VTS Vitesse Energy Inc

Vitesse Energy, Inc. (NYSE: VTS) (“we,” “our,” “Vitesse,” or the “Company”) today reported the Company’s first quarter 2024 financial and operating results, announced additional acquisitions, raised 2024 guidance and declared an increased quarterly cash dividend.

HIGHLIGHTS

• Declared a quarterly cash dividend of $0.525 per common share, a 5% increase from the prior quarter, to be paid on June 28, 2024

• Announced additional near-term development acquisitions in the Williston Basin driving over $40 million of incremental capital expenditures throughout the remainder of 2024

• Increased 2024 annual oil and gas production guidance as a result of new capital program

• Net loss of $2.2 million and Adjusted Net Income(1) of $10.2 million

• Adjusted EBITDA(1) of $39.1 million

• Cash flow from operations of $39.4 million and Free Cash Flow(1) of $11.9 million

• Production of 12,557 barrels of oil equivalent (“Boe”) per day (71% oil)

• Total cash development capital expenditures and acquisition costs of $32.2 million

• Total debt of $98.0 million and Net Debt to Adjusted EBITDA ratio(1) of 0.62

(1) Non-GAAP financial measure; see reconciliation schedules at the end of this release

MANAGEMENT COMMENTS

“Vitesse is a return of capital company and payment of our fixed dividend is our top priority. We are increasing our quarterly dividend by 5%, supported in large part by the combination of these impactful highly economic acquisitions, strong capital returns on our organic development, and additional hedging activity. We continue to see attractive near-term drilling deal flow which meets or exceeds our economic hurdles, allowing us to raise our annual production and capex guidance for 2024,” commented Bob Gerrity, Vitesse’s Chairman and Chief Executive Officer.

STOCKHOLDER RETURNS

Vitesse’s Board of Directors declared its second quarter cash dividend for Vitesse’s common stock of $0.525 per share for stockholders of record as of June 14, 2024, which will be paid on June 28, 2024.

On March 29, 2024, the Company paid its first quarter cash dividend of $0.50 per share to common stockholders of record as of March 15, 2024.

During the first quarter, 332,840 shares of Vitesse’s common stock were retired after being exchanged for $6.9 million of tax withholding related to vesting of restricted stock units at an average price of $20.85 per share.

FINANCIAL AND OPERATING RESULTS

First quarter net loss was $2.2 million, including the impact of a $14.7 million unrealized loss on commodity derivatives, and Adjusted Net Income was $10.2 million. Adjusted EBITDA was $39.1 million. See “Non-GAAP Financial Measures” below.

Oil and natural gas production for the first quarter of 2024 averaged 12,557 Boe per day, a decrease of 8% from the fourth quarter of 2024. First quarter 2024 production was negatively impacted by widespread operating disruptions due to severe winter weather in North Dakota in January 2024. Oil represented 71% of production and 94% of total oil and natural gas revenue. Total revenue, including the effects of our realized hedges, was $62.0 million.

Vitesse’s average realized oil and natural gas prices before hedging were $70.62 per Bbl and $1.93 per Mcf, respectively, during the first quarter of 2024. The Company had hedges covering 50% of oil production in the first quarter of 2024 and its realized oil price with hedging was $71.65 per Bbl.

Lease operating expenses in the first quarter of 2024 were $11.8 million, or $10.32 per Boe, a 16% increase on a per unit basis compared to the fourth quarter of 2023. The higher lease operating expense is primarily attributable to workover activity, weather related expenses and other operating costs. General and administrative expenses for the first quarter of 2024 totaled $5.4 million, or $4.70 per Boe.

LIQUIDITY AND CAPITAL EXPENDITURES

As of March 31, 2024, Vitesse had $1.4 million in cash and $98.0 million of borrowings outstanding on its revolving credit facility. Vitesse had total liquidity of $113.4 million as of March 31, 2024, consisting of cash and $112.0 million of committed borrowing availability under its revolving credit facility.

In May 2024, the Company expects to complete its semi-annual redetermination of its revolving credit facility borrowing base. The borrowing base is anticipated to remain at $245.0 million and elected commitments are expected to increase from $210.0 million to $245.0 million.

During the quarter, Vitesse spent $25.4 million on development capital expenditures and $6.8 million on acquisitions of oil and gas properties.

OPERATIONS UPDATE

As of March 31, 2024 the Company owned an interest in 274 gross (5.9 net) wells that were either drilling or in the completion phase, and another 399 gross (10.6 net) locations that had been permitted for development at the end of the quarter.

Subsequent to March 31, 2024 the Company has acquired or agreed to acquire additional oil and gas interests in the Williston Basin of North Dakota that will result in over $40 million of acquisition and related development capital expenditures. These acquisitions increased the Company’s 2024 capital expenditures guidance range and are expected to provide material increases to production and cash flows primarily during the second half of 2024 and into 2025.

REVISED 2024 ANNUAL GUIDANCE

Vitesse has increased its previously issued 2024 annual guidance, which is set forth below.

 

Original 2024 Guidance

Revised 2024 Guidance

Annual Production (Boe per day)

12,500 - 13,500

13,000 - 14,000

Oil as a Percentage of Annual Production

67% - 71%

67% - 71%

Total Capital Expenditures ($ in millions)

$90 - $110

$130 - $150

FIRST QUARTER 2024 RESULTS

The following table sets forth selected financial and operating data for the periods indicated.

 

 

 

 

 

 

 

 

 

QUARTER ENDED MARCH 31,

 

INCREASE (DECREASE)

($ in thousands, except production and per unit data)

 

2024

 

 

 

2023

 

AMOUNT

 

PERCENT

Financial and Operating Results:

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Oil

$

57,364

 

 

$

50,486

 

$

6,878

 

 

14

%

Natural gas

 

3,829

 

 

 

7,475

 

 

(3,646

)

 

(49

%)

Total revenue

$

61,193

 

 

$

57,961

 

$

3,232

 

 

6

%

Operating Expenses

 

 

 

 

 

 

 

Lease operating expense

$

11,791

 

 

$

9,080

 

$

2,711

 

 

30

%

Production taxes

 

5,799

 

 

 

5,255

 

 

544

 

 

10

%

General and administrative

 

5,374

 

 

 

10,862

 

 

(5,488

)

 

(51

%)

Depletion, depreciation, amortization, and accretion

 

23,545

 

 

 

18,472

 

 

5,073

 

 

27

%

Equity-based compensation

 

1,605

 

 

 

27,972

 

 

(26,367

)

 

(94

%)

Interest Expense

$

2,203

 

 

$

1,181

 

$

1,022

 

 

87

%

Commodity Derivative (Loss) Gain Net

$

(13,824

)

 

$

7,419

 

$

(21,243

)

 

*nm

Income Tax (Benefit) Expense

$

(731

)

 

$

40,371

 

$

(41,102

)

 

*nm

Production Data:

 

 

 

 

 

 

 

Oil (MBbls)

 

812

 

 

 

692

 

 

120

 

 

17

%

Natural gas (MMcf)

 

1,982

 

 

 

2,071

 

 

(89

)

 

(4

%)

Combined volumes (MBoe)

 

1,143

 

 

 

1,037

 

 

106

 

 

10

%

Daily combined volumes (Boe/d)

 

12,557

 

 

 

11,524

 

 

1,033

 

 

9

%

Average Realized Prices before Hedging:

 

 

 

 

 

 

 

Oil (per Bbl)

$

70.62

 

 

$

72.95

 

$

(2.33

)

 

(3

%)

Natural gas (per Mcf)

 

1.93

 

 

 

3.61

 

 

(1.68

)

 

(47

%)

Combined (per Boe)

 

53.55

 

 

 

55.88

 

 

(2.33

)

 

(4

%)

Average Realized Prices with Hedging:

 

 

 

 

 

 

 

Oil (per Bbl)

$

71.65

 

 

$

74.02

 

$

(2.37

)

 

(3

%)

Natural gas (per Mcf)

 

1.93

 

 

 

3.61

 

 

(1.68

)

 

(47

%)

Combined (per Boe)

 

54.28

 

 

 

56.60

 

 

(2.32

)

 

(4

%)

Average Costs (per Boe):

 

 

 

 

 

 

 

Lease operating

$

10.32

 

 

$

8.75

 

$

1.57

 

 

18

%

Production taxes

 

5.08

 

 

 

5.07

 

 

0.01

 

 

—

%

General and administrative

 

4.70

 

 

 

10.47

 

 

(5.77

)

 

(55

%)

Depletion, depreciation, amortization, and accretion

 

20.61

 

 

 

17.81

 

 

2.80

 

 

16

%

 

 

 

 

 

 

 

 

*Not meaningful

COMMODITY HEDGING

Vitesse hedges a portion of its expected annual oil production volumes to increase the predictability and certainty of its cash flow and to help maintain a strong financial position to support our dividend. Vitesse does not currently have hedges in place on its expected natural gas production volumes. The following table summarizes Vitesse’s open oil commodity derivative swap contracts scheduled to settle after March 31, 2024, including those entered into in April 2024.

 

 

 

 

SETTLEMENT PERIOD

OIL (Bbls)

 

WEIGHTED AVERAGE PRICE

Swaps-Crude Oil

 

 

 

2024:

 

 

 

Q2

532,500

 

$ 78.42

Q3

507,500

 

$ 77.97

Q4

490,000

 

$ 78.11

2025:

 

 

 

Q1

375,000

 

$ 73.81

Q2

360,000

 

$ 74.65

Q3

90,000

 

$ 75.00

Q4

90,000

 

$ 75.00

 

 

 

 

The following table presents Vitesse’s settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented:

 

 

 

 

 

QUARTER ENDED MARCH 31,

(in thousands)

 

2024

 

 

 

2023

Realized gain on commodity derivatives (1)

$

832

 

 

$

742

Unrealized (loss) gain on commodity derivatives (1)

 

(14,656

)

 

 

6,677

Total commodity derivative (loss) gain

$

(13,824

)

 

$

7,419

 

 

 

 

(1)

Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative gain (loss) in the consolidated statements of operations included below. Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of Vitesse’s hedge position.

Q1 2024 EARNINGS CONFERENCE CALL

In conjunction with Vitesse’s release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Tuesday, May 7, 2024 at 11:00 a.m. Eastern Time.

An updated corporate slide presentation that may be referenced on the conference call will be posted prior to the conference call on Vitesse’s website, www.vitesse-vts.com, in the “Investor Relations” section of the site, under “News & Events,” sub-tab “Presentations.”

Those wishing to listen to the conference call may do so via the Company’s website or by phone as follows:

Website: https://event.choruscall.com/mediaframe/webcast.html?webcastid=CrlyJnSG

Dial-In Number: 877-407-0778 (US/Canada) and 201-689-8565 (International)

Conference ID: 13746085 - Vitesse Energy First Quarter 2024 Earnings Call

Replay Dial-In Number: 877-660-6853 (US/Canada) and 201-612-7415 (International)

Replay Access Code: 13746085 - Replay will be available through May 14, 2024

UPCOMING INVESTOR EVENTS

Vitesse management will be participating in the Jefferies Energy Conference in Kiawah Island, SC, June 4 - 6, 2024.

ABOUT VITESSE ENERGY, INC.

Vitesse Energy, Inc. is focused on returning capital to stockholders through owning financial interests as a non-operator in oil and gas wells drilled by leading US operators.

More information about Vitesse can be found at www.vitesse-vts.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this release regarding Vitesse’s financial position, operating and financial performance, business strategy, dividend plans and practices, guidance, plans and objectives of management for future operations, and industry conditions are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future production and sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond Vitesse’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: changes in oil and natural gas prices; the pace of drilling and completions activity on Vitesse’s properties; Vitesse’s ability to acquire additional development opportunities; potential acquisition transactions; integration and benefits of property acquisitions, or the effects of such acquisitions on Vitesse’s cash position and levels of indebtedness; changes in Vitesse’s reserves estimates or the value thereof; disruptions to Vitesse’s business due to acquisitions and other significant transactions; infrastructure constraints and related factors affecting Vitesse’s properties; cost inflation or supply chain disruption; ongoing legal disputes over and potential shutdown of the Dakota Access Pipeline; the impact of general economic or industry conditions, nationally and/or in the communities in which Vitesse conducts business, including central bank policy actions, bank failures and associated liquidity risks; changes in the interest rate environment, legislation or regulatory requirements; conditions of the securities markets; Vitesse’s ability to raise or access capital; cyber-related risks; changes in accounting principles, policies or guidelines; and financial or political instability, health-related epidemics, acts of war (including the armed conflict in the Middle East and Ukraine) or terrorism, and other economic, competitive, governmental, regulatory and technical factors affecting Vitesse’s operations, products and prices. Additional information concerning potential factors that could affect future results is included in the section entitled “Item 1A. Risk Factors” and other sections of Vitesse’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as updated from time to time in amendments and subsequent reports filed with the SEC, which describe factors that could cause Vitesse’s actual results to differ from those set forth in the forward looking statements.

Vitesse has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond Vitesse’s control. Vitesse does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.

FINANCIAL INFORMATION

VITESSE ENERGY, INC.

Condensed Consolidated Statements of Operations (Unaudited)

 

 

 

 

 

FOR THE THREE MONTHS ENDED MARCH 31,

(In thousands, except share data)

 

2024

 

 

 

2023

 

Revenue

 

 

 

Oil

$

57,364

 

 

$

50,486

 

Natural gas

 

3,829

 

 

 

7,475

 

Total revenue

 

61,193

 

 

 

57,961

 

Operating Expenses

 

 

 

Lease operating expense

 

11,791

 

 

 

9,080

 

Production taxes

 

5,799

 

 

 

5,255

 

General and administrative

 

5,374

 

 

 

10,862

 

Depletion, depreciation, amortization, and accretion

 

23,545

 

 

 

18,472

 

Equity-based compensation

 

1,605

 

 

 

27,972

 

Total operating expenses

 

48,114

 

 

 

71,641

 

Operating Income (Loss)

 

13,079

 

 

 

(13,680

)

Other (Expense) Income

 

 

 

Commodity derivative (loss) gain, net

 

(13,824

)

 

 

7,419

 

Interest expense

 

(2,203

)

 

 

(1,181

)

Other income (expense)

 

31

 

 

 

(2

)

Total other (expense) income

 

(15,996

)

 

 

6,236

 

 

 

 

 

(Loss) Before Income Taxes

$

(2,917

)

 

$

(7,444

)

 

 

 

 

Benefit from (Provision for) Income Taxes

 

731

 

 

 

(40,371

)

 

 

 

 

Net Loss

$

(2,186

)

 

$

(47,815

)

Net income attributable to Predecessor common unit holders

 

—

 

 

 

1,832

 

Net Loss Attributable to Vitesse Energy, Inc.

$

(2,186

)

 

$

(49,647

)

 

 

 

 

Weighted average common shares outstanding–basic and diluted

 

29,933,962

 

 

 

29,663,644

 

 

 

 

 

Net loss per common share

$

(0.07

)

 

$

(1.67

)

 

 

 

 

 

VITESSE ENERGY, INC.

Condensed Consolidated Balance Sheets (Unaudited)

 

 

 

 

 

 

MARCH 31,

 

DECEMBER 31,

(in thousands, except shares)

 

2024

 

 

 

2023

 

Assets

 

 

 

Current Assets

 

 

 

Cash

$

1,377

 

 

$

552

 

Revenue receivable

 

41,286

 

 

 

44,915

 

Commodity derivatives

 

148

 

 

 

10,038

 

Prepaid expenses and other current assets

 

3,074

 

 

 

2,841

 

Total current assets

 

45,885

 

 

 

58,346

 

Oil and Gas Properties-Using the successful efforts method of accounting

 

 

 

Proved oil and gas properties

 

1,189,175

 

 

 

1,168,378

 

Less accumulated DD&A and impairment

 

(487,395

)

 

 

(464,036

)

Total oil and gas properties

 

701,780

 

 

 

704,342

 

Other Property and Equipment—Net

 

191

 

 

 

189

 

Other Assets

 

 

 

Commodity derivatives

 

34

 

 

 

1,109

 

Other noncurrent assets

 

1,841

 

 

 

1,984

 

Total other assets

 

1,875

 

 

 

3,093

 

Total assets

$

749,731

 

 

$

765,970

 

Liabilities and Equity

 

 

 

Current Liabilities

 

 

 

Accounts payable

$

18,497

 

 

$

27,692

 

Accrued liabilities

 

30,145

 

 

 

32,507

 

Commodity derivatives

 

3,623

 

 

 

—

 

Other current liabilities

 

118

 

 

 

204

 

Total current liabilities

 

52,383

 

 

 

60,403

 

Long-term Liabilities

 

 

 

Credit facility

 

98,000

 

 

 

81,000

 

Deferred tax liability

 

63,854

 

 

 

64,329

 

Asset retirement obligations

 

8,515

 

 

 

8,353

 

Commodity derivatives

 

68

 

 

 

—

 

Other noncurrent liabilities

 

4,195

 

 

 

5,479

 

Total liabilities

$

227,015

 

 

$

219,564

 

Commitments and Contingencies

 

 

 

Equity

 

 

 

Preferred stock, $0.01 par value, 5,000,000 shares authorized; 0 shares issued at March 31, 2024 and December 31, 2023, respectively

 

—

 

 

 

—

 

Common stock, $0.01 par value, 95,000,000 shares authorized; 32,498,570 and 32,812,007 shares issued at March 31, 2024 and December 31, 2023, respectively

 

325

 

 

 

328

 

Additional paid-in capital

 

546,153

 

 

 

567,654

 

Accumulated deficit

 

(23,762

)

 

 

(21,576

)

Total equity

 

522,716

 

 

 

546,406

 

Total liabilities and equity

$

749,731

 

 

$

765,970

 

 

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES

Vitesse defines Adjusted Net Income (Loss) as net income (loss) before (i) non-cash gains and losses on unsettled derivative instruments, (ii) non-cash equity-based compensation, and (iii) certain other non-cash items; reduced by the estimated impact of income tax expense.

Net Debt is calculated by deducting cash on hand from the amount outstanding on our revolving credit facility as of the balance sheet or measurement date.

Adjusted EBITDA is defined as net income (loss) before expenses for interest, income taxes, depletion, depreciation, amortization and accretion, and excludes non-cash equity-based compensation and non-cash gains and losses on unsettled derivative instruments in addition to certain other items.

Vitesse defines Free Cash Flow as cash flow from operations, adding back changes in operating assets and liabilities, less development of oil and gas properties.

Management believes the use of these non-GAAP financial measures provides useful information to investors to gain an overall understanding of financial performance. Specifically, management believes the non-GAAP financial measures included herein provide useful information to both management and investors by excluding certain items that management believes are not indicative of Vitesse’s core operating results. In addition, these non-GAAP financial measures are used by management for budgeting and forecasting as well as subsequently measuring Vitesse’s performance, and management believes it is providing investors with financial measures that most closely align to its internal measurement processes. A reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP measure is included below.

RECONCILIATION OF ADJUSTED NET INCOME

 

 

(in thousands)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Net Loss

$

(2,186

)

Add:

 

Unrealized loss (gain) on derivative instruments

 

14,656

 

Equity-based compensation

 

1,605

 

Benefit from income taxes

 

(731

)

Adjusted Income Before Adjusted Income Tax Expense

 

13,344

 

 

 

Adjusted Income Tax Expense(1)

 

(3,122

)

 

 

Adjusted Net Income (non-GAAP)

$

10,222

 

 

 

(1)

The Company determined the income tax impact on the “Adjusted Income Before Adjusted Income Tax Expense” using the relevant statutory tax rate of 23.4%.

 

RECONCILIATION OF NET DEBT AND ADJUSTED EBITDA

 

 

(in thousands except for ratio)

AT MARCH 31, 2024

Revolving credit facility

$

98,000

 

Less: Cash

 

1,377

 

Net Debt

$

96,623

 

 

 

 

 

 

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Net Loss

$

(2,186

)

Add:

 

Interest expense

 

2,203

 

Benefit from income taxes

 

(731

)

Depletion, depreciation, amortization, and accretion

 

23,545

 

Equity-based compensation

 

1,605

 

Unrealized loss (gain) on derivative instruments

 

14,656

 

Adjusted EBITDA

$

39,092

 

 

 

Annualized Adjusted EBITDA

 

156,368

 

Net Debt to Adjusted EBITDA ratio

 

0.62

 

 

 

 

RECONCILIATION OF FREE CASH FLOW

 

 

(in thousands)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Net cash provided by operating activities

$

39,419

 

Add back: changes in operating assets and liabilities

 

(2,086

)

Cash flow from operations before changes in operating assets and liabilities

 

37,333

 

Less: development of oil and gas properties

 

(25,432

)

Free Cash Flow

$

11,901

 

 

 

 

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INVESTOR AND MEDIA CONTACT Ben Messier, CFA Director – Investor Relations and Business Development (720) 532-8232 benmessier@vitesse-vts.com