Crescent Energy Company

The solid execution this year allowed us to generate outstanding free cash flow and improved returns on our invested capital. These efficiencies, especially associated with the acquisitions in our core areas, not only helped us perform in the second half of 2023, they've also positioned us extremely well for continued success in 2024, where we are expecting year-over-year production growth without an increase in annual CapEx. We are extremely pleased with the portfolio we've built and what it provides to our investors. Our unique skill set operating both conventional and shale assets allows us to combine stable, low-decline cash flows with attractive reinvestment opportunities, positioning Crescent as one of the most capital-efficient platforms in the sector. Now, I will highlight how our operations performance can also drive M&A success, a key tenet of our growth strategy. We successfully executed on our acquisition strategy again this year, with $850 million of complementary and accretive acquisitions in the Western Eagleford. This year's acquisitions allowed us to transform an existing non-operated interest into a scaled, high-quality operated position in a core area of operation for Crescent. The acquisitions added significant production and reserve to our portfolio, which we've grown in a disciplined way at a 20% and 15% compounded annual growth rate, respectively, over the last three years. When evaluating acquisition opportunities, we have two key objectives. First, to buy assets that fit our portfolio at attractive value, targeting cash on cash returns in excess of two times our money. And second, to drive incremental returns through the application of our operating expertise. We've talked a lot about the attractive valuations on our 2023 acquisitions over the last few quarters, so I won't repeat myself. But I do want to spend a bit more time talking about the second objective, both as it relates to our recent Eagleford acquisitions, as well as our 2022 acquisition in the Uinta Basin. Now that we've had the time to integrate the assets and begin implementing our operating strategy across both areas, we are generating meaningful value above what we initially underwrote in our investment evaluation and business plan. I'll begin in the Western Eagle Fruit. While it is still early in our efforts, the outperformance has been significant. We talked last quarter about the immediate 15 to 20% cost savings we were seeing on the DMC side with Crescent now the operator managing development, and that has continued across all of our recent activity. Most importantly, these savings aren't coming at the cost of performance. In fact, our team is generating significantly better performance from all wells brought online since we took over operations in September. While still early in our efforts, we are seeing a 60% increase in well performance to date with 15% lower costs across the program, which represents a massive shift in capital efficiency on the assets. Over time, we expect to more clearly demonstrate the quality of the acquired assets in our hands. This improvement in well performance is only a piece of the incremental value we expect to drive on these assets under our ownership. We've also targeted and begun to capture a variety of synergies through better operating practices, including production costs and marketing, which combined with the improved well performance represent an opportunity for $30 to $50 million of incremental annual cash flow compared to our original underwriting. I will now move to our 2022 Uinta acquisition, where we've continued to drive strong performance through improved well designs. When we acquired this position, the only horizontal development on the assets utilized a legacy, smaller completion design with roughly 1,500 pounds of profit per foot. As we have implemented our operational approach, we are seeing significantly enhanced returns and improved capital efficiencies through larger completions, which we've doubled to roughly 3,000 pounds per foot. The early results from our updated design, which we implemented over the last nine months, are significantly better than the previous design. Importantly, in optimizing the DNC program, our team has managed to keep the new DNC costs generally flat versus the prior operator, despite the significant increase in job size. The Uinta Basin is an active area for the industry, where development was historically focused on the Ute-Land Butte formation. it is worth noting that adjacent operators across the basin have invested significantly in de-risking multiple additional productive formations beyond the Utlin Butte, including the Douglas Creek, Wasatch, and Castle Peak. In addition to our high-quality existing inventory, we see significant runway and upside development potential. on our acreage in incremental formations beyond the Utlin Butte, which was the primary source of production when we underwrote and acquired the assets. Looking ahead, we believe our operations team will build on these recent successes and continue driving meaningful efficiencies across our entire asset base. Importantly, we are also ready to apply our operating techniques to any new assets we acquire and integrate into the portfolio. This is great news because we currently have one of the largest pipelines of M&A opportunity in our recent history, which gives us confidence we are well positioned for operational value creation and accretive growth in 2024 and beyond. With this backdrop, I will also reiterate that we firmly believe in our ability to become an investment-grade company over time. To us, that means adding size and scale with financial discipline and a focus on compounding capital and shareholder value over time. We are investing in assets to generate attractive, full cycle cash on cash returns, and we expect to be an active participant in the ongoing wave of consolidation in the sector, particularly across our core operating areas in Texas and the Rockies. We believe that we are uniquely positioned as a leading acquisition growth company, employing our proven investment and operational expertise and supported by our strong balance sheet to acquire attractive assets accretively. Next, I'd like to discuss sustainability, an area that's core to our operations and long-term business strategy. We continue to make improvements in our greenhouse gas and methane emissions, and we're proud to report a 27% decrease in absolute scope one emissions in 2022 relative to our baseline. In December, we were awarded the gold standard pathway rating by the oil and gas methane partnership for the second consecutive year. This designation is the highest reporting level under the OGMP initiative and signifies we have a credible multi-year plan to accurately measure our methane emissions. Crescent was one of only four U.S.-based upstream companies to receive this rating for a second consecutive year. As one of the first U.S. onshore energy companies to join OGMP 2.0 in early 2022, we firmly believe that accurate measurement of emissions is imperative as we seek to most effectively improve our emissions profile. Again, we are proud of our 2023 performance We're optimistic about 2024, and we believe Crescent has never been better positioned. Our differentiated growth strategy, combining investment and operating expertise, continues to deliver a strong value proposition for our investors. With that, I'll turn the call over to Brandy to provide more detail on the quarter and our strengthened return of capital framework. Brandy?

Thanks, David. As David mentioned, performance has been extremely strong, with another quarter of record production and significant cash flow, averaging approximately 165,000 barrels of oil equivalents per day, generating $276 million of adjusted EBITDA and $102 million in levered free cash flow. This quarter's results are the first to include the impacts of both of our two Western Eagleford acquisitions. We had 134 million of capital expenditures during the fourth quarter, which has positioned us well for 2024. During the quarter, we brought online 17 gross-operated wells in the Eagleford and three gross-operated wells in the Uinta, which are all posting strong early-time results and are expected to generate in excess of two times our capital invested at current commodity prices. Turning to our outlook for 2024, as David mentioned, the capital efficiencies we've achieved to date alongside our accretive acquisition, set us up for continued strong performance. Our production is expected to be 155,000 to 160,000 barrels of oil equivalents per day, which represents a roughly 6% increase relative to 2023, with consistent capital spend supported by a two-to-three rate program. Maintaining capital spend at current levels, despite the year-over-year production growth, is a testament to the quality of our operating team and the efficiencies they've been able to drive across the asset base. At today's commodity prices, we expect to generate substantial free cash flow in 2024 and beyond. The unique stability of our asset base and cash flow generation have allowed us to return significant capital back to our shareholders with a consistent dividend for more than a decade. This quarter, we are excited to announce an even firmer commitment to shareholder returns by transitioning our current $0.12 per share dividend into a truly fixed quarterly dividend, providing even more certainty of returns to our shareholders at an industry-leading yield of roughly 4%. On top of this announcement, we also authorized up to $150 million for share buybacks, which will initially be focused on our Class B shares. At current trading levels, we believe investing in our own business offers a compelling return, and focusing on the Class B shares highlights our continued commitment to simplifying our corporate structure over time. To further emphasize our progress in this regard, we have successfully increased our public float by nearly 80% this year, significantly improving liquidity for our public investors. Moving to our balance sheet, we are exiting this year from a position of strength as we look forward to another active year in the M&A and A&D markets. We exited the year with leverage of 1.3 times and 1.3 billion of liquidity on an almost completely undrawn RBL facility. Finally, to provide a brief update on our hedging activity. In line with our strategy of preserving returns on capital, we layered on additional hedges alongside the signing of the two Western Eagleford acquisitions. As we look into 2024 and 2025, we are well protected from the current gas market volatility with roughly 50% of our production hedged through a mix of fixed swaps and collar floors of around 350 to 450 for MMBTU. On the oil side, we're well hedged in 2024, but maintain attractive long-term exposure given the long duration nature of our production base. With that, I'll turn the call back over to David.

Thank you, Brandi. Before we wrap up, there are a few things we hope you take away from today's call. First, our 2023 performance was extremely strong. We met or exceeded our increased guidance across the board and meaningfully beat on free cash flow. Our 2023 activity and execution have positioned us well for continued outperformance in 2024 and beyond. Second, we continue to execute on our growth through acquisition strategy. Our two acquisitions this past year, plus our Uinta Basin acquisition in 2022, are generating significantly more value than we underwrote. and we are unlocking incremental value through our operating capabilities. We've grown the business accretively, as production has grown at a 20% compounded annual growth rate over the last three years, and we fully expect to continue on that trajectory. Third, we are committed to a peer-leading return of capital strategy and have strengthened our framework to include a significant fixed dividend and a new share buyback program. And lastly, we have a simple value proposition. We believe Crescent is the best stock to own for long-term exposure to oil and gas prices, as we uniquely offer the discipline and capabilities of a large-cap business combined with the value and high growth potential of a proven mid-cap company. We have a lot of ambition and hold ourselves to a high standard, but we are pleased with what we've accomplished to date, and we intend to continue to do exactly what we say we're going to do. With that, I'll open it up for Q&A. Operator?