Greetings, and welcome to the Vitesse Energy Second Quarter 2025 Earnings Call. Please note that this conference is being recorded. I will now turn the conference over to the Director, Investor Relations and Business Development at Vitesse, Ben Messier. Thank you. You may begin.

Good morning, everyone, and thanks for joining. Today, we will be discussing our financial and operating results for the second quarter of 2025. 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 this morning by our Chairman and CEO, Bob Gerrity; our President, Brian Cree; and our CFO, Jimmy Henderson. 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 will turn the call over to Vitesse's Chairman and CEO, Bob Gerrity.

Thank you, Ben, and good morning, everyone. The second quarter demonstrated the resilience of our asset and the discipline of our team. I want to thank our team members for the excellent job they continue to do. Importantly, we are positioned to deliver in a subdued oil price market while remaining well prepared for when prices strengthen. During the second quarter of '25, we fully integrated the Lucero assets and certain employees into Vitesse, with the accretive impact apparent in our financial metrics and balance sheet. The asset is performing as expected, and we are realizing better G&A synergies than we underwrote. The operated leg of our strategy provides another lever that we can pull at our discretion. We successfully settled a multiyear lawsuit with one of our key operating partners, which resulted in a one-time cash payment as well as entering into long-term gas gathering, processing and marketing agreements. Kudos to our team for their diligent efforts in seeing this through. We continue to invest capital selectively while generating excess free cash flow that was used to reduce debt. We allocate capital based on our returns-driven hierarchy as noted in our investor presentation posted on our website. And again, we're not held to a fixed capital budget. As I've said before, in addition to our organic drilling, we are always looking at both near-term development deals and larger asset acquisitions that will support the dividend, but these deals must meet our strict return hurdles. Additional hedges were added in the quarter to take advantage of increased oil prices, and we will continue to make decisions that bolster the dividend. Last week, our Board declared our third quarter dividend at an annual rate of $2.25 per share. I will now hand the call over to our President, my partner, Brian Cree, to discuss our operations.

Thanks, Bob. Good morning, everyone, and thank you for joining today's call. Production for the quarter averaged just under 19,000 barrels of oil equivalent per day, which was an increase of 27% from the first quarter. This brings our year-to-date production to just under 17,000 barrels of oil equivalent per day. As of June 30, 2025, we had 23 net wells in our development pipeline, including 7.9 net wells that were either drilling or completing and another 15.1 net locations that had been permitted for development. As Bob touched on, during the quarter, we resolved pending litigation with one of our largest operators related to post-production revenue deductions. We received a one-time cash payment of $24 million, which was recorded to revenue and to offset litigation costs previously expensed. In addition to the one-time cash payment, we have elected to take virtually all of our gas production in-kind from this operator's wells and simultaneously entered into long-term gas gathering, processing and marketing agreements with the operator and its affiliates. We capitalized on increased oil prices during the quarter by adding oil hedges at price levels that support our dividend. For 2025, we have approximately 71% of our remaining oil production hedged at a weighted average price of $69.83 per barrel and nearly half of the remaining 2025 natural gas production hedged with attractively priced collars at a weighted average floor of $3.73 and ceiling of $5.85 per MMBtu, both percentages based on the midpoint of our guidance. Additionally, we have over 3,300 barrels per day and 12,700 MMBtu per day of our 2026 oil and natural gas production hedged at $66.43 per barrel and through a costless collar of $3.72 by $4.99 per MMBtu. In the first quarter of 2027, we have over 8,800 MMBtu per day of natural gas production hedged with a $4 floor by a $5.68 collar. Additionally, we have over 207,000 barrels of NGL production hedged in the second half of 2025 and 2026 at $23.61 per barrel. Thanks for your time. Now I will turn the call over to our CFO, Jimmy Henderson.

Thanks, Brian. Good morning, everyone. I just want to highlight a few items from our financial results for the second quarter of 2025. You can refer to our earnings release and 10-Q, which were filed last night for further details. With the Lucero assets fully integrated, our production for the quarter was 18,950 Boe per day with a 65% oil cut. For the quarter, adjusted EBITDA was $61.1 million, adjusted net income was $18.4 million, and GAAP net income was $24.7 million. All of these figures include the effect of the legal settlement as we've discussed earlier. You can see the reconciliation in our press release filed last night. Cash CapEx and acquisition costs for the quarter were $35.7 million, which was almost entirely organic as we had minimal acquisition costs during the quarter. These costs were funded within our operating cash flows and excess cash flow was used to pay down debt. During the second quarter, we decreased our total debt to $106 million, giving us net debt to an adjusted annualized EBITDA of just 0.4x. Our annual guidance for 2025 has not changed. We 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 now anticipated to be $80 million to $110 million, weighted towards the first half of the year. With that, let me turn the call over to the operator for Q&A.

Our first question today comes from Jeff Grampp of Northland Capital Markets.

I have a question regarding production. You had a good performance in Q2, and you maintained your guidance for the full year, which suggests there might be a noticeable decline in production in the second half of the year. I understand that activity levels in the basin have decreased, which is expected. However, I would like to gain more insight into your production expectations for the rest of the year.

Yes, Jeff, this is Brian. I'll take the first crack at that and anyone can add in. But yes, we kept our guidance the same for the year. Obviously, our second quarter numbers were really strong. We liked them. From that standpoint, we did have some wells that got turned on a little sooner than we had expected. And we are constantly watching the amount of organic CapEx that we're seeing. We're very encouraged by the AFE activity that we've seen with oil prices in the mid-$60s. We're pretty happy to see a lot more AFE activity than we were seeing earlier in the year actually. We're not quite at the levels we were last year from an AFE activity but certainly above the levels we've seen on average over the last few years. So something that we're encouraged about. But at this point in time, just with the visibility that we have, we've decided to keep those estimates in terms of the second half production right in line with where we were earlier.

Okay. And for my follow-up on the acquisition side of things, I know that at least looking at the cash flow statement, the kind of ground game acquisition side of the business has been a little bit slower. I know you guys have been seemingly pretty bullish in the last couple of calls on acquisition deal flow overall, both for small and larger deals. So just hoping to get an update on what you guys kind of view as the pipeline for acquisitions, both for ground game and larger deals.

Yes, I'll address that. We've seen strong activity on the organic side, and there's a solid pipeline for near-term development. However, none of the opportunities have met our standards yet. We haven't felt the need to lower our hurdle rate and accept smaller returns. We feel comfortable with our current position. We're still looking at larger deals and have many options under analysis. As mentioned before, we have stringent requirements for these opportunities. We're optimistic about the number of prospects available but remain cautiously optimistic that some will reach completion.

The next question is from Poe Fratt of Alliance Global Partners.

Just to follow up on the guidance question, could you help me understand the likelihood of reaching the low end of the guidance? What would need to occur for you to achieve 15,000 Boe per day for the year? It seems like an unlikely scenario, but understanding the low end of the guidance would be helpful.

Yes, Poe, this is Jimmy. Thanks for the question. Yes, obviously, the low end of the guidance has a pretty minimal chance of hitting that level. But I think Brian described it pretty well. We're excited about the second quarter. There were some things that pulled forward from the second half into the quarter. So we're comfortable. We've got great momentum going into the second half. So we're pretty excited, but we're not quite at the point where we wanted to adjust that up.

Yes, Poe, I would just add quickly to that, that even in the second quarter, we did see some operators in the basin curtail production. So realistically, to get to that lower end of the range, I think you'd have to see a pretty good drop in the price of oil, and you'd have to see operators start to curtail production.

Okay. That's really helpful. And then can we just talk about the cost structure a little bit? It looks like LOE was up quarter-to-quarter on a Boe basis. And then I'd like to understand what your run rate on G&A is. Obviously, the settlement had an impact there. But on your reported G&A, if you can just help me understand sort of those two factors going forward, that would be helpful.

Yes, I'll take the first crack on LOE and let Jimmy handle the G&A question. But look, on our LOE, we closed the transaction and the acquisition of Lucero. There were some things that we wanted to do out in the field in that first 3, 4 months of getting those operations under our belt. And so we did a few things. And look, I think you can also see that some of those additional LOE costs probably drove our production a little higher in the second quarter also. So those two kind of offset each other a little bit, but it was just really getting the operated properties into the format that we wanted them to be in.

Yes. Poe, on G&A, yes, obviously, it's kind of hard to get a run rate given all the things that we've had running through there over the last few quarters with legal costs as well as costs related to the Lucero acquisition. But I think if you make the adjustment based on what is in this quarter with the reimbursement on the legal cost, we're sort of in the mid-3s per Boe, and I think we firmly believe that, that will continue to decline as we scale up. I think we'll have a lot of leverage with our existing team and not a lot of adds on the G&A side as production scales up over time. So I think you'd continue to see that ramp down.

Okay. And then I should have congratulated you on the settlement. Big cash payment, obviously. But more importantly, going forward, can you help me understand the implications of taking your gas in-kind? And then also, can you give me an appreciation for how the contracts compare to what you've been paying historically?

Yes, Poe, this is Jimmy again. Yes. So obviously, they're better than what they were before. We have a bespoke contractual situation now with the operator and their affiliates to move our gas primarily. And so it’s definitely expected to be better going forward. I think if we look at, say, the first half, we probably would have seen an improvement in the $2.5 million to $3 million range for the first half of the year. So kind of give you an idea of what we expect to see as a run rate going forward.

Great. Bob, during the last conference call, you mentioned the possibility of larger assets becoming available. You seem optimistic about potential developments in the second half of the year. Have you turned down or passed on any deals that are currently not moving forward? Or is the acquisition pipeline still quite active?

Thanks for the question, Poe. This is Bob. I want to emphasize that in our 12 years in business, we've never encountered as much deal flow as we are currently seeing in the larger asset category. With the industry consolidating, we've managed to add an engineer and an operations person to our evaluation team, and they're quite busy. Now that the legal process of the transaction is complete, we're dedicating significant time to reviewing deals. We have high standards; any deal must be supportive of or accretive to dividends, and finding such opportunities is challenging. However, we are eager to pursue one when possible. Our team is actively engaged in this effort. Fortunately, our underlying asset is performing well, and we are cautious not to compromise that performance with any new deals. We are actively searching.

The next question is from Noel Parks of Tuohy Brothers.

Apologize if you already touched on this. But I just wonder if you've gotten any sense from the finally completed Hess transaction with Chevron, if over time you're going to see any sort of changes to their planned activity levels up there? And whether you think that would have the possibility of changing sort of the dynamics of maybe Bakken consolidation and so forth.

Yes, Noel, this is Bob. I'll take a first crack at that. We don't know the specific plans that Chevron has for the Bakken, but we've got a paradigm to work with because Chevron came in and made a big purchase in the DJ, and we really are encouraged by how they've performed with Noble. And so if that's any indication, we're very much looking forward to Chevron taking control of the Hess asset. The Hess asset up there is fantastic. And so we are encouraged that Chevron will actually increase the activity. But that's speculation, Noel.

Sure. I think there's still some lag in how the market perceives the status of inventory in the Bakken, including remaining inventory and what can still be achieved through technical efficiency. We're hearing more about advancements in downhole monitoring, AI, and other technologies. Do you see any chances for increased awareness of the opportunities that remain in the Bakken?

This is Brian. I can talk to it first and let others add in. But yes, I mean, the capital efficiency that we're seeing just continues to improve in the Bakken. We're just very excited about what we see each month in terms of the 3-mile laterals. Now we're seeing a lot more 4-mile laterals, refracs. There's just so many things going on in the Bakken that we think continues to make that field more and more productive over time and certainly from a capital efficiency standpoint.

This now concludes our question-and-answer session. I would like to turn the floor back over to Bob Gerrity for closing comments.

We'd like to thank everyone for their continued support. Please reach out to Ben if you have any specific questions, and we look forward to talking to everybody again in 3 months. Thank you.

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines, and have a wonderful day.