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Civitas Resources Q4, Full Year 2022 Results; 2023 Capital Plans

Share Print Bookmark    |    Friday,February 24,2023

Civitas Resources, Inc. announced its fourth quarter and full-year 2022 financial and operating results, as well as its 2023 outlook.

2023 Capital Plans

2023 guidance is shown below.

Note: Guidance is forward-looking information that is subject to considerable change and numerous risks and uncertainties, many of which are beyond the Company's control. See "Forward-Looking Statements" below.

Fourth Quarter 2022 Highlights:

• Average daily sales of 169.4 thousand barrels of oil equivalent per day ("MBoe/d"), of which 45% was oil
• Total capital expenditures of $278.2 million
• GAAP net income of $281.9 million and Adjusted EBITDAX⁽¹⁾ of $505.1 million
• Net cash provided by operating activities of $512.2 million and free cash flow⁽¹⁾ of $230.7 million
• Fixed-plus-variable dividend, to be paid in March, increased to $2.15 per share, up approximately 10% sequentially from $1.95 per share in the prior quarter
• Total liquidity was $1.8 billion as of December 31, 2022, which consisted of $768.0 million of cash plus funds available under the Company's credit facility

$1 Billion Buyback Authorization

Civitas is committed to sustainably returning cash to its shareholders and its return philosophy and track record is one of the strongest in the industry today. Recent shareholder cash return highlights are below:

• The company repurchased $300 million worth of its outstanding Common Stock in January, 2023
• Today, the Company announced Board approval for the repurchase of up to $1 billion of additional Common Stock, effective through December 31, 2024
• In 2022, the Company paid out over $530 million in base and variable dividends
• In 2023, Civitas expects to distribute over $600 million in dividends, more than 60% of expected free cash flow⁽¹⁾ during the year, at current strip prices

⁽¹⁾ Non-GAAP financial measure; see attached reconciliation schedules at the end of this release.

Dividend to be Paid in March

The Company's Board of Directors approved a dividend of $2.15 per share, payable on March 30, 2023 to shareholders of record as of March 15, 2023. The total reflects the combination of the quarterly base dividend of $0.50 per share and a quarterly variable dividend of $1.65 per share. Additional details regarding the calculation of the variable dividend can be found in the Company's new investor presentation located on its website.

Civitas CEO Chris Doyle said, "Civitas reported outstanding results this quarter, with production coming in at the high end of our guidance range despite the cold temperatures we experienced in December. Recently, we've seen a meaningful pullback in commodity prices while service costs remain high given current utilization. As a result, we are choosing to moderate our capital spending in 2023 to maximize capital efficiency. With capital spending down year-over-year and production broadly flat, we expect to generate significant free cash flow in 2023 and return the vast majority of it to shareholders through dividends and the newly authorized share repurchase program."

Q4, Full-Year 2022 Financial and Operating Results

During the fourth quarter of 2022, the Company reported average daily sales of 169.4 MBoe/d, of which 45% was crude oil, 29% was natural gas, and 26% was natural gas liquids.

Net crude oil, natural gas, and natural gas liquids revenue for the fourth quarter of 2022 was $814.3 million, compared to $1.0 billion for the third quarter of 2022. The decrease was primarily related to 12%, 22%, and 25% lower crude oil, natural gas, and natural gas liquids realized prices, respectively. Crude oil accounted for approximately 68% of total revenue for the quarter. Differentials for the Company's crude oil production averaged approximately negative $3.30 per barrel in the fourth quarter.

Capital expenditures were $278.2 million and $988.5 million, which included $18.6 million and $74.4 million of land and midstream investments, for the fourth quarter and full-year of 2022, respectively. During the fourth quarter, the Company drilled 37 gross (30.1 net), completed 39 gross (33.5 net), and turned to sales 18 gross (17.5 net) operated wells.

Lease operating expense ("LOE") for the fourth quarter of 2022, on a unit basis, increased to $3.02 per Boe from $2.78 per Boe in the third quarter of 2022. Full-year 2022 LOE was $2.74 per Boe.

The Company's general and administrative ("G&A") expenses for the fourth quarter were $40.8 million, which included $6.9 million in non-cash stock-based compensation and $6.2 million of other non-recurring G&A expenses. Recurring cash G&A, which excludes non-recurring and non-cash items, was $27.7 million for the fourth quarter of 2022. On a per unit basis, the Company's recurring cash G&A increased 34% sequentially from $1.33 per Boe in the third quarter of 2022 to $1.78 per Boe in the fourth quarter of 2022.

Recurring cash G&A is a non-GAAP financial measures. Please see Schedule 7 at the end of this release for a reconciliation to the most comparable GAAP measure.

2022 Proved Reserves, Costs Incurred, and F&D Costs

At December 31, 2022, the Company had proved reserves of 416.0 million Boe, a 5% increase from year-end 2021 reserves. The Company's year-end 2022 proved reserves were comprised of 152.6 million barrels of crude oil, 867.5 billion cubic feet of natural gas, and 118.8 million barrels of natural gas liquids. 83% of the total proved reserves are proved developed. The Company's proved reserves PV-10, utilizing Securities and Exchange Commission ("SEC") pricing, was $9.8 billion. Civitas' independent reserve engineering firm, Ryder Scott Company, LP., completed its estimate of the Company's year-end 2022 proved reserves in accordance with SEC guidelines using pricing of $93.67 per barrel for crude oil and $6.36 per million British Thermal Units for natural gas. Please see Schedule 10 at the end of this release for information on SEC pricing and a reconciliation of PV-10 to the GAAP figure "Standardized Measure of Oil and Gas."