Crescent Energy Company Q2 FY2025 earnings call

• David highlighted the quarter was exceptional with strong free cash flow and exceeded expectations, enhancing the full-year outlook. • Operational excellence drives long-term value, with strong free cash flow from impressive execution, record production, capital efficiency, and cost savings. • Made the most of market volatility, navigating acquisitions/divestitures at compelling valuations, transitioning to a single share class, and driving operational savings through acquisition integration and base business execution. • Brandi noted the company's strong track record of free cash flow generation, eliminated Up-C structure, repurchased stock, increased liquidity, refinanced debt, and added oil hedges.

Crescent Energy had an exceptional quarter with record production of 263,000 barrels of oil equivalent per day (108,000 barrels of oil per day). Adjusted EBITDA was approximately $514 million, capital expenditures were $265 million, and levered free cash flow was approximately $171 million. The company generated strong free cash flow, driven by operational execution, record production, capital efficiency gains, and cost savings.

• Enhanced outlook for the full year, reaffirming production expectations with reduced capital and cash tax expectations, driving increased free cash flow. • Continues to focus on maximizing free cash flow and returns on capital invested, with flexible capital programs in the Eagle Ford and prudent approach in the Uinta. • Sees opportunity in the A&D market, with accretive transactions including acquisitions and divestitures.

• Commodity price volatility. • Global geopolitical conflict. • Business strategies and other factors that may cause actual results to differ from forward-looking statements. • Market dislocation affecting A&D activity.

Q: John Freeman asked about D&C efficiency gains and Uinta well results affecting capital allocation.

A: David mentioned it's execution of best practices, and the Uinta results change capital allocation thinking due to proven economic inventory.

Q: Michael Furrow asked about adding to minerals portfolio and balance sheet.

A: Clay said it's accretive and fits the strategy, Brandi discussed capital allocation priorities on balance sheet, dividend, and buyback.

Q: Charles Meade asked about A&D market dislocation.

A: David said the market is functioning but much is on the sidelines.

Q: Oliver Huang asked about D&C efficiencies and cost levers.

A: Brandi said it's drilling and completion efficiencies, with D&C costs expected to creep up slightly.

Q: John Abbott asked about capital allocation and tax benefits.

A: David said flexibility to shift capital, Brandi discussed cash tax savings from tax legislation.

Q: Tim Rezvan asked about leverage target.

A: David and Brandi discussed focus on managing balance sheet, aiming for 1x leverage, and comfortable with M&A within leverage guidelines.

Q: Michael Scialla asked about stock valuation and Uinta drilling pause.

A: David said focus on demonstrating business strength, and Uinta drilling pause is due to evaluating stacked resources for maximized development.