Crescent Energy Company · NYSE:CRGY
Crescent Energy — Q2 2022 Earnings Presentation
37 slides from Crescent Energy's earnings presentation, Aug 10, 2022
Slide 1: Solid Execution, Delivering Value
August 2022 (NYSE: CRGY) Solid Execution, Delivering Value Second Quarter 2022 CRESCENT ENERGY
Slide 2: Disclaimer
Disclaimer The information in this presentation relates to Crescent Energy Company (the “Company”) and contains information that includes or is based upon “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E
Slide 3: Second Quarter 2022 Highlights
Second Quarter 2022 Highlights $373 MM / + 92% + 18% / + 45% Adjusted EBITDAX(1) / Production / Adjusted EBITDAX(1) QoQ Oil Production QoQ $282 MM Net Income Q2 Production: 142 Mboe/d $137 MM Levered FCF(1) Q2 Oil Production: 64 Mbbls/d (8%) / (18%) ~1.2x Operating Expenses(2) / Net LTM Leverage(1)
Slide 4: Second Quarter 2022 Highlights (Continued)
Second Quarter 2022 Highlights (Continued) • Successful integration of Uinta assets; first full quarter of Uinta assets in financials • Produced 142 MBoe/d (59% liquids), an 18% QoQ increase Strong Q2 2022 • Generated $373 MM of Adjusted EBITDAX(1), $640 MM of Unhedged Adjusted EBITDAX(1) and $137 M
Slide 5: Crescent Energy: A Differentiated U.S. Energy Company
Crescent Energy: A Differentiated U.S. Energy Company Well-Capitalized Energy Company with an Investor Mindset and Commitment to Sustainable Value Creation Substantial Cash Flow Disciplined Investment and Focused on Returning Committed to ESG Generation Supported by Accretive Growth Through Capital
Slide 6: Proven Track Record of Execution
Proven Track Record of Execution Seek to Provide Attractive Risk-Adjusted Returns and Predictable Cash Flow Through Cycles Strategy combines investor mindset with operational expertise Capital discipline and a focus on free cash generation Acquiring, developing a portfolio of high-quality, low-risk
Slide 7: Disciplined Approach to Generating Free Cash Flow
Disciplined Approach to Generating Free Cash Flow Predictable Free Cash Flow, Supported by Financial Discipline and Growth Through Returns-Driven Investing 10% of Targeting 1.0x Leverage Focused on Value Creation Adj. EBITDAX(1) $0.17 / share per Strong capital Returns-driven Opportunistic, quarter
Slide 8: Low-Decline Assets Drive Strong FCF Generation
Low-Decline Assets Drive Strong FCF Generation Scaled Portfolio Generates Substantial and Predictable Free Cash Flow First Year PDP Decline vs. Peers(1) 38% Cash Flow Stability 37% 35% 34% 33% Through: 29% 29% 28% • Low-decline PDP base 23% 22% 21% 13% • Flexible, returns-driven 12% investments 7% •
Slide 9: Low-Risk, High Quality Eagle Ford and Uinta Inventory
Low-Risk, High Quality Eagle Ford and Uinta Inventory 80%+ of Our 2022E Capital Program is Allocated to Eagle Ford and Uinta Eagle Ford Uinta 145K largely contiguous net acres in Duchesne & Uintah Acreage 82K largely contiguous net acres in Atascosa & Frio counties counties % HBP ~80% ~85% Operated
Slide 10: Robust Universe of Attractive Target Opportunities
Robust Universe of Attractive Target Opportunities Historically-low Equity Capital Formation and An Increasing Supply of Assets and Businesses For Sale (Capital(1) | $Bn) (Deals(2)) Large, Increasing Universe Private Equity Raised Primary Equity Raised of Attractive Target Deals on the Market Opport
Slide 11: Proven Consolidator – Delivering Accretive Deals with Upside
Proven Consolidator – Delivering Accretive Deals with Upside Uniquely Positioned to Capitalize on Market Opportunities Focused on Accretive Crescent Consistent Strategy Acquisitions(1) Actively Pursuing Acquisition Strategy Since 2011 Acquisitions with 8 Significant Upside Potential 6 4 • Cash-gener
Slide 12: Uinta Transaction Demonstrates Acquisition Strategy
Uinta Transaction Demonstrates Acquisition Strategy Acquired for <1.0x Proved Developed PV-10 of ~$1.1 Bn at 6/30 NYMEX(1) with a Multi-Year Inventory of High-Return Drilling Opportunities Closed Acquisition on March 30, 2022, for a Total Cash Consideration of ~$690 MM(2) Highly accretive, high-ma
Slide 13: Disciplined Financial Policy and Active Risk Management
Disciplined Financial Policy and Active Risk Management Financial Policy Designed to Prioritize Shareholder Returns and Balance Sheet Strength Through Cycles “Fixed Within a Framework” Dividend Policy Maintain Strong Balance Sheet (Long-Term Leverage Target ≤1.0x) Generate Attractive Risk-Adjusted R
Slide 14: Commitment to Financial Strength and Flexibility
Commitment to Financial Strength and Flexibility Low Leverage Strategy with 1.0x Long-Term Target Capitalization Table as of 6/30 ($ in MM, unless noted) Targeting Investment Grade Balance 6/30/2022 Sheet Metrics Cash & Cash Equivalents $55 RBL Borrowings 829 7.25% Senior Notes 700 • 1.2x Net LTM Le
Slide 15: Reliable Dividend – Fixed within a Framework
Reliable Dividend – Fixed within a Framework Adj. EBITDAX-Based Dividend Framework Designed to Deliver Reliable Return of Capital to Our Shareholders(1) Illustrative Dividend Dividend Framework Distributes (Assuming $1Bn of Adj. EBITDAX) 10% of Adjusted EBITDAX(1) ($MM) Dividend Policy Crescent Fram
Slide 16: Crescent Business Model: Sustainable Through Cycles
Crescent Business Model: Sustainable Through Cycles We Have Maintained Consistent Financial Discipline Over the Past Decade ($/Bbl) ($/MMBtu) Post 2014 Today (1) (2) Industry Average Crescent Energy Crescent Energy Net LTM Leverage (x) 3.1x 1.2x 1.2x (3) Reinvestment Rate (%) 91% 40% 48% Unhedged Re
Slide 17: Our Commitment to ESG Improvement
Our Commitment to ESG Improvement Crescent Energy has Identified Five ESG Priorities Plans to Provide Short- and Long- ESG Priorities Term ESG Targets in 2021 Report Focused on EHS and Emissions Work to reduce greenhouse gas emissions Since Closing the Merger in December, We Continue to Execute on I
Slide 18: Crescent Energy: A Compelling Investment
Crescent Energy: A Compelling Investment Well-Capitalized Energy Company with an Investor Mindset and Commitment to Sustainable Value Creation Focused on cash return of capital to shareholders Consistent strategy and leadership Shallow declines and disciplined reinvestment Deep drilling inventory wi
Slide 19: Appendix
©) Crescent Energy Appendix
Slide 20: Flexible & Returns-Driven Organic Growth Potential
Flexible & Returns-Driven Organic Growth Potential Balanced Portfolio of Attractive, Low-Risk Reinvestment Opportunities in Key Proven Basins Across The Lower 48 • Extensive low-risk capital opportunity • Attractive & competitive development returns • Minimal drilling requirements provide valuable o
Slide 21: Crescent Energy Reserves Summary
Crescent Energy Reserves Summary Year-End Proved Reserves of 598 MMBoe at SEC Pricing Comprised of 55% Liquids and 83% Proved Developed PV-10 ($MM) PV-10 ($MM) Reserve Category Oil (MMBbl) Gas (Bcf) NGL (MMBbl) Total (MMBoe) SEC(1) (2) NYMEX(1) (3) Proved Developed 183 1,497 66 499 $5,038 $7,031 Pro
Slide 22: Previously Disclosed 2022 Guidance
Previously Disclosed 2022 Guidance 2022 Program Generates $525 - $625 MM of Levered Free Cash Flow(1) 2022 Guidance Capital Allocation Commentary ($100 / Bbl WTI and $6 / MMbtu Henry Hub) Crescent with 9 • 80-85% of capital budget focused on Months of Uinta operated D&C in the Eagle Ford and Acquisi
Slide 23: Our Proactive Hedge Strategy
Our Proactive Hedge Strategy Active Hedge Strategy Protects the Balance Sheet and Protects Returns on Capital, While Maintaining Exposure to Long-Term Commodity Prices Protect the Balance Sheet: • Hedge a portion of PDP volumes when debt outstanding • Utilize hedges to ensure all debt repaid out of
Slide 24: Summary Hedge Position as of 6/30/2022
Summary Hedge Position as of 6/30/2022 ~60% Hedged in 2022 at the Midpoint of the Production Guidance Range WTI Oil Brent Oil Natural Gas NGLs Hedged Weighted Hedged Weighted Hedged Weighted Hedged Weighted Swaps: Volume Average Price Volume Average Price Volume Average Price Volume Average Price (M
Slide 25: G&A Costs In-Line with Peers
G&A Costs In-Line with Peers Crescent Energy Has Access to KKR’s Global Platform and Maintains Attractive G&A Metrics Relative to Peers • Pursuant to a management agreement, an affiliate of KKR provides Crescent with its executive management team and manages all day-to-day operations, including: C
Slide 26: Aligned Management & Board with Investor Mindset
Aligned Management & Board with Investor Mindset Uniquely Aligned Management Team with High Insider Ownership and Exclusively Performance-Based Long-Term Incentive Structure David Brandi Todd Ben Clay Bo Rockecharlie Kendall Falk Conner Rynd Shi CEO CFO CAO Executive VP Executive VP General Counsel
Slide 27: Our Board of Directors
Our Board of Directors Crescent’s Board of Directors Brings Together a Diverse Group of Seasoned Executives with a Broad Range of Valuable Expertise • Crescent Board comprised of more than 75% Independent Directors (1) • One Director to serve on separate and dedicated ESG Advisory Council John Goff
Slide 28: ESG Advisory Council
ESG Advisory Council External expertise • Meets quarterly • Chaired by Board member • Constructive feedback on ESG initiatives and industry best-practices • Reviews annual ESG report Founding Members Karen John Dr. Michael E. Simon (Board Rep.) Mingé Webber • Former Vice Chairman, • Former Chairman
Slide 29: Our “Up-C” Organizational Structure
Our “Up-C” Organizational Structure The Diagram Below Depicts Our Organizational Structure Immediately Following the Closing of the Merger with Contango Oil & Gas Company • Up-C Investors and Crescent Energy Company (“PubCo”) hold units (“OpCo Units”) Up-C Public in an operating company (“OpCo”) tha
Slide 30: Per Unit Performance
Per Unit Performance For the three months ended June 30, 2022 March 31, 2022 June 30, 2021 Average daily net sales volumes: Oil (MBbls/d) 64 44 37 Natural gas (MMcf/d) 356 333 247 NGLs (MBbls/d) 20 20 16 Total (MBoe/d) 142 120 94 Average realized prices, before effects of derivative settlements: Oil
Slide 31: Adjusted EBITDAX & Levered Free Cash Flow
Adjusted EBITDAX & Levered Free Cash Flow Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands) Net income (loss) $ 281,898 $ (272,861) $ (124,109) $ (439,129) Adjustments to reconcile to Adjusted EBITDAX: Interest expense 24,937 17,443 41,461 24,826 Realized (gain
Slide 32: Unhedged Adjusted EBITDAX
Unhedged Adjusted EBITDAX Unhedged Adjusted EBITDAX Crescent defines Unhedged Adjusted EBITDAX as Adjusted EBITDAX plus realized (gain) loss on commodity derivatives. Management believes Unhedged Adjusted EBITDAX is a useful performance measure because it allows for an effective evaluation of the Co
Slide 33: Net LTM Leverage & PV-10 Reconciliation
Net LTM Leverage & PV-10 Reconciliation Net LTM Leverage Crescent defines Net LTM Leverage as the ratio of consolidated total debt to consolidated Adjusted EBITDAX as calculated under the credit agreement (the "Credit Agreement") governing Crescent’s Revolving Credit Facility. For purposes of the Cr
Slide 34: Adjusted Recurring Cash G&A
Adjusted Recurring Cash G&A Adjusted Recurring Cash G&A Crescent defines Adjusted Recurring Cash G&A as General and Administrative Expense, excluding non-cash equity-based compensation and transaction and nonrecurring expenses, and including Manager Compensation RNCI Distributions(1). Management bel
Slide 35: Adjusted Net Income
Adjusted Net Income Adjusted Net Income Crescent defines Adjusted Net Income as net income (loss), adjusted for certain items. Management believes that Adjusted Net Income is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas compani
Slide 36: Adjusted Current Income Tax & Adjusted Dividends Paid
Adjusted Current Income Tax & Adjusted Dividends Paid Adjusted Current Income Tax Crescent defines Adjusted Current Income Tax as current income tax provision (benefit) plus Income Tax RNCI Distributions. Management believes Adjusted Current Income Tax is a useful performance measure because it refl
Slide 37: Stay Connected.
Stay Connected. Emily Newport IR@crescentenergyco.com 600 Travis Street Suite 7200 Houston, Texas 77002 + 1 (713) 332-7001 www.crescentenergyco.com
Crescent Energy Company — Q2 2022 Earnings Presentation on 6ix