Crescent Energy Company · NYSE:CRGY
Crescent Energy — Q1 2024 Earnings Presentation
32 slides from Crescent Energy's earnings presentation, May 7, 2024
Slide 1: Q1'24 Results Conference Call
Q1’24 Results Conference Call May 2024
Slide 2: Disclaimer
Disclaimer The information in this presentation relates to Crescent Energy Company (the “Company” or “CRGY”) 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 Se
Slide 3: A Differentiated U.S. Energy Company
A Differentiated U.S. Energy Company Disciplined Growth Strategy that Combines an Investor Mindset and Deep Operational Expertise CRGY at a Glance $4.4 BN Proved Developed PV-10(1) Cash Flow Rockies $5.6 BN Total Proved PV-10(1) • Substantial Cash Flow ~40% of ‘24E Production 166 Mboe/d Q1’24 Produc
Slide 4: Delivering On Strategic Priorities
Delivering On Strategic Priorities ✓ Strong Financial Performance • Outperformed estimates; increased guidance • Strong realizations drive improved margins ✓ Operational Execution • Continued gains in well productivity • Simul-frac completions drive additional efficiencies ✓ Accretive Growth • Incre
Slide 5: Executing Our Proven Strategy: Strong Q1 Results
Executing Our Proven Strategy: Strong Q1 Results Substantial Large, Low Decline Cash Flow Generation Base Production $313 MM Adj. EBITDAX(1) 166 Mboe/d $66 MM Levered FCF(1) 42% Oil / 59% Liquids Attractive Balance Sheet Return of Capital Strength $0.12/sh Fixed Quarterly Dividend(2) 1.4x Net LTM Le
Slide 6: Enhanced 2024 Outlook
Enhanced 2024 Outlook Well Productivity Gains Lead to 1.5% Increase in 2024 Production Guidance 2024 Production Outlook ✓ (Mboe/d) Production ~2.5 157 - 162 Outperformance 155 - 160 (~0.5) • Solid Western Eagle Ford and Uinta well performance ✓ Peer Leading Capital Efficiencies • More production on
Slide 7: Strong Realizations Drive Improved Margins
Strong Realizations Drive Improved Margins Oil Realizations ✓ Marketing Synergies (% of WTI) 96% Improve Oil 95% Realizations • Meaningful uplift 92% 92% 92% since closing Western Eagle Ford transactions in 2H’23 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Gas Basis Q1’24 Gas Realizations ✓ Balanced Bas
Slide 8: Sustained Efficiency Gains Enhance Cash Flow
Sustained Efficiency Gains Enhance Cash Flow Operational Efficiencies Improving Well Costs and Increasing Returns ~2,000’ Drilling ~1,575’ ~1,750’ Speed (ft/day) +25% 2022 2023 Current Simul-frac driving completion efficiencies ~100,000 Completion ~72,000 ~90,000 Speed (fluid bbl/day) +40% 2022 2023
Slide 9: Best in Class Eagle Ford D&C Performance
Best in Class Eagle Ford D&C Performance Simultaneous Operations Increasing Efficiencies and Reducing Costs Drilled Measured Depth per Day(1) ✓ Drilling ~25% More (Eagle Ford 2022+ Wells: ft) 2,000 Footage per Day than Peer Avg: ~1,650 Peers 1,500 • Reducing cycle times 1,000 and cost with 500 consi
Slide 10: Western Eagle Ford Assets Continue to Outperform
Western Eagle Ford Assets Continue to Outperform Continued Improvement in Well Performance Relative to Prior Operator Enhanced Well Productivity(1) ✓ ~100% Increase in Well (Avg Cum. Boe/ft) Productivity Through ~135 Days • Significant and sustained outperformance through additional production time
Slide 11: Optimized Uinta Well Design Drives Increased Productivity
Optimized Uinta Well Design Drives Increased Productivity Significantly Larger Completions with Minimal D&C Cost Impact, Driving Capital Efficiencies and Improved Returns Optimizing Increased Driving Capital Completions Well Productivity(1) Efficiencies(2) (Avg Proppant Intensity - lbs/ft) (Avg Cum.
Slide 12: Track Record of Accretive Acquisitions
Track Record of Accretive Acquisitions Targeting Cash Generative Assets in Proven U.S. Onshore Basins ✓ Consistent Approach to Acquisition Underwriting • Target short payback Crescent Acquisitions Consistent Acquisition Strategy(1) 6 period (<5 years) and 2.0x+ MOIC 4 ✓ Incremental Returns 3 Through
Slide 13: Accretive Minerals Bolt-On Within Core Focus Region
Accretive Minerals Bolt-On Within Core Focus Region Acquired ~1,200 Net Royalty Acres in the Eagle Ford for ~$25 MM Minerals Cash Flow(1) Meets CRGY Other 15% ✓ Investment Criteria: Eagle Ford 32% >2.0x MOIC, short payback and accretive to key metrics Rockies 53% Pro Forma Key Metrics Focused Minera
Slide 14: 12-Yr Track Record of Returning Capital
12-Yr Track Record of Returning Capital Framework Provides Discipline, Certainty and Simplicity to Shareholders Return of Capital Framework: Peer Leading Fixed Dividend Yield(1) Consecutive 12 years 4.5% Priority #1 Fixed Dividend: • $0.12 / share per quarter of dividend payments(2) 4.0% 2.6% 2.7% 2
Slide 15: Consistent Capital Markets Execution Since Going Public
Consistent Capital Markets Execution Since Going Public Improvement in Capital Markets Access and Positioning At IPO CRGY Increase (Dec 2021) Today Increased Public Float % 25% 63% ~150% Increased ADTV(1) ~$4 MM ~$15 – $20 MM ~400% ($ / shares) ~300 K shares ~1.6 MM shares Added Research Analysts
Slide 16: Improving Structural Access to Our Stock
Improving Structural Access to Our Stock CRGY Ownership ✓ Increased Public Private Investors Float to ~63% of KKR 22% Shares Outstanding Public 34% Shareholders +23% 55% 15% +76% 15% ✓ 16% Enhanced Clarity in 63% Corporate Structure 51% 29% 2023 Capital 2024 Capital 1/1/2022 CRGY 1/1/2023 CRGY 1/1/2
Slide 17: "BB" Balance Sheet Reflects Financial Strength
“BB” Balance Sheet Reflects Financial Strength Targeting Investment Grade Balance Sheet Metrics Through Cycles Commitment to Balance Sheet Strength ✓ Maintain Ample Liquidity: Current Leverage Total Current liquidity is ~2.5x our Leverage(1) Target / Max Liquidity(2) >$500 MM target 1.4x 1.0x / 1.5x
Slide 18: Peer Leading Decline Rate and Capital Efficiency
Peer Leading Decline Rate and Capital Efficiency… Low Decline Production = Greater Capital Efficiency 19% 2-3 Rigs % NTM Decline Rate Maintenance Activity Peers Replace ~60% More Peers Spend ~$375 MM / Year More Production Each Year in Capex for Same Production(1) First Year PDP Decline vs. Peers(2)
Slide 19: Leads to Compelling Valuation On Cash Flow Metrics
….Leads to Compelling Valuation On Cash Flow Metrics Crescent Is Expected to Generate Significant Levered Free Cash Flow(1) >$2 BN 22% ’24E – ’28E Cum. Levered FCF(1) % FCF Yield Cumulative LFCF Greater Than CRGY FCF Yield is ~65% Current Market Capitalization Higher Than Peers ‘24E – ’28E Cum. LFCF
Slide 20: Appendix
©) Crescent Energy Appendix
Slide 21: Reducing Our Emissions Impact
Reducing Our Emissions Impact Our Sustainability DIVERSITY & Focus Areas CLIMATE ENVIRONMENT SAFETY COMMUNITY INCLUSION ✓ Transparent Reporting to Support Long-Term Goals • Awarded OGMP 2.0 Gold Standard pathway rating in 2023 for the second consecutive year ✓ Monitoring and Reducing Emissions • Act
Slide 22: Capital Allocation Priorities
Capital Allocation Priorities Priority #1A Financial Strength Target max 1.5x leverage in an acquisition scenario Target 1.0x long-term leverage Priority #1B Returning Capital to Shareholders Fixed Dividend: $0.12 per share per quarter(1) A B Returns-Driven Investing: Priority #2 Target >2.0x MOIC(2
Slide 23: Eagle Ford Asset Overview
Eagle Ford Asset Overview: Scaled Position Across Oil / Condensate Window Asset Detail Operated Central Western Non-Op Net Acres ~82,000 ~124,000 ~33,000 Atascosa and Dimmit, Webb Zavala, Frio, Counties Frio and La Salle Atascosa, Webb Avg. ~95% / ~72% ~63% / ~47% ~38% / ~30% WI / NRI(1) % Oil(1) ~8
Slide 24: Uinta Asset Overview
Uinta Asset Overview: Proven Oil Resource with Multi-Year Development Inventory Asset Detail Uinta Net Acres ~145,000 Counties Duchesne and Uintah Avg. WI / NRI ~85% / ~70% % Oil ~65% % HBP ~85% Current 1 Rigs Gross Locations(1) Low-Risk 250 Total 650 MOIC(2) >2.0x DC&F ~$950 CRGY (Op) $ / ft Altamo
Slide 25: Hedge Position: Oil
Hedge Position: Oil Q2’24 Q3’24 Q4’24 FY 2025(1) NYMEX WTI (Bbls, $/Bbl) Swaps Total Volumes 3,827,100 2,271,480 1,966,630 -- Total Daily Volumes 42,056 24,690 21,376 -- WA Swap Price $67.91 $68.11 $69.03 -- Collars Total Volumes -- 2,622,000 2,622,000 4,197,500 Total Daily Volumes -- 28,500 28,500
Slide 26: Hedge Position: Gas
Hedge Position: Gas Q2’24 Q3’24 Q4’24 FY 2025 NYMEX Henry Hub (MMBtu, $/MMBtu) Swaps Total Volumes 10,216,210 10,323,800 10,320,370 -- Total Daily Volumes 112,266 112,215 112,178 -- WA Swap Price $3.69 $3.69 $3.69 -- Collars Total Volumes 4,550,000 4,600,000 4,600,000 58,765,000 Total Daily Volumes
Slide 27: Per Unit Performance
Per Unit Performance For the three months ended March 31, 2024 March 31, 2023 December 31, 2023 Average daily net sales volumes: Oil (Mbbls/d) 70 59 71 Natural gas (MMcf/d) 403 351 386 NGLs (Mbbls/d) 28 19 30 Total (Mboe/d) 166 137 165 Average realized prices, before effects of derivative settlement
Slide 28: Adjusted EBITDAX & Levered Free Cash Flow
Adjusted EBITDAX & Levered Free Cash Flow Adjusted EBITDAX & Levered Free Cash Flow Crescent defines Adjusted EBITDAX as net income (loss) before interest expense, loss from extinguishment of debt, income tax expense (benefit), depreciation, depletion and amortization, exploration expense, non-cash
Slide 29: Adjusted EBITDAX & Levered Free Cash Flow (Cont'd)
Adjusted EBITDAX & Levered Free Cash Flow (Cont’d) For the three months ended March 31, 2024 March 31, 2023 (in thousands) Net income (loss) $ (32,364) $ 255,611 Adjustments to reconcile to Adjusted EBITDAX: Interest expense 42,686 29,320 Loss from extinguishment of debt 22,582 — Income tax expense
Slide 30: 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. Management believes Ne
Slide 31: 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. Management belie
Slide 32: Stay Connected.
Stay Connected. Brandi Kendall IR@crescentenergyco.com 600 Travis Street Suite 7200 Houston, Texas 77002 + 1 (713) 332-7001 www.crescentenergyco.com
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