Vitesse Energy (VTS) 5 Nov 24 2024 Q3 Earnings call transcript

In Vitesse Energy's third quarter 2024 earnings call, the company shared significant updates on its financial and operational performance, emphasizing strategic capital allocation, production growth, and maintaining financial stability. Here are the key takeaways from the call.

Return on Capital Strategy and Capital Efficiency

Vitesse Energy's Chairman and CEO, Bob Gerrity, highlighted the company's return of capital strategy, which has continued to pay dividends to shareholders while maintaining capital efficiency. The company does not have a fixed capital budget, allowing it to be responsive to market conditions and maximize returns. This strategy has enabled the company to be resilient during price fluctuations, ensuring the dividend remains protected.

Operational Updates

The company's operations have seen a slight decrease in production in Q3, averaging 13,009 barrels of oil equivalent per day. However, this is expected to increase significantly as more wells come online in the coming months. The pipeline of drilling and completing wells is at an all-time high, with 20.2 net wells in development, including 11.3 wells currently being drilled and completed. This acceleration of development on organic acreage is the company's highest return investment opportunity.

Financial Performance

The company reported an adjusted EBITDA of $37.6 million and adjusted net income of $7.6 million for the quarter, while GAAP net income stood at $17.4 million. Cash CapEx and acquisition costs totaled $17.2 million for the quarter and $87 million for the first nine months of the year, which is below prior guidance. The company has reduced its CapEx guidance for the year, reflecting the timing of wells coming online and the company's responsive strategy.

Looking Ahead

Vitesse Energy expects annual production to range from 13,750 to 14,500 barrels of oil equivalent per day in 2025, representing a 7% increase at the midpoint from its revised 2024 guidance. The company will continue to be opportunistic in its capital allocation, focusing on high return investments and maintaining financial stability.

Analyst Questions and Management Responses

Analysts on the call focused on the company's capital expenditures, particularly the reduction in CapEx for the year, and the company's acquisition strategy. Management emphasized their responsive strategy, which allows them to be flexible in capital allocation and focus on high return opportunities. They also noted the company's success in securing oil hedges, which protects against downside risks in oil prices.

Overall, Vitesse Energy's earnings call highlighted the company's strategic approach to capital allocation, operational efficiency, and financial stability, positioning it well for growth in the current market environment.