Vital Energy, Inc. (NYSE: VTLE) ("Vital Energy" or the "Company")
today reported its second-quarter 2023 financial and operating
results. Supplemental slides have been posted to the Company's
website and can be found at www.vitalenergy.com. A conference call
and webcast to discuss the results is planned for 7:30 a.m. CT,
Wednesday, August 9, 2023. Participation details can be found
within this release.
Highlights
- Reported 2Q-23 net income of $294.8 million, Adjusted Net
Income1 of $78.6 million and cash flows from operating activities
of $248.9 million
- Generated 2Q-23 Consolidated EBITDAX1 of $239.5 million and
Free Cash Flow1 of $60.7 million
- Reported 2Q-23 oil and total production that exceeded the
high-end of Company guidance, producing 44.4 thousand barrels of
oil per day ("MBO/d"), a Company record, and 90.0 thousand barrels
of oil equivalent per day ("MBOE/d")
- Reported 2Q-23 incurred capital expenditures below the low-end
of guidance, investing $149 million, excluding non-budgeted
acquisitions and leasehold expenditures
- Closed previously announced accretive Midland and Delaware
basin acquisitions, adding approximately 35,000 net acres and 130
gross high-value, oil-weighted locations
"Vital Energy continued to deliver exceptional
results in the second quarter, exceeding production expectations
while controlling capital investments and operational expenses and
delivering more than $60 million of Free Cash Flow," stated Jason
Pigott, President and Chief Executive Officer. "We are highly
confident in our ability to execute on our 2023 plan as we further
drive down costs, enhance base production and efficiently develop
our high-margin inventory to maximize Free Cash Flow generation and
reduce debt."
"In the second quarter, we closed two accretive,
high-value oil acquisitions, further growing our inventory of
capital efficient, oil-weighted development opportunities,"
continued Mr. Pigott. "These transactions enhance our operational
scale and create sustainable synergies that enhance our Free Cash
Flow outlook in 2023 and 2024."
1Non-GAAP financial measure; please see
supplemental reconciliations of GAAP to non-GAAP financial measures
at the end of this release.
Second-Quarter 2023 Financial and
Operations Summary
Financial Results. The Company reported net income
attributable to common stockholders of $294.8 million, or $16.30
per diluted share, including income of $222.2 million related to
the reduction of the valuation allowance against the Company's
gross deferred tax asset. Adjusted Net Income was $78.6 million, or
$4.35 per adjusted diluted share. Cash flows from operating
activities were $248.9 million and Consolidated EBITDAX was $239.5
million.
Production. Consistent with preliminary volumes
disclosed in July, Vital Energy's oil and total production during
the period averaged 44,360 barrels of oil per day and 90,030
barrels of oil equivalent per day, respectively. Production
outperformance was driven by improvements in base production and
acceleration of production from new wells.
Capital Investments. Total incurred capital
expenditures were $149 million, excluding non-budgeted acquisitions
and leasehold expenditures. Capital investments were lower than
expected, primarily related to moderating inflationary pressures
and continuing operational efficiencies. Vital Energy completed 16
wells and turned-in-line ("TIL") 23 wells during second-quarter
2023. Investments included $125 million in drilling and
completions, $10 million in land, exploration and data related
costs, $7 million in infrastructure, including Vital Midstream
Services investments, and $7 million in other capitalized
costs.
Operating Expenses. Lower than expected unit lease
operating expenses ("LOE") during the period were $7.05 per BOE,
primarily related to higher production levels and reduced
inflationary pressures for tangible goods and day rates for
workover rigs and rental equipment.
General and Administrative Expenses. General and
administrative ("G&A") expenses, excluding long-term incentive
plan ("LTIP") expenses and transaction expenses, for second-quarter
2023 were $1.88 per BOE, lower than guidance, primarily related to
lower compensation related expenses. Cash and non-cash LTIP
expenses were in line with expectations at $0.16 per BOE and $0.32
per BOE, respectively.
Liquidity. At June 30, 2023, the Company had $575
million drawn on its $1.0 billion senior secured credit facility
and cash and cash equivalents of $72 million.
At August 4, 2023, the Company had $595 million
drawn on its senior secured credit facility and cash and cash
equivalents of $73 million.
2023 Outlook
Production. The Company recently increased
expectations for full-year 2023 production to incorporate
second-quarter 2023 outperformance and production associated with
the Forge acquisition. Higher than expected volumes year-to-date
were primarily related to stronger base production, which exceeded
expectations for both oil and total production by approximately
10%. As a result, full-year 2023 oil production guidance is further
increased to 41.9 - 43.4 MBO/d (previously 40.0 - 43.0 MBO/d) and
total production guidance to 87.0 - 89.0 MBOE/d (previously 82.0 -
86.0 MBOE/d).
Capital Investments. Vital Energy recently updated
full-year 2023 capital investment guidance to incorporate activity
associated with the Forge acquisition. To optimize completions
activities across the Midland and Delaware basin programs, Vital
Energy expects to utilize a second completions crew in the Midland
Basin commencing in late November 2023, a month earlier than
previously planned. The additional capital expenditures are
expected to be offset by operational efficiencies and moderating
inflation. Accordingly, full-year 2023 capital investment guidance
is reduced to $665 - $695 million (previously $675 - $725
million).
Operating Expenses. Total LOE is expected to
increase slightly in the second half of the year, with unit LOE
varying with production volumes. Unit LOE in the second half of
2023 is estimated at $7.40 per BOE.
Free Cash Flow. Through the first half of 2023,
Vital Energy generated $57 million of Free Cash Flow. Integration
of the Forge acquisition enhances the outlook for Free Cash Flow,
which is expected to be approximately $90 million in the second
half of 2023, at $80 WTI. Full-year 2023 Free Cash Flow is
estimated to be approximately $150 million.
The table below reflects the Company's guidance
for total and oil production and incurred capital expenditures for
the third and fourth quarters of 2023 and full-year 2023.
|
3Q-23E |
|
4Q-23E |
|
FY-23E |
Total
production (MBOE/d) |
94.0 - 98.0 |
|
83.3 - 87.3 |
|
87.0 - 89.0 |
Oil production (MBO/d) |
45.5 -
48.5 |
|
39.3 -
42.3 |
|
41.9 -
43.4 |
Incurred
capital expenditures, excluding non-budgeted acquisitions ($
MM) |
$165 -
$180 |
|
$165 -
$180 |
|
$665 -
$695 |
The table below reflects the Company's guidance
for select revenue and expense items for third-quarter 2023.
|
|
3Q-23E |
Average
sales price realizations (excluding derivatives): |
|
|
Oil (% of WTI) |
|
101% |
NGL (% of WTI) |
|
19% |
Natural gas (% of Henry Hub) |
|
63% |
|
|
|
Net
settlements received (paid) for matured commodity derivatives ($
MM): |
|
|
Oil |
|
($13) |
NGL |
|
$0 |
Natural gas |
|
($3) |
|
|
|
Selected
average costs & expenses: |
|
|
Lease operating expenses ($/BOE) |
|
$7.00 |
Production and ad valorem taxes (% of oil, NGL and natural gas
sales revenues) |
|
6.50% |
Transportation and marketing expenses ($/BOE) |
|
$1.20 |
General and administrative expenses (excluding LTIP and transaction
expenses, $/BOE) |
|
$2.00 |
General and administrative expenses (LTIP cash, $/BOE) |
|
$0.11 |
General and administrative expenses (LTIP non-cash, $/BOE) |
|
$0.30 |
Depletion, depreciation and amortization ($/BOE) |
|
$12.75 |
|
|
|
2024 Outlook
"Our recent operational performance and successful
acquisitions have materially strengthened our outlook for 2024,"
said Mr. Pigott. "In 2024, we expect to maintain our full-year 2023
production levels while holding investment levels relatively flat
and growing full-year 2024 Free Cash Flow to approximately $175
million, at current strip commodity prices."
Vital Energy expects to operate three drilling
rigs and approximately 1.7 completions crews across the Company's
Midland and Delaware basin assets in 2024. The Company expects to
complete and TIL 70 - 75 gross (58 - 62 net) wells in 2024, a
slight increase versus 2023.
Conference Call Details
Vital Energy plans to host a conference call at
7:30 a.m. CT on Wednesday, August 9, 2023, to discuss its
second-quarter financial and operating results and management's
outlook, the content of which is not part of this earnings release.
A slide presentation providing summary financial and statistical
information will be posted to the Company's website. The Company
invites interested parties to listen to the call via the Company's
website at www.vitalenergy.com, under the tab for "Investor
Relations | News & Presentations." Portfolio managers and
analysts who would like to participate on the call should dial
800.715.9871, using conference code 2893062. A replay will be
available following the call via the Company's 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 Statements This
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 military conflict,
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, 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; 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, 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, 2022 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.
The SEC generally permits oil and natural gas
companies, in filings made with the SEC, to disclose proved
reserves, which are reserve estimates that geological and
engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing
economic and operating conditions, and certain probable and
possible reserves that meet the SEC's definitions for such terms.
In this press release and the conference call, the Company may use
the terms "resource potential," "resource play," "estimated
ultimate recovery" or "EURs," "type curve" and "standardized
measure," each of which the SEC guidelines restrict from being
included in filings with the SEC without strict compliance with SEC
definitions. These terms refer to the Company’s internal estimates
of unbooked hydrocarbon quantities that may be potentially
discovered through exploratory drilling or recovered with
additional drilling or recovery techniques. "Resource potential" is
used by the Company to refer to the estimated quantities of
hydrocarbons that may be added to proved reserves, largely from a
specified resource play potentially supporting numerous drilling
locations. A "resource play" is a term used by the Company to
describe an accumulation of hydrocarbons known to exist over a
large areal expanse and/or thick vertical section potentially
supporting numerous drilling locations, which, when compared to a
conventional play, typically has a lower geological and/or
commercial development risk. "EURs" are based on the Company’s
previous operating experience in a given area and publicly
available information relating to the operations of producers who
are conducting operations in these areas. Unbooked resource
potential and "EURs" do not constitute reserves within the meaning
of the Society of Petroleum Engineer’s Petroleum Resource
Management System or SEC rules and do not include any proved
reserves. Actual quantities of reserves that may be ultimately
recovered from the Company’s interests may differ substantially
from those presented herein. Factors affecting ultimate recovery
include the scope of the Company’s ongoing drilling program, which
will be directly affected by the availability of capital, decreases
in oil, natural gas liquids and natural gas prices, well spacing,
drilling and production costs, availability and cost of drilling
services and equipment, lease expirations, transportation
constraints, regulatory approvals, negative revisions to reserve
estimates and other factors, as well as actual drilling results,
including geological and mechanical factors affecting recovery
rates. "EURs" from reserves may change significantly as development
of the Company’s core assets provides additional data. In addition,
the Company's production forecasts and expectations for future
periods are dependent upon many assumptions, including estimates of
production decline rates from existing wells and the undertaking
and outcome of future drilling activity, which may be affected by
significant commodity price declines or drilling cost increases.
"Type curve" refers to a production profile of a well, or a
particular category of wells, for a specific play and/or area. The
"standardized measure" of discounted future new cash flows is
calculated in accordance with SEC regulations and a discount rate
of 10%. Actual results may vary considerably and should not be
considered to represent the fair market value of the Company’s
proved reserves.
This press release and any accompanying
disclosures include financial measures that are not in accordance
with generally accepted accounting principles ("GAAP"), such as
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 June 30, |
|
Six months
ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(unaudited) |
|
(unaudited) |
Sales volumes: |
|
|
|
|
|
|
|
|
Oil (MBbl) |
|
|
4,037 |
|
|
|
3,690 |
|
|
7,504 |
|
|
7,317 |
NGL (MBbl) |
|
|
2,050 |
|
|
|
2,100 |
|
|
3,899 |
|
|
4,094 |
Natural gas (MMcf) |
|
|
12,638 |
|
|
|
12,774 |
|
|
24,167 |
|
|
25,017 |
Oil equivalent (MBOE)(1)(2) |
|
|
8,193 |
|
|
|
7,920 |
|
|
15,430 |
|
|
15,581 |
Average daily oil equivalent sales volumes (BOE/d)(2) |
|
|
90,030 |
|
|
|
87,032 |
|
|
85,250 |
|
|
86,080 |
Average daily oil sales volumes (Bbl/d)(2) |
|
|
44,360 |
|
|
|
40,553 |
|
|
41,457 |
|
|
40,424 |
Average sales prices(2): |
|
|
|
|
|
|
|
|
Oil ($/Bbl)(3) |
|
$ |
74.09 |
|
|
$ |
111.20 |
|
$ |
75.41 |
|
$ |
103.57 |
NGL ($/Bbl)(3) |
|
$ |
12.63 |
|
|
$ |
34.52 |
|
$ |
15.11 |
|
$ |
33.62 |
Natural gas ($/Mcf)(3) |
|
$ |
0.71 |
|
|
$ |
5.21 |
|
$ |
1.12 |
|
$ |
4.20 |
Average sales price ($/BOE)(3) |
|
$ |
40.76 |
|
|
$ |
69.38 |
|
$ |
42.24 |
|
$ |
64.22 |
Oil, with commodity derivatives ($/Bbl)(4) |
|
$ |
74.43 |
|
|
$ |
74.72 |
|
$ |
75.53 |
|
$ |
71.01 |
NGL, with commodity derivatives ($/Bbl)(4) |
|
$ |
12.63 |
|
|
$ |
27.24 |
|
$ |
15.11 |
|
$ |
26.65 |
Natural gas, with commodity derivatives ($/Mcf)(4) |
|
$ |
1.45 |
|
|
$ |
3.33 |
|
$ |
1.45 |
|
$ |
2.90 |
Average sales price, with commodity derivatives ($/BOE)(4) |
|
$ |
42.07 |
|
|
$ |
47.41 |
|
$ |
42.82 |
|
$ |
45.01 |
Selected average costs and expenses per BOE sold(2): |
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
7.05 |
|
|
$ |
5.30 |
|
$ |
6.99 |
|
$ |
5.32 |
Production and ad valorem taxes |
|
|
2.64 |
|
|
|
4.17 |
|
|
2.73 |
|
|
3.88 |
Transportation and marketing expenses |
|
|
1.30 |
|
|
|
1.39 |
|
|
1.40 |
|
|
1.65 |
General and administrative (excluding LTIP and transaction
expenses) |
|
|
1.88 |
|
|
|
1.71 |
|
|
2.42 |
|
|
1.73 |
Total selected operating expenses |
|
$ |
12.87 |
|
|
$ |
12.57 |
|
$ |
13.54 |
|
$ |
12.58 |
General and administrative (LTIP): |
|
|
|
|
|
|
|
|
LTIP cash |
|
$ |
0.16 |
|
|
$ |
0.11 |
|
$ |
0.15 |
|
$ |
0.47 |
LTIP non-cash |
|
$ |
0.32 |
|
|
$ |
0.33 |
|
$ |
0.32 |
|
$ |
0.30 |
General and administrative (transaction expenses) |
|
$ |
(0.11 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Depletion, depreciation and amortization |
|
$ |
12.61 |
|
|
$ |
9.87 |
|
$ |
12.32 |
|
$ |
9.73 |
____________________(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) |
|
June 30, 2023 |
|
December 31, 2022 |
|
|
(unaudited) |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
71,696 |
|
|
$ |
44,435 |
|
Accounts receivable, net |
|
|
143,672 |
|
|
|
163,369 |
|
Derivatives |
|
|
11,942 |
|
|
|
24,670 |
|
Other current assets |
|
|
15,619 |
|
|
|
13,317 |
|
Total current assets |
|
|
242,929 |
|
|
|
245,791 |
|
Property and equipment: |
|
|
|
|
Oil and natural gas properties, full cost method: |
|
|
|
|
Evaluated properties |
|
|
10,349,348 |
|
|
|
9,554,706 |
|
Unevaluated properties not being depleted |
|
|
198,805 |
|
|
|
46,430 |
|
Less: accumulated depletion and impairment |
|
|
(7,500,936 |
) |
|
|
(7,318,399 |
) |
Oil and natural gas properties, net |
|
|
3,047,217 |
|
|
|
2,282,737 |
|
Midstream and other fixed assets, net |
|
|
128,792 |
|
|
|
127,803 |
|
Property and equipment, net |
|
|
3,176,009 |
|
|
|
2,410,540 |
|
Derivatives |
|
|
24,314 |
|
|
|
24,363 |
|
Operating lease right-of-use assets |
|
|
127,958 |
|
|
|
23,047 |
|
Deferred income taxes |
|
|
222,217 |
|
|
|
— |
|
Other noncurrent assets, net |
|
|
22,002 |
|
|
|
22,373 |
|
Total assets |
|
$ |
3,815,429 |
|
|
$ |
2,726,114 |
|
Liabilities and stockholders' equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
84,803 |
|
|
$ |
102,516 |
|
Accrued capital expenditures |
|
|
66,488 |
|
|
|
48,378 |
|
Undistributed revenue and royalties |
|
|
166,663 |
|
|
|
160,023 |
|
Derivatives |
|
|
2,338 |
|
|
|
5,960 |
|
Operating lease liabilities |
|
|
48,961 |
|
|
|
15,449 |
|
Other current liabilities |
|
|
64,492 |
|
|
|
82,950 |
|
Total current liabilities |
|
|
433,745 |
|
|
|
415,276 |
|
Long-term debt, net |
|
|
1,619,599 |
|
|
|
1,113,023 |
|
Derivatives |
|
|
3,025 |
|
|
|
— |
|
Asset retirement obligations |
|
|
74,428 |
|
|
|
70,366 |
|
Operating lease liabilities |
|
|
75,844 |
|
|
|
9,435 |
|
Other noncurrent liabilities |
|
|
5,215 |
|
|
|
7,268 |
|
Total liabilities |
|
|
2,211,856 |
|
|
|
1,615,368 |
|
Commitments and contingencies |
|
|
|
|
Stockholders' equity: |
|
|
|
|
Preferred stock, $0.01 par value, 50,000,000 shares authorized and
zero issued as of June 30, 2023 and December 31, 2022 |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 40,000,000 shares authorized, and
18,593,867 and 16,762,127 issued and outstanding as of June 30,
2023 and December 31, 2022, respectively |
|
|
186 |
|
|
|
168 |
|
Additional paid-in capital |
|
|
2,838,143 |
|
|
|
2,754,085 |
|
Accumulated deficit |
|
|
(1,234,756 |
) |
|
|
(1,643,507 |
) |
Total stockholders' equity |
|
|
1,603,573 |
|
|
|
1,110,746 |
|
Total liabilities and stockholders' equity |
|
$ |
3,815,429 |
|
|
$ |
2,726,114 |
|
|
Vital
Energy, Inc. Consolidated statements of
operations |
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands, except per share data) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
|
Oil sales |
|
$ |
299,085 |
|
|
$ |
410,359 |
|
|
$ |
565,816 |
|
|
$ |
757,802 |
|
NGL sales |
|
|
25,887 |
|
|
|
72,505 |
|
|
|
58,893 |
|
|
|
137,660 |
|
Natural gas sales |
|
|
8,952 |
|
|
|
66,606 |
|
|
|
27,026 |
|
|
|
105,195 |
|
Sales of purchased oil |
|
|
338 |
|
|
|
8,795 |
|
|
|
14,189 |
|
|
|
87,659 |
|
Other operating revenues |
|
|
800 |
|
|
|
1,891 |
|
|
|
1,645 |
|
|
|
4,235 |
|
Total revenues |
|
|
335,062 |
|
|
|
560,156 |
|
|
|
667,569 |
|
|
|
1,092,551 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Lease operating expenses |
|
|
57,718 |
|
|
|
42,014 |
|
|
|
107,899 |
|
|
|
82,890 |
|
Production and ad valorem taxes |
|
|
21,607 |
|
|
|
33,001 |
|
|
|
42,138 |
|
|
|
60,488 |
|
Transportation and marketing expenses |
|
|
10,681 |
|
|
|
10,994 |
|
|
|
21,596 |
|
|
|
25,737 |
|
Costs of purchased oil |
|
|
588 |
|
|
|
6,780 |
|
|
|
14,755 |
|
|
|
89,744 |
|
General and administrative |
|
|
18,482 |
|
|
|
16,999 |
|
|
|
44,412 |
|
|
|
38,943 |
|
Depletion, depreciation and amortization |
|
|
103,340 |
|
|
|
78,135 |
|
|
|
190,119 |
|
|
|
151,627 |
|
Other operating expenses, net |
|
|
1,351 |
|
|
|
3,999 |
|
|
|
2,835 |
|
|
|
4,137 |
|
Total costs and expenses |
|
|
213,767 |
|
|
|
191,922 |
|
|
|
423,754 |
|
|
|
453,566 |
|
Gain on disposal of assets, net |
|
|
154 |
|
|
|
930 |
|
|
|
391 |
|
|
|
670 |
|
Operating income |
|
|
121,449 |
|
|
|
369,164 |
|
|
|
244,206 |
|
|
|
639,655 |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
Gain (loss) on derivatives, net |
|
|
(18,044 |
) |
|
|
(65,927 |
) |
|
|
2,446 |
|
|
|
(391,743 |
) |
Interest expense |
|
|
(31,529 |
) |
|
|
(32,807 |
) |
|
|
(60,083 |
) |
|
|
(65,284 |
) |
Loss extinguishment of debt, net |
|
|
— |
|
|
|
(798 |
) |
|
|
— |
|
|
|
(798 |
) |
Other income, net |
|
|
1,104 |
|
|
|
6 |
|
|
|
1,958 |
|
|
|
150 |
|
Total non-operating expense, net |
|
|
(48,469 |
) |
|
|
(99,526 |
) |
|
|
(55,679 |
) |
|
|
(457,675 |
) |
Income before income taxes |
|
|
72,980 |
|
|
|
269,638 |
|
|
|
188,527 |
|
|
|
181,980 |
|
Income tax benefit (expense): |
|
|
|
|
|
|
|
|
Current |
|
|
(503 |
) |
|
|
(4,513 |
) |
|
|
(1,834 |
) |
|
|
(5,731 |
) |
Deferred |
|
|
222,334 |
|
|
|
(2,579 |
) |
|
|
222,058 |
|
|
|
(484 |
) |
Total income tax (benefit) expense |
|
|
221,831 |
|
|
|
(7,092 |
) |
|
|
220,224 |
|
|
|
(6,215 |
) |
Net income |
|
$ |
294,811 |
|
|
$ |
262,546 |
|
|
$ |
408,751 |
|
|
$ |
175,765 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
16.35 |
|
|
$ |
15.60 |
|
|
$ |
23.71 |
|
|
$ |
10.46 |
|
Diluted |
|
$ |
16.30 |
|
|
$ |
15.41 |
|
|
$ |
23.60 |
|
|
$ |
10.31 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
18,031 |
|
|
|
16,834 |
|
|
|
17,236 |
|
|
|
16,800 |
|
Diluted |
|
|
18,085 |
|
|
|
17,039 |
|
|
|
17,319 |
|
|
|
17,040 |
|
|
Vital Energy, Inc. Consolidated statements
of cash flows |
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(unaudited) |
|
(unaudited) |
Cash flows
from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
294,811 |
|
|
$ |
262,546 |
|
|
$ |
408,751 |
|
|
$ |
175,765 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Share-settled equity-based compensation, net |
|
|
2,893 |
|
|
|
2,604 |
|
|
|
5,465 |
|
|
|
4,657 |
|
Depletion, depreciation and amortization |
|
|
103,340 |
|
|
|
78,135 |
|
|
|
190,119 |
|
|
|
151,627 |
|
Gain on disposal of assets, net |
|
|
(154 |
) |
|
|
(930 |
) |
|
|
(391 |
) |
|
|
(670 |
) |
Mark-to-market on derivatives: |
|
|
|
|
|
|
|
|
(Gain) loss on derivatives, net |
|
|
18,044 |
|
|
|
65,927 |
|
|
|
(2,446 |
) |
|
|
391,743 |
|
Settlements received (paid) for matured derivatives, net |
|
|
10,783 |
|
|
|
(172,454 |
) |
|
|
8,440 |
|
|
|
(297,824 |
) |
Loss on extinguishment of debt, net |
|
|
— |
|
|
|
798 |
|
|
|
— |
|
|
|
798 |
|
Deferred income tax (benefit) expense |
|
|
(222,334 |
) |
|
|
2,579 |
|
|
|
(222,058 |
) |
|
|
484 |
|
Other, net |
|
|
2,763 |
|
|
|
9,233 |
|
|
|
5,147 |
|
|
|
15,964 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
3,399 |
|
|
|
7,782 |
|
|
|
17,360 |
|
|
|
(53,960 |
) |
Other current assets |
|
|
(766 |
) |
|
|
1,752 |
|
|
|
(8,230 |
) |
|
|
6,844 |
|
Other noncurrent assets, net |
|
|
(755 |
) |
|
|
(18,830 |
) |
|
|
1,590 |
|
|
|
(34,057 |
) |
Accounts payable and accrued liabilities |
|
|
(6,742 |
) |
|
|
(10,476 |
) |
|
|
(17,435 |
) |
|
|
(8,634 |
) |
Undistributed revenue and royalties |
|
|
13,672 |
|
|
|
95,166 |
|
|
|
1,847 |
|
|
|
139,460 |
|
Other current liabilities |
|
|
30,003 |
|
|
|
34,290 |
|
|
|
(18,647 |
) |
|
|
32,819 |
|
Other noncurrent liabilities |
|
|
(69 |
) |
|
|
10,003 |
|
|
|
(4,499 |
) |
|
|
13,991 |
|
Net cash provided by operating activities |
|
|
248,888 |
|
|
|
368,125 |
|
|
|
365,013 |
|
|
|
539,007 |
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
|
Acquisitions of oil and natural gas properties, net |
|
|
(526,985 |
) |
|
|
(17 |
) |
|
|
(526,985 |
) |
|
|
(7,887 |
) |
Capital expenditures: |
|
|
|
|
|
|
|
|
Oil and natural gas properties |
|
|
(144,181 |
) |
|
|
(139,250 |
) |
|
|
(309,223 |
) |
|
|
(282,750 |
) |
Midstream and other fixed assets |
|
|
(4,128 |
) |
|
|
(2,607 |
) |
|
|
(6,899 |
) |
|
|
(4,952 |
) |
Proceeds from dispositions of capital assets, net of selling
costs |
|
|
77 |
|
|
|
30 |
|
|
|
2,252 |
|
|
|
2,049 |
|
Settlements received for contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
2,035 |
|
|
|
— |
|
Net cash used in investing activities |
|
|
(675,217 |
) |
|
|
(141,844 |
) |
|
|
(838,820 |
) |
|
|
(293,540 |
) |
Cash flows
from financing activities: |
|
|
|
|
|
|
|
|
Borrowings on Senior Secured Credit Facility |
|
|
500,000 |
|
|
|
85,000 |
|
|
|
595,000 |
|
|
|
135,000 |
|
Payments on Senior Secured Credit Facility |
|
|
(45,000 |
) |
|
|
(185,000 |
) |
|
|
(90,000 |
) |
|
|
(240,000 |
) |
Extinguishment of debt |
|
|
— |
|
|
|
(32,334 |
) |
|
|
— |
|
|
|
(32,334 |
) |
Share repurchases |
|
|
— |
|
|
|
(9,071 |
) |
|
|
— |
|
|
|
(9,071 |
) |
Stock exchanged for tax withholding |
|
|
(385 |
) |
|
|
(742 |
) |
|
|
(2,844 |
) |
|
|
(6,589 |
) |
Payments for debt issuance costs |
|
|
— |
|
|
|
(1,725 |
) |
|
|
— |
|
|
|
(1,725 |
) |
Other, net |
|
|
(596 |
) |
|
|
— |
|
|
|
(1,088 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
454,019 |
|
|
|
(143,872 |
) |
|
|
501,068 |
|
|
|
(154,719 |
) |
Net increase
in cash and cash equivalents |
|
|
27,690 |
|
|
|
82,409 |
|
|
|
27,261 |
|
|
|
90,748 |
|
Cash, cash
equivalents and restricted cash, beginning of period |
|
|
44,006 |
|
|
|
65,137 |
|
|
|
44,435 |
|
|
|
56,798 |
|
Cash and
cash equivalents, end of period |
|
$ |
71,696 |
|
|
$ |
147,546 |
|
|
$ |
71,696 |
|
|
$ |
147,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vital Energy, Inc.
Supplemental reconciliations of GAAP to non-GAAP financial
measures
Non-GAAP financial measures
The non-GAAP financial measures of Free Cash Flow,
Adjusted Net Income, Consolidated EBITDAX, as defined by the
Company, may not be comparable to similarly titled measures used by
other companies. Furthermore, these non-GAAP financial measures
should not be considered in isolation or as a substitute for GAAP
measures of liquidity or financial performance, but rather should
be considered in conjunction with GAAP measures, such as net income
or loss, operating income or loss or cash flows from operating
activities.
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure
that the Company defines as net cash provided by operating
activities (GAAP) before net changes in operating assets and
liabilities and non-budgeted acquisition costs, less incurred
capital expenditures, excluding non-budgeted acquisition costs.
Management believes Free Cash Flow is useful to management and
investors in evaluating operating trends in its business that are
affected by production, commodity prices, operating costs and other
related factors. There are significant limitations to the use of
Free Cash Flow as a measure of performance, including the lack of
comparability due to the different methods of calculating Free Cash
Flow reported by different companies.
The following table presents a reconciliation of
net cash provided by operating activities (GAAP) to Free Cash Flow
(non-GAAP) for the periods presented:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
(unaudited) |
|
(unaudited) |
Net cash provided by operating activities |
|
$ |
248,888 |
|
$ |
368,125 |
|
$ |
365,013 |
|
|
$ |
539,007 |
Less: |
|
|
|
|
|
|
|
|
Net changes in operating assets and liabilities |
|
|
38,742 |
|
|
119,687 |
|
|
(28,014 |
) |
|
|
96,463 |
General and administrative (transaction expenses) |
|
|
861 |
|
|
— |
|
|
— |
|
|
|
— |
Cash flows from operating activities before net changes in
operating assets and liabilities and non-budgeted acquisition
costs |
|
|
209,285 |
|
|
248,438 |
|
|
393,027 |
|
|
|
442,544 |
Less incurred capital expenditures, excluding non-budgeted
acquisition costs: |
|
|
|
|
|
|
|
|
Oil and natural gas properties(1) |
|
|
144,350 |
|
|
135,496 |
|
|
328,464 |
|
|
|
303,864 |
Midstream and other fixed assets(1) |
|
|
4,239 |
|
|
2,467 |
|
|
7,769 |
|
|
|
4,998 |
Total incurred capital expenditures, excluding non-budgeted
acquisition costs |
|
|
148,589 |
|
|
137,963 |
|
|
336,233 |
|
|
|
308,862 |
Free Cash Flow (non-GAAP) |
|
$ |
60,696 |
|
$ |
110,475 |
|
$ |
56,794 |
|
|
$ |
133,682 |
____________________ (1) Includes
capitalized share-settled equity-based compensation and asset
retirement costs.
Adjusted Net Income
Adjusted Net Income is a non-GAAP financial
measure that the Company defines as net income or loss (GAAP) plus
adjustments for mark-to-market on derivatives, premiums paid or
received for commodity derivatives that matured during the period,
impairment expense, gains or losses on disposal of assets, income
taxes, other non-recurring income and expenses and adjusted income
tax expense. Management believes Adjusted Net Income helps
investors in the oil and natural gas industry to measure and
compare the Company's performance to other oil and natural gas
companies by excluding from the calculation items that can vary
significantly from company to company depending upon accounting
methods, the book value of assets and other non-operational
factors.
The following table presents a reconciliation of
net income (GAAP) to Adjusted Net Income (non-GAAP) for the periods
presented:
|
|
Three months ended June 30, |
|
Six months ended June 30, |
(in thousands, except per share data) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(unaudited) |
|
(unaudited) |
Net income |
|
$ |
294,811 |
|
|
$ |
262,546 |
|
|
$ |
408,751 |
|
|
$ |
175,765 |
|
Plus: |
|
|
|
|
|
|
|
|
Mark-to-market on derivatives: |
|
|
|
|
|
|
|
|
Gain (loss) on derivatives, net |
|
|
18,044 |
|
|
|
65,927 |
|
|
|
(2,446 |
) |
|
|
391,743 |
|
Settlements received (paid) for matured derivatives, net |
|
|
10,783 |
|
|
|
(174,009 |
) |
|
|
9,020 |
|
|
|
(299,379 |
) |
Settlements received for contingent consideration |
|
|
— |
|
|
|
1,555 |
|
|
|
1,455 |
|
|
|
1,555 |
|
Gain on disposal of assets, net |
|
|
(154 |
) |
|
|
(930 |
) |
|
|
(391 |
) |
|
|
(670 |
) |
Loss on extinguishment of debt, net |
|
|
— |
|
|
|
798 |
|
|
|
— |
|
|
|
798 |
|
Income tax (benefit) expense |
|
|
(221,831 |
) |
|
|
7,092 |
|
|
|
(220,224 |
) |
|
|
6,215 |
|
General and administrative (transaction expenses) |
|
|
(861 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted income before adjusted income tax expense |
|
|
100,792 |
|
|
|
162,979 |
|
|
|
196,165 |
|
|
|
276,027 |
|
Adjusted income tax expense(1) |
|
|
(22,174 |
) |
|
|
(35,855 |
) |
|
|
(43,156 |
) |
|
|
(60,726 |
) |
Adjusted Net Income (non-GAAP) |
|
$ |
78,618 |
|
|
$ |
127,124 |
|
|
$ |
153,009 |
|
|
$ |
215,301 |
|
Net income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
16.35 |
|
|
$ |
15.60 |
|
|
$ |
23.71 |
|
|
$ |
10.46 |
|
Diluted |
|
$ |
16.30 |
|
|
$ |
15.41 |
|
|
$ |
23.60 |
|
|
$ |
10.31 |
|
Adjusted Net Income per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
4.36 |
|
|
$ |
7.55 |
|
|
$ |
8.88 |
|
|
$ |
12.82 |
|
Diluted |
|
$ |
4.35 |
|
|
$ |
7.46 |
|
|
$ |
8.83 |
|
|
$ |
12.64 |
|
Adjusted diluted |
|
$ |
4.35 |
|
|
$ |
7.46 |
|
|
$ |
8.83 |
|
|
$ |
12.64 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
18,031 |
|
|
|
16,834 |
|
|
|
17,236 |
|
|
|
16,800 |
|
Diluted |
|
|
18,085 |
|
|
|
17,039 |
|
|
|
17,319 |
|
|
|
17,040 |
|
Adjusted diluted |
|
|
18,085 |
|
|
|
17,039 |
|
|
|
17,319 |
|
|
|
17,040 |
|
____________________ (1) Adjusted income tax
expense is calculated by applying a statutory tax rate of 22% for
each of the periods ended June 30, 2023 and 2022.
Consolidated EBITDAX
Consolidated EBITDAX is a non-GAAP financial
measure defined in the Company's Senior Secured Credit Facility as
net income or loss (GAAP) plus adjustments for share-settled
equity-based compensation, depletion, depreciation and
amortization, impairment expense, gains or losses on disposal of
assets, mark-to-market on derivatives, accretion expense, interest
expense, income taxes and other non-recurring income and expenses.
Consolidated EBITDAX provides no information regarding a company's
capital structure, borrowings, interest costs, capital
expenditures, working capital movement or tax position.
Consolidated EBITDAX does not represent funds available for future
discretionary use because it excludes funds required for debt
service, capital expenditures, working capital, income taxes,
franchise taxes and other commitments and obligations. However,
management believes Consolidated EBITDAX is useful to an investor
because this measure:
- is used by investors in the oil and natural gas industry to
measure a company's operating performance without regard to items
that can vary substantially from company to company depending upon
accounting methods, the book value of assets, capital structure and
the method by which assets were acquired, among other factors;
- helps investors to more meaningfully evaluate and compare the
results of the Company's operations from period to period by
removing the effect of the Company's capital structure from the
Company's operating structure; and
- is used by management for various purposes, including (i) as a
measure of operating performance, (ii) as a measure of compliance
under the Senior Secured Credit Facility, (iii) in presentations to
the board of directors and (iv) as a basis for strategic planning
and forecasting.
There are significant limitations to the use of
Consolidated EBITDAX as a measure of performance, including the
inability to analyze the effect of certain recurring and
non-recurring items that materially affect the Company's net income
or loss and the lack of comparability of results of operations to
different companies due to the different methods of calculating
Consolidated EBITDAX, or similarly titled measures, reported by
different companies. The Company is subject to financial covenants
under the Senior Secured Credit Facility, one of which establishes
a maximum permitted ratio of Net Debt, as defined in the Senior
Secured Credit Facility, to Consolidated EBITDAX. See Note 7 in the
2022 Annual Report for additional discussion of the financial
covenants under the Senior Secured Credit Facility. Additional
information on Consolidated EBITDAX can be found in the Company's
Tenth Amendment to the Senior Secured Credit Facility, as filed
with the SEC on November 3, 2022.
The following table presents a reconciliation of
net income (GAAP) to Consolidated EBITDAX (non-GAAP) for the
periods presented:
|
|
Three months ended June 30, |
|
Six months
ended June 30, |
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(unaudited) |
(unaudited) |
Net income |
|
$ |
294,811 |
|
|
$ |
262,546 |
|
|
$ |
408,751 |
|
|
$ |
175,765 |
|
Plus: |
|
|
|
|
|
|
|
|
Share-settled equity-based compensation, net |
|
|
2,893 |
|
|
|
2,604 |
|
|
|
5,465 |
|
|
|
4,657 |
|
Depletion, depreciation and amortization |
|
|
103,340 |
|
|
|
78,135 |
|
|
|
190,119 |
|
|
|
151,627 |
|
Gain on disposal of assets, net |
|
|
(154 |
) |
|
|
(930 |
) |
|
|
(391 |
) |
|
|
(670 |
) |
Mark-to-market on derivatives: |
|
|
|
|
|
|
|
|
(Gain) loss on derivatives, net |
|
|
18,044 |
|
|
|
65,927 |
|
|
|
(2,446 |
) |
|
|
391,743 |
|
Settlements received (paid) for matured derivatives, net |
|
|
10,783 |
|
|
|
(174,009 |
) |
|
|
9,020 |
|
|
|
(299,379 |
) |
Settlements received for contingent consideration |
|
|
— |
|
|
|
1,555 |
|
|
|
1,455 |
|
|
|
1,555 |
|
Accretion expense |
|
|
903 |
|
|
|
973 |
|
|
|
1,802 |
|
|
|
1,992 |
|
Interest expense |
|
|
31,529 |
|
|
|
32,807 |
|
|
|
60,083 |
|
|
|
65,284 |
|
Loss extinguishment of debt, net |
|
|
— |
|
|
|
798 |
|
|
|
— |
|
|
|
798 |
|
Income tax (benefit) expense |
|
|
(221,831 |
) |
|
|
7,092 |
|
|
|
(220,224 |
) |
|
|
6,215 |
|
General and administrative (transaction expenses) |
|
|
(861 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Consolidated EBITDAX (non-GAAP) |
|
$ |
239,457 |
|
|
$ |
277,498 |
|
|
$ |
453,634 |
|
|
$ |
499,587 |
|
The following table presents a reconciliation of
net cash provided by operating activities (GAAP) to Consolidated
EBITDAX (non-GAAP) for the periods presented:
|
|
Three months
ended June 30, |
|
Six months
ended June 30, |
(in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(unaudited) |
|
(unaudited) |
Net cash
provided by operating activities |
|
$ |
248,888 |
|
|
$ |
368,125 |
|
|
$ |
365,013 |
|
|
$ |
539,007 |
|
Plus: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
31,529 |
|
|
|
32,807 |
|
|
|
60,083 |
|
|
|
65,284 |
|
Current income tax expense |
|
|
503 |
|
|
|
4,513 |
|
|
|
1,834 |
|
|
|
5,731 |
|
Net changes in operating assets and liabilities |
|
|
(38,742 |
) |
|
|
(119,687 |
) |
|
|
28,014 |
|
|
|
(96,463 |
) |
General and administrative (transaction expenses) |
|
|
(861 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Settlements received for contingent consideration |
|
|
— |
|
|
|
1,555 |
|
|
|
1,455 |
|
|
|
1,555 |
|
Other, net |
|
|
(1,860 |
) |
|
|
(9,815 |
) |
|
|
(2,765 |
) |
|
|
(15,527 |
) |
Consolidated EBITDAX (non-GAAP) |
|
$ |
239,457 |
|
|
$ |
277,498 |
|
|
$ |
453,634 |
|
|
$ |
499,587 |
|
Investor Contact: Ron Hagood
918.858.5504 ir@vitalenergy.com
Vital Energy (NYSE:VTLE)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Vital Energy (NYSE:VTLE)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024