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spk_0: that morning at thank you for joining christmas third quarter twenty twenty two earnings call her remarks today will come from our ceo david rock early and myself todd fog cheap accounting officer and then connor and clay read both executive vice president are also here today and available during una they call may contain projections that other forward looking statements within the meaning of the federal securities law the statements are subject to risks and uncertainties quick money price volatility the continue impact the poet nineteen geopolitical conflicts including in russia and ukraine our business strategies and other factors that may cause actual results to differ from those express or implied in a statement and are either disclosures we plain any obligation to attend any opening statements to call in addition today's discussion may include disclosures regarding not job financial measures for reconciliation of historical non gaap financial measures to the most directly comparable gap measure please reference or ten q and earnings press release of l on a website with that i will turn it over to eat it
spk_1: great thing to be really and good morning
spk_0: next month to marker first anniversary of becoming a public company a lot has changed in the market environment over the last year
spk_2: but a crescent we continue to execute the same strategy that we've used successfully over the last decade through market cycles and volatility number one generating significant free cash flow number two exercising prudent risk management and number three producing outside returns on investment
spk_1: and thanks to the dedication expertise of hard work of every one of the numbers are team we're pleased to discuss yet another strong quarter an exceptional progress on or value creation tools
spk_2: before moving to this quarter's results i'd like to highlight some of the significant achievements from this past year old operationally and financially which add value to the company and keep as well positioned for continued long term value creation for our shareholders
spk_1: to begin we continued our successful acquisition track record would be highly creative six hundred and ninety million dollars you into these an acquisition closed earlier this year
spk_2: we believe these assets as meaningful value for shareholders significantly increasing the scale of our production base with approximately one billion dollars to prove developed pt town while also enhancing or margins and adding attractive will waited inventory the transaction exemplifies the power of or acquisition platform
spk_1: and we expect are deeply experienced team of investments and operational professionals will continue to to to deliver value to our acquisition strategy and what remains a capital constrained sector
spk_0: next we continue to demonstrate our commitment to balance sheet strength free cash flow and returns to investors or cash flow generation allowed us to achieve over two hundred and fifty million dollars of debt reduction post acquisition and our leverage at nine thirty is in line with our long term target of one
spk_2: times that you didn't
spk_1: we also announced seventeen cents per share dividend again this quarter which has expanded forty percent over the course of this year from twelve cents per share in the first quarter we continue to execute well operationally across the company even as we face tougher market conditions and increasing scale of the business
spk_2: he went acquisition marked our seventh transaction since the beginning of twenty twenty one and our team continues to successfully integrate these assets into our portfolio while maintaining strong operations
spk_1: crescent is an organization of scale with approximately one hundred and fifty thousand barrels of oil equivalent per day of production and one point four billion of annualised just to keep it off
spk_2: and two point three billion of adjust to be ebitda on an unhedged basis for the third quarter
spk_1: we also have approximately six point three billion approved developed pv town at nine thirty strict pricing additionally we can to create value from are large reservists investing six hundred to seven hundred million dollars in our development capital program primarily concentrated across are operated positions in the evil for and you intimations where we expect to generate an excess of two times are invested capital that are attractive drilling inventory and consistently low rebuff the rape crisis has been able to compound value through the drill bit more preserving the strength of our balance sheet importantly we continue to prioritize or role as stewards of the barman summary of to initiatives
spk_2: joining the oil and gas methane partnership and publishing our second is to report in september
spk_1: i encourage you all to read our sustainability report which includes tangible operational metrics and targets most notably or goal to reduce absolute emissions by fifty percent relative to or twenty twenty one pp a reported base one
spk_2: our team has identified a number of will cost projects a provide high confidence emissions reductions opportunities and has increased efforts on detection and measurement of emissions which are highlighted in the report
spk_0: we will continue to update the market or progress and this important area
spk_1: finally we continue to execute are chapel market strategy into what has been an increasingly volatile broader market in the high yield market consistent with our strategy was issued two hundred million dollars of tackle notes in february to turn out the ordeal that we acquired through the contango merger and through good performance and support of our bank group we increased or boring days as extended are term maturity to five years ensuring and know near term measures
spk_0: in the equity capital markets we completed our inaugural secondary offering in september which was the first market a deal in the empty space the sheer raising gross proceeds of eighty six million dollars
spk_1: the transaction progress to significant goals for our organization increasing public float by fifteen percent and taking a key step and continuing to build public awareness and broader broaden our institutional investors
spk_2: further in connection with the transaction we executed the concurrent by back of over two point five million class be private shares reducing total shares are standing by approximately two percent at what we believe remains on attract evaluation of our business
spk_1: additionally we significantly advanced or public presence through increase research coverage adding for research analyst since the closing of our merger with contango late last year and as a reminder we describe our current investor base in three groups one or legacy private investors hold approximately fifty five percent pro forma ownership has transaction
spk_2: down from sixty percent number two a or in coach or manager did not participate in the offering and remains and a lines and supportive long term shareholder retaining and sixteen percent ownership and number three the public class a shares represent twenty nine percent ownership impressive up from twenty five percent we are pleased with our progress on these goals and will continue to execute er chapel market strategy and a methodical way that is aligned with long term value creation for all shareholders in summary the scale of our achievements year to date is a testament to the strength of our asset base and the quality and performance of our people and we did not take this for granted each of these accomplishments aligns with the broader goals we set for ourselves and outline to the market since becoming a public company late last year
spk_1: to put it plainly we've done what we said we were going to do and we're confident we are well positioned to continue to execute on our strategy of creating long term value for shareholders
spk_2: now moving on to our third quarter results as i briefly touched on crescent continues to perform in line with our expectations
spk_1: in what we anticipate will be our most active quarter of well completions for the year
spk_0: we spent one hundred and ninety billion dollars in capital and the third quarter a bulk of which was attributable to her operated drilling program having maintain two and a half rigs across the you winter an eagle ford and wrong line thirteen gross operated wells with quarter
spk_1: additionally we participated in another seven gross and one that was brought on line across are operated assets in the permian basin and
spk_2: given the heightened completion activity total production increase six percent from one hundred and forty two to one hundred and fifty thousand b o e per day and oil production increased eight percent from sixty four to sixty nine thousand barrels per day
spk_1: on the financial side the this is generated three hundred and fifty nine million in adjusted ebitda and one hundred and forty four million in levered free cash flow delivering consistent cash flow despite this decline commodity prices relative to the previous quarter going forward we expect our cap on spent to be fairly flat quarter over quarter while well completions in the fourth quarter will decrease ahead of increased completion activity in the first half of twenty twenty three the a the market will remain on pace to evaluate north of one hundred and fifty transactions this year and would characterize the past two quarters as a more challenging period to be a buyer across the section
spk_0: in the energy market more broadly this past quarter sauce sustains commodity price volatility exacerbated by an increasingly complex to political environment
spk_2: oh well ongoing inflationary pressures continue to create headwinds across our industry in the form of supply chain constraints and service companies apply to me and balances this combination of commodity price and cost uncertainty alongside and economy wind shift in central banking policy and the implied cost of capital has continued to challenge the bit ask spread in the energy asset markets
spk_0: even as an ever increasing volume of assets are coming to market significant portion of these processes
spk_3: remain on the sidelines
spk_1: however a the activity has begun picking up recently and were expecting meaningful improvement in the a in the market over the coming months
spk_2: fortunately for crescent or continued participation in the a the market has kept our finger on the pulse all while the nature of our asset base with are low decline rate and multi your inventory of high returning locations has permitted us to stay patient and evaluating the transactions that patients allows us to continue to adhere to the discipline framework and investment criteria a guide our evaluation process or market presence and patients have also allowed us to find good value as we opportunistically divest not caresses
spk_1: turning back to operations over the course of the last quarter we ran one and a half rigs in the winter basin and when reagan evil for and our development program continues to be underpinned by returns driven decision making
spk_0: generating attractive return on capital and short payback period we plan to run one rake in the winter for the remainder of your a shift we need in august
spk_2: this allows us to continue to validate or spacing and completions design optimization relative to the previous operator and while it's still early or additional data suggests those changes or translating into a positive impact on overall performance this process of validation and optimization comes to the good time as it corresponds well with managing our development cadence while or midstream provider as additional capacity to our in fuel gathering system to support future volume growth
spk_1: as we have said in previous course we continue to see if industry trend a deferred maintenance impacts and our assets and service providers are knowledge
spk_2: we will continue to do our best with planning and operations to mitigate the potential for future impacts are crushed
spk_1: and while inflationary pressures continue to manifest we expect to remain within our publicly stated capital gains range primarily due to increased drilling efficiencies across our eagle for position
spk_2: where are continuous acreage position allows us to get to extend levels most recently
spk_1: through had brought on lines as past quarter with average lateral links in excess of sixteen thousand feet
spk_2: as well as through the continuous improvement as we implement our development strategy in the winter both of which would feel will continue to provide a tangible offset the costs as we work with service providers on establishing a consistent repeatable process
spk_1: additionally we continue to see sustained inflationary pressures across are operating costs structure approximately ten percent years a day primarily due to increase maintenance and commodity went costs and also due to high returning elective of activity as well as nonrecurring expenses related to our recent acquisitions and merger with contango looking ahead to next year we expect me to see further inflation particularly on the service the side with market remains a novelist we time
spk_2: but we are confident or team will continue to find ways to achieve repeatable operational efficiency
spk_1: as we remain focused on operations in key for and beyond we look forward to posting twenty twenty three guidance over the coming months
spk_2: at a high level we anticipate running mate one maintenance level development program over the course of next year as we are mindful of margin compression into stabilizing commodity prices with the potential for sustained capital inflation our organization will focus on generating attractive return on capital as opposed to growing production insurers will remain flexible particularly as the a and the market continues to have and with it or view on the highest returns capital in short were happy with the progress we've made the sheer and remain optimistic about our value creation potential given crescents current positioning and a unique opportunity said laid out before us with that altering the color brandy to cover or third quarter twenty twenty two for each results in more detail and or remainder of your out read
spk_0: they say that i third quarter results reflect yet another solid quarter purposes we continue to prioritize shareholder returns and announced to recap the hundred fifty thousand that barrels of oil per day and fifty thousand that barrels of oil per day which reflected six percent in percent in require or or respectively hammer like a higher plane can respect additionally regenerate three hundred million for justice back a hundred forty four million offer free cash flow maintain a consistent cash by generation despite the off and tomorrow alongside earning bring out the quarterly dividend payment of seventy and per share consistent with the previous quarter her forthcoming twenty twenty three guidance intend to reevaluate our faith and then within the confines of a ten percent of a justice backed by mark and subject for approval for to declaring are twenty twenty three different as part of our forward outlet early next year daddy into specific are all differential increase muslim quarter over quarter primarily due to growing production march twenty eighth and access which has been more than offset by the higher oil waiting of our production the square operating costs the production at our taxes or the quarter or fifteen dollars and thirty three that are ble four percent increase quarter of a quarter as david briefly mentioned the increase percent during by inflationary pressures and started crying and caught by means of or overall increase was driven by and mean that had a high return elective for our project definitely we encourage certain nonrecurring operating as is over the course of the third quarter primarily due to the expenses democrat first year as a public company as well as are most recent acquisition green as nonrecurring others are operating costs a fraction other taxes decrease to forty eighty seven on a korean updated outside the high end of our prior attack died i just had recurring cashed in a total that dollar forty for ble which is in line with previous expectation we continue to benefit from synergies he was he went to be an acquisition which added significance sales a broader business or contributing animal incremental today i would know this calculation excludes or nonrecurring expenses the contango merger and the formation of crescent energy as a new public company and we expected incremental three five million of one time expenses for the remainder of twenty twenty two including postcard or integration another transaction costs but for you your we anticipate twenty five to thirty million of nonrecurring expenses in fact today operating expenses
spk_4: you did factors
spk_0: on top of then we invested one hundred ninety million and third quarter trolling five growth operator locations in the usa five discovered additionally we brought a fine another thirteen growth up about an event that today we brought on my fifty growth operate well and forty eight that operate welcome here at pirate twenty twenty program and continue to see hyperactivity and throttle return on capital expect a significant much majority of our program to pay back the range a twelve month to generate more than two types or investment as a commodity prices hey we're continuing to operate one ragged both the offer any went to beat them as a him off quarter we shifted to wondering if the us in august as it began to implemented monitor optimized i think completion design and managed by the head of our third party gap gatherers play an expansion and david mentioned respected her car to be or most active this year for well turn and mine i are upcoming quarter our guiding relatively consistent capital fell to the second and third quarter at lower production due to lack completion activity a full year twenty twenty two capital got his or estimates are unchanged at six hundred to seven hundred million for the past nearly eighty percent allocated to operate development in the new entity as as a call last quarter we expect to end up between the a high end of our original guidance range subject at hiding adjustment said it it with our operate program around and of the year summers others across the industry would continue to be inflationary pressures that happen able to successfully mitigate portion of those pressures through increased drawing and completion efficiency the proper operate at it even the rapid escalation and development costs couple with a significant half as integrating and thirty thousand barrel of oil per day out that are pleased with efforts our team has put forth and keep us with an arcade it's range said at the beginning of the year on about she reacted at a quarter what else can leverage of one time and six hundred and twenty five million and liquidity since closing the your it's acquisition at the end of the first quarter with were paid two hundred fifty six million debt and as we continue to generate significant free cash flow for the remainder of the year weeks back to maintain leverage at or below our target level of one time the done by hugh grant in september this year we completed are already determination increasing our day from one point eight to two billion in extending our term maturity an additional two and a half years ensuring we had no near term maturity for the foreseeable future additionally we successfully negotiated fifty basic point reduction and interest rate margin or mouth outstanding on our credibility taken together we're pleased with the outcome of a determination process which speaks to the relative strength of the business the outlook for success cash flow are growing proved reserves in are strong balance sheet additionally last week we find a purchase agreement to divest are non or operated medlin basic positions or total proceeds of eighty million dollars subject to customary purchase price jumped the proceeds of which will be used to repay that in the near term and we anticipate the transaction a close by your and twenty three to you your date with the vessel over one hundred million of noncore assets which will decrease twenty twenty two production by one and a half to two thousand barrels of oil per day and but our by twenty five to thirty million dollars relative to a higher for your garden in the capital markets as we hit on that quarter we recognize that the current market positioning an awareness of crusted not yet at a level consistent with peers have a similar size and more nuanced aspects of the business such as or lower decline in the impact hedges have on your term cash oh they're still not fully appreciated reflected in our current valuation while some of these teachers will improve over time as you continue to pose positive result complete a of acquisition and legacy acquisition related hedges continue to roll off we felt the market visibility in education as a key piece or strategic plan for twenty twenty two and beyond we're committed to an active approach to building awareness of our story which we intend to accomplish vacation with the market with or follower ships improve our floating and increase ugly research coverage the past quarter we tickets run of the sabbath doing just that through our inaugural public actually offering which was the first mp marketed actually offering of the year initially market for five million shares we received significant enthusiasm for the offering from both existing and doing bastard an urban allowing us exercise or greens you option and salad additional seven hundred fifty thousand shares the offering complemented by the company concurrent purchase and or terminal over two point five million class be private shares the same price per share received by the selling stock holders and combined offering for me pro rata or legacy private investors with exception of the unit own directly backyard co to continue to retain ownership a pro forma for the transaction or private investors are pretty five another business maintaining significant aligning with press public float okay carotenes it's direct investment in crescent as a supportive long term shareholder in addition to kick retaining a estate members or amendment human board of directors continue to increase their direct ownership and crescent over the course of the quarter further promoting the alive and we believe is crucial to creating an optimal outcome for our shareholders the might have the offering want to reiterate that we do not intend to pursue a public share buyback program like many of our public company peers which we believe would run counter to the creation of long term value that agree to floating market presence would provide however we may continue to conduct similar vibe accept private server detects connection with future second are offering that is a tool available to us the does not compromise our but which will continue to evaluate based on the implied returns associated with that you the capital and impact our galaxy looking forward to this upcoming quarter we anticipated by supply production given that increase completion activity and her quarter of this year as a significant portion of our development capital will be driven by drilling activity and a full your twenty twenty two we suspect the land near the midpoint of our production guys range due to the continued inflationary pressures impact your operating costs rapture at the low end of are either die for cash flow guide in my county for as the divestitures and decreased my presence as a reminder of higher got is with salish long at our first quarter earnings in maine provided at one hundred dollars per barrel oil and six dollars from in utica we remain pleased with are adults year to date and the progress we've made and operational results are continuing business as usual and crescent had taken a significant step forward at expanding our public markets positioning through it's inaugural secondary offering with adults from the caliber david a private closing remarks
spk_1: thanks read it before moving on to cuny i want to reiterate some of on your to date highlands which we believe provide the foundation for sixteen value success first we completed the you into base acquisition adding significant scale to the business and increasing a runway of high margin will we didn't between second we increase or dividend by forty percent passing through the creative nature of the winter transaction while continuing to deliver the business having repaid over two hundred fifty million of death over the past six months third we continue to post strong quarterly results while successfully integrating number of new assets into our business
spk_2: creating a business scale with approximately two point three billion and unhedged annualized adjusted ebitda and approximately six point three billion improve developed pv term at nine thirty strip pricing
spk_1: worth we've continue to create organic value across or six hundred to seven hundred million dollar capital programme developing hi returning locations and managing an inflationary environment with repeatable operational efficiency we continued to prioritize are road stewards of the barman publishing or second is to report committing to reduce absolute emissions by fifty percent by twenty twenty so
spk_2: and finally we continue to prioritize capital markets activities freezing incremental bank and how you that completing the years first is mp equity issuance which increased or public float or fifteen percent and a research coverage from for analysts over the course of the your the achievements we've had our first years of public company continue to demonstrate cousins differentiated business model is working and will continue to position the company for success into what remains an attractive market backdrop from our sector thanks again for joining us today and with that we will now be happy to take your questions
spk_5: thank you
spk_6: at this time we will be conducting a question and answer session if you would like to ask a question please to star one on your telephone keypad for confirmation don't will indicate your nine is in the question too you better start to if you would like to remove your christian from the que for participants using speaker equipment it may be necessary to pick up your hands it before pressing the starches one moment please why the portal questions to ask questions is for a star one we have a first west into the lineup neil dingman with truest securities just go ahead
spk_7: the monica six the details you talk maybe just a bit about more your maintenance point i know you don't have specific twenty three but he just can't think about you know maybe fly production how you might think about caused all us as and everything is effects next year thank you
spk_8: yeah have to take that meals ben know what i'd say is as david i'm ready noted in their opening remarks in a we expect to kind of be in maintenance mode next year and kind of thinking about running kind of the to reprogram that we've been running more recently and next year we talked about that the past you know to maintain decide we grow up production let's method to the to reprogram so i think that's what you should come
spk_7: you need to see from us from our activity level but will be subsequent i would guidance yemen there's the term as it relates to the contemplation what we're seeing the same trend that everybody else in the sector is saying which is expected given to move in the commodity price and increased activity in can we noted that in a when we came out for guidance uncoupled with the you into base and transaction would increase of kinda fifty percent know we've we've done a good job combating mad boat true you know enhancing lateral slings and that he offered him and also you know changing our completion design and you into which is your meaningfully below
spk_9: in a where the properties costs was before you take into account the
spk_8: inflation but you know on the outlook you know our view from here is that inflation's really going to be tied to activity and continued activity in the sector and so you know lobby still see pressure we certainly have seen the pace of increasing costs moderate ah them and we think that in order to as a base will continue advantages and in an inflationary environment just given the you know the relatively lower amount of capital addis required for us to send us back around said said to maintain our production sort of over that answers your questions but but happy go to expand on that
spk_6: thank you deal do have any further questions
spk_7: sometimes when about the you into if you're be stimulator what you're doing their absurd revitalize said thank you
spk_8: yeah really arm and a deterrent better presentation at one hundred for from in terms of the exact page but really what we've done in the you into his is twofold one ah we've widened out spacing arm which you would expect her to deliver in a better results and then coupled with that we've increased that completion intensity both in terms of the the prop and and fluid that we're pumping in the in the reservoir
spk_7: and can we change that you know in terms of the types of of things that were pumping into the ground which which ultimately it is is is lowering the cost of about completion
spk_6: back you do you have any further questions new thank you we take the next question from line of lloyd born with jeffries please go have a judge david
spk_10: nice job the he talked about the a and the market and how you to scrutinize a hundred and fifty transactions and in the market might be getting better as you look out so maybe you could address that and then also you talked about when he sold actor scale and does that mean that you'd rather scale up the with an eeg offered or it doesn't really matter as long as
spk_11: the value is there
spk_12: yeah we we disarm on actor quickly added if we wanted to for foyer and i was just an asset that they're going to be difficult to scale around you know where it was in the basin in and frankly wasn't going to replace we were very committed or just an example on so ran across arson and so like we got good guy years i don't they just a direct you know statement nor the broader primary to my dad was just that assets for prayer and kind of how we felt about that the chapel opportunity known him for foil
spk_7: in terms of a broader market he obviously they are david david had a bunch of this but here we we really actors close to signing other contango murdered it over a billion dollars in transactions are you on and then your duty one two three know was marty volatility there was a tough time dark and of a fire at value
spk_9: they what would you know as we walk out of here we can remain an active dialogue on a number of conversations
spk_7: each other the stability and a mortgage a dead although to do you see volatile
spk_12: providing an outward where we we can we think will be on the transact by your most of the next six six to nine months just and in of the i just say is that what we're even better position today
spk_8: really coming out of all the accomplishment that you know we've we've completed a lot of a quarter sweet successfully integrated you into acquisitions going well we've continued to pay down debt on the balance sheet and completed an equity offering that that was really well received so just as a business we feel really very well positioned going into next year where we we do expect the city he continued activity in the a be marking the things that have gotten done i've got done it very attractive guys thing
spk_11: kids great and the me as on the back of that are you talk about paying down debt and your balances and great shape what are the priorities for you
spk_13: levered free cash going for stolen cash at this point waiting for the right opportunity at easy but that
spk_14: a voice
spk_0: good question of pacifiers money one btc to be given and and the balance know alongside earning allah
spk_15: we are now
spk_0: for sure for for her
spk_16: language the mine with our last worse is directly apply for thank you
spk_0: he we few days i keep it isn't framework in the near term of a paying out and retired would expect next quarters dividends to be braves the roughly seventy cents a share it will have to reset it one titan in twenty twenty three
spk_17: it's really balance sheet long term target about return with right now that to given and will look out in a organically into our
spk_18: our capital program right where we're spending capital and and been mentioned earlier work with
spk_19: you
spk_10: for today
spk_11: in a project that has animal
spk_13: republican on terror that's great
spk_20: safety because i could squeeze one more in on the drilling efficiency side because a pretty good job obviously with a longer lateral
spk_9: and are helping offset inflation is are more they're going forward
spk_7: i know neil touch the is the you with that but just in general
spk_8: see efficiencies and maybe are selling so many inflation
spk_6: this resume
spk_2: yeah we look i think our teams have done a really good job today and and we've done a good job combating of the sheer there's always room for continued improvement so don't want to over promised there but overdrive in everyday turn to reduce or cycle times and tell you know do the things we've done the shared turn to reduce costs so i think you'll see
spk_21: he continued efforts on that and and really you know it's i think as as an earlier is really just how is the sector gonna be and
spk_22: ultimately where where do we land there and term some to supply chain constraints that we've seen but again like i said he is it has moderated by we do see contain pressure so open up to the same except that we've seen over rate of change this year but overseen pressuring number constantly push about trying to be creative third content lorcaserin
spk_0: thank you thank you we have next question for the line of tara comments with jp morgan is gone
spk_23: hi this is that enough for tired things to think our questions some first as he mentioned on the you plan to increase quickly set to be in the first half the toy three or just want to see the were get your thoughts on what you're expecting her production kid and centering for que by awesome through toy twenty three for any high level
spk_0: monitor you could provide
spk_21: brady
spk_22: and
spk_17: the scarecrow remarks
spk_24: production declined slightly for or and not really driven by kill activists and as you know we don't provide quarterly
spk_6: wait for you to our with and mentioned earlier to diversity about twenty twenty three and enough
spk_2: going to be more ambition and that would expect on an average for the year we'd be undermined hundred and forty now and again
spk_25: gotta thank you that's helpful and then author's ones he could provide will be more color on working capital in the third quarter there is any can carry forward into the fourth quarter
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