Crescent Energy (CRGY) Q4 Results - Feb 26

[dan_s]

Crescent Energy Company (NYSE: CRGY) ("Crescent" or the "Company"), today announced financial and operating results for the fourth quarter and full year 2024, as well as its 2025 capital budget and production outlook.
A supplemental slide deck can be found at www.crescentenergyco.com.

Q4 Reported Net Income (GAAP) include large non-cash charges for impairment and mark-to-market negative adjustment on hedges.
> Ignore reported Net Income
> Focus on production volumes that were in-line with my forecast and Adjusted Operating Cash Flow that exceeded my forecast.

Full Year 2024 Highlights
> Delivered strong financial performance, with all key metrics meeting or exceeding guidance expectations
> Enhanced operations, improving D&C costs approximately 10% and increasing well productivity approximately 30% year-over-year, resulting in a significant rate-of-change in the Eagle Ford
> Generated $1.2 billion in Operating Cash Flow and $630 million in Levered Free Cash Flow < Q4 Adjusted Operating Cash Flow exceeded my forecast by $80 million.
> Achieved record annual production of 201 MBoe/d, a greater than 30% increase year-over-year, driven by acquired volumes and increased well productivity < Q4 total production was very close to my forecast but oil volumes a bit lower than my forecast.
> Executed over $3 billion of accretive Eagle Ford M&A across five transactions
– Divested approximately $50 million of non-core assets, with a continued focus on portfolio optimization
> Utilized approximately 20% of the authorized Share Repurchase Program at a weighted average share price of $10.07
> CRGY was added to the S&P SmallCap 600 Index, recognizing greater scale, market liquidity and industry standing

Crescent CEO David Rockecharlie said, “2024 was a transformational year for Crescent, defined by strong
financial and operational execution, as well as significant and profitable growth through multiple accretive
acquisitions. We delivered on our key priorities – generating attractive returns on our capital program and
strong cash flow for our investors. We more than doubled the size of our Eagle Ford position through five
complementary and value-enhancing transactions, and we've successfully integrated these assets, capturing
meaningful synergies.

Our 2024 performance and acquisitions have positioned us well for continued success in 2025, and we
remain focused on disciplined execution, flexible capital allocation and maximizing free cash flow and returns
from our high-quality assets. We are coming into this year a bigger, better business, and I am confident that
we have the team, the assets, the balance sheet and the strategy to generate profitable growth and value
creation for our shareholders over the long-term.”

Fourth Quarter 2024 Results

Fourth quarter production averaged a record 255 MBoe/d (38% oil and 56% liquids). The Company drilled 22
gross operated wells (18 in the Eagle Ford and 4 in the Uinta), brought online 20 gross operated wells (15 in
the Eagle Ford and 5 in the Uinta) and incurred capital expenditures (excluding acquisitions) of $221 million
during the quarter. < Q4 total production was exactly my forecast, but a bit "gassy".

Crescent reported $170 million of net loss and $132 million of Adjusted Net Income in the fourth quarter. < Adjusted Net Income beat my forecast of $48.8 million by a wide margin and Adjusted Operating Cash Flow was also more than $80 million higher than my forecast.

Outstanding Q4 Results: The Company generated $535 million of Adjusted EBITDAX, $384 million of Operating Cash Flow and $259 million of Levered Free Cash Flow for the period.

Full Year 2024 Results

Crescent released its full-year 2025 outlook, forecasting approximately 30% year-over-year production
growth. The Company plans to operate a flexible 4 - 5 rig program, allocating capital across its oil and gas
assets to maximize returns and free cash flow. The outlook incorporates an 11-month contribution from the
recently acquired Ridgemar assets, following the successful closing on January 31, 2025.
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I will take a harder look in the morning and update my forecast/valuation model.

[dan_s]

Crescent Energy uses the Successful Efforts method of accounting, which is why they had to record the big impairment charge in Q4 2024. Successful Efforts companies are required to use FAS 121 to mark-to-market each significant asset.
Impairment is a non-cash expense (it is like taking a bunch of DD&A at one time), which has no impact on my stock valuations.

Impairment does not = abandonment. Crescent Energy still owns the assets and with much higher natural gas prices this year, they are worth a lot more than their impaired book value at 12-31-2024.

Just learn to ignore GAAP Net Income and focus on Cash Flow From Operations. Rule: "Cash pays the bills, not GAAP Net Income."

[ChuckGeb]

This is a very difficult company to analyze. They added a lot new moving parts. Silver Bow was a company I could understand, CRGY not so much. A lot to sort out. Maybe KKR likes it that way.