Crescent Energy (CRGY) Q1 Results - May 5

[dan_s]

Production volumes and Adjusted Operating Cash Flow beat my forecast. Realized oil, gas and NGL prices all were slightly higher than my forecast.

I will update my forecast/valuation model in the morning.

[Petroleum economist]

Different to Dan I think that the Crescent Q1 production was a bit disappointing.

Production
• Crescent produced 250 K BoE/d in Q4.
• Crescent closed the Ridgemar acquisition with 20 K BoE/d on 31st of January thus adding 2 months Ridgemar with 20 K BoE/d.
• Therefor I had expected a Q1 production of 248+2/3*20 = 268 K BoE/d.
• The actual 258 K BoE/d therefore was a bit of a disappointment.

Energy prices
• Like all other companies that I track, the realized gas price was a bit of a disappointment.
• No company so far is tracking the steep increase of the Henry Hub Q1 gas prices in the realized gas prices. It seems a bit like that the Henry Hub gas prices were mostly paper trades.
• For Crescent the delta between the Henry Hub price and the realized gas price increased between Q1 2024 and Q1 2025 with $ 0.50/MM Btu.

Costs
• Operating costs were slightly lower than expected.
• Depreciation/amortization were significantly lower than expected.
• Administration costs were significantly lower than expected.

Profit
• The lower costs cancelled out the lower production and the lower gas prices.
• The adjusted profit ($ 143 M) was slightly higher than I expected.
• Note that there was a net loss (-$ 2 M) due to a $ 45 M impairment (unknown for what) and non-cash hedging losses.

[ChuckGeb]

It’s very clear to me, a year later, that the Silver Bow shareholders got the short end of the Crescent Energy merger. I am sure the former management of SBOW came out great, and while I haven’t analyzed it, I am confident KKR is being rewarded handsomely. Very disappointing to say the least!

[Cliff_N]

Harry, given the market reaction, it seems they agree with your assessment of production or are spooked by the impairment charge.

[dan_s]

Just remember that "Impairment" does not equal "abandonment". FAS 121 can be very misleading.

[ChuckGeb]

During the three months ended March 31, 2025, we sold non-core assets to unrelated third-party buyers for $6.9 million in aggregate cash proceeds and recorded a gain of $10.9 million on the sale of such assets. In addition, in March 2025, we entered into the purchase and sale agreement to sell certain of our non-core assets to an unrelated third-party buyer for $83.0 million in aggregate cash proceeds, subject to customary purchase price adjustments. The transaction closed during the second quarter of 2025. We determined that the assets associated with this divestiture met the criteria of held for sale classification as of March 31, 2025. We performed a fair value assessment of the associated assets and liabilities and recorded an impairment of $45.6 million to the carrying value of the associated oil and natural gas properties. The table below summarizes the balance sheet information associated with assets and liabilities held for sale related to the transaction as of the balance sheet date.