PDC Energy, Inc.

Good day, ladies and gentlemen, and welcome to the PDC Energy Fourth Quarter and Year-End 2021 Earnings Conference Call. At this time, all participants are on the listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Kyle Sork, Investor Relations. You may begin, sir.

Thank you, and good morning. On today's call, we have President and CEO, Bart Brookman, Executive Vice President, Lance Locke, Chief Financial Officer, Scott Myers, and Senior Vice President of Operations, Dave Lillo. This morning, we issued our press release and posted a presentation that accompanies our remarks today. We also filed our Form 10-K. The press release and presentation are available on the Investor Relations page of our website, www.pdce.com. On today's call, we will reference both forward-looking statements and non-US GAAP financial measures. The appropriate disclosures and reconciliations can be found on slide two and the appendix of that presentation. With that, I'll turn the call over to our CEO, Bart Brookman.

Thank you, Kyle, and welcome, everyone. We have a busy morning with four exciting topics to cover. First, the strategic and highly accretive acquisition in the core Wattenbergs. of Great Western Petroleum. Second, a refined top-tier shareholder return framework for PDC, including the doubling of our base dividend. Third, the terrific results from 2021 and the company's very strong fourth quarter. And last, what I consider an impressive 2022 guide and 2023 outlook. Regarding the Great Western acquisition, let me begin by thanking everyone at PDC who worked on this deal, as well as the Great Western team and their ownership group. Since closing the merger in early 2020, we have been clear about our desire to pursue additional scale with the goal of not just getting bigger, but equally important, getting better. This acquisition is a natural next step towards executing this strategy. It represents a transaction which checks all the boxes. It enhances our free cash flow generation capabilities, brings undrilled locations that complement PDC's existing inventory, enables PDC to increase shareholder returns. It is accretive on almost all PDC key financial metrics, and it honors our balance sheet. I will let the team give the details of the acquisition, but let me touch on some of the highlights. $1.3 billion purchase price funded by cash on hand utilizing our undrawn revolver and private placement of approximately 4 million shares of PDC stock. It includes an estimated 185 million BOE approved reserves and pro forma PDC will be a 1 billion barrel approved reserve company. Production of approximately 55,000 BOE per day. That is at a 42% oil mix. An acquisition price of approximately $24,000 per flowing barrel. Extremely favorable and competitive in today's market. The acquisition brings 315 quality drilling locations. 125 of these are ducts or are fully approved and permitted. The transaction is accretive on several key metrics, including free cash flow, free cash flow per share, shareholder returns, GNA, and LOE. It also improves our greenhouse gas and methane emission intensities as we pursue our 2025 emission reduction goals. Overall, an outstanding deal for PDC, our employees, and our shareholders. Now, let me switch to 2021, a tremendous year. First, congratulations to our operating teams. Three years without a lost time injury in either basin, an outstanding job. During the year, we generated $950 million of free cash flow on a capital spend just under $600 million. We reduced debt nearly $700 million and ended the year with a leverage ratio of 0.6. We returned $245 million to our shareholders, launched a base dividend of 12 cents per share, paid a 50 cent per share special dividend in the fourth quarter, and repurchased just under 4 million shares at approximately $45 a share. We also introduced new and aggressive greenhouse gas and methane emission targets. In 2022, our operational focus and financial momentum will continue to accelerate. Pro forma, we expect to generate approximately $1.3 billion of free cash flow. After we assume the debt from this transaction, we anticipate year-end leverage ratio will be approximately 0.7. Let me provide some highlights around our planned shareholder returns. which Scott Myers will cover in more detail later in the call. I want to start by saying how pleased I am that our board recently approved doubling our quarterly base dividend to 25 cents per share and upping it to 35 cents upon the closing of the acquisition. We also increased our authorized share repurchase program to $1.25 billion for approximately 20% of the current market capitalization. We plan to execute these repurchases by year-end 2023. With regard to our shareholder return framework, 60% of post-dividend annual free cash flow is planned to be returned to shareholders through our buyback program and special dividends if needed. Last and extremely important, the company is not losing sight on ESG, and the team is making great strides here. In 2022, we plan to invest approximately $80 million to further improve ESG performance, including a 10% year-over-year greenhouse gas improvement, 15% methane intensity reduction, and industry-leading outreach programs, including charitable giving, and community relations efforts. We've also made continued progress on our board refreshment, including the addition of three diverse members over the past 12 months. And we have included emissions reductions in our 2022 quantitative metrics and fully defined the governance of ESG at the board level. With that, I'll turn the call over to Scott Myers for more details on the financial outlook of the company.