Greetings, and welcome to the Vitesse Energy's First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to the Director, Investor Relations and Business Development at Vitesse, Ben Messier. Thank you. You may begin.

Good morning, and thank you for joining. Today, we will be discussing our financial and operating results for the first quarter of 2025 and revised annual guidance. Our 10-Q and earnings were released yesterday after market close and an updated investor presentation can be found on the Vitesse website. I'm joined here this morning by Bob Gerrity, Vitesse' Chairman and CEO; our President, Brian Cree; and our CFO, Jimmy Anderson. Before we begin, please be reminded that this call may contain estimates, projections, and other forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. Please review our earnings release and risk factors discussed in our filings with the SEC for additional information. In addition, today's discussion may reference non-GAAP financial measures. For a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings release. Now I'll turn the call over to Vitesse' Chairman and CEO, Bob Gerrity.

Thanks, Ben, and good morning, everyone. Thank you for participating in today's earnings call. The first quarter of 2025 was a step change for Vitesse with the acquisition of Lucero. This operating leg gives us additional affirmative decision-making ability and further control over our capital spending. We can now toggle our activity in a new way. This complements our already dynamic business model, which allows us to adapt quickly to the changing macro environment. Our business plan, which includes our long-duration asset, low leverage, and disciplined hedging strategy, positions us not only to withstand but to be opportunistic during market disruptions. The oil and gas industry is highly cyclical. Sometimes, it's best to expand the asset and other times, it is better to be highly disciplined and prudent with our spending. Our objective is to invest money at the highest rates of return possible, which allows us to return capital to our shareholders through all cycles. Reflecting the durability of our asset and business model, last week, our Board reaffirmed our dividend at an annual rate of $2.25 per share. I will now hand the call over to our President, Brian Cree, to discuss our operations.

Good morning, everyone, and thanks, Bob. Production for the quarter averaged just under 15,000 barrels of oil equivalent per day, which was at the top end of our first quarter expectations of 14,000 to 15,000 barrels of oil equivalent per day. Production increased by 16% from the fourth quarter of 2024. As of March 31, 2025, we had 25 net wells in our development pipeline, including 9.5 net wells that were either drilling or completing and another 15.5 net locations that had been permitted for development. The overall pipeline is higher than ever, primarily as a result of our acquisition of Lucero. The pipeline includes 1.9 net wells that are waiting on completion at our discretion. We proactively decided to defer the completion of these drilled but uncompleted wells due to recent commodity price volatility. Additionally, we chose not to close on $20 million of acquisitions in early April that were included in our original 2025 guidance. To mitigate the impact of commodity price volatility, for the remainder of 2025, we have approximately 61% of our oil production hedged at a weighted average price of $70.75 per barrel and 30% of remaining 2025 natural gas production hedged at a weighted average floor of $3.73 per MMBtu, both percentages based on the midpoint of our updated guidance. Additionally, we have over 2,500 barrels per day and 12,700 MMBtu per day of our 2026 oil and natural gas production hedged at roughly $67 per barrel and through a costless collar of $3.72 by $5 per MMBtu. Last week, we added NGL hedges to the streams that trade attractively relative to recent averages. Thanks for your time. Now I'll turn the call over to our CFO, Jimmy Henderson.

Thanks, Brian. Good morning, everyone. I want to highlight just a few items from our financial results for the first quarter of 2025. Please refer to our earnings release and 10-Q, which we filed last night for any further details. Our production for the quarter was 14,971 BOE per day with a 68% oil cut. For the quarter, adjusted EBITDA was $39.9 million and adjusted net income was $8 million with GAAP net income of $2.7 million. You can see that reconciliation in our press release that we put out last night. Cash CapEx, including acquisition costs for the quarter were $30.4 million. These costs were all funded within our operating cash flows. At the end of the first quarter, we had total debt of $117 million and net debt to adjusted annualized EBITDA of 0.7 times. We are revising guidance for 2025 in response to current commodity price volatility to preserve returns and maintain financial flexibility. We now anticipate production in the range of 15,000 to 17,000 BOE per day for the full year with an anticipated oil cut of 64% to 68%. Cash CapEx for the year is anticipated to be $80 million to $110 million, still weighted towards the first half of the year. This wider guidance reflects a 32% reduction in CapEx based on the midpoints with only a 9% decline in production. We will remain adaptable in navigating volatile markets to protect long-term shareholder returns and value. In the event that the commodity market firms or we see the expected repricing of assets and costs, we are in a position to quickly react. Lastly, again, I want to thank everyone for their hard work in closing the Lucero transaction. We are very eager to see what we can all achieve together. With that, let me turn the call over to the operator for Q&A.

Thank you. We’ll now be conducting a question-and-answer session. Our first question comes from the line of Jeff Grampp with Northland Capital Markets. Please proceed.

I wanted to start first on the guidance front of things. Obviously, acknowledging you guys have a little bit wider range than we had previously. Can you give us a little more detail on what drives things towards the higher end versus the lower end? What are the main factors there? Is it primarily, would you say, I guess, timing of wells in inventory? Or what other factors should we kind of keep an eye on that could drive you one end versus another? Thanks.

Hey, Jeff, this is Brian. I'll take the first crack at that and let Bob and Jimmy jump in if they feel like it. Obviously, one of the key items is going to be the timing of the completion of our drilled uncompleted wells. Obviously, from our standpoint, we have deferred those. We're very much driven by rates of return, and we'll continue to watch both the prices that we might receive and completion costs. And so that will certainly dictate when we decide to complete those wells. That will have an impact on the lower versus the higher part of our range in production. The other aspect of that is we'll continue to look at acquisitions. We did back away from some acquisitions that we were planning to do at the beginning of April as prices started to go down a little bit in March. We did try to renegotiate those acquisitions, but we were unsuccessful. It doesn't mean that we will not be very, very active in the acquisition market over the course of this year. And if we find things that meet our hurdle rates of return, we're going to jump on them all day. So those are two things. Look, we're still waiting to see how the rest of our operators handle the decline in oil prices. Timing of wells coming online is certainly an impact. So with a lot of that uncertainty, we just decided that it would be more prudent to widen the range of our guidance.

Yeah, Jeff, this is Bob. Just to add briefly to what Brian said, before Liberation Day and the Saudi decision to add extra barrels, we had seen a meaningful decrease in the cost of AFEs from our operators. So we haven't really seen another readjustment. We're only a month into that, but we're encouraged by that trend. So with our data, we can see a lot of what's going on in the field almost real-time. So we're eager to look at the trend, and we're ready to spend money.

Great. I appreciate all those details. For my follow-up, more of kind of a capital allocation question. The stock is kind of at levels we haven't seen since you guys first came public, dividend yields in double digits. You could almost make an argument that buybacks are actually accretive to leverage in the long term. So I'm just wondering, to what extent do buybacks make sense for you guys in the context of, albeit lower operating cash flow. And then also just to what extent you can execute buybacks given any limitations on the credit facility. Thanks.

Sure, I can address that, Jeff. From the start, we've concentrated on maintaining a fixed dividend at a sustainable price. Given the current commodity prices, there's limited flexibility for ongoing capital investments and share repurchases. However, we understand the essence of your question. We continuously evaluate the options of repurchasing shares versus reinvesting in assets and generating cash flow to support the dividend. All of these factors play a role in our capital allocation decisions.

Yeah, Jeff, this is Bob. We're investors, and we want to invest money where it gets the biggest rate of return. So we look at this all the time, whether it's by making an acquisition, investing in AFEs, or buying our own stock. So it's a dynamic process. We do have room to buy back our shares, but we're trying to always look at where we're going to make the most amount of money.

Understood. All right. Thank you guys for that.

Thanks, Jeff.

Thank you. Our next question comes from the line of Emma Schwartz with Jefferies. Please proceed.

Hi, Vitesse team. Thanks for taking my question today. I think the updated 2025 guidance makes a lot of sense in the current macro environment and enhances the resiliency of the business. Could you provide more details on your willingness to flex the balance sheet to maintain the dividend? Is there limitations on the credit facility that we should know about?

No, Emma, this is Bob. We're not restricted at all with our credit facility. Our product is our dividend. We feel very confident in our ability to pay the dividend in this pricing environment. So again, it's a decision that we make pretty much on a quarterly basis. But our product is our dividend. We do everything we can to support the dividend and make the decisions to be able to grow it. So Jimmy, do you want to add to that?

Yeah. I would say that there are provisions in the credit facility that at some point would limit the ability to. But at current levels, and that certainly plays into our capital allocation to make sure that we've got plenty of buffer room underneath that. And I think that's what Bob was speaking to, that we're in good shape on that front right now, and we're comfortable with our capital allocation.

Yeah, that's great to hear. As a second question, I wanted to ask on the Lucero acquisition. How have the assets been performing now that the deal is closed? I know it's non-op, but are there any potential synergies or learnings that you're gaining from Lucero?

Sure, this is Brian. I would say that the integration of the Lucero assets is going exactly how we would have expected them. The assets are performing just as we had underwritten them. We'll continue to work in terms of using our non-op portfolio to enhance potentially the value of the operated portfolio. One of the advantages that we have with such a large non-op portfolio is the ability to trade back and forth with other companies that could very well enhance the undeveloped locations that we have on the operated side.

That’s good to hear. Thank you so much.

Thanks, Emma.

Thank you. Our next question comes from the line of Noel Parks with Tuohy Brothers. Please proceed.

Hi, good morning. I have a couple of questions. I'm curious about what you've been observing regarding operator behavior at this early stage. Many companies seem to have a lot of flexibility in their programs and maintenance drilling, especially with their generally strong balance sheets and capital discipline. Are you noticing any early signs from your producing partners regarding their AFEs or the quality of these AFEs?

Yeah. This is Brian. I'll start with this and let others add in. But certainly, from the quality aspect of our AFEs, we're really not seeing a change. I would say that we're starting to see more and more 4-mile laterals. It's an interesting development that's ongoing as all of the operators are looking to enhance their capital efficiency, and we are seeing more 4-mile laterals. As Bob mentioned earlier, we have seen some decline in AFE costs. Our 2-mile laterals between the first quarter and the fourth quarter of last year declined about 5%, and the AFE costs on our 3-mile laterals during that same time frame went down by about 8%. So again, though, the quality, we're not really seeing any change in that. Operators are continuing to develop wells. And rig count was closer to 35 at the end of the first quarter. It's declined a little bit. I think as all of the operators, and we're seeing a lot of people report earnings now and talk about their guidance, I think everyone is taking a prudent perspective to the remainder of the year.

Great. Thanks a lot. And I guess just wondering, and this is sort of an ongoing strategic question. In the event we see sort of a sustained pullback in the commodity, there are a number of companies in other basins that have probably gotten a bit more extended on their balance sheet through cash acquisitions than they might have expected just given where the oil strip has been. And I wonder if you were either getting inquiries from or had ideas about other basins that you might be looking at if we're headed into sort of an unusual point in the cycle?

Yeah. Thanks, Noel. This is Bob. Interestingly enough, we have been getting inbounds from companies that we were surprised that, yes, I think we're seeing more stress out there, a lot of it from the private companies than I think a lot of people anticipate. This is also one of the reasons why we took the measures with our CapEx to bolster our balance sheet to be in a position to find a nice fat pitch. So again, we are looking at other basins as we have for the last couple of years. And we're trying to be greedy and just try to pick off the one that is most economic. But it is an interesting time, and there's a lot of discussion here about what opportunity set we would see if the price of oil went to $50 and stayed there through the rest of this year. That would be a situation where we wouldn't necessarily relish, but we were in a position to take advantage of.

Exactly sure things I was wondering about. Thanks a lot.

Thank you. Our next question comes from the line of Poe Fratt with Alliance Global Partners. Please proceed.

Good morning. Noel just addressed the question about the Bakken. Could you elaborate on your CapEx range of $80 million to $110 million? Also, could you provide more details on whether there are still plans for acquisitions in that budget? Last call, you mentioned the potential for acquisitions at $20 million, but those have since been impacted by market conditions. What is currently allocated in the budget for acquisitions?

Part of the reason, Poe, we have such a wide range is because we want the flexibility to make acquisitions if they're attractive. We're underwriting about $10 million of base case acquisitions currently. But in past years, we've gotten a little bit closer to $30 million. So if good opportunities come across our desk at rates of return that we can't turn down, which has been the scenario over the last few years, you could see that number go higher, and that's why we built in a little bit more cushion on the upside on that CapEx there. As everyone mentioned earlier, we turned down a $20 million acquisition that we tried to renegotiate, but we saw prices drop. That acquisition didn't meet our return hurdles. And so that's a big contributing factor to why we reduced production and CapEx from our prior guidance.

Poe, this is Bob. You can take a look at our revised guidance and conclude that they cleared the decks of everything that's not super economical and they're looking to load it back up with stuff that's economic that works in the $50 to $60 oil price environment. So look, we're in a position with our capital structure to move very quickly to make other acquisitions, which is what our plan is. It's just we don't have that built into our guidance at this point.

Thanks, Bob. Last quarter, you mentioned seeing larger transactions. I assume that was related to the $20 million acquisition that didn't go through. In the past month or six weeks, have you been observing bigger acquisitions, or has that slowed down as companies are being more cautious and trying to ride things out?

Good question. It is chunky time. And if you take a look at the Lucero acquisition we did, it was good for Lucero shareholders, good for the Vitesse shareholders. So we like that as a template. That's something that works for both parties. And we are very busy in our deal shop, and we like the chunky acquisitions. So don't be surprised if we revise the guidance in the future because we're looking, we're definitely looking. A lot of opportunities happen at $55 oil, and we're in a position to take advantage of it.

Great. That's helpful. And just if I could squeeze one more in. G&A expense was up because of the Lucero acquisition. I think you quantified it at $4.6 million. That added, it looks like just about $3.50 to your G&A per BOE in the quarter. Can you give me an idea of how G&A is going to run per BOE for the rest of the year?

Yeah. Poe, this is Jim. Yes, I think kind of that $4 range per BOE is a pretty good run rate for us. In addition to that those acquisition costs, we disclosed that we also had some litigation costs where we're the plaintiff. And so that's coming to fruition now. So that should drop off here in the future.

And Jimmy, was that $1.6 million on litigation? Did I read that correctly?

Yeah, in the quarter, that's correct.

Will there be any in the second quarter because I think there's a June trial date there?

Yes, certainly. The trial date looming, there'll certainly be some more in the second quarter.

Okay, great. That’s helpful. Thank you so much.

Thanks, Poe.

Thank you. There are no further questions at this time. I'd like to pass the call back over to Bob for any closing remarks.

Thank you. Thanks, everyone, for joining, and those were a great set of questions from our analysts, which we always appreciate. If you have any other questions, please feel free to contact Ben directly. Thank you. We'll see you next quarter.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.