Crescent Energy today announced financial and operating results for the third quarter of 2022 and a quarterly cash dividend of $0.17 per share.

Third Quarter 2022 Highlights

• Produced 150 MBoe/d, a 6% quarter-over-quarter increase; oil comprised 46% of total third quarter volumes on an equivalent basis
• Reported $555 million of net income and $179 million of Adjusted Net Income
• Generated $359 million of Adjusted EBITDAX, $570 million of Unhedged Adjusted EBITDAX
• Announced $144 million of Levered Free Cash Flow
• Exited the third quarter at 1.0x Net LTM Leverage, in-line with the Company's long-term target
• Capital investments, excluding acquisitions, were $190 million, in-line with expectations
• Announced positive amendments to its revolving credit facility
• Completed secondary equity offering, and concurrent buyback of OpCo Units, increasing public equity float by 15%
• Entered into a definitive purchase agreement to sell non-core Permian assets for $80 million, subject to customary purchase price adjustments
• Reaffirms full year 2022 guidance for production, capital expenditures, Adjusted EBITDAX and Levered Free Cash Flow assuming prior pricing assumptions and adjusted for divestitures
• Published second environmental, social and governance ("ESG") report, setting targets for five ESG priority areas, as well as benchmarks for measuring future performance.

Crescent CEO David Rockecharlie said, 
“Since going public less than a year ago, we’ve executed exceptionally well and advanced our top priorities: generating significant cash flow, completing accretive acquisitions, accessing the capital markets, executing on our high-return, multi-rig development program and publishing our second ESG report. Our year-to-date achievements are a testament to the quality of both our asset base and our people – each of these accomplishments align with our strategy and broader goals to create long-term shareholder value.”

Third Quarter 2022 Results

Crescent reported $555 million of net income and $179 million of Adjusted Net Income. The Company generated $359 million of Adjusted EBITDAX, $570 million of Unhedged Adjusted EBITDAX(1) and $144 million of Levered Free Cash Flow(1) for the period, a 4% decrease, 11% decrease and 5% increase, respectively, relative to the second quarter.

Costs and expenses, stated on a Boe basis, were generally in-line with Company expectations, despite industry-wide inflationary pressures. Operating costs and operating costs excluding production and other taxes, were both 4% higher relative to the second quarter, and in excess of our operating cost guide, reflecting incremental inflation and infrastructure maintenance as well as overall elevated workover activity. This increase includes $0.46 per Boe of transaction and nonrecurring operating expenses. G&A expense and Adjusted Recurring Cash G&A (includes manager compensation and excludes non-cash equity-based compensation) totaled $1.25 and $1.40 per Boe, a 17% decrease and nominal percent increase relative to the second quarter, respectively.

Crescent produced 150 net MBoe/d in the third quarter (comprised of 46% oil, 13% NGLs, and 41% gas), a 6% increase above the prior quarter, and in-line with the Company's expectations.

Average realized price for the third quarter, excluding the effect of commodity derivatives, totaled $61.65 per Boe, 11% lower than the second quarter. Excluding the effect of commodity derivatives during the quarter, average realized prices by commodity were $86.77 per barrel of oil (95% of WTI), $6.99 per Mcf of gas (95% of Henry Hub) and $35.22 per barrel of NGLs (38% of WTI).

Third quarter capital investments, excluding acquisitions, were $190 million. The Company drilled five gross operated locations in the Uinta and five in the Eagle Ford. In addition, Crescent brought online 13 gross wells in the Uinta. Crescent is planning to operate two rigs (one Uinta, one Eagle Ford) for the remainder of the year.

On November 4, 2022, subsequent to quarter end, Crescent entered into a definitive purchase and sale agreement to divest non-core Permian basin assets in Ector County, Texas for $80 million in cash, subject to customary purchase price adjustments. Closing is expected to occur by year-end 2022. Closing is subject to customary closing conditions. Proceeds are expected to reduce outstanding borrowings on the Company’s Credit Facility. Year to date, the Company has divested non-core assets for combined proceeds in excess of $100 million.

Financial Position

In late September, the Company announced positive amendments to its Credit Facility, effective September 23, 2022. The amendments were approved by the 11 member banks supporting the facility. Highlights include: (i) an 11% borrowing base increase to $2.0 billion from $1.8 billion, (ii) a flat elected commitment amount of $1.3 billion, (iii) a facility term extension through September 2027 and (iv) a 50 bps decrease in the interest rate margin for amounts outstanding on the Credit Facility.

As of September 30, 2022, the Company had total long-term debt of $1.4 billion, consisting of $700 million of senior unsecured notes and $685 million of outstanding borrowings on its revolving credit facility. Total liquidity as of September 30, 2022, was $625 million, including availability on its revolver ($1.3 billion elected commitment with a $2.0 billion borrowing base), cash and cash equivalents of $22 million, and outstanding letters of credit of $12 million. Crescent exited the quarter with a Net LTM Leverage ratio of 1.0x, in-line with its stated target. The Company expects to generate additional cash flow for the remainder of 2022, which it plans to use to fund its dividend and further strengthen the balance sheet.

KeyFacts Energy Industry Directory: Crescent Energy