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Crescent Energy Co. First Quarter 2022 Results

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   |    Friday,May 13,2022

Crescent Energy Co. announced financial and operating results for the first quarter of 2022 and increased its quarterly cash dividend by 40% to $0.17 per share.

Recent Highlights:

  • Produced 120 MBoe/d (54% liquids) and incurred $85 million of capital
  • Generated $406 million net loss (including $498 million of unrealized derivative losses)
  • Reported $195 million of Adjusted EBITDAX(1), $371 million of Unhedged Adjusted EBITDAX(1) and $90 million of Levered Free Cash Flow(1)
  • Closed accretive acquisition of Uinta Basin assets on March 30, 2022 for total cash consideration of approximately $690 million - the company is maintaining a two rig program in the region
  • Exited the quarter at 1.3x Net LTM Leverage(1)
  • Continued to advance ESG initiatives - joined the Oil & Gas Methane Partnership 2.0 initiative and plan to publish second ESG report this summer with ESG targets focused on EHS and emissions
  • Raised the mid-point of 2022 Adjusted EBITDAX(1) and Levered Free Cash Flow(1) guidance to $1.35 billion and $575 million, respectively, to reflect current commodity prices
    • $650 million capital program focused on high-return multi-year inventory in Eagle Ford and Uinta

Crescent CEO David Rockecharlie said, "We delivered strong operating results in the first quarter, generated significant free cash flow and solid investment returns and increased our quarterly dividend to $0.17 per share. At the end of March, we closed the accretive acquisition of Uinta Basin assets, which significantly increased our scale and added high margin oil production at a very attractive price. Today, Crescent remains well positioned with scale in high-return basins, a clear framework to return cash to shareholders, a strong balance sheet and a track record of making accretive acquisitions."

First Quarter 2022 Results

Crescent produced 120 net MBoe/d in the first quarter 2022, in line with previous guidance (excluding Uinta Acquisition). Average realized price for the first quarter 2022, excluding the effect of commodity derivatives, was $54.28 per barrel of oil equivalent, compared to $48.87 for the fourth quarter 2021, an 11% increase. Excluding the effect of commodity derivatives, averaged realized price by commodity in the first quarter was $93.47 per barrel of oil, $4.77 per Mcf of gas and $38.97 per barrel of NGL.

Operating expense, excluding production and other taxes, of $15.97 per Boe, was in line with previous guidance (excluding Uinta Acquisition) when adjusting for certain contractual commodity-linked costs (~$0.25-$0.50 per Boe)(3), which increased in the higher commodity price environment relative to guidance issued at $75 / Bbl WTI. These higher contractual commodity-linked costs were more than offset by higher realized prices and improved margins. General and administrative expense totaled $2.08 per Boe, including non-cash equity compensation and certain non-recurring transaction related costs. Adjusted Recurring Cash G&A(1) totaled $1.69 per Boe, which was in line with previous guidance (excluding Uinta Acquisition).

During the quarter, Crescent incurred approximately $85 million in capital expenditures, excluding acquisitions. The Company operated one rig in the Eagle Ford during the quarter and brought online 9 gross (9 net) operated wells. In addition, Crescent participated in 7 gross (1 net) non-operated wells in the Eagle Ford. Upon closing the Uinta Acquisition, Crescent took over operations from the previous operator and has maintained their two rig development program.

Crescent generated $406 million net loss (including $498 million of unrealized derivative losses), $195 million of Adjusted EBITDAX(1), $371 million of Unhedged Adjusted EBITDAX(1) and $90 million of Levered Free Cash Flow(1) for the period.

Financial Position

As of March 31, 2022, the Company had principal amount of indebtedness of $1.6 billion and net debt of approximately $1.5 billion, consisting of $700 million of senior unsecured notes and $941 million of outstanding borrowings on its revolving credit facility (the "Credit Facility"). In connection with the closing of the Uinta Acquisition in March, the Company's borrowing base was increased to $1.8 billion with an elected commitment of $1.3 billion. In February 2022, Crescent issued $200 million in aggregate principal amount of 7.250% senior notes due 2026 at 101% of par and used the proceeds to repay amounts outstanding on the Credit Facility. Total liquidity as of March 31, 2022 was $451 million, including outstanding letters of credit of $21 million and cash and cash equivalents of $113 million. Crescent exited the quarter with a Net LTM Leverage(1) ratio of 1.3x. The Company expects to generate significant free cash flow for the remainder of 2022, which is expected to be used to fund dividends and further strengthen the balance sheet.

Dividend

Consistent with the Company's framework to return cash to shareholders, the Board of Directors approved a quarterly cash dividend of $0.17 per share, a 40% increase relative to the prior quarter, or $0.68 per share on an annualized basis. The quarterly dividend is payable on June 7, 2022 to shareholders of record as of the close of business on May 24, 2022. Subject to board approval and applicable law, Crescent intends to pay a $0.17 per share quarterly dividend for the remainder of 2022.

2022 Guidance (Including Uinta Acquisition)

Crescent increased the midpoint of its 2022 outlook for Adjusted EBITDAX(1) and Levered Free Cash Flow(1) (including Uinta Acquisition) by 17% and 35%, respectively, based on the strength of commodity prices. Full-year production and capital guidance was reiterated and remains unchanged. Operating expense, excluding production taxes, also remained unchanged with the exception of an increase to reflect a portion of costs that are contractually indexed to commodity prices. Today, Crescent continues to operate one rig in the Eagle Ford and two rigs in the Uinta Basin.


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