Ladies and gentlemen, greetings and welcome to the Crescent Energy Company Q4 fiscal year 2024 results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, as a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reid Gallagher, Investor Relations. Please go ahead.

Good morning, and thank you for joining Crescent Energy Company's fourth quarter full year 2024 conference call. Today's prepared remarks will come from our CEO, David Rockecharlie, our CFO, Brandi Kendall. Executive Vice President of Investments, Clay Rynd, will also be available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties including commodity price volatility, global geopolitical conflict, 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 have no 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, the most directly comparable GAAP measure, please reference our 10-K and earnings press release available under the investor section on our website. With that, I will turn it over to David. Good morning, and thank you for joining us.

Yesterday, Crescent Energy Company posted financial and operating results. In summary, it was a great quarter and a great year for our business. Before we get into the details, I want to begin with a few key points I hope you take away from this call. First, 2024 was a transformational year for our business. Highlighted by impressive financial and operational execution, alongside significant and profitable growth from accretive acquisitions. That more than doubled our core Eagle Ford position cementing Crescent Energy Company as a top three producer in a premier basin. Our talented team continues to deliver creating value in numerous ways, with increased well productivity, improved capital costs, and accelerated outsized synergy capture. Second, we expect continued outperformance in 2025. Our advantaged asset base provides the unique flexibility to invest in both oil and gas weighted development, and our operational plan is designed to maximize free cash flow generation and returns for our investors through commodity price cycles. And finally, Crescent Energy Company has never been better positioned to capitalize on the opportunity ahead of us. With consistent execution of our strategy, we have become a bigger and better business and I am confident that through disciplined investing, and safe and efficient operations, we can continue to deliver value for our shareholders. And achieve our goal of becoming an investment grade company. Following those quick highlights, I will now discuss our results in a bit more detail. We reported impressive financial results for the fourth quarter. With our advantaged low decline production base generating significant free cash flow and continued improvements in capital efficiency. With strong execution from our team, we exceeded expectations across both production and capital. With this outperformance alongside accelerated synergy capture, we generated approximately $260 million of free cash flow for the quarter, well…

Crescent Energy Company's impressive results for the quarter closed out a tremendous year for the business. With approximately $535 million of adjusted EBITDA and $259 million in levered free cash flow across the three months. We had $221 million of capital expenditures during the quarter, better than forecast as the team continues to drive improvements in D&C costs. Brought online 15 growth operated wells in the Eagle Ford and five growth operated wells in the Uinta. All of which are generating strong initial results. We exited the year with net leverage of 1.4 times. Within our publicly stated range of 1 to 1.5 times. Approximately $1.4 billion of liquidity pro forma for the closing of the Ridgemar acquisition, and no near term maturity are well positioned for the future. We also announced another dividend of $0.12 per share. Together, our dividend and repurchases over the course of 2024 equated to an attractive 4% annualized yield. On top of our return of capital framework, we also made substantial progress in the equity market this year. With significantly increased float and trading liquidity highlighted by our recent addition to the S&P 600 index. With that, I'll turn the call back over to David for closing remarks.

Thanks, Brandi. Before we wrap up, I want to reiterate our key messages coming out of the year. First, 2024 was a transformational year for our business. We saw significant growth and generated substantial free cash flow. We met or exceeded our latest guidance across all key metrics, and had a meaningful beat on free cash flow generation relative to Wall Street estimates. We executed on multiple accretive acquisitions, creating a premier Eagle Ford footprint and enhancing the broader value proposition of our business. Second, we expect continued outperformance in 2025. With flexible capital allocation to maximize free cash flow generation, and returns across our high quality asset base. And finally, Crescent Energy Company has never been better positioned to capitalize on the opportunity ahead of us. We are a bigger and better business. We have ambitious goals, and we are only getting started. I'm confident that we have the unique combination of investing and operational expertise required to continue our profitable growth trajectory and deliver sustainable long term value for our investors. With that, I'll open it up for Q&A. Operator?

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on the telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from Oliver Huang with TPH. Please go ahead.

Good morning, David, Brandi, and team, and thanks for taking the questions. Maybe just wanted to start out on 2025. I mean, feels like it's simply economics being better in the current commodity backdrop on gas. Driving greater free cash flow. But just wanted to get a deeper walk through into the decision making process that kinda came about for a capital allocation for the 2025 program.

Hey. Great. Thanks for the question, and it's David. I'll start on that one. I think the best way I can describe it is that we today have a portfolio like we've never had before. Our Eagle Ford position is cored up across oil and the what we call a mixed area and then into dry gas. So I think all you're seeing is what I'll call very operationally efficient ability to allocate capital dynamically across that position. So there is a little bit more gas drilling in the portfolio this year off stronger gas prices. But the end of the day, it's just us maximizing returns around our operational Cape our asset base. It's a pretty straightforward.

Okay. That makes sense. And maybe just for a follow-up, on OpEx and oil realizations, just kinda looking at Q4. It certainly looks like certain line items like GP and T, LOE, they seem to have come in meaningfully better for Q4. And looks to kind of have carried through to some extent looking to 2025 guidepost. Just trying to better understand the primary drivers, how much of it is the moving parts of SilverBow, Ridgemar, maybe some lower cost dry gas volumes being in the mix versus future synergy capture. And just on the oil realizations, I know in the past you you all had kinda talked about potential marketing benefits from scale out of the Eagle Ford. So maybe any color in terms of how much of a factor that played into it all would be great.

Hey, Oliver. It's Brandi. I'll take those questions. So from an oil realization standpoint, you're right. That's something that we've talked about the last quarter or two of just some of the progress that we've made in the Eagle Ford specifically around oil marketing, right? The fact that we're marketing a bigger portfolio of assets just gives us more flexibility ultimately from a counterparty perspective, but also how we sell the various types of crude. So we've definitely made some continued good progress there from a synergy capture standpoint, and I would say that's really driving the increase in order realizations from kind of the low nineties to the mid-nineties. That's something that we think we've captured on a go forward basis that's reflected in our 2025 guidance. From an OpEx standpoint, you're right. Q4, we reported close to $11.50 per BOE. I would say that's a couple things driving the outperformance there. One, we've just continued to make really good improvement from an operating cost standpoint. Last quarter, we talked about some of the synergy capture with respect to, you know, chemicals and fields, etcetera. So that's flowing through into our Q4 print. But we also had some, you know, one-off items hit in the fourth quarter. So for example, we inject CO2 into some of our Rockies assets, the plan in where we get that CO2 was down in the quarter, so that's actually resulting in lower LOE. In the fourth quarter. Obviously, didn't impact our operations there or really production from a top line standpoint. So I think go forward, the right way to think about OpEx is that the $12.25 to $13.25 that we guided to.

Perfect. Thanks for the time.

Thank you. Our next question comes from Neal Dingmann with Tuis Securities. Please go ahead.

Morning, all. Dave, my first question just, you know, I'd like your comment about not going for sort of growth sake. I'm just wondering, when you look at the scale now, are you sort of satisfied and and and sort of second part of that is there still you look at your footprint, a lot of white space where not necessarily just big deals, but there's a lot of potential fill-ins to do.

Yeah. Hey, Neal. Thanks. Great question. Maybe I'll give you a couple different ways to think about that. First of all, yes, we're definitely satisfied with the prior acquisitions we've made, how the integrations have gone, and how things you know, look going forward. Hopefully, what you're getting from us is a really strong outlook on the business going forward as well based on everything we got accomplished last year. But what I would say is that we learn something every time, and I think you're also seeing us talk about a lot of benefits we've gotten as we've grown the business over the last few years. So two things. We are not gonna grow the business with really high growth through the drill bit. Just not our strategy. Typically, we acquire assets from others who have a more operation intensive strategy than we do, and we get the benefit of bringing I'll call it more discipline and method as things come into our portfolio. But we do see significant opportunity still in the sector and in particular in the Eagle Ford to add on, bolt on, and continue to increase our position. When we find it and when it's attractive. So long story short, I see tremendous opportunity ahead. But we're gonna be really disciplined about it. It's gotta reach a, you know, a very high.

No. That's great to hear. That's a good that we need as much. And then secondly, just wondering that you have the size and scale, you know, rather than just adding normal, you know, what a service cost doing, are you seeing where you're getting maybe better prices and and and such now that you have bigger scale it No. Part of that maybe just talk about what you are seeing around for service cost these days.

I would say that we'll continue to get efficiency around service cost pricing. A lot of it, I would say, which is just kinda doing your job at bigger scale, and you'll recall, this as well that some of the acquisitions we've made from others, or themselves a collection of acquisitions. And so when you see one-off service decisions or even just one-off operational decisions, there is inefficiency there that may not be as inefficient when you're in a small confined area. But as you drop things into our larger portfolio, we're absolutely ways to be more efficient as we operate assets as part of a single portfolio. And to your point, it's everything from just optimization of the existing resources we have available in the company to being more efficient and frankly clear with what we need from service providers as we buy more services.

Perfect. Thanks, David.

Thank you. The next question comes from Tim Rezvan with KeyBanc Capital Markets Inc. Please go ahead.

Good morning, folks. Thank you for taking my questions. I want to start, David, in your prepared comments you gave a little more color on the non-core asset sale opportunities, $50 million in 2024. And I think you said, like, a meaningful list for divestitures. Know you all are open to kinda transact it at fair prices. But can you talk about what that opportunity set is? You know? Is that a $50 million again, or or could you go, like, you know, multiples bigger? For the right price? And are you being your your tone seems to be changing a bit on this. So just kinda curious you're you know, any comments or color you can provide.

Hey, Tim. It's Clay. Yeah. Certainly, I think we've continued to iterate that we see opportunity and we were able to grow the business and excited about the growth of the business accretively last year, but see opportunity on both the acquisition and divestiture side to create value for the business. You know, we put out there publicly that the $250 million pipeline for divestitures. So I think certainly relative to the $50 million, there is bigger opportunity in our business for investor. And I think to your point, you know, the focus there for us is finding the right value in particular assets. Where we see others valuing them more than we would value them in our own portfolio and take we can create value by selling those assets. So we certainly think that that opportunity exists. We'll be prudent and thoughtful as we approach it, but we are excited about the ability to kinda create value on the investor side as well.

Okay. Thanks. And is that a 2025 timeline we should think about?

Yeah. We haven't put a set date on it. Right? Everything for us is opportunity. And focus on value, but certainly think that that size and scale of opportunity exists for us in 2025.

Okay. Okay. That's fair. As my follow-up I wanna pivot to Utah. I know when you the asset sort of fell in your lap. You didn't really pay out for inventory, got some promising results out there. You know, one rig is only gonna do so much on the delineation and development side. So it's interesting you got some third party capital that to come in there. You talk about your willingness to sort of pursue more more unorthodox kind of opportunities? Like this to maybe pull value forward or or pull learnings forward on delineation? Thank you.

Yeah. Thanks for the question. It's David. I'll give you just a high level answer, and then I'll let Clay give a little more context around the approach we took there. But there's two things. One, I think you're seeing just the size and scale of the Eagle Ford position relative to the that you went to today. So we've basically had one rig running on that asset. Our expectations are still to have you know, in the ZIP code of one rig, on that asset, just the position has huge resource potential, but we look at it as a long term. Play. And so I think the most important thing was know, last year and what we talked about in some of our disclosures is that we have started to allocate some more capital to what I'll call expanding the resource potential there. And so you're just seeing early days for us. So I don't think you'll see a fundamental change in how we approach our business overall. But we are starting to take, you know, more steps, and I'll let Clay cover a little bit of the thinking there.

Yeah. And I just say, you know, I think that, the specific JV that you bought, Tim, is a good example of us for for me that the opportunity of the resource base in the Uinta and then just how we think about allocating capital and using and managing risk. And so there, you know, we had a JV partner who took the risk on the capital spend. We focused it in an area where we thought we could donate the position in an area of the basin that we have less delineation. But we also focused the footprint. Right? So it's really a single DSU. We haven't done anything broadly that takes away flexibility and optionality for us. Go forward. So certainly think there's more opportunity for us to be thought about, you know, resource delineation and capital risk and allocation. But I think it's a good example of just the ability to do that.

I appreciate the call, and we'll go from there. Thank you. Our next question comes from the line of Michael Scialla with Stevens. Please go ahead.

Good morning. Everybody. Just start off and stay on the same topic that Tim brought up with Utah. Looking at your location count of 650, obviously, got some pretty exciting results, albeit early days with the delineation work you're doing on the eastern side. Any potential or any commentary you could provide on how that location count may change if these some of these areas, like, are zones, I should say, like, the black shale. Pan out, what's the potential upside here? Did those zones carry across on your western acreage? Just looking for some more commentary on what the resource potential could be here.

Yeah. Hey. Hey, Michael. It's Clay. We have it planned to put it out in a quanta pure quantification of that. But I would just say the delineation here is pure outside from a location count perspective. So certainly excited about the resource as you heard from us. Early days, we plan to be fast followers here. It focused on data aggregation and prudent capital allocation, but see upside to location count at this point.

Okay. And I wanted to see I know you pointed out in one of your slides of, you know, the goal of getting to investment grade just wanna see the path you think you'd need to take to get to that point.

Yeah. It's pretty simple. Two things. We believe to meet an investment grade criteria today, it is about scale from their perspective. So, you know, think about doubling the business. All that being said, our strong indication to investors is that when we achieve scale, we're gonna achieve scale with a great financial position. So I think just really maintaining our investment grade metrics around the balance sheet and the way we manage the business so that, opportunistically, if we get the chance to grow we're gonna grow the right way. So, again, if you just wanna put a number to it, we probably gotta double the production base of the business. But we're gonna maintain investment grade credit metrics along the way.

Sounds good. Thank you.

Thank you. Our next question comes from John Abbott with Wolfe Research. Please go ahead.

Hey. Good morning, and thank you for taking our questions. Staying with the Uinta and the new zones, not ready to give a resource estimate yet. Understand. But can you just sort of talk about the prob what how many wells you need to drill and the process of delineating these other zones and what do you think the time frame could possibly be in terms of understanding the potential there?

Hey, John. It's Clay. You know, I think for us and not to beat a drum here, but for us, everything comes down to returns on capital and the ability to kinda generate value for the business. So I think as we approach the Uinta, that's that still leads. So I think you know, to your point, right, there is a real delineation opportunity and there's a real kind of resource expansion opportunity in the basin. But what you've seen from us is allocating capital away that still focuses on our ability to generate free cash flow, generate returns on that capital. And so I don't think we're coming at it with a in the next couple years, we're gonna try to create a full kind of delineation of the resource. We're just trying to gather data that not get ahead of ourselves and be able to kinda generate returns on capital. But certainly, ton of excitement about the resource, but we're also gonna allow others to be ahead of us as they have been and delineate alongside us.

And, John, it's David. I might not you know, so gonna add one more thing for you, which is the basin itself is fairly well set. You know, the acreage has been leased and the operators. You know, our sort of pursuing their own business plan. So I think we've gotten the benefit of a couple of strong operators who were delaying over the last few years that have now sold positions to operators who are gonna continue to do that, that we you know, all hope to learn together. So I think it's not just about what we do. Is really the punchline.

Appreciate it. And then I wanna go back to the topic of divestitures. So, I mean, there's a pipeline. There's no set timeline here. I understand that. Mean, if I sort of look at your portfolio, maybe there's some assets in Oklahoma. You got you got a Barnett position. Maybe there's other assets that I'm kinda missing. When I sort of think about when you sort of think about commodity prices, I mean, how do you think about selling oil versus gas assets in the current environment? I mean, you seem to be more constructive on gas given the pivot here. Do you wait? To sell me? Like, if you were to sell the Barnett, do you just sort of wait? And oil, you know, if we sort of look at the year performance of this of names today, oil stocks have not necessarily always done as well. So is this the right time asset? So is it So how do you look at the commodities in the timing of divestitures?

Yeah. Hey, John. It's David. Great question. I think you framed it, you know, the way you know, a lot of good questions that around that framing that we would think through. I think the punchline as we said earlier, is that we are committed to becoming a bigger company opportunistically more efficient company opportunistically, and that means we're gonna be buyers and sellers. Of assets. So the timing of that, yes, is important. We're focused on creating great value as we buy and sell. But long story short is we are signaling that we've sold approximately $50 to $100 million of assets a year. For the last few years and that know, we've got at this scale a bigger pipeline of that going forward. So I would think about your question. We're gonna evaluate all those comments that you made on oil, gas, do they make our position in the portfolio better. More streamlined. But, fundamentally, we have some assets that we think will be better in other people's hands. And we think now is a reasonable time to be thinking about that in greater scale than we have in the past.

Alright. Thank you very appreciate it. Thank you for taking our questions.

Thank you. Our next question comes from Michael Furrow with Pickering Energy. Please go ahead.

Hi. Good morning. Thanks for taking my questions. Just like to ask a question about capital flexibility. You know, the decision to reallocate some capital to dry gas seems like it could be a good long term strategy given the macro environment and highlights your ability to mobilize in response to different commodity pricing fairly quickly. But in the slide deck, you know, your 2025 guidance is for $70 a barrel and $3.30 Henry Hub. So I was wondering, does that mean that the company plans to move forward with dry gas drilling at prices that are $3 or higher. And does that also mean that you would transition back to liquids and be flexible with your spending program if gas prices dip below $3. At least for 2025, Am I good.

It's Brandi. As David mentioned in the prepared remarks, right, we're all about drilling and allocating capital to the highest returning opportunities portfolio and maximizing free cash flow. I think you're seeing right in our 2025 plan just the flex the Eagle Ford. Look at how we allocated capital last year. It was heavily across our liquids and oil weighted inventory. Right? And that was in a $75 and kind of $2.50 world given gas prices are north of $4. Right? There's a lot of really attractive inventory that we're bringing forward in into 2025. So, again, I think you're gonna continue to see us maintain capital allocation flexibility, but always towards an eye of right, allocating capital to really high returning opportunities in our portfolio.

Yeah. That makes sense. Gas prices are surely higher than $3 right now. I appreciate the disclosure about the 2024 program, and then you end up 25% of the allocation to the non-mute and beaut. Do you think you could provide any color about what the expectation is for non-new in view intervals in 2025? And then, additionally, you know, you've already hit on the productivity today. I was wondering if you could provide some details about the comparable economics between the different zones and, you know, if they're if they're coming in a little better or worse depending on know, maybe drilling or completions.

Hey. It's Clay. You know, I think you can assume a similar kind of program makeup as we look at 2025. You know? And certainly, from a resource perspective, it's early, but we're seeing similar results across the intervals, which is what's got us excited about the prospectivity for the total resource base.

Yeah. And it's David. Just to add one thing, though. When you start delaying new formations, the range of outcomes is gonna be wider. So you're hearing really I'll call it optimistic expectations from us because we've seen great resource. We've had great results. But I think part of the expectation in this phase is we're gonna learn a lot and just have a wider range of outcomes, but still around a good I'll call it, good overall program.

Alright. Thank you. I appreciate the call.

Thank you. Our next question comes from John Freeman with Raymond James. Please go ahead.

Yeah. Thanks. First question, you know, this plan for 2025 just, you know, generates a massive amount of free cash flow and when I sort of look at, you know, last year, you utilized 20% of the buyback program, leverage is around 1.4 times, you know, target of one times. It looks like you could, you know, accomplish both, you know, the rest of the buyback and that leverage target this year and and and so I'm just maybe help me think about the priority and kind of ranking of that free cash flow that you're generating above and beyond that base dividend.

Hey, John. It's Brandi. So I would say fundamentally no change as to how we think about capital allocation. Top priorities remain the base dividend, if you like, but also the balance sheet. After that, it's all about, right, how do we drive or earn the best risk adjusted return on the capital that we invest with that. We're buying back our stock because it's discounted to intrinsic value or we're investing our business or buying assets accretively. So again, I think we view the buyback as an opportunistic tool. As you flagged, we used 20% of it in 2024. We bought back stock at an average price of $10 per share. So we view it as a in 2025, they continue to be an opportunistic tool that we have at. And that we would expect that the base dividend to stay in the $0.12 per share per quarter range. With incremental return of capital likely coming from the buyback.

Got it. And then, you know, you in the presentation, y'all highlighted these u-turn or kind of advanced trajectories wells that you did the first of those. It looks like you've identified about 12 of these locations. In the larger Eagle Ford. Are there additional additional ones in this current 2025 plan that y'all have slated.

Hey, John. It's Brandi again. So I would say nothing really in the 2025 plan specifically with respect to u-turns, but I would say at a high level, right, as we're looking develop a particular asset, we're gonna do so in the most optimized way as that may be right, just straight laterals. It may be from straight laterals plus a plus a u-turn well. So, again, it's a nice tool. Right, to have in our D&C toolkit that we'll look to use opportunistically in the future.

Got it. Thanks for.

Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to David Rockecharlie, CEO, for closing comments.

Great. Thank you all again for joining us, for supporting the company, and for the questions today. We, again, are really just proud of the company and the team that comes to work here every day for outstanding performance in 2024 and again, we have really high expectations and a great outlook for 2025 again. So look forward to catching up with you all soon.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.