Crescent Energy Company · NYSE:CRGY
Crescent Energy — Q1 2022 Earnings Presentation
33 slides from Crescent Energy's earnings presentation, May 11, 2022
Slide 1: A Differentiated U.S. Energy Company
May 2022 (NYSE: CRGY) A Differentiated U.S. Energy Company CRESCENT ENERGY
Slide 2: Disclaimer
Disclaimer This presentation relates to Crescent Energy Company (the “Company”) and contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. All statem
Slide 3: Why Crescent?
Why Crescent? Crescent Offers Investors Differentiated Returns From an Experienced Team with a Proven History Through Commodity Price Cycles Differentiated business model focused on cash return of capital to shareholders Consistent management team for the last decade Shallow declines and disciplined
Slide 4: Crescent Energy: A Differentiated U.S. Energy Company
Crescent Energy: A Differentiated U.S. Energy Company Diversified and Well-Capitalized Energy Company Focused on Sustainable Value Creation • Substantial Cash Flow Rockies Generation Supported by ~43% 2022E Production Predictable PDP Base • Focused on Returning Capital to Shareholders Barnett • Attr
Slide 5: Recent Highlights
Recent Highlights • Produced 120 MBoe/d (54% liquids) • Generated $195 MM of Adjusted EBITDAX(1), $371 MM of Unhedged Adjusted EBITDAX(1) and Strong Q1 2021 $90 MM of Levered Free Cash Flow(1) • Operated one rig in the Eagle Ford and incurred $85 MM of capital Performance • Exited the quarter at 1.3
Slide 6: Consistently Executing Our Strategy
Consistently Executing Our Strategy We Seek to Deliver Attractive Risk-Adjusted Investment Returns and Predictable Cash Flows Across Cycles Employing a differentiated business model that combines an investor mindset and deep operational expertise Investing capital with discipline and a focus on cash
Slide 7: Sustainable Value Creation: Our Free Cash Flow Model
Sustainable Value Creation: Our Free Cash Flow Model Stable Asset Base Generates Predictable Free Cash Flow, Supported by Financial Discipline and Growth Through Returns-Driven Investing Cash flow is the foundation of our business, and each dollar flows through our disciplined framework 10% of Targe
Slide 8: Low-Decline Production Base Drives FCF Generation
Low-Decline Production Base Drives FCF Generation Scaled Portfolio of Stable, Low-Decline Production from a Diversified Asset Base Generates Substantial and Predictable Free Cash Flow First Year PDP Decline vs. Peers(1) 41% 42% • Low-decline FCF from 37% 35% 35% PDP base underpins 34% 32% 32% 30% va
Slide 9: High Quality Operated Inventory: Eagle Ford and Uinta
High Quality Operated Inventory: Eagle Ford and Uinta Low-Risk Reinvestment Opportunities Focused in the Eagle Ford and Uinta; 80% - 85% of 2022 Capital Program is Allocated to Operated Assets, Primarily in the Eagle Ford and Uinta Eagle Ford Uinta 145K largely contiguous net acres in Duchesne & Uin
Slide 10: An Attractive Market for Consolidation
An Attractive Market for Consolidation Historically Low Equity Capital Formation and An Increasing Supply of Assets and Businesses For Sale Has Created a Unique Market Opportunity (Capital(1) | $Bn) (Deals(2)) Large, Increasing Universe Private Equity Raised Primary Equity Raised of Attractive Targe
Slide 11: Continuing Our Active Acquisition Strategy
Continuing Our Active Acquisition Strategy Differentiated Business Model, Scaled Asset Base & Investment Experience Uniquely Position Crescent to Further Capitalize on the Market Opportunity Focused on accretive acquisitions Crescent Consistent Acquisition Strategy with significant upside potential
Slide 12: Uinta Transaction Demonstrates Acquisition Strategy
Uinta Transaction Demonstrates Acquisition Strategy Highly Accretive Acquisition of High-Margin Oil Assets in the Uinta Basin, Acquired for <1.0x Proved Developed PV-10 of ~$1.0 Billion at 3/31 NYMEX with a Multi-Year Inventory of High-Return Drilling Opportunities • Closed acquisition on March 30,
Slide 13: Disciplined Financial Policy and Active Risk Management
Disciplined Financial Policy and Active Risk Management Financial Policy Complements Crescent’s Focus on Cash Flow, Risk Management and Cash on Cash Returns Pursue “Fixed Within a Framework” Dividend Policy Maintain Balance Sheet Strength (Long-Term Leverage Target ≤1.0x) Generate Attractive Risk-Ad
Slide 14: Commitment to Financial Strength and Flexibility
Commitment to Financial Strength and Flexibility Low Leverage Strategy with 1.0x Long-Term Target Capitalization Table as of 3/31 Targeting Investment Grade Balance ($ in MM, unless noted) Sheet Metrics 3/31/2022 Cash & Cash Equivalents $113 • LTM net leverage of ~1.3x(1) RBL Borrowings $941 7.25% S
Slide 15: Our Reliable Dividend – Fixed within a Framework
Our Reliable Dividend – Fixed within a Framework Our Adj. EBITDAX-Based Dividend Framework is Designed to Deliver a Reliable Return of Capital to Our Shareholders(1) Illustrative Dividend Dividend framework designed to (Assuming $1Bn of Adj. EBITDAX) distribute 10% of Adjusted ($MM) Dividend Policy
Slide 16: Sustainability of Crescent Business Model
Sustainability of Crescent Business Model Crescent Has Maintained Consistent Financial Discipline Throughout Cycles ($/Bbl) Post 2014 Today (1) Industry Average Crescent Energy Crescent Energy Net Leverage (x) 3.1x 1.2x 1.3x Reinvestment Rate (%) 92% 40% 48% Unhedged Reinvestment 89% 40% 30% Rate (%
Slide 17: Updated 2022 Guidance
Updated 2022 Guidance 2022 Program Generates $525 - $625 MM of Levered Free Cash Flow(1) Capital Allocation Commentary 2022 Guidance ($100 / Bbl WTI and $6 / MMbtu Henry Hub) • 80-85% of capital budget focused on Crescent with 9 Months of Uinta operated D&C in the Eagle Ford and Acquisition Uinta EB
Slide 18: Our Commitment to ESG Improvement
Our Commitment to ESG Improvement Crescent Energy has identified five ESG priorities Plans to provide short- and long- ESG Priorities term ESG targets in 2021 report focused on EHS and emissions Work to reduce greenhouse gas emissions Since closing the merger in December, we have executed on three i
Slide 19: Crescent Energy: A Compelling Investment
Crescent Energy: A Compelling Investment A Diversified and Well-Capitalized Energy Company with an Investor Mindset and a Focus on Sustainable Value Creation Differentiated business model focused on cash return of capital to shareholders Consistent management team for the last decade Shallow decline
Slide 20: Appendix
©) Crescent Energy Appendix
Slide 21: Flexible & Returns-Driven Organic Growth Potential
Flexible & Returns-Driven Organic Growth Potential Balanced Portfolio of Attractive, Low-Risk Reinvestment Opportunities in Key Proven Basins Across The Lower 48 • Extensive low-risk capital opportunity • Attractive & competitive development returns • Minimal drilling requirements provide valuable o
Slide 22: Crescent Energy Reserves Summary
Crescent Energy Reserves Summary Year-End Proved Reserves of 598 MMBoe at SEC Pricing Comprised of 55% Liquids and 83% Proved Developed PV-10 ($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 $6,687 Pro
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 F
Slide 24: Summary Hedge Position as of 4/29/2022
Summary Hedge Position as of 4/29/2022 ~60% Hedged in 2022 at the Midpoint of the Production Guidance Range. Hedge Protection Only Represents ~12% of Proved Developed Volumes WTI Oil Brent Oil Natural Gas NGLs Swaps: Hedged Weighted Hedged Weighted Hedged Weighted Hedged Weighted Volume Average Pric
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 Our ESG Advisory Council meets quarterly and advises management and the board on a variety of ESG topics, including environmental, health & safety; climate change & greenhouse gas emissions reduction; water management; community relations; and diversity, equity & inclusion ESG A
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 March 31, 2022 March 31, 2021 December 31, 2021 Average daily net sales volumes: Oil (MBbls/d) 44 37 37 Natural gas (MMcf/d) 333 231 267 NGLs (MBbls/d) 20 16 18 Total (MBoe/d) 120 91 99 Average realized prices, before effects of derivative settlements:
Slide 31: Adjusted EBITDAX and Levered Free Cash Flow
Adjusted EBITDAX and Levered Free Cash Flow For the three months ended March 31, 2022 March 31, 2021 December 31, 2021 (in thousands) Net income (loss) $ (406,007) $ (166,268) $ 168,945 Adjustments to reconcile to Adjusted EBITDAX: Interest expense 16,524 7,383 12,930 Realized (gain) loss on interes
Slide 32: Net LTM Leverage and PV-10 Reconciliation
Net LTM Leverage and 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
Slide 33: Stay Connected.
Stay Connected. Emily Newport IR@crescentenergyco.com 600 Travis Street Suite 7200 Houston, Texas 77002 + 1 (713) 332-7001 www.crescentenergyco.com
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