Crescent Energy Company

Good morning, and thank you for joining Crescent's second quarter 2024 conference call. Our prepared remarks today will come from our CEO, David Rocacharli, and CFO, Ramey Kendall. Our Chief Accounting Officer, Todd Falk, and our Executive Vice President of Investments, Clay Rind, will also be available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility and global geopolitical conflict, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We have no obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10Q and earnings press release available on our website. With that, I will turn it over to our CEO, David.

Good morning, and thank you for joining us. We have another great quarter to go over today, and we're eager to get started. Before we get into the details, I want to begin with a few key points I hope you take away from this call. First, our standalone business continues to produce strong results, generating significant cash flow and attractive returns on our invested capital. We are increasing standalone guidance for production for the second time this year, and improving our expectations for capital spend as the team continues to capture efficiencies in our development program. Second, we closed on our transformative acquisition of Silverbow resources. We are grateful for the trust from our original Crescent shareholders and our new Silverbow shareholders, who voted almost unanimously to approve our merger and elected to take equity consideration in order to participate in the go-forward company. highlighting their belief in the value proposition ahead. This complimentary and creative combination represents another major step forward for our business, creating a premier growth through acquisition company with one of the largest positions in the Eagleford. Today, we are focused on rapidly integrating our new assets and personnel and delivering on the significant synergies we've identified. The Silverbow assets enhance our overall business profile which combines a substantial base of long life, low decline production, and a deep inventory of proven development locations to drive advantaged stability of production and free cash flow generation. And finally, Crescent has never been better positioned. Through disciplined investing and operations, we've delivered profitable growth of both production and cash flow, tripling the size of our business over the last four years. and I'm confident in our ability to continue executing on our strategy going forward. Crescent offers investors a compelling value proposition with a scaled and balanced portfolio of high-quality assets, substantial free cash flow with a disciplined capital allocation framework, and a demonstrated track record of accretive, returns-driven growth through M&A. We believe we've established Crescent as a must-own mid-cap company, which uniquely combines the discipline, stability, and capabilities of a large-cap operator with the value and growth potential of a proven mid-cap business. The Silver Bow transaction represents a significant step change for our business. Today, we have a leading position in the Eagleford, and we are just getting started. Following those quick highlights, I will now discuss things in a bit more detail, beginning with our standalone second quarter results. We had solid financial performance this quarter, beating consensus expectations again on both EBITDA and free cash flow, driven by strong operational execution. Our team continues to deliver impressive results with another quarter of production outperformance alongside our ongoing improvements in capital costs. With this quarter's outperformance and the consistent execution from our team, we have increased full-year production guidance for the standalone Crescent business for the second consecutive quarter with lower expected capital expenditures. In the Eagleford, we've continued to build momentum and increase capital efficiency, delivering more production and cash flow for less capital. We are seeing meaningful and sustained improvements to well productivity since taking over the assets we acquired in the Western Eagleford last fall, with average production per well roughly double the results seen by the prior operator to date. We've been able to accomplish this by bringing industry best practices to the field, and we look forward to further demonstrating the quality of the assets we acquired. In addition to the improved well performance, we've captured significant synergies since our Western Eagleford acquisitions, with roughly $60 million in annual cash flow uplift relative to $850 million of combined purchase price, driven by a number of active initiatives across the field. First and foremost is capital execution. where more efficient operations and the introduction of Simulfrac have improved well costs by up to 15% versus our underwriting. This, combined with a successful oil blending campaign and active field management, have generated significant incremental cash flow for our investors. We've also begun to see solid results from our Austin Chalk development in the Western Eagle Fruit. With early time production generally in line with our lower Eagle Fruit performance, and investment returns expected to exceed our two times multiple of invested capital benchmark. We intend to continue to allocate capital to the Austin Chalk in this area going forward. Moving to point number two, the closing of the Silver Bow acquisition. This acquisition is transformative for our business. Not only was it one of the most compelling investment opportunities we've seen in the market, with cash-on-cash returns in excess of our returns hurdles and immediately accretive to cash flow and NAV per share, but it also provides significant strategic benefits with increased scale, substantial synergy opportunities, enhanced operating capabilities, extended inventory life, and an improved credit profile. This transaction firmly positions Crescent as one of the largest operators in the Eagle Ford alongside ConocoPhillips and EOG. with a broader portfolio of low-decline, long-life production, and a deep, high-quality inventory that supports compelling returns through cycles. We were able to close the Silver Bow acquisition ahead of schedule, and integration is well underway. We're very optimistic about the future of our business and what we can accomplish with our high-quality asset base and the talented people from both organizations working together. With increased scale and significant operational overlap, we see incredible opportunities for needle-moving synergies as a combined company, and we are confident in our ability to create incremental value for our investors. We've already made great strides towards our announced synergy expectations, capturing roughly $35 million or a third of the high end of our target ahead of closing through a successful bond offering and improved cost of capital relative to Silver Bow standalone. Silver Bow's business has also continued to generate strong results since we announced our combination in May. With performance in line, we're exceeding expectations for the second quarter. Coming together, we believe our business is well positioned to continue delivering meaningful value from our growth through acquisition strategy, combining safe, efficient operations with returns-driven and free cash flow-focused investing. Looking forward, we expect to run four rigs across the combined business for the remainder of the year, with three rigs in the Eagle Fruit and one in the Uinta. We are still in the early days of operational integration and expect capital allocation to remain largely consistent with Crescent's and Silver Bow's standalone business plans for the near term. But we expect to begin realizing both capital and operating cost synergies over the next few quarters as we capture the benefits of the combined asset profile. Crescent has the operational and investing expertise required to execute on our growth through acquisition strategy, and we are looking forward to delivering more value from our existing asset base and future acquisitions. We are a proven growth through acquisition company, and currently we have one of the largest pipelines of M&A opportunity in our recent history. The Eagleford in particular remains one of the most fragmented basins in the US, and we see meaningful opportunity there. With our increased scale, strong operating and financial performance, and solid balance sheet, we've never been better positioned for a creative growth and further value creation over the remainder of 2024 and beyond. Crescent's value proposition has never been clearer as we continue towards our goal of being a valuable and industry-leading investment-grade business. With that, I'll turn the call over to Brandy to provide more detail on the quarter. Brandy?

Thanks, David. Crescent's standalone performance for the quarter built on our strong first quarter results with production of 165,000 barrels of oil equivalent per day and significant cash flow generating $320 million of adjusted EBITDA and 147 million in levered free cash flow. We had 120 million of capital expenditures during the quarter, less than forecast, with meaningful savings to date. We brought online six growth-operated wells in the Eagleford and five growth-operated wells in the Uinta, all of which are generating strong initial results and are on track to exceed our returns target of two times our capital invested at current commodity prices. Turning to our outlook for the remainder of 2024, As David mentioned, we increased standalone production guidance for the second time this year to 160 to 162.5 thousand barrels of oil equivalents per day while improving our full year capital guidance to 550 to 600 million dollars. We also released second half 2024 guidance for our full combined business pro forma for the closing of our Silver Bowl acquisition. This updated guidance reflects five months of Silver Bowl contribution and highlights the strength of the combined business. At today's commodity prices, we expect to generate substantial free cash flow in 2024 and beyond. In conjunction with our Silver Bowl acquisition, we were thoughtful about positioning our capital structure to maintain our balance sheet strength and enhance our credit profile. David already mentioned our successful NOS offering to refinance a portion of Silver Bowl's debt outstanding. And we also secured an upside to our existing credit facility of $2 billion to ensure significant liquidity and flexibility as we continue to execute on our growth strategy. Today, we are within our targeted leverage threshold of 1.5 times with no near-term maturity and believe the increased scale and asset profile of the combined business positions Crescent for further cost of capital improvements as we look forward, highlighted by our recent corporate ratings upgrade by Fitch. Alongside earnings last night, we announced another dividend of $0.12 per share under our recently enhanced framework, which provides certainty and simplicity to our shareholders with a peer-leading yield of around 4%, excluding the impact of our active share buyback program. We've exercised 15% of the total $150 million buyback authorization to date, and we continue to view share purchases as an attractive tool in our shareholder return framework. With that, I'll turn the call back over to David.