Civitas Resources, Inc.

Good day and thank you for standing by. Welcome to the Civitas Resources 4th Quarter 2024 Earnings Conference Call and Webcast. My name is Jadine and I will be your operator for today's call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions. To ask questions, you may press star 1 on your touch-tone phone. And to read through your question, please press star 1 again. Please be advised that today's conference call is being recorded. I will now turn the call to Brad, head of investor relations. Brad, please go ahead.

Thanks, operator. Good morning, everyone, and thank you for joining us. Yesterday, we released our fourth quarter and full year 2024 results, provided our 2025 outlook, and issued supplemental slides for your review. In addition, our 10-K was filed yesterday, and all of these items are available on our website. This morning I'm joined by our CEO, Chris Doyle, and our CFO, Marianella Foskey, and other members of management. After our prepared remarks, which will come from Chris and Marianella, we will conduct a question and answer session. As always, please limit your time to one question and one follow-up so we can work through the list efficiently. We will make certain forward-looking statements today which are subject to risks and uncertainties that could cause actual results to differ materially from projections. Please make sure and read our full disclosures regarding these statements in our most recent SEC filings. We may also refer to certain non-GAAP financial metrics. Reconciliation to the appropriate GAAP measure can be found in yesterday's earnings release and our SEC filings. With that, I'll turn the call to Chris.

Good morning, everybody. Thanks for joining today's call. I want to start with a quick recap of 2024 before focusing most of my time on 2025 and the actions we're taking to strengthen the company. By continuing to enhance our operating performance and portfolio, reducing our costs and prioritizing the balance sheet, we're creating more durable business and better positioning Civitas to generate sustainable free cash flow for years to come. Quickly on 2024, it was a transformational year for the company. Underpinned by our high quality assets and strong operational execution, our full year production was above plan and we beat original guidance for capital and operating costs. Over the past year plus, we built scaled positions in the Midland and Delaware basins, materially strengthening and diversifying our company. We brought in a proven leadership team with deep Permian roots. I'm very pleased with what the team has accomplished in just one year, highlighted by the following. Midland Basin well costs are down 15%. Daily drilling footage is up nearly 20%. Daily completion throughput is up 50%. In addition, we de-risked prospective horizons and added high-value inventory across our acreage position. And all of this has been accomplished while delivering excellent safety performance. Further, we strengthened both our Midland and Delaware positions through ground game initiatives, including more than 50 trades, swaps, and new leasing. And importantly, we did so with little to no cash. Yesterday, we announced a bolt-on transaction in the Midland Basin, adding 19,000 acres and 130 locations. With this announcement and to offset the purchase price, We set a $300 million asset sales target for 2025, which is likely to come for the DJ Basin. Effectively, this is expected to accelerate value from the DJ in support of extending our runway in the Permian. Between the ground game and Bolton, we've added nearly two years of future development in our Permian business unit and extended lateral links and working interests across our portfolio by 5%. This was done at very attractive valuations, well below recent market transactions. Today, our Permian inventory stands at 1,200 development locations. While establishing a successful track record in the Permian, we didn't lose focus, as the DJ Basin also had a strong year of performance. In 2024, we turned in line the industry's first four-mile laterals in Colorado. These were record-setters, representing the state's highest 180-day cumulative oil producers. Armed with basin-leading operational capabilities, our team added high-return development locations through a combination of ground game transactions in our core areas, including Watkins, and through continual development optimization. Overall, free cash flow for the year was about $1.3 billion, and we returned more than 70% of that to our shareholders through $5 a share in dividends and a repurchase of more than 7% of our outstanding shares. All in, we had a very successful year in 2024, and Civitas is a deeper, more durable business today. Now let's turn to 2025 and the steps we're taking to strengthen our business. Our plan focuses on delivering the following strategic priorities. Run the business to maximize free cash flow, built upon a leading cost structure and enhanced by sustainable capital efficiencies. Second, deploy that free cash flow to protect and strengthen the balance sheet. As Marianella will discuss further, we're prioritizing debt reduction in 2025. Third, return cash to shareholders. Predominantly come from a strong base dividend this year. And finally, lead an ESG and build this long-term sustainable business. as we execute on our target to further reduce our emissions. In 2025, we're level loading our capital investments compared to 2024, where the front-loaded program led to low till counts at the end of the year. While level loading impacts near-term production, this is more than offset by the long-term benefits in operating and capital efficiencies. Keeping activity levels flat in 2025 will deliver full-year oil production of 150,000 to 150,000 barrels of oil per day after level loading. and we'll invest $1.8 to $1.9 billion split relatively evenly between the Permian and DJ basins. This is approximately 5% lower than last year, reflecting the well cost savings our teams have delivered. Notably, our reinvestment rate in 2025 is consistent with 2024, despite WTI strip pricing being $5 lower year over year. As expected, our first quarter production will be low point for 2025. 80% of the sequential drop is related to natural declines in the DJ basin, following peak production in the fourth quarter. This was driven by a low till count exiting 2024 and in the first quarter of 2025, as well as severe winter weather and unplanned third-party processing downtime. We expect to grow meaningfully through the middle part of the year as new tills come online. Specific to the 2025 plan, I want to mention a few other items of note. Within our Permian program, we're increasing our allocation of capital to the Delaware Basin. Today, we have four rigs running in the Permian, two of which are in the Delaware. and a third coming shortly. Nearly all of our completions in the Permian Basin will be simulfrac, leveraging the advancements our team delivered last year, improving fluid throughput by 50% versus the start of the year. And in the DJ Basin, we have two rigs running today, and we'll continue to push the limits with longer levels. We're moving more of our production facilities to tankless operations, and our teams are operating the most efficient, lowest emission rigs and completion crews in the Basin. Our 2025 plan delivers approximately $1.1 billion of free cash flow at $70 WTI, a free cash flow yield of over 20%. Maintaining a culture of performance and cost leadership is critical to building a durable, sustainable enterprise. To further enhance our business, we're streamlining our organizational structure with a 10% reduction in workforce throughout various levels of the company. These are tough decisions. We're committed to staying low cost, driving efficiencies, and enhancing margins across all areas of the business. I'll turn it over to Marianella to discuss the steps we're taking to accelerate our balance sheet goals.