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Crescent Energy Co. Second Quarter 2022 Results

Share Print Bookmark    |    Wednesday,August 10,2022

Crescent Energy Co. announced financial and operating results for the second quarter of 2022 and a quarterly cash dividend of $0.17 per share.

Second Quarter 2022 Highlights:

• Produced 142 MBoe/d, an 18% increase over the first quarter, primarily driven by Uinta volumes following close of the acquisition on March 30, 2022
  • Produced 64 MBbl/d of oil, a 45% increase over the first quarter; oil comprised 45% of total second quarter volumes on an equivalent basis
• Reported $282 million of net income and $226 million of Adjusted Net Income⁽¹⁾
• Generated $373 million of Adjusted EBITDAX⁽¹⁾, $640 million of Unhedged Adjusted EBITDAX⁽¹⁾ and $137 million of Levered Free Cash Flow⁽¹⁾, representing a 92%, 73% and 53% quarter-over-quarter increase, respectively
• Exited the second quarter at 1.2x Net LTM Leverage⁽¹⁾, in-line with its long-term corporate target
• Operating expense and general and administrative ("G&A") expenses decreased on a Boe basis
• Crescent's inaugural Oil & Gas Methane Partnership 2.0 submission rated highest-level "Gold Standard"
• Capital investments, excluding acquisitions, during the second quarter were $193 million, in-line with guidance

Crescent CEO David Rockecharlie said, “Through mid-year, we continue to perform incredibly well across the business and execute our business plan to add long-term value for our shareholders. We are seeing solid early-time results from our new assets in the Uinta, which are contributing significantly to our near 100% quarter-over-quarter increase in cash flow. Although industry-wide inflation and service availability are creating headwinds, our people continue to find ways to mitigate these pressures, while generating significant returns on invested capital.”

Second Quarter 2022 Results

Crescent reported $282 million of net income and $226 million of Adjusted Net Income⁽¹⁾. The Company generated $373 million of Adjusted EBITDAX⁽¹⁾, $640 million of Unhedged Adjusted EBITDAX⁽¹⁾ and $137 million of Levered Free Cash Flow⁽¹⁾ for the period, a 92%, 73% and 53% increase, respectively, relative to the first quarter, reflecting the addition of Uinta volumes and higher commodity prices.

Costs and expenses during the quarter were in-line with Company expectations. Lower costs per Boe from Uinta volumes resulted in a 3% decrease in operating expense relative to the first quarter, and an 8% decrease excluding production and other taxes. This improvement includes certain transaction expenses from the Uinta acquisition and incremental workover activity during the quarter. G&A expense and Adjusted Recurring Cash G&A⁽¹⁾ (includes manager compensation and excludes non-cash equity-based compensation) totaled $1.52 and $1.40 per Boe, a 27% and 18% decrease relative to the first quarter, respectively, reflecting limited incremental overhead from the Uinta acquisition.

Crescent produced 142 net MBoe/d in the second quarter (comprised of 45% oil, 14% NGLs, and 41% gas), an 18% increase above first quarter volumes, and in-line with guidance.

Average realized price for the second quarter, excluding the effect of commodity derivatives, totaled $68.96 per Boe, a 27% increase relative to $54.28 in the first quarter. Excluding the effect of commodity derivatives, average realized price by commodity in the second quarter was $104.23 per barrel of oil, $6.40 per Mcf of gas, and $46.98 per barrel of NGLs

Capital investments, excluding acquisitions, were $193 million during the quarter. The Company drilled 16 gross operated locations in the Uinta and 9 in the Eagle Ford. In addition, Crescent brought online 4 gross wells in the Uinta and 9 in the Eagle Ford. Crescent is planning to operate two rigs (one Uinta, one Eagle Ford) for the remainder of the year.

Financial Position

As of June 30, 2022, the Company had total debt of $1.5 billion, consisting of $700 million of senior unsecured notes and $829 million of outstanding borrowings on its revolving credit facility (the "Credit Facility"). Total liquidity as of June 30, 2022, was $508 million, including availability on its revolver ($1.3 billion elected commitment with a $1.8 billion borrowing base), cash and cash equivalents of $55 million, and outstanding letters of credit of $18 million. Crescent exited the quarter with a Net LTM Leverage⁽¹⁾ ratio of 1.2x, in-line with its stated target. The Company expects to generate significant Levered Free Cash Flow for the remainder of 2022, which it plans to use to fund its dividend and further strengthen the balance sheet.

Dividend

Consistent with the Company’s framework to return cash to shareholders, the Board approved a quarterly cash dividend of $0.17 per share, payable on September 6, 2022, to shareholders of record as of the close of business on August 23, 2022. Crescent expects to pay a $0.17 per share quarterly dividend for the remainder of 2022, subject to Board approval and applicable law.

Risk Management

Crescent utilizes hedges to manage commodity price risks, protect the balance sheet, and ensure returns on invested capital. Crescent is approximately 60% hedged for the remainder of 2022 at the midpoint of its production guidance range. Approximately 50% of the Company’s current hedge book was entered into in connection with prior acquisitions.