook. Supplemental slides have been posted to the Company's website and can be found at www.vitalenergy.com. A conference call and webcast is planned for 7:30 a.m. CT, Thursday, November 7, 2024. Participation details can be found within this release.
Highlights
Closed the Point Energy acquisition for total cash consideration of $815 million, exclusive of transaction- related expenses and post-closing adjustments
Reported net income of $215.3 million, Adjusted Net Income1 of $60.4 million and cash flows from operating activities of $246.2 million
Generated Consolidated EBITDAX1 of $309.5 million and Adjusted Free Cash Flow1 of $34.0 million
Reduced lease operating expense ("LOE") to $8.78 per BOE, below guidance of $8.95 per BOE
Produced Company-record 133.3 thousand barrels of oil equivalent per day ("MBOE/d") and oil production of 59.2 thousand barrels of oil per day ("MBO/d")
Reported capital investments of $241.9 million, excluding non-budgeted acquisitions and leasehold expenditures
Increased 2025 oil hedges to approximately 16.1 million barrels at $74.79 per barrel NYMEX WTI
Reduced methane intensity by 90% from 2019 baseline, as of YE-23
"We delivered strong results as we closed the largest single acquisition in our history and continued to optimize operations on acquisitions closed late last year," stated Jason Pigott, President and Chief Executive Officer. "Higher production from both standalone Vital Energy assets and the assets acquired from Point Energy, operating cost reductions and disciplined capital investments drove strong Adjusted Free Cash Flow in the quarter. Today, we raised our fourth quarter expectations for both total and oil production. Importantly, we plan to deliver this higher production without increasing capital investments."
"Our operational momentum will carry us into 2025," continued Mr. Pigott. "We have increased flexibility to allocate capital to our highest return projects, which will enhance our capital efficiencies. We expect to invest about $900 million in 2025 and maintain oil production of approximately 66,500 barrels per day. We believe that sustainable development efficiencies will benefit Adjusted Free Cash Flow and allow us to maintain a leverage ratio of about 1.5x through year-end 2025."
1Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release.
Third-Quarter 2024 Financial and Operations SummaryFinancial Results. The Company reported net income of $215.3 million, or $5.73 per diluted share, and Adjusted Net Income of $60.4 million, or $1.61 per adjusted diluted share. Cash flows from operating activities were $246.2 million and Consolidated EBITDAX was $309.5 million.
Production. Vital Energy's third quarter total and oil production averaged 133,339 BOE/d and 59,198 BO/d, respectively. Both total and oil production volumes benefited from 11 days of production associated with the early closing of the Point Energy acquisition, accelerated completion of a 10-well package on Point Energy acreage and outperformance of Point Energy wells compared to initial assumptions. Weather-related downtime on a Howard County facility impacted quarterly total and oil production by 850 BOE/d and 650 BO/d, respectively. The issue has been remediated and we do not expect it to impact fourth-quarter production.
Capital Investments. Total capital investments, excluding non-budgeted acquisitions and leasehold expenditures, were $242 million, including $6 million associated with activity on assets acquired from Point Energy. Investments included $197 million for drilling and completions, $35 million in infrastructure investments, $8 million in other capitalized costs and $2 million in land, exploration and data-related costs.
Operating Expenses. Vital Energy significantly reduced its lease operating expenses ("LOE") recently through optimized workover activity and lower chemical processing costs. The Company believes these reductions are largely sustainable and will benefit future periods. LOE during the period was $8.78 per BOE ($8.72 per BOE excluding Point Energy assets), below guidance of $8.95 per BOE.
General and Administrative Expenses. General and administrative expenses totaled $1.78 per BOE for third-quarter 2024, excluding transaction-related expenses. General and administrative expenses, excluding long-term incentive plan ("LTIP") and transaction expenses were $1.53 per BOE. Cash LTIP expenses were $(0.03) per BOE and reflected the decrease in Vital Energy's common stock price during the third quarter. Non-cash LTIP expenses were $0.28 per BOE.
Liquidity. At September 30, 2024, the Company had $860 million drawn on its $1.5 billion senior secured credit facility and cash and cash equivalents of $22 million.
Point Energy
On September 20, 2024, the Company closed the Point Energy acquisition, its largest single acquisition. Production from the acquired assets is exceeding expectations, including base production and a recently completed 10-well package that commenced production earlier than anticipated. Integration efforts are progressing well and the Company completed a five-well package on the assets early in the fourth quarter.
2024 Outlook
Production. The Company increased its full-year 2024 total and oil production guidance to 131.0 - 132.5 MBOE/d (from 127.0 - 131.0 MBOE/d) and to 60.9 - 61.7 MBO/d (from 59.0 - 61.0 MBO/d), respectively. The increase reflects third quarter outperformance and higher expected fourth quarter volumes related to the outperformance of the Point asset.
Capital Investments. Full-year 2024 capital investments guidance was adjusted to $845 - $870 million (from $820 - $870 million), reflecting capital investments in the third quarter which included investments related to the early closing of the Point Energy acquisition.
Fourth-Quarter 2024 Guidance
During the fourth quarter of 2024, Vital Energy plans to operate five drilling rigs and one to two completions crews, and TIL 26 wells, including five on Point acreage.
The Company today increased its fourth quarter total and production guidance to 137.0 - 143.0 MBOE/d (from 134.0 - 140.0 MBOE/d) and 66.5 - 69.5 MBO/d (from 65.0 - 68.0 MBO/d), respectively. The Company reiterated its capital guidance at $175 - $200 million. The table below reflects the Company's guidance for production and capital investments for the fourth quarter of 2024.
4Q-24E
Total production (MBOE/d)
137.0 - 143.0
Oil production (MBO/d)
66.5 - 69.5
Capital investments, excluding non-budgeted acquisitions ($ MM)
$175 - $200
The table below reflects the Company's guidance for select revenue and expense items for fourth-quarter 2024.
4Q-24E
Average sales price realizations (excluding derivatives):
Oil (% of WTI)
102%
NGL (% of WTI)
23%
Natural gas (% of Henry Hub)
5%
Net settlements received (paid) for matured commodity derivatives ($ MM):
Oil
$36
NGL
$0
Natural gas
$16
Selected average costs & expenses:
Lease operating expenses ($/BOE)
$9.35
Production and ad valorem taxes (% of oil, NGL and natural gas sales revenues)
6.20%
Oil transportation and marketing expenses ($/BOE)
$1.05
Gas gathering, processing and transportation expenses ($/BOE)
$0.55
General and administrative expenses (excluding LTIP and transaction expenses, $/BOE)
$1.70
General and administrative expenses (LTIP cash, $/BOE)
$0.04
General and administrative expenses (LTIP non-cash, $/BOE)
$0.27
Depletion, depreciation and amortization ($/BOE)
$15.50
Conference Call Details
Vital Energy plans to host a conference call at 7:30 a.m. CT on Thursday, November 7, 2024, to discuss its third-quarter 2024 financial and operating results and its enhanced future outlook. Supplemental slides will be posted to the Company's website. Interested parties are invited to listen to the call via the Company's website at www.vitalenergy.com, under the tab for "Investor Relations | News & Presentations | Upcoming Events." Portfolio managers and analysts who would like to participate should dial 800.715.9871, using conference code 1544492. A replay will be available following the call via the website.
About Vital Energy
Vital Energy, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma. Vital Energy's business strategy is focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas.
Additional information about Vital Energy may be found on its website at www.vitalenergy.com.
Forward-Looking StatementsThis press release and any oral statements made regarding the contents of this release, including in the conference call referenced herein, contain forward-looking statements as defined under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, that address activities that Vital Energy assumes, plans, expects, believes, intends, projects, indicates, enables, transforms, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management's current belief, based on currently available information, as to the outcome and timing of future events. Such statements are not guarantees of future performance and involve risks, assumptions and uncertainties.
General risks relating to Vital Energy include, but are not limited to, continuing and worsening inflationary pressures and associated changes in monetary policy that may cause costs to rise; changes in domestic and global production, supply and demand for commodities, including as a result of actions by the Organization of Petroleum Exporting Countries and other producing countries ("OPEC+") and the Russian-Ukrainian or Israeli-Hamas military conflicts, the decline in prices of oil, natural gas liquids and natural gas and the related impact to financial statements as a result of asset impairments and revisions to reserve estimates, reduced demand due to shifting market perception towards the oil and gas industry; competition in the oil and gas industry; the ability of the Company to execute its strategies, including its ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to its financial results and to successfully integrate acquired businesses, assets and properties and its ability to successfully execute on its strategy to enhance well productivity, including by drilling long-lateral horseshoe wells, pipeline transportation and storage constraints in the Permian Basin, the effects and duration of the outbreak of disease, and any related government policies and actions, long-term performance of wells, drilling and operating risks, the possibility of production curtailment, the impact of new laws and regulations, including those regarding the use of hydraulic fracturing, and under the Inflation Reduction Act (the "IRA"), including those related to climate change, the impact of legislation or regulatory initiatives intended to address induced seismicity on our ability to conduct our operations; uncertainties in estimating reserves and production results; hedging activities, tariffs on steel, the impacts of severe weather, including the freezing of wells and pipelines in the Permian Basin due to cold weather, technological innovations and scientific developments, physical and transition risks associated with climate change, increased attention to ESG and sustainability-related matters, risks related to our public statements with respect to such matters that may be subject to heightened scrutiny from public and governmental authorities related to the risk of potential "greenwashing," i.e., misleading information or false claims overstating potential sustainability-related benefits, risks regarding potentially conflicting anti-ESG initiatives from certain U.S. state or other governments, possible impacts of litigation and regulations, the impact of the Company's transactions, if any, with its securities from time to time, the impact of new environmental, health and safety requirements applicable to the Company's business activities, the possibility of the elimination of federal income tax deductions for oil and gas exploration and development and imposition of any additional taxes under the IRA or otherwise, and other factors, including those and other risks described in its Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report"), subsequent Quarterly Reports on Form 10-Q and those set forth from time to time in other filings with the Securities and Exchange Commission ("SEC"). These documents are available through Vital Energy's website at www.vitalenergy.com under the tab "Investor Relations" or through the SEC's Electronic Data Gathering and Analysis Retrieval System at www.sec.gov. Any of these factors could cause Vital Energy's actual results and plans to differ materially from those in the forward-looking statements. Therefore, Vital Energy can give no assurance that its future results will be as estimated. Any forward-looking statement speaks only as of the date on which such statement is made. Vital Energy does not intend to, and disclaims any obligation to, correct, update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
This press release and any accompanying disclosures include financial measures that are not in accordance with generally accepted accounting principles ("GAAP"), such as Adjusted Free Cash Flow, Adjusted Net Income and Consolidated EBITDAX. While management believes that such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. For a reconciliation of such non-GAAP financial measures to the nearest comparable measure in accordance with GAAP, please see the supplemental financial information at the end of this press release.
Unless otherwise specified, references to "average sales price" refer to average sales price excluding the effects of the Company's derivative transactions.
All amounts, dollars and percentages presented in this press release are rounded and therefore approximate.
Vital Energy, Inc.Selected operating data
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
(unaudited)
(unaudited)
Sales volumes:
Oil (MBbl)
5,446
4,507
16,161
12,011
NGL (MBbl)
3,460
2,421
9,567
6,320
Natural gas (MMcf)
20,160
14,593
57,958
38,760
Oil equivalent (MBOE)(1)(2)
12,267
9,361
35,388
24,791
Average daily oil equivalent sales volumes (BOE/d)(2)
133,339
101,746
129,153
90,809
Average daily oil sales volumes (Bbl/d)(2)
59,198
48,996
58,981
43,997
Average sales prices(2):
Oil ($/Bbl)(3)
$
76.51
$
83.23
$
78.84
$
78.34
NGL ($/Bbl)(3)
$
12.08
$
15.82
$
13.46
$
15.38
Natural gas ($/Mcf)(3)
$
(0.48
)
$
1.46
$
0.05
$
1.25
Average sales price ($/BOE)(3)
$
36.58
$
46.44
$
39.73
$
43.82
Oil, with commodity derivatives ($/Bbl)(4)
$
78.37
$
78.62
$
76.75
$
76.69
NGL, with commodity derivatives ($/Bbl)(4)
$
12.07
$
15.82
$
13.34
$
15.38
Natural gas, with commodity derivatives ($/Mcf)(4)
$
0.45
$
1.32
$
0.84
$
1.40
Average sales price, with commodity derivatives ($/BOE)(4)
$
38.95
$
44.01
$
40.04
$
43.27
Selected average costs and expenses per BOE sold(2):
Lease operating expenses
$
8.78
$
7.05
$
9.24
$
7.02
Production and ad valorem taxes
2.22
2.92
2.40
2.80
Oil transportation and marketing expenses
1.01
1.15
0.97
1.31
Gas gathering, processing and transportation expenses
0.38
—
0.34
—
General and administrative (excluding LTIP and transaction expenses)
1.53
2.16
1.76
2.32
Total selected operating expenses
$
13.92
$
13.28
$
14.71
$
13.45
General and administrative (LTIP):
LTIP cash
$
(0.03
)
$
0.29
$
0.05
$
0.20
LTIP non-cash
$
0.28
$
0.28
$
0.29
$
0.30
General and administrative (transaction expenses)
$
0.02
$
0.33
$
0.02
$
0.13
Depletion, depreciation and amortization
$
15.25
$
12.87
$
14.91
$
12.53
_______________________________________________________________________________
(1)
BOE is calculated using a conversion rate of six Mcf per one Bbl.
(2)
The numbers presented are calculated based on actual amounts and may not recalculate using the rounded numbers presented in the table above.
(3)
Price reflects the average of actual sales prices received when control passes to the purchaser/customer adjusted for quality, certain transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the delivery point.
(4)
Price reflects the after-effects of the Company's commodity derivative transactions on its average sales prices. The Company's calculation of such after-effects includes settlements of matured commodity derivatives during the respective periods.
Vital Energy, Inc.Consolidated balance sheets
(in thousands, except share data)
September 30, 2024
December 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
22,192
$
14,061
Accounts receivable, net
224,958
238,773
Derivatives
146,074
99,336
Other current assets
26,038
18,749
Total current assets
419,262
370,919
Property and equipment:
Oil and natural gas properties, full cost method:
Evaluated properties
13,352,711
11,799,155
Unevaluated properties not being depleted
241,410
195,457
Less: accumulated depletion and impairment
(8,276,433
)
(7,764,697
)
Oil and natural gas properties, net
5,317,688
4,229,915
Midstream and other fixed assets, net
133,784
130,293
Property and equipment, net
5,451,472
4,360,208
Derivatives
75,645
51,071
Operating lease right-of-use assets
132,132
144,900
Deferred income taxes
137,277
188,836
Other noncurrent assets, net
35,223
33,647
Total assets
$
6,251,011
$
5,149,581
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities
$
164,540
$
159,892
Accrued capital expenditures
108,977
91,937
Undistributed revenue and royalties
188,611
194,307
Operating lease liabilities
86,795
70,651
Other current liabilities
77,409
78,802
Total current liabilities
626,332
595,589
Long-term debt, net
2,433,271
1,609,424
Asset retirement obligations
87,995
81,680
Operating lease liabilities
41,566
71,343
Other noncurrent liabilities
6,006
6,288
Total liabilities
3,195,170
2,364,324
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, and zero and 595,104 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
—
6
Common stock, $0.01 par value, 80,000,000 shares authorized, and 38,168,725 and 35,413,551 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
382
354
Additional paid-in capital
3,819,118
3,733,775
Accumulated deficit
(763,659
)
(948,878
)
Total stockholders' equity
3,055,841
2,785,257
Total liabilities and stockholders' equity
$
6,251,011
$
5,149,581
Vital Energy, Inc.Consolidated statements of operations
Three months ended September 30,
Nine months ended September 30,
(in thousands, except per share data)
2024
2023
2024
2023
(unaudited)
(unaudited)
Revenues:
Oil sales
$
416,668
$
375,166
$
1,274,119
$
940,982
NGL sales
41,807
38,303
128,752
97,196
Natural gas sales
(9,724
)
21,234
3,150
