Infinity Natural Resources, Inc. Class A

Operator good morning and thank you for joining our 1st, quarter 2025 earning results conference call. With me today are Zach Arnold president and chief executive officer. And David's role 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 may 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. Now over to Zach.

Thanks, Greg. And welcome to Infinity Natural Resources first quarter 2025 earnings call. I'm pleased to share our operational and financial results for the quarter, as well as provide an update on our development activities and outlook. I first want to say how proud I am of my team's execution during the first quarter. Aside from all the work associated with the IPO, the first quarter of 2025 was the most active operational quarter in our history. We executed and we delivered. Moreover, it was the first harsh winter we've experienced in quite some time up here in Appalachia. Being able to drill and complete our projects, as well as maintain uptime on our producing wells in such an environment, is a testament to the capabilities and experience of our highly skilled team. With regards to our first quarter performance, we achieved strong operational execution across our portfolio. As I just noted, the first quarter was our most active quarter to date. We turned into sales six wells during the period, one in the volatile oil window in the Ohio Utica and five natural gas wells in the Marcellus Shale in Pennsylvania. We continue to increase our production volumes. Our production averaged 26.5 thousand barrels of oil equivalent per day in Q1, a 13% increase compared to fourth quarter 2024. The five natural gas wells were turned in line only days away from the end of the quarter. As such, our production growth in Q1 was largely attributable to our recent oil weighted development in Guernsey County, Ohio, where we have added seven long laterals since Thanksgiving 2024, including the one well that we turned into sales in early January. Operationally, we ran two rigs for most of the quarter, drilling eight wells. We TD'd four of the wells, totaling 62,000 lateral feet during Q1, and finished drilling the remaining four in early Q2. On the completion side, we stimulated seven wells, completing 522 stages while pumping 4.6 million barrels of water. As an aside, most of those barrels were pumped in below freezing temperatures. Further breaking down activity by region. In the Ohio Utica, we drilled four wells during the first quarter. As a result, we have now drilled 34 wells into the volatile oil window, totaling 420,000 lateral feet. We continue to extend our laterals, with our most recent Ohio pad being our longest wells drilled to date, averaging approximately 19,000 feet per well. With the addition of the one well we brought online in Q1, our total operated well count stood at 119 to end the quarter. Further, we exited the quarter with three drilled and completed wells that we have yet to bring online, two ducts, and two WIPs in Guernsey County. All of these wells brought online or in development in Ohio are well hedged. In Pennsylvania, the five natural gas weighted Marcellus wells that we turned to sales totaled 67,000 lateral feet in Indiana and Armstrong Counties. That project was brought online ahead of schedule and in line with our cost expectations. While we are early in production, we are encouraged by the well results to date. Additionally, we opportunistically contracted a second drilling rig in Q1 for our next Marcellus project. The four-well project, totaling approximately 54,000 lateral feet, is anticipated to be online this summer. Remember, this pad was a farmer's field back in November 2024. We are very proud of our team's ability to accelerate and execute on projects like these. We are continuing to ramp our natural gas assets, delivering growth within cash flow while securing high DROIs. All of these projects are well hedged, again, securing the economics we saw at FID. As a reminder, our hedging program remains a key component of our risk management strategy for our near-term development projects. We've secured hedges covering a substantial portion of anticipated 2025 production, providing meaningful downside protection while maintaining upside exposure. This strategy has allowed us to lock in the attractive economics that we saw. We expect to continue to maintain a dynamic hedging strategy that locks in returns at key stages of a project cycle. Looking at the second quarter, we're executing as planned and remain on track with the development program embedded in the full year 2025 outlook we provided on our Q4 2024 earnings call. This includes reducing our operated rig count to one rig and moving our drilling operations to our next oil-weighted project, a three-well pad in Guernsey County, totaling 57,000 lateral feet. On the oil and natural gas projects that we drilled in Q1, we are moving ahead with our planned completion activities across those eight wells during Q2 with two front crews. Turning now to our full-year 2025 development plan. As you're aware, the macro landscape has shifted since our last update about six weeks ago. Market sentiment remains cautious about the outlook for oil prices in the back half of this year. However, the market remains more constructive regarding natural gas prices. Our unique asset composition and limited obligations allow us to allocate capital as the market dictates. Optionality to advance gas or oil projects rapidly is necessary today more than in prior periods. In response to the current environment, we have elected to bring forward our next natural gas project. We will be constructing this pad during the second quarter and expect to begin drilling these wells this summer. Concurrently, we are reviewing our oil weighted development plans in the second half of the year and will be flexible with our operations depending on estimated project returns as we progress through our one rig schedule. Taking a step back, What we are experiencing today again highlights the value of our differentiated business model. Our strategic positioning in Appalachia with a balanced portfolio across oil-weighted Utica assets in Ohio and natural gas-weighted assets in Pennsylvania provides unique optionality in varying commodity price environments. Our strong balance sheet and development planning have allowed us to quickly pull forward projects as highlighted previously that were originally slated for later years. With approximately 60,000 net horizon acres in Pennsylvania and 63,000 in Ohio, we've built our success on developing long lateral wells, maintaining a deep inventory of high-quality locations, and efficiently allocating capital between commodities based on market conditions. Our longstanding relationships with key service providers, combined with the dynamic nature of the Appalachian service market, enable us to optimize costs while maintaining access to high-quality equipment and crews. We continue working closely with our service providers to identify additional efficiency opportunities. Zooming out even further, our foundation remains strong. With 325 undeveloped locations across both operating areas, we have nearly two decades of high-quality development opportunities. This deep inventory, coupled with our proven operational expertise and successful track record of acquiring and integrating assets, positions us well for sustainable growth. Our financial position further strengthens the outlook for our business. With approximately $7 million in net debt and $344 million in liquidity at quarter end, our balance sheet provides significant flexibility to evaluate strategic opportunities, including M&A for both oil and natural gas weighted deals, while maintaining our commitment to discipline growth. With that, I'll turn the call over to David for a more detailed review of our financial results.

Thanks, Zach. And again, hello to everyone. I wanted to start by reiterating some of the themes from Zach's remarks. Our execution in the first quarter was based on a combination of our operational expertise and financial approach. We are prudently developing our asset base out of cashflow, focusing always on discounted returns on investments and payback periods while preserving our balance sheet strength. We secure our wealth high rates of return through an active hedge program that Zach noted earlier, while allowing our industry-leading growth profile to provide additional commodity exposure and upside. Now turning to our first quarter 2025 results, we are very proud of our team's performance during this period. We continue to execute our plan. We increased our net production 13% from the fourth quarter of 2024 to 26.5 MBOE per day. We increased our adjusted EBITDA to $57 million, representing an $11 million increase compared to the fourth quarter of 2024. Moreover, we further expanded our adjusted EBITDA margin to $23.96 per BOE, or $1.73 per BOE increase quarter over quarter. As we've noted in the past, we believe our EBITDA margin remains the best among our Appalachian peers. Operating costs on a per unit basis declined during the first quarter to $8.42 per BOE, compared with $9.41 per BOE in the first quarter of 2024. This decline was largely attributable to a decline in GP&T costs, reflecting a greater weighting towards Guernsey County, Ohio production, where GP&T per unit cost is lower versus Carroll County, Ohio. Moreover, we continue to anticipate further declines in our per unit cost structure as we increase our natural gas production from Pennsylvania during the remainder of the year. As Zach noted, the first quarter represented one of the most active periods in our company's history. We incurred $78 million in DNC capital expenditures during the first quarter. We anticipate capital spending to remain elevated during the first half of the year before beginning to decline. Turning to the balance sheet, our financial position remains very strong. We have minimal debt outstanding under our credit facility, which we feel is a significant competitive advantage. We have ample liquidity of $344 million, affording us operational and strategic flexibility. We are developing out of cash flow and will continue to position the company to take advantage of opportunities via acquisitions, or asset acceleration as the market dictates. Thank you. I'll now turn it back over to Zach for some closing thoughts. Zach?