Jarrod Giroue

Jarrod Giroue asked for more color on the $40 million+ in synergies already achieved from the Vital acquisition and what specific savings are expected to reach the doubled annual target of $190 million. He also inquired about Crescent's prioritization of shareholder returns in 2026, specifically between the base dividend, share repurchases, and debt reduction, following the increased buyback authorization.

Answer

CFO Brandi Kendall stated that the $40 million in synergies captured to date were largely from overhead, duplicative public company expenses, and cost of capital. She detailed that 50% of the increased synergy target is operations-related, with the remaining 50% from additional overhead, marketing, and further cost of capital reductions. COO Joey Hall elaborated on operational improvements, including increasing wells per pad for simulfrac, extending lateral lengths, and supply chain opportunities. Brandi Kendall reiterated that capital allocation priorities remain unchanged, with the balance sheet and base dividend as top priorities, focusing on deleveraging while retaining flexibility for opportunistic share repurchases.

Jarrod Giroue inquired about Crescent Energy's prioritization of shareholder returns among the base dividend, share repurchases, and debt reduction for 2026, especially given the upsized share repurchase authorization.

Answer

CFO Brandi Kendall reiterated that the balance sheet and base dividend remain top priorities, with a focus on deleveraging. She clarified that the increased buyback authorization provides flexibility to be opportunistic and repurchase shares if the stock experiences significant dislocation, aligning with their 'all-of-the-above' return of capital program.

Jarrod Giroue asked why the full-year production guidance remained unchanged despite a strong Q1 beat, implying a potential decline later in the year, and questioned if the trend of increased share repurchases as a percentage of discretionary cash flow would continue.

Answer

CEO Christopher Conoscenti explained that while they were thrilled with Q1 results, it is too early in the current commodity price environment to adjust full-year guidance, noting they will likely revisit it after Q2, similar to the prior year. He confirmed that their buyback program is designed to be more aggressive during price dislocations, and investors should expect that trend to continue, as evidenced by their increased repurchase activity in April.

Jarrod Giroue from Stephens Inc. asked about Sitio's interest in Appalachian mineral deals given the constructive natural gas outlook and inquired about the company's strategic priorities for free cash flow allocation in 2025.

Answer

CEO Christopher Conoscenti explained that while Sitio previously owned assets in Appalachia, they divested them to fund a high-return DJ Basin acquisition. He acknowledged the region's resource potential but highlighted unique land-related challenges that complicate future development visibility, a point elaborated on by VP of Land Britton James. Regarding cash flow, Conoscenti prioritized returning capital to shareholders (nearly $850M returned since mid-2022) and reinvesting retained capital into high-return acquisitions while maintaining a strong balance sheet and advantageous cost of capital.

Jarrod Giroue asked about the recent focus on DJ Basin acquisitions, questioning if deal flow was higher there or if valuations were more attractive, and also inquired about the company's capital return priorities between share buybacks and debt reduction.

Answer

CEO Christopher Conoscenti explained that while the Permian Basin offers the largest number of acquisition opportunities, the DJ Basin has recently presented superior rates of return, guiding their capital allocation. Regarding capital return, he reiterated the company's framework of returning at least 65% of discretionary cash flow, with 35% retained for balance sheet strength. The returned capital is split between a minimum 35% cash dividend and the remainder allocated to dividends or opportunistic share buybacks.