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Crescent Energy Co. Talks Pro Forma Q3 Results

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   |    Wednesday,December 29,2021

Crescent Energy Co. announced pro forma 3Q21 results related to the business combination between Independence Energy LLC and Contango Oil & Gas Co.

Highlights and Recent Developments:

  • Formed Crescent Energy on December 7, 2021 with the successful completion of the merger between Independence and Contango; stock is now trading on the NYSE under ticker symbol "CRGY"
  • Delivered strong pro forma financial results underpinned by predictable, low-decline PDP Base
  • Implemented a disciplined capex program focused on risk-adjusted returns
  • Reduced risk via balance sheet strength and a consistent commodity hedging program
  • Executed on its consolidation strategy, closing three acquisitions in 2H'21 including Contango

Highlights for the YTD and Annualized Period:


9 Months Ended 9/30/21



115 MBoe/d

% Liquids


% Hedged (Predecessor Only)


Total Revenues (GAAP)

$1,254 MM

$1,672 MM

Net Loss (GAAP)1

$(678) MM


Adj. EBITDAX (non-GAAP)2

$467 MM

$623 MM

Levered Free Cash Flow (non-GAAP) 2

$286 MM

$381 MM

Unhedged Adj. EBITDAX (non-GAAP)2

$674 MM

$899 MM

Net Debt

$830 MM

Net Debt / Annualized Adj. EBITDAX


Net Debt / Ann. Unhedged Adj. EBITDAX


2022 Outlook

  • Targets quarterly dividends of approximately 10% of Adjusted EBITDAX3 and intends to pay a dividend in the first quarter of 2022, based on fourth quarter 2021 Adjusted EBITDAX
  • Low decline asset base with 15% estimated 2022 proved developed producing (PDP) decline rate
  • Modest capital requirements with 45% average historical re-investment rate4 since 2014
  • Plans to release 2022 annual guidance early in the first quarter of 2022

David Rockecharlie, CEO, commented: "We are pleased with what we have accomplished in 2021. Our talented organization continued to execute our disciplined, cash flow-based strategy. The team delivered strong operational performance while closing several valuable acquisitions throughout the year, culminating in the completion of our merger with Contango. The combined business generates significant cash flow, supported by our robust hedge book and low leverage. Given the strength of our underlying base business, we expect to lead industry consolidation by generating superior risk-adjusted returns for our shareholders."

Results Summary

Total pro forma production averaged 115 thousand barrels of oil equivalent per day ("MBoe/d") for the Year to Date Period, with pro forma liquids production totaling 66 thousand barrels per day, or 57% of total production.

Pro forma total revenues and net loss for the Year to Date Period totaled $1.3 billion and $678 million, respectively. The net loss was impacted by a significant change in the market value of the Company's commodity derivatives associated with the rise in oil and gas prices throughout 2021, including $592 million of unrealized derivative losses and $199 million of expense related to an early settlement of certain outstanding derivative oil commodity contracts for open positions associated with calendar years 2022 and 2023. Subsequent to the settlement, the Company entered into new commodity derivative contracts at prevailing market prices.

Pro forma Adjusted Unhedged EBITDAX and pro forma Adjusted EBITDAX for the Year to Date Period totaled $674 million and $467 million, respectively. Pro forma levered free cash flow for the Year to Date Period totaled $286 million with pro forma capital expenditures related to drilling and completion activity of $136 million (brought online 68 gross (16 net) working interest wells in the DJ, Eagle Ford and Permian basins).

Financial Position

As of September 30, 2021, the Company had principal amount of indebtedness of $897 million on a pro forma combined basis, which consisted of $500 million of senior unsecured notes and $397 million of outstanding borrowings on its reserve based lending credit facility ("Crescent Credit Facility"). Crescent ended the quarter with a net debt to Annualized Adjusted EBITDAX ratio of 1.3x and a net debt to Annualized Unhedged Adjusted EBITDAX ratio of 0.9x, on a pro forma combined basis.

Upon the closing of the merger with Contango, the Company's borrowing base increased to $1.3 billion with an elected commitment of $700 million. Based on the elected commitment for the merged company, total liquidity as of September 30, 2021 on a pro forma combined basis was $349 million, including outstanding letters of credit of $21 million and cash and cash equivalents of $67 million. Subsequent to September 30, 2021, Crescent closed on a $71 million acquisition of producing assets and funded the purchase with borrowings under the Crescent Credit Facility and cash on hand.

Pro Forma Capitalization as of September 30, 2021

(in millions)


Cash & Cash Equivalents





Borrowings Under Crescent Credit Facility




7.25% Senior Notes



Total Principal Debt Outstanding




Net Debt






Elected Commitment Under Crescent Credit Facility




Less: Borrowings Under Crescent Credit Facility



Plus: Cash & Cash Equivalents



Less: Letters of Credit



Total Liquidity







Net Debt / Annualized Adj. EBITDAX ($623 MM)



Net Debt / Annualized Unhedged Adj. EBITDAX ($899 MM)




Total Class A and Class B Shares Outstanding (MM)



Acquisitions and Divestitures

On December 7, 2021, Crescent announced the successful completion of the combination of Independence and Contango, creating a premier, diversified and well-capitalized U.S. energy company focused on consolidation. Crescent's Class A common stock started trading on the New York Stock Exchange under the ticker symbol "CRGY" at the open of trading on December 8, 2021. As previously announced, each eligible share of Contango common stock issued and outstanding immediately prior to the effective time of the transaction was exchanged for 0.2000 shares of Crescent Class A common stock.

Crescent closed three transactions in the second half of 2021, including two asset acquisitions (for approximately $140 million of aggregate consideration) and the merger with Contango.




Market Theme

Gas-Weighted PDP Asset

Q3 2021


Large-Cap Divestiture

High-Margin Conventional Asset

Q4 2021

Rockies and Permian

Private Company
Seeking Liquidity

Contango Oil and Gas

Q4 2021

Rockies, Permian
and Mid-Continent

Strategic M&A

Dividend Policy

Crescent targets quarterly dividends of approximately 10% of Adjusted EBITDAX, subject to approval by the Board. The Company intends to pay a dividend in the first quarter of 2022, based on fourth quarter 2021 Adjusted EBITDAX.

2022 Guidance

The Company plans to release its 2022 outlook early in the first quarter 2022.

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