Vitesse Energy Inc (VTS) 2025 Q3 法說會逐字稿

Greetings. Welcome to the Vertes Energy Third quarter 2025 earnest call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to the director, Investor relations and Business Development at Vites Ben Messier. Thank you. You may be in.

Good morning everyone and thanks for joining. Today we will be discussing our financial and operating results for the 3rd quarter of 2025 and increased production and capital expenditures guidance. Our 10 and earnings were released yesterday after market closed, and an updated investor presentation can be found on the test website. I'm joined this morning by our Chairman and CEO Bob Gerty, our President Brian Cree, and our CFO Jimmy Henderson.

Before we begin, please be reminded that this call may contain estimates, projections, and other forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. Please review our earnings release and risk factors discussed in our filings with the SEC for additional information. In addition, today's discussion may reference non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10 and earnings release. Now I will turn the call over to Visa's Chairman and CEO Bob Gerty.

Thank you, Ben, and good morning everybody. Thanks for joining. In the 3rd quarter, we stuck to our strategy of disciplined capital allocation.

We participated in an increasing number of 3 and 4 mile laterals drilled by our operating partners.

And significantly, we successfully completed two the tests operated wells as Brian will discuss.

As a result, we increased our production and capital expenditure guidance for 2025.

Advancements in technology continue to enhance the value of our assets. Extended laterals are delivering strong economic results through lower drilling and completion costs per lateral foot. Drilling activity continues to progress further into the areas where the tests.

Hold concentrated positions.

Our original strategy of acquiring acreage outside the core of the Bakken is paying off as activity now moves into these areas, generating returns comparable to historically those seen in the cores. We estimate that we have over 2 million net lateral feet of development remaining on our asset, which translates to more than 200 net 2 mile equivalent wells.

The oil industry is highly cyclical. Our long duration asset, low leverage, and disciplined hedging positions us not only to withstand but to be opportunistic during market disruptions. We are capital allocators and will continue to make the best decisions with our capital each quarter based on the opportunity set available.

As a testament to our allocation decisions, last week, our board declared our fourth quarter dividend at an annual rate of $2.25 per share. I will now hand the call over to our President, Brian Cree, to provide more detail on our operations.

Thanks, Bob. Good morning, everyone, and thanks for joining today's call.

In late September, the Tesla's operating team turned to production to gross, 1.9 net drilled but uncompleted wells acquired through the Lucero acquisition earlier this year. The wells are exceeding our initial oil and natural gas production expectations and were completed approximately $2 million or 15% under budget.

We continue to contemplate the best time to advance a broader operated drilling plan, but we will only implement a development plan at a cadence and return thresholds that strengthen our dividend.

Production for the quarter averaged 18,163 barrels of oil equivalent per day. This brings our year-to-date production to 17,373 barrels of oil equivalent per day.

As of September 30th, 2025, we had 20.8 net wells in our development pipeline.

Including 5.6 net wells that were either drilling or completing and another 15.2 net locations that had been permitted for development.

For 2025, we have approximately 60% of our remaining oil production hedged at nearly $70 per barrel and just under half of the remaining 2025 natural gas production hedged with attractively priced collars at a weighted average floor of $3.73 and ceiling of $5.85 per MBTU, both percentages based on the midpoint of our revised guidance. Additionally, we have over 3,300 barrels per day and 12,700 mmbTU per day of our 2026 oil and natural gas production hedged at $66.43 per barrel and through a costless collar of $3.72 by $4.99 per MMBTU.

Thanks for your time. Now I'll turn the call over to our CFO, Jimmy Henderson.

Good morning, everyone. Just wanted to highlight a few items from our financial results for the 3rd quarter of 2025. Please refer to our earnings release and TMQ which were filed last night for any further details.

Production for the quarter was 18,163 BOE per day with a 65% oil cut.

For the quarter, adjusted even doll was $41.6 million and adjusted net income was $3.8 million.

GAAP net income was a loss of $1.3 million and you can see that reconciliation in our press release.

Cash capexs, including acquisition costs for the quarter were $31.8 million.

These costs were funded within our operating cash flows.

At the end of the 3rd quarter, we had a total debt of $114 million and net debt of $108 million giving us net debt to adjusted annualized EBITDA of 0.65 times.

We increased our annual guidance for 2025 due to the completion of our two ducts, as Brian discussed, and incremental organic well proposals primarily focused on 3 and 4 mile development.

We now anticipate production in the range of 17,000 to 17,500 BOE per day for the full year of 2025 with an anticipated oil cut of 65% to 67%.

Cash CapEx for the year is now anticipated to be between $110 million and $125 million.

With that, let me turn the call over to the operator and open for Q&A.

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

One moment please while we pull for questions.

Our first question comes from the line of Jeff Grant with Northland Capital Markets. Please proceed with your question.

To get.

Hey.

I was I was.

Curious to start off, on these longer laterals. I know that's something that you guys have kind of talked as directionally happening a bit more for a bit, but it seems like maybe a bit of a step change in terms of the proportion there. So I was just hoping to dive into that a bit more. Do you guys have any numbers on, I don't know what what percent of the program, are these 3 and 4 mile laterals now and can you remind us how that maybe compares to, I don't know earlier this year or this time last year.

Hi Jeff, it's Ben. I would say approximately over the course of the year, about half of our AFEs that we've received have been extended.

Laterals.

We don't see 1 mile laterals anymore, at least we haven't this year, so the remaining half has been 2 mile laterrals.

Got it perfect excuse me, and on the acquisition side, it looked like, you guys were a bit more active there. It looked like perhaps maybe even the most active quarter, since, maybe a year or so ago. I is that you guys just refresh this what are you seeing on the acquisition market was this expected? Was this surprising and what's kind of the outlook, on the acquisition side? Is this a sign of more things to come? Thanks.

Yeah, Jeff, this is Brian.

Obviously, as we are always looking at near term development opportunities buying AFfes from those that they are looking to divest and, over the course of about the last year, it's just been a very competitive market. We've continued to be very disciplined with our rate of return approach on how we look at those, and you just keep banging away and we we've looked at.

And hundreds of opportunities we continue to bid them as we have in the past and we are fortunate to be able to close a couple of deals in the 3rd quarter and we'll continue to look at deals. The market is very strong. We're seeing lots of AF opportunities, but again, we're being very disciplined with our approach in terms of how we're looking at making those acquisitions.

Thanks, Brian. And just to clarify, I guess there's nothing, I guess dramatically different that you guys saw either from a competitiveness standpoint or or your underwriting practices. It's just a function of, some days you win the lottery, some days you don't kind of thing.

Yeah, I think there's, I think we are seeing more activity out there in terms of, at least on our acreage, which is helpful because as we look at as we analyze those AFEs that are coming into our acreage position, it gives us an opportunity to be a little more. I don't want to use the word aggressive, but it gives us a little bit of a leg up when we're looking at buying in AFE opportunities on our existing acreage from others that are looking to sell them because we've done a ton of work on that and it just gives us a little bit of a leg up.

That makes sense. Okay, I'll turn it back. I appreciate the time.

Thank you guys.

Thank you.

Our next question comes from the line of po frat with Alliance Global Partners. Please proceed with your question.

Yeah, just to follow-up on CapEx, can you just highlight what acquisitions might be built into the 4th quarter CapEx range?

Hipo, it's Ben here. We tend to budget conservatively on acquisitions. We don't know exactly when. As Jeff said, we're going to hit the lottery and win acquisitions in any given quarter. Currently we have a few 100 grand budgeted for acquisitions in the fourth. We hope that we come across economic opportunities that allow us to deploy more capital there, which is part of the reason you see a $15 million range for the fourth quarter, which is, pretty wide range, but we leave some wiggle room to make attractive acquisitions if they present themselves.

Sounds good. And then on the operated inventory, you, you've finished the two dots that were, that you talked about previously.

What what sort of the line of sight on any of the operated inventory opportunities that you have, looking out into 2026?

Well, as we've said previously, we've got somewhere around 15 net undeveloped locations that we picked up through the acquisition of Lucero.

We continue to look at those, look at the best ways to drill those, look at the ability to make trades with other partners to improve the economics and those, and that's, as Bob stated and we've said we're desperate, we're definitely looking at. A 2026 plan, but a lot of that's going to depend on where oil prices are and what else we're seeing in terms of CapEx from our partners. So it's something that we're continuing to evaluate. We're kind of planning out a 2026 and 2027 operated program, but a lot of that will depend as we as we finalize our models and budgets for 2026.

That's helpful and then when I look at the cost structure for the 3rd quarter, the second quarter had a lot of noise, just positive noise because of the settlement.

Can you, look at the 3rd quarter cost structure run rate, and is that normal, is that more normalized compared to, the second quarter?

Yeah, definitely. Well, this is Jimmy, definitely exactly as you constructed that 3rd quarter is a much better indicator of run rate for G&A, particularly LOE slightly higher than we expected, but we're, we've had some workovers as we've talked before, and I think that's kind of coming to an end, so it should be slightly lower there and on say gas prices we're probably.

In the range that we expect, hopefully we'll see a little bit better results going forward as oil prices and NGO prices have a little bit of life in the future. So hopefully that helps you in your modeling.

Yeah, let me just add this, Brian, let me add to that. I mean, the LOE in the 3rd quarter, look, I mean, we continue to look at all of the new wells that we acquired from Lucero, and I think we're making the right decisions in terms of when to spend. Money on on those wells and as Jimmy said, I think we've seen a lot less activity in the 4th quarter than we did in the 3rd quarter. So I agree with Jimmy's comment there. And then obviously with with the gas price differential when you've got oil at $60 and NGLs where they are, that 3rd quarter, looks pretty tough from a gas price standpoint, but we typically see that improve quite a bit in the 4th quarter and 1st quarters as we're in those winter months.

Great.

Thank you.

Thank you.

Our next question comes from the line of Noel Parks with Tui Brothers. Please proceed with your question.

Hi, good morning. Just a couple of, one thing I was, thinking about is, we're, still seeing a fair amount of uncertainty in the credit environment, just as far as sort of the. The U curve and so forth. I just wonder, do you sort of, see any signs of that, being, on producers' minds as they look at their say 2026 budgets, as far as just how inclined they are to be sort of either aggressive or or hold back, kind of again because of the funding environment.

Hey, No it's Jimmy.

You know there are a lot of factors play into what operators' plans are, most notably, of course, is oil prices and consolidation is a big part of that, as many of our operators have continued to consolidate the basin and they're working on their plans to how they're going to allocate capital and move rigs in or out.

We're still, we feel like things are going our way, as Bob mentioned before, we're starting to see much more of our acreage get developed where we have a more concentrated position, so that probably plays more into the plans for next year than the interest rate environment that we're in, but yeah, it certainly helps that that's a positive move, but we're still. A hopeful to see operators put their budgets together for next year and then we can have a better idea, more line of sight to what our plans are going to be.

Great, thanks. And just wondering if you have any updated thoughts as far as you look at different opportunities and potentially different basins about the gas opportunities out there, these days.

Yeah, no, this is Bob. We look, we're looking a lot.

So I can't speak to any specific asset that we're looking for other than our lens is pretty wide at this point and we would love to buy gas assets at the right price. Look, the M&A market now is pretty frenetic, but if you take a look at the Bakken, it's pretty quiet. So you know we're going to be looking at the Bakken first and the fun part about the operators in the Bakken, they are very well funded, they're not stressed and there other than the Hess Chevron transaction which we think is certainly a net positive, and the Cod Enter plus, which is also a net positive, that there's, we're looking at the Bakken first.

Of the billion dollars of deals that we have in our deal shop right now, probably a third of them are gas-oriented, but it's.

It's a very frenetic market and all, and I can't handicap what's going to be the next deal we do.

Great, fair enough, thanks a lot.

Thanks, Noel.

Thank you. We have reached the end of the question-and-answer session. I would like to turn the floor back to Bob Gery for closing remarks.

Thanks and thanks for everybody for joining in. If you've got any follow-up questions, Ben Messy does a great job in answering those. So thanks everybody. See you in a couple of months.

Bye-bye.

Thank you, and this concludes today's conference, and you may disconnect your live at this time.

Thank you for your participation.