Vitesse Energy’s Contradictory Guidance on Operated Development and PRB Asset Strategy

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Date of Call: Aug 4, 2026

Guidance:

• Annual production guidance narrowed to 16,300 to 17,200 BOE per day.
• Oil as a percentage of production tightened to 60 to 62%.
• Total cash capital expenditure guidance raised at the bottom end, now ranging from $65 to $80 million for the year.

Business Commentary:

Dividend Strategy and Financial Performance:

• Vitesse declared a third quarter cash dividend at an annualized rate of $1.75 per share, marking the 15th consecutive quarter of uninterrupted dividends since its spin-off in January 2023.
• The total cumulative dividends declared have reached $7.6375 per share, representing half of the current share price returned to shareholders in under four years.
• The company's strategy is to maintain a durable dividend funded by free cash flow, with capital allocation focused on opportunities that exceed hurdle rates and a conservative balance sheet.

Production and Hedging Strategy:

• Production in Q2 averaged 17,354 barrels of oil equivalent per day, a 9% sequential increase from Q1, with a 60% oil cut.
• Adjusted EBITDA for the quarter was $40.2 million, with free cash flow of $16.3 million after development capital expenditures of $21.1 million.
• The company has maintained a strong hedge book extending into 2029, with cumulative realized hedge loss since spin-off being less than 1% of total revenue, providing a margin of safety for the dividend.

Capital Expenditure and Acreage Development:

• Vitesse ended the quarter with a total debt of $158.5 million, resulting in a net debt to adjusted EBITDA ratio of less than one times, aligning with its target.
• The company has 19.4 net wells in its development pipeline, with 6.9 net wells drilled or completing, and 13 net locations permitted, reflecting a focus on organic acreage conversion.
• The trend towards longer laterals in the Williston Basin continues, with 69% of AFEs being three-mile or longer laterals, enhancing capital efficiency and reducing maintenance capital requirements.

Acquisition Markets and Strategy:

• The near-term development acquisition market has become more competitive, prompting Vitesse to maintain high return hurdles.
• The producing property acquisitions market has seen robust deal flow, especially in the Powder River Basin, with Vitesse able to acquire assets at attractive free cash flow yields.
• The company remains selective in its acquisition strategy, focusing on properties that are accretive to net asset value and support the dividend, leveraging its non-operated model and Luminous data platform.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed confidence in strategy and dividend durability, stating 'Our priorities are what they've always been... Our conviction in this strategy.' They highlighted strong results: 'Production... a sequential increase of 9%... adjusted EBITDA was $40.2 million.' The tone was optimistic about growth opportunities, e.g., 'More to come there that's very much in the works right now.'

Q&A:

• Question from Jeff Gramp (Northland Capital Markets): Any update on operated activity as a potential vector for organic growth CapEx, and was that a factor in narrowing the CapEx guide?
  Response: Management is evaluating partnering opportunities to extend laterals on acreage operated by others, with more to come.

• Question from Jeff Gramp (Northland Capital Markets): What's the latest on the near-term development and producing property acquisition markets, given volatile commodity markets?
  Response: Near-term development market is more competitive with high return hurdles; producing property market is robust with attractive cash flow yields, especially for larger packages in key basins.

• Question from Noel Parks (Tohee Brothers): Any updated thoughts on the Powder River Basin acquisition regarding geology and A&D activity?
  Response: The acquisition is being implemented; management is evaluating it under different market prices and will provide more details on AFEs and plans for the basin.

• Question from Noel Parks (Tohee Brothers): What is the operator profile of the Powder River Basin assets acquired?
  Response: The assets are primarily operated by large operators EOG and Continental, which were a key advantage.

Contradiction Point 1

Evaluation and Timing of Operated Development Opportunities

Ongoing evaluation versus specific, near-term planning for operated development.

Jeff Gramp (Northland Capital Markets) - Jeff Gramp (Northland Capital Markets)

2026Q2: Evaluations of operated development opportunities are ongoing. The focus is on partnering to extend laterals on acreage operated by others. More details are expected as discussions progress. - Jamie Bernard(CEO)

Has the operated activity as a potential vector for organic growth CapEx from last quarter been updated, and did it influence the narrowing of the CapEx guide? - Charles Fratt (Alliance Global Partners)

2026Q1: There is a comprehensive planning process underway for operated development, with four locations currently being contemplated.... The decision will be made based on evolving conditions, likely impacting 2027 production more than 2026. - Jamie Bernard(CEO) and Brian Cree(CFO)

Contradiction Point 2

Characterization of the Producing Property Acquisition Market

Market robustness and deal flow described as robust versus noting a slowdown due to commodity volatility.

Jeff Gramp (Northland Capital Markets) - Jeff Gramp (Northland Capital Markets)

2026Q2: The market has remained robust... Deal flow was not slowed in Q2. - Ben Messier(DIR)

How are volatile commodity markets impacting underwriting and deal timing in the near-term development (bucket 3) and producing property (bucket 4) acquisition markets? - Noel Parks (Tuohy Brothers Investment Research, Inc.)

2026Q1: Approximately 80% of the transactions being evaluated are PE-backed portfolio companies looking to monetize assets in the current high-price environment.... The higher oil prices provide them with an opportunity to meet their internal hurdle rates for returns, aligning with Vitesse's evaluation window. - Ben Messier(DIR)

Contradiction Point 3

Characterization of Near-Term Development Acquisition Market

Statements on market competitiveness and deal flow visibility conflict between quarters.

Jeff Gramp (Northland Capital Markets) - Jeff Gramp (Northland Capital Markets)

2026Q2: The market has become more competitive. Spending has decreased as the company maintains high return hurdles and is reluctant to lower them. - Ben Messier(Director, Investor Relations and Business Development)

How are volatile commodity markets impacting underwriting, deal timing, and the near-term development (bucket 3) and producing property (bucket 4) acquisition markets? - Christopher Baker (Evercore ISI Institutional Equities)

2025Q4: There is currently limited visibility on near-term development acquisitions due to a competitive deal landscape. - Robert Gerrity(CEO)

Contradiction Point 4

Production Profile and Development Plan for Powder River Basin Acquisition

Expectations for production and capital expenditure on the PRB asset shift from flat to requiring a development plan.

Noel Parks (Tohee Brothers) - Noel Parks (Tohee Brothers)

2026Q2: The company is excited about the acquisition... The next step is to review the AFEs and determine the development plan. - Jamie Bernard(CEO)

Have you updated your geological focus or A&D activity plans for the Powder River Basin since the acquisition? - Unknown Analyst (Jefferies, on behalf of Lloyd Byrne)

2025Q4: Production from the Powder River Basin asset is expected to be fairly flat for the next few years with annual CapEx of $4 million to $6 million. - Ben Messier(Director, Investor Relations and Business Development)

Contradiction Point 5

Visibility and Approach to Operator-Partnered Drilling Activity

The company's stance on predicting operator drilling on its acreage changes from conservative to more engaged.

What are your expectations for the upcoming quarter? - Jeff Gramp (Northland Capital Markets)

2026Q2: Evaluations of operated development opportunities are ongoing. The focus is on partnering to extend laterals on acreage operated by others. - Jamie Bernard(CEO)

Has operated activity as a potential vector for organic growth CapEx seen any updates, and was it a factor in narrowing the CapEx guide? - Christopher Baker (Evercore ISI Institutional Equities)

2025Q4: The company is taking a conservative view on operator capital, as visibility is limited. - Robert Gerrity(CEO)

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