Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vitesse Energy Inc (VTS, Financial) declared a consistent dividend of $0.525 per share for both September and December, reflecting a strong return of capital strategy.
- The company demonstrated capital efficiency by reducing CapEx by 18% while maintaining production guidance within the prior range.
- Vitesse Energy Inc (VTS) expects a 7% production growth in 2025 with 2% less CapEx at the midpoints, indicating improved operational efficiency.
- The company has hedged 54% of its remaining 2024 oil production at above $78 per barrel and 43% of its 2025 production at above $73 per barrel, providing a stable revenue outlook.
- Vitesse Energy Inc (VTS) reduced its debt by $10 million within the quarter, resulting in a leverage ratio of 0.68 times on an annualized adjusted EBITDA basis.
Negative Points
- The company's production for the third quarter was at the low end of prior guidance, averaging 13,009 barrels of oil equivalent per day.
- CapEx for the third quarter was lower than expected due to delays in well completions, pushing some activities to the fourth quarter and early 2025.
- Production guidance was slightly lowered within the previous range due to timing issues with wells acquired earlier in the year.
- The company faces challenges in winning deals when oil prices are high, as seen over the summer.
- There is an expectation of field costs to decrease, but actual drilling costs have not yet shown a significant reduction.
Q & A Highlights
Q: Can you explain the dynamics behind the lower-than-expected CapEx for the third quarter, given the robust activity levels and record wells in progress?
A: Brian Cree, President: The lower CapEx was primarily due to the timing of wells associated with acquisitions made in the second quarter. These wells are expected to be completed and brought online in the fourth quarter and early 2025, rather than the third quarter.
Q: With the preliminary outlook for 2025, do you have better visibility on the organic CapEx and its durability?
A: Brian Cree, President: Yes, we have more visibility now. The AFEs received in 2024 are nearly double those from 2023, indicating increased drilling on our organic acreage. This allows us to allocate more capital to higher return opportunities.
Q: How do lower oil prices impact your acquisition strategy and deal flow?
A: Brian Cree, President: Lower oil prices in the 60s or 70s make near-term opportunities more attractive. However, these opportunities must compete with the high returns from our organic investments. We remain selective and strategic in pursuing acquisitions.
Q: Did the wildfires in North Dakota affect your production volumes?
A: James Henderson, CFO: The wildfires did not significantly impact our production volumes. The slight reduction in production guidance was due to the timing of wells coming online, not the wildfires.
Q: Are there any trends in costs embedded in the AFEs you are seeing?
A: Brian Cree, President: The AFEs remained consistent between the second and third quarters. We expect drilling costs to decrease, although it may take operators some time to adjust the AFEs to reflect lower oil prices.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
