TULSA, OK, Feb. 21, 2024 (GLOBE NEWSWIRE) — Vital Energy, Inc. (NYSE: VTLE) (“Vital Energy” or the “Company”) today reported fourth-quarter and full-year 2023 financial and operating results and provided its 2024 outlook.
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Vital Energy Wells Drilled 2023
Fourth-Quarter 2023 Highlights
- Reported 4Q-23 net income of $281.4 million, Adjusted Net Income1 of $76.1 million and cash flows from operating activities of $233.7 million
- Generated 4Q-23 Consolidated EBITDAX1 of $304.2 million and Adjusted Free Cash Flow1 of $69.0 million
- Reported 4Q-23 total and oil production that exceeded the high-end of Company guidance by 7% and 4%, respectively, producing 113.7 thousand barrels of oil equivalent per day (“MBOE/d”) and 53.1 thousand barrels of oil per day (“MBO/d”), both Company records
- Reported 4Q-23 capital investments of $184.2 million, excluding non-budgeted acquisitions and leasehold expenditures, in line with Company guidance
- Closed three Permian Basin acquisitions and announced a fourth transaction to increase working interests on a portion of the acquired properties
- Organically added ~185 new oil-weighted locations
Full-Year 2023 Highlights
- Reported FY-23 net income of $695.1 million, Adjusted Net Income1 of $325.0 million and cash flows from operating activities of $813.0 million
- Generated FY-23 Consolidated EBITDAX1 of $1.04 billion and Adjusted Free Cash Flow1 of $217.1 million
- Reported FY-23 total production of 96.6 MBOE/d and oil production of 46.3 MBO/d, an increase of 17% and 22%, respectively, versus FY-22
- Exited 2023 with a Net Debt1/Consolidated EBITDAX1 ratio of 1.09x (credit facility covenant calculation), 8% lower than prior year-end
- Reported year-end 2023 proved reserves of 404.9 million BOE, an increase of 34% versus prior year
- Closed six accretive Permian Basin acquisitions for $1.6 billion, adding approximately 88,000 net acres and 465 gross oil-weighted locations, 280 of which were announced with the acquisitions, increasing inventory of oil-weighted development locations to more than 10 years at current activity levels
- Reported reduced Scope 1 GHG emissions intensity and methane emissions intensity of 38% and 65%, respectively, as of year-end 2022
1Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release.
“Our 2023 accomplishments were impressive as we enhanced scale, established a core operating position in the Delaware and significantly improved the depth and quality of our inventory,” said Jason Pigott, President and Chief Executive Officer. “Operationally, we exceeded expectations and delivered Company-record production for lower-than-expected capital. Continued capital discipline maximized our cash flows from operating activities and Adjusted Free Cash Flow and allowed us to strengthen our balance sheet.”
“Our strategy to build long-term value is clear and proven,” continued Pigott. “We now have the scale and inventory to sustainably maximize cash flows from operating activities and generate Adjusted Free Cash Flow. In 2024, we are focused on adding inventory through targeted leasing and bolt-on acquisitions and delineating additional formations in and around our existing positions. We are applying our operational and technological expertise to recent acquisitions to enhance efficiencies and improve returns while reducing debt and strengthening our leverage ratio.”
Fourth-Quarter 2023 Financial and Operations Summary
Financial Results. The Company reported net income of $281.4 million, or $9.44 per diluted share, and Adjusted Net Income of $76.1 million, or $2.55 per adjusted diluted share. Cash flows from operating activities were $233.7 million and Consolidated EBITDAX was $304.2 million.
Production. Consistent with preliminary volumes disclosed in January, Vital Energy’s fourth quarter total and oil production set Company records, averaging 113,747 BOE/d and 53,070 BO/d, respectively. Production volumes benefited from outperformance of new wells across the Company’s leasehold.
Capital Investments. Total capital investments, excluding non-budgeted acquisitions and leasehold expenditures, were $184 million, consistent with preliminary amounts disclosed in January. Vital Energy turned-in-line (“TIL”) 15 wells during fourth-quarter 2023. Investments included $143 million for drilling and completions, $27 million in infrastructure investments (including Vital Midstream Services), $8 million in other capitalized costs and $6 million in land, exploration and data related costs.
Operating Expenses. Lease operating expenses (“LOE”) during the period were $8.33 per BOE, in line with expectations.
General and Administrative Expenses. General and administrative (“G&A”) expenses, excluding long-term incentive plan (“LTIP”) and transaction expenses, for fourth-quarter 2023 were $2.12 per BOE. Cash LTIP expenses, reflecting the price decline of Vital Energy’s common stock during the fourth quarter of 2023, were $(0.09) per BOE. Non-cash LTIP expenses were lower than expectations at $0.22 per BOE.
Liquidity. At December 31, 2023, the Company had $135 million drawn on its $1.25 billion senior secured credit facility and cash and cash equivalents of $14 million.
2024 Outlook
Capital Investments. The Company’s 2024 development plan is designed to maximize Adjusted Free Cash Flow, enhance capital efficiency and organically add high-return locations. Vital Energy plans to invest $750 – $850 million in 2024, excluding non-budgeted acquisitions and leasehold expenditures, operating four drilling rigs throughout the year and averaging 1.7 completions crews. Capital investments are expected to peak in the first quarter due to higher working interest on wells being TIL’d during the quarter.
Production. The Company expects total production of 116.5 – 121.5 MBOE/d and oil production of 55.0 – 59.0 MBO/d for full-year 2024.
Oil-Weighted Inventory
Vital Energy significantly increased its inventory of high-return development locations in 2023. The Company closed six acquisitions in 2023 to expand its Midland Basin position and initiate a core position in the Delaware Basin, adding approximately 280 locations. Subsequently, the Company added an additional 185 locations on the acquired properties through further technical evaluation.
At year-end 2023, Vital Energy had approximately 830 high-return locations with an average breakeven WTI oil price of <$55 per barrel, representing more than 10 years of drilling inventory at current activity levels. Approximately 275 of these locations breakeven below $50 per barrel WTI.
2023 Proved Reserves
Vital Energy’s total proved reserves at year-end 2023 were 404.9 MMBOE (39% oil, 71% developed). The standardized measure of discounted net cash flows was $4.15 billion and the PV-10 value was $4.49 billion utilizing SEC benchmark pricing of $78.22 per barrel for oil and $2.64 per MMBtu for natural gas. Consistent with its past methodology of only booking locations it intends to develop over the next three years, the Company booked a total of 212 proved undeveloped locations.
Proved reserves increased 34% over the prior year, driven primarily by reserve adds from acquired properties. Proved developed and proved undeveloped reserves from the acquired properties were valued at $1.63 billion at year-end 2023. The Company has included only 111 of the 355 development locations on properties acquired in 2023 as proved undeveloped reserves.
Sustainability
In 2023, Vital Energy published the Company’s fourth Sustainability Report and an inaugural Climate Risk and Resilience Report. Both reports detail the Company’s performance against its sustainability targets. Two Company targets (Scope 1 GHG emissions intensity and methane emissions reductions) were achieved as of year-end 2022, three years ahead of schedule.
The Company is committed to quickly mitigating emissions on acquired assets. From year-end 2020 to year-end 2022, Vital Energy reduced absolute emissions on acquired assets by 36% while growing production on those assets by 42%. Additionally, the Company was the first Permian operator to receive the third-party TrustWell certification for responsible operations, placing Vital Energy in the top-quartile of U.S. onshore operators. In 2023, Vital Energy expanded this certification to approximately 60% of its gross operated oil production and became the first company to receive the TrustWell Low Methane Rating.
First-Quarter 2024 Guidance
During the first quarter of 2024, Vital Energy plans to operate four drilling rigs and two completions crews, and TIL 15 wells, with 10 being TIL’d in the second half of the quarter as part of a 20 well development package.
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