Greetings. Welcome to Crescent Energy Second Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now turn the conference over to Brandi Kendall, Chief Financial Officer. Thank you, you may begin.

Good morning. And thank you for joining Crescent's second quarter2022 earnings call. Our prepared remarks today will come from our CEO, David Rockecharlie, and myself; Todd Falk, Chief Accounting Officer; and Ben Conner and Clay Rynd, both Executive Vice Presidents are also here today and available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the federal security law. These statements are subject to risks and uncertainties, including commodity price volatility to continued impact of COVID-19, geopolitical conflicts, including in Russia and Ukraine, our business strategies and other factors that may cause actual results to differ from those expressed or implied in these statements, and our other disclosures. We disclaim any obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings press release available on our website. With that, I will turn it over to David.

Thanks, Brandi, and good morning everyone. We appreciate your joining us today for our second quarter 2022 earnings call. It's been less than a year since we began trading publicly as Crescent Energy, and we continue to be excited about the market opportunity ahead of us. For over a decade, our organization has maintained a consistent strategy based on cash flow, risk management, and investment returns, with the goal of creating long term value for shareholders through commodity cycles. We believe now more than ever that Crescent remains exceptionally well positioned to execute on this strategy. We are pleased to share with you today's results, as this is our first full quarter including our recent Uinta Basin acquisition. As a reminder, we will also take your specific questions at the end of our remarks. Overall, our second quarter results were in line with our performance expectations as we focused on operations of our existing assets and the successful integration of our highly accretive Uinta Basin acquisition. The addition of the Uinta Assets has significantly increased the scale of our production base, reduced our per unit cost structure, and added high margin oil inventory, which has resulted in significant growth in our business. Relative to our first quarter results, net production has increased 18% and adjusted EBITDA has increased 92%, offering another tangible example of our acquisition strategy creating value for shareholders. In the second quarter, we continued to generate significant free cash flow and strong returns on invested capital, allowing us to maintain a healthy balance sheet and return capital to shareholders through our fixed quarterly dividend structure. Operationally, we continue to execute on our 2022 capital program having maintained three rigs across the Uinta and Eagle Ford and brought online 13 gross operated wells for the quarter. Additionally, we…

Thank you, David. We are pleased with our results for the first half of this year. As we are successfully integrating our accretive view into acquisition while maintaining our rigorous commitment to cash flow priorities, 1A and 1B shareholder returns in the balance sheet. Alongside earnings, we announced a quarterly dividend payment of $0.17 per share consistent with the second quarter. We intend to pay $0.17 per share quarterly for the remainder of the year, generating an attractive 5% yield based on recent trading prices. On the balance sheet, we exited the quarter with LTM leverage at 1.2x and over $500 million in liquidity. As we continue to generate significant free cash flow through the remainder of the year, we expect to reduce leverage to our target level of 1.0x EBITDA, absent any potential acquisitions. For the second quarter of 2022, our first full quarter, following the Uinta acquisition, we produced over 140,000 net barrels of oil equivalent per day in line with our previous guidance. Additionally, we generated $373 million of adjusted EBITDAX and $137 million of levered free cash flow, which represents a 92% and 53% quarter over quarter increase respectively. Our strong second quarter results underscore the relative strength of the business and quick integration of the Uinta assets within our broader portfolio. Operating expenses, excluding production and other taxes for the quarter were $14.68 cents per Boe, an 8% decrease quarter over quarter. The improvement is credited to the addition of high margin Uinta to volumes partially offset by higher commodity linked costs. For the remainder of the year, we continue to expect operating cost to trend lower on a $1 per Boe basis, which we anticipate will result in full-year OpEx per Boe, around the high end of our previous guidance range. The addition of…

Thanks Brandi. Before moving on to the Q&A, let me quickly summarize today's key highlights. We are very pleased with our second quarter performance. Crescent's differentiated business model is working and Crescent benefits from a number of key and important characteristics. Number one, we've made seven accretive acquisitions in the last 18 months and grown adjusted EBITDA to $1.5 billion on a hedge basis and $2.6 billion on an unhedged basis on an annualized basis for Q2. We continue to deliver strong free cash flow, which supports our high quality balance sheet and dividends. Number two, we have a low decline PDP asset base at 22% with approved developed PV-10 value of $7 billion as of 630. Number three, we have a proven high quality multi-year development inventory. Number four, we have excellent alignment with supportive and proven investors as long-term insiders. Number five, we believe our stock will gain momentum in the market as our legacy acquisition hedges roll off, and we continue to increase market awareness, trading liquidity and float in our shares over time. And finally, number six, we continue to believe Crescent presents a compelling long term value proposition for shareholders. Thanks again for joining us today, and as always for your interest in our company. We will now be happy to take your questions.

Our first question is from Neil Davies with Truist Securities. Please proceed. Please go ahead.

Thanks for the time. My first question, Dave, probably a strategy question for you and pretty broad, obviously kind of the topic as you specifically. I wanted to get a sense of, now that you guys are making obviously great, some great progress, how you're thinking about future shareholder returns? Really besides, I think it's fair to say, you're certainly going to maintain the base given, which is great to see. And I just wanted to see sort of beyond that, I wanted to get a sense of how you're thinking about allocating the remaining pre-cash flow? Do you think these days, is it best to, you mentioned that doing buybacks, I agree with that, but not paying more back to investors either for variable whatever reason? Or would you think about more organic growth? Or would you build dry powder for further deals that you've been very successful with?

Yes, great. Thanks for the question. Happy to take that. The most important thing is as we consider that question is just ultimately we're stewards of capital. So, we can be patient. We don't have to do anything other than produce the assets we have efficiently. And to your question, I think the first things we think about are the investors. And so, that's the balance sheet and the current dividend strategy we have. What I would say that's differentiated about us and we think presents a really compelling opportunity is the rest of the industry faces higher decline rates, faces a lot of pressure to return capital given what's happened in the public markets over the last decade. And in some senses we see other companies really liquidating the assets they have. And so at a time when equity capital in particular is scarce in the sector, we do think our acquisition strategy, which has been proven over many years should deliver us really compelling opportunity to continue to grow the Company. So I would say, again, just to repeat that number one, we're focused on the balance sheet and the existing dividend. We're just patient with the excess capital we have, and in an ideal world, we'll find really attractive acquisitions while others are focused on a different strategy than we are. All that said though, we are number one, as I said, focused on investor returns. And so, as this market evolves, we'll be happy to consider what I would call more traditional uses of the free cash flow we're generating.

Got it. Okay. And then just, second question, maybe for Brandi or for you David. Just on kind of intertwined what you were just talking about, given the improved finances, also your hedges, I noticed you haven't put too much on lately, but again, wondering more on the hedging strategy. Is it still, I understand if you would buy something you'll probably still hedge it, but more on existing on a go forward, would you -- would you continue with the same sort of hedging level?

Neil, it's Brandi. So, no change in our position quarter over quarter. So, the last time we executed hedges was really in relation to signing the PSA for the Uinta transaction. We feel really good about where the balance sheet sits today, so would expect new hedges to come in in the context of an acquisition.

Got it. And then, if I could squeeze one last thing just on Uinta, it sounds like things going from two to one rig, but it sounds like now post nil all this synergy, everything kind of maybe David, you talked about anything there that was unexpected or really sounds to me like things are going very much as expected, but I didn't know if anything stood out to you on that?

Yes. I'll let Ben Connor take that one.

Hey, Neil. Yes, look I think, the overall message is that we've been pretty pleased with the overall transition and the integration of the assets. So, obviously when you take over things, there's certain things that you learn along the way, but nothing notably surprising and everything kind of really in terms of overall our investment thesis is really playing out as expected. Its early days, but I think what we're most excited about is how quickly we were able to implement some of the operational changes, particularly around the development of the asset. And so the results are early, but they're encouraging. And so, we'll be excited to talk about that in future quarters, but all in all, nothing, nothing surprising and things are going pretty well.

Our next question is from Tarek Hamid with JP Morgan. Please proceed.

Just want to ask around the acquisition environment. We've obviously seen a number of trades in the last couple weeks one reasonably large one in the Eagle Ford. So just wanted to get a sense of sort of, what are you guys seeing and do you think we've sort of hit a price point on strip where sort of transactions are a little bit more viable than they were maybe a few months ago?

Yes. Hey, it's Clay. I'm happy to take this one. I think, David did a good job of kind of laying out our thoughts in the opening comments, but certainly I think the volatility made it tough to get things done. You obviously referenced the deal that got done. I assume you're talking about the one in the Eagle Ford that happened. We've certainly seen some more strategic deals get done that public operator's done a couple. But I'd say the market's playing out as we expected, right. We're seeing a ton of asset supply. There hasn't been as much capital formation relative to that asset supply. And the volatility is creating some uncertainty around transactions. So, I don't think we view that kind of individual deal or a couple as a signal to a broader market. We expect things to start getting done as we head into the fourth quarter, if we kind of have some stability here. But this is the market kind of we expectant do think it plays well to our strengths.

Got it. And then you touched on this, I think everybody in the industry has touched on just the broader inflation narrative, any sort of particular items that are worth highlighting in terms of where you think there's a little bit more risk on the cost side?

Yes. I mean, look think it's been a pretty dynamic market thane think, a lot of places where we've seen it and you've heard it as round steel pricing, a diesel, obviously just given where oil and gas prices have been -- sand has been a particular notable item. And then just with the type service market you're just kind of sting steady creep as you think of rig rates, which are smaller part of the capital cost as well as just the availability of completion crew. So, it's really kind of been steady in certain places you've seen higher growth, but I think what we're starting to see, particularly with the pullback and oil. And again, it's too early to call. It is just some stability starting to shake up in kind of the day-to-day commentary, but it's really been across the broad, but it's really kind of steel diesel pricing, and sand is where I'd say, we've seen the most notable price increases.

And, sorry, this is David. Just one other thought on that, which is in terms of things evolving the way we expected. We really -- we built our portfolio over the last seven, eight year downturn to be heavily production weighted and lower decline, and anticipating inflationary environment like this with a increase in commodity price environment. We do from production perspective just have less exposure on the OpEx side to inflation than the typical D&C side that a lot of the industry faces. So. we feel really good about the overall portfolio positioning despite the just general industry trends, which obviously we expect to continue.

We have reached the end of our question and answer session. I would like to turn the call back over to management for closing comments.

Well thank you all again for joining us and for all the support and attention you've given the Company. We are, as you hopefully heard today, hard at work continuing to try to deliver exceptional results. And we look forward to staying in touch and we'll talk to you next quarter.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.