Infinity Natural Resources, Inc. Class A

joining our fourth quarter and year-end 2024 earning results conference call. With me today are Zach Arnold, President and Chief Executive Officer, and David Sproul, Executive Vice President and Chief Financial Officer. In a moment, Zach and David will present their prepared remarks with a question and answer session to follow. An updated investor presentation has been posted to the investor relations portion of our website, and we will reference certain slides during today's discussion. A replay of today's call will be available on our website beginning this evening. I'd like to remind you that today's call may contain forward-looking statements. All statements that are not historical facts are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause actual results to materially differ from these forward-looking statements. Please review our earnings release and the risk factors discussed in our SEC filings. We will also be referring to certain non-GAAP financial measures. Please refer to our earnings release and investor presentation for important disclosures regarding such measures, including definitions and reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Zach.

Thanks, Greg, and good day to everyone. We appreciate you joining us for Infinity Natural Resources' first-ever earnings call. We are delighted to discuss our fourth quarter and full year 2024 financial and operational performance, as well as to provide an outlook for the upcoming calendar year. Before we dive in, I'm excited to share our journey with you and provide a brief overview of our company for those of you who are new to our story. Infinity is a leading exploration and production company focused in the Appalachian Basin. Our journey began with a vision to harness the region's potential, and today we stand as a testament to that vision. Like many of our employees, I was born and raised in Appalachia. I grew up about five miles from an area we operate in Ohio. Being local is an integral part of our company's DNA. The majority of our nearly 90 employees live, work, and call Appalachia home. Living and working in this area virtually our entire careers provides us with a competitive advantage, whether it's managing vendor relationships, securing leasehold, or acquiring and developing assets. Our team's vast experience and strong local presence allow us to focus on true corporate drivers over individual departmental goals. Our team has worked together for the better part of 15 years. Our CFO David Sproul and I have worked together for over a decade. Our team's continuity and familiarity with each other not only allows us to enhance our operational and financial performance, but helps us to establish a strong, collaborative culture that emanates across our organization. This past February, we closed our IPO on the New York Stock Exchange, which was a significant milestone for our company. We would like to thank our financial sponsors, Earl Energy and NGP, for their instrumental role in our success. We share a common alignment focused on relative value, asset capture, and delivering incremental value through the drill pit. Our partnerships have been a cornerstone of our growth and operational excellence. We appreciate their support and leadership as we embark on the next phase of our corporate vision. This is a starting line for Infinity, and we're excited about our ability to drive future value for all our shareholders. That's our background. Now let's turn to our business. Balance, optionality, and disciplined growth are the key attributes of our company. We are uniquely positioned in Appalachia, operating in two distinct areas that provide exposure to either oil or natural gas. The proximity of these fields to each other, comparable well costs, and similar drilling equipment requirements provide us with the ability to allocate capital quickly across our portfolio to maximize returns in the ever-changing commodity environment. We have a high quality inventory base characterized by long laterals averaging roughly 14,000 feet across both of our areas of operations that enable us to develop our resources, while maintaining leading drilling costs and capital efficiency metrics. In Pennsylvania, we have approximately 60,000 net horizon acres in the dry gas Marcellus and deep dry gas Utica shales, providing 179 undeveloped locations at year end and representing approximately a decade of drilling inventory. Additionally, we own and operate our own gathering system, which further enhances our margins while providing operational and developmental flexibility. In Ohio, We have approximately 63,000 net acres in the Utica Shales Volatile Oil Window with 154 undeveloped locations at year end. Since our arrival to this area in the spring of 2021, we have been a leader in the development of this high-quality, oil-weighted resource play in Eastern Ohio. We have drilled 34 wells and operate 118 wells as of year end 2024. Our exposure to the well data across the play along with our operational activities provide us with unique insight into the development of this emerging resource play. We are a leader in this play, whether by operational performance or continued activity, and we intend to remain such through our active development. Again, balance and optionality. So the deep inventory of long laterals across both plays is unique to any company, but particularly to those who operate in Appalachia. Between our two areas, we have a deep inventory of 333 undeveloped locations at year-end, representing 4.6 million lateral feet for approximately 19 years of inventory. And remember, the proximity of our assets and development flexibility allows us to allocate capital quickly based on the commodity environment. Let me take a minute to talk about our recent natural gas project to give you a sense of the speed of our cycle times. Based on improving gas backdrops, we made a decision in early November to develop an additional natural gas project in Pennsylvania. We leveraged the preparation of our land and operations teams to take what was a farmer's field and construct our pad in six weeks. We brought a spot rig onto location in early January and expect the wells to be online by mid-year. This is a very quick cycle time and is something that can only be done if you prepare to maintain for development optionality. As you can see on page six, we have targeted development based on the current commodity environment. In 2024, we allocated more capital towards oil-weighted projects because it made sense to do so. Oil was strong and gas was weak. Frankly speaking, our oil returns were better than our gas returns in that environment. As we move into 2025, we are increasing our capital allocation to natural gas-weighted projects. We have positioned the company to maximize our optionality to develop our high-quality resources when prudent. Balance is a key attribute of our company that allows us to develop our resources when the environment dictates. Throughout our history, we have maintained a strong balance sheet. We think the strength of our balance sheet represents a key attribute of our company, allowing us the flexibility to develop our asset base and capitalize on strategic opportunities. We have virtually no debt today. Our familiarity with the basin gives us an advantage in identifying and extracting value from acquired assets. As such, we have been highly active on the acquisitional front, adding 72,000 acres through various yield types since our initial acquisition. Our hit-the-ground running approach has been successful in quickly integrating and developing newly acquired assets and delivering exceptional results. In 2024, we executed our plan and delivered significant production growth while maintaining a strong balance sheet and financial metrics. Our production averaged 24 MBOE per day, comprised of 27% oil, 53% natural gas, and 20% NGLs. For 2024, that represented a production growth of approximately 28% overall. Of note, we grew our oil production by 97% year over year. All of our drilling and completion capex was funded through cash flow while we pursued strategic bolt-on acquisitions to expand our acreage footprint within the Volta oil window. For 2024, we acquired over 11,000 net acres in the Volta oil window in close proximity to our operational focus areas, adding multiple years of inventory to our program. We drilled 19 wells, five in Pennsylvania and 14 in Ohio, totaling roughly 254,000 lateral feet, and completed 14 oil-weighted wells in Ohio, representing 181,000 lateral feet. We elected to defer the completion activities of our natural gas-weighted wells until Q1 of 2025. We put into production six oil-weighted wells totaling 82,000 lateral feet in late Q4 2024. We exited 2024 with seven ducts and two PD&P wells. Since year end 2024, we have turned one of those PD&P wells into sales in early January and finished completing all seven ducts. As we made the decision to develop those wells, we utilized a disciplined hedging program to lock in our high project DROIs. David will touch on hedging more a bit later. Building on our momentum from fiscal year 2024, Infinity's 2025 development program, as disclosed in our earnings materials released yesterday, reflects our continued focus on balancing capital allocation across both natural gas-weighted and oil-weighted opportunities. We intend to grow our production by approximately 40% year over year based on the midpoint of our guidance and anticipating funding our development entirely out of free cash flow. And 2025 development program is focused on maintaining a balance between our operational areas. We will continue to develop our high quality oil assets in Ohio's volatile oil window of the Utica Shale while increasing our activity in our natural gas weighted region in Pennsylvania. Our DNC capital budget for the year is $240 million to $280 million. We intend to maintain a single rig for the entirety of 2025, other than using a second rig for the four-well pad development in the Marcellus dry gas that I mentioned earlier. Turning to our production, our 2025 plan highlights a transition towards a greater balance between natural gas and oil-weighted wells. we continue to ramp and anticipate turning into sales more wells in 2025 than any other year in our history. In 2025, we anticipate that our natural gas weighted wells will represent more than 35% of all wells put into production during the year. Regarding our oil weighted assets, we intend to turn into sales more oil weighted wells than we did in 2024. In short, We remain incredibly excited about the opportunities set ahead and are confident that we will be able to achieve our goals for 2025. Before turning the call over to David to elaborate on results and our outlook, I would like to congratulate Greg Pipkin on his well-deserved promotion to Senior Vice President of Corporate Development and Strategy. His contributions to the company since his arrival have greatly assisted us in our success, and we thank him tremendously for that. David, the mic is yours.

Thanks, Zach, and good morning, everyone. I share Zach's excitement about our achievements and the promising future ahead. I also wanted to congratulate Greg on his promotion. To reiterate and expand upon some of the themes from Zach's remarks, at Infinity, we emphasize a disciplined approach to growth by developing high-return drilling inventory and optimizing return on capital with industry-leading cycle times and payback periods. Our expansive portfolio of low-risk, high-return oil and natural gas assets allows us to strategically capitalize on asset development while maintaining balance sheet strength. Our superior capital efficiency supports production growth and generates attractive free cash flow, positioning us for sustained success. Our strong organic cash flow is safeguarded through an active hedging strategy. This approach has enabled us to secure attractive discounted return on investments as we develop our projects. On the back of this, we are proud to complete our successful IPO in early February and raised $286.5 million in net proceeds. We issued 15.2 million shares via the offering and have an outstanding share count of 60.9 million as of today. With that said, let me now expand upon our quarterly and full year results. We reported an adjusted EBITDA of 46.2 million and 195.7 million for the fourth quarter and year end 2024, respectively. Our adjusted EBITDA margin for calendar year 2024 increased to $22.20 per barrel of oil equivalent. representing a $3.87 per BOE increase over 2023. We believe our EBITDA margin to be the best among our Appalachian peers. Operating costs for the fourth quarter and full year 2024 totaled $8.72 and $8.84 per barrel of oil equivalent, respectively. The company's focus on oil-weighted activity and the greater weighting of liquids in our production mix led to an increase in both our 2024 per-unit LOE and our 2024 per-unit gathering, processing, transportation, and compression costs relative to prior year periods. For 2025, we anticipate these operational costs to decline on a per-unit basis due to the increased natural gas production in Pennsylvania, where we operate our wholly owned midstream system. Despite the elevated operational cost experience in 2024, it is important to highlight that this increase was more than offset by the improved margin performance from our oil-weighted inventory. Our all-in realized price for the fourth quarter and full year 2024 was $32.12 and $29.22 per BOE, respectively, excluding the impact of cash-settled derivatives. This represented a year-over-year increase of $4.25 per BOE and $6.11 per BOE increase for the fourth quarter and full year 2024, respectively, despite a 20% reduction in natural gas prices during 2024 relative to 2023. We realized a cash hedging gain of approximately $28.4 million for the year while incurring an unrealized loss of $50.4 million. We anticipate remaining active with our hedge program throughout the calendar year. With respect to our current hedge position, for 2025, we have hedges covering roughly 36 BCF of natural gas at an average price of $3.58 per mm BTU. Additionally, we have 2.2 million barrels of oil production covered at an average price of $71.65 per barrel. With over 19 years of high return development inventory evenly split across oil and natural gas opportunities, we have significant upside exposure and operational flexibility to quickly adapt to changes in the commodity environment. We provide further details on our full derivative position on slides 15 and 16 of the earnings presentation and in our 10-K, which will be filed soon. During the past year, Infinity incurred approximately $281 million in capital expenditures, of which $165.8 million was allocated to drilling and completion activities. Due to our operational performance and the high quality of our assets we're developing, Infinity was able to generate all-in F&D costs, inclusive of revisions, of $7.30 for BOE for 2024. Over the past three years, our all-in F&D cost was approximately $6.03 for VOE, a statistic I am very proud to report. Our continued strength in F&D highlights the leading capabilities of our land and operational teams. When considered in relation to our adjusted EBITDA margin, Infinity once again delivered leading capital efficiency metrics of approximately 3.0 times in 2024, which we believe to be the best among our Appalachian peers. Turning to the balance sheet, our financial position remains very strong, with trailing 12-month net leverage ending the year at 1.3 times. We used the net proceeds from our IPO in February to repay outstanding debt under our credit facility. When adjusting for the IPO, our pro forma leverage as of December 31, 2024, was zero. and our liquidity totaled approximately $354 million, comprised of approximately $29 million in cash plus $325 million of farm-based availability. Our liquidity today is more than sufficient to fund any development needs we might have for the foreseeable future and provides tremendous flexibility from a financial perspective going forward. Thank you. I'll now turn it back over to Zach for some closing thoughts.