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CIVITAS RESOURCES, INC. (CIVI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered solid operations: sales volumes 352 MBoe/d (+1% q/q) and oil 164 MBbl/d (+3% q/q); revenue was $1.29B and diluted EPS was $1.57. Higher-than-expected revenues offset elevated Permian cash operating costs tied to winterization and workovers .
  • Full-year 2024 Adjusted FCF was $1.27B; Q4 Adjusted FCF was $519MM as capex tracked to plan ($278MM) and OCF was $858MM; Adj. EBITDAX was $895MM .
  • 2025 outlook pivots to balance-sheet strength: capex cut ~5% to $1.8–$1.9B, oil guide 150–155 MBbl/d, ~$1.1B FCF at $70 WTI, YE net debt target < $4.5B, with more FCF after base dividend directed to debt reduction; a 10% workforce reduction lowers cost structure .
  • Stock reaction catalysts: deleveraging priority (less variable buybacks), 1Q oil guide dip to 140–145 MBbl/d before mid‑year ramp, and a $300MM Midland bolt‑on partly offset by a $300MM divestiture program (likely DJ) .

What Went Well and What Went Wrong

  • What Went Well

    • Sequential volume growth in Q4 (352 MBoe/d; oil 164 MBbl/d) with DJ strength after Q3 TILs; revenue resilience despite commodity variability .
    • Structural efficiency gains: Midland two‑mile well costs cut from ~$850/ft to < $725/ft (>15% improvement); simulfrac boosted throughput >40% .
    • Capital discipline and returns: Q4 capex $278MM (in line), debt cut by $350MM, and $205MM returned to shareholders; 2024 returned >$920MM (base + buybacks) .
    • Management quote: “Our high-quality assets and strong execution delivered in-line to better-than-expected sales volumes, capital expenditures, and operating costs.” — CEO Chris Doyle .

  • What Went Wrong

    • Higher Q4 LOE in Permian from winterization and workovers; management expects moderation after Q1 .
    • Q1 2025 oil volumes guided to trough (140–145 MBbl/d) due to low late‑2024/early‑2025 TILs, winter weather and third‑party processing downtime in DJ; growth resumes mid‑year .
    • Shift of free cash flow from buybacks to deleveraging reduces near‑term variable capital returns; management prioritizes YE 2025 net debt < $4.5B (targeting ~$800MM reduction vs YE 2024 pro forma) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue – Crude oil, natural gas and NGL sales ($MM)$1,311.5 $1,271.4 $1,291.7
Net Income ($MM)$216.0 $295.8 $151.1
Diluted EPS ($)$2.15 $3.01 $1.57
Operating Cash Flow ($MM)$359.6 $835.0 $858.1
Adjusted Net Income ($MM)$207.0 $195.8 $171.2
Adjusted EBITDAX ($MM)$918.1 $910.1 $895.2
Adjusted Free Cash Flow ($MM)$235.4 $366.3 $518.8
Capital Expenditures ($MM)$566.5 $438.4 $278.2
Sales Volumes (MBoe/d)342.9 348.1 352.0
Oil Volumes (MBbl/d)155.3 159.0 164.0

YoY snapshot (Q4 2023 vs Q4 2024):

  • Revenue: $1,125.7MM → $1,291.7MM .
  • Diluted EPS: $3.20 → $1.57 .

Segment/KPIs

  • Regional volumes (select): Oil (MBbl/d) — DJ 71 → 84; Permian 88 → 80. Total MBoe/d — DJ 159 → 176; Permian 189 → 176 (Q3 → Q4) .
  • Realized prices: Oil $75.46 → $69.96/bbl; Gas $0.17 → $1.14/mcf; NGL $19.38 → $21.47/bbl; total $/Boe $39.70 → $39.90 (Q3 → Q4) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Oil production (MBbl/d)FY 2025—150–155 New
Capital expenditures ($B)FY 2025—1.8–1.9 New (implies ~5% lower vs 2024)
Free Cash Flow (@ $70 WTI, $B)FY 2025—~1.1 New
Net debt (YE, $B)2025—<4.5 New (deleverage priority)
Base dividend ($/share)Ongoing$0.50 declared Nov 2024 $0.50; payable Mar 28, 2025 Maintained
Sales volumes (MBoe/d)Q4 2024347–353 Actual 352 Met (top of range)
Oil volumes (MBbl/d)Q4 2024162–166 Actual 164 Within
Capital expenditures ($MM)Q4 2024245–295 Actual 278 Within

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Capital returnsFramework enhanced: flexibility to mix buybacks/dividends; $500MM buyback authorization Board prioritized balance sheet + buybacks; variable payout repurchased FCF after base dividend reallocated toward debt reduction; buybacks opportunistic Shift from formulaic returns to deleveraging
Balance sheetLiquidity $1.4B; leverage target <0.75x EBITDAX LT Debt reduced; facility borrowings cut; positive outlook from rating agencies later in year YE 2025 net debt < $4.5B; path to ~1.0x leverage by late 2026 Deleveraging elevated
Permian strategyWell cost down 10%+; strong Permian growth Added Permian locations via ground game; cost down; Wolfcamp D emerging More capital to Delaware; 4 rigs, simulfrac widespread; Midland bolt‑on adds 19k acres/≈130 locs Upweight Delaware; inventory expansion
DJ Basin & regulatory4‑mile laterals begin; divested non‑core; regulatory risk reduced (SB 24‑229/230) Watkins uplift expected in Q4 Q1 DJ decline from low TILs, weather, third‑party downtime; recover mid‑year Near‑term dip, structurally robust
Cost structure/LOECash op ex $8.97/boe Cash op ex $9.32/boe; efficiencies continue Q4 Permian LOE elevated (winterization/workovers); workforce -10% to lower costs Short‑term pressure; structural cuts
HedgingSystematic oil hedge; gas volatility mgmt Added 2025 oil, 2025/26 gas/basis hedges ~40% oil hedged 2025; ~50% Permian gas hedged 2025/26 Continued discipline
M&A/DivestituresGround game expanding laterals Location adds; swaps extend laterals $300MM Midland bolt‑on; targeted $300MM divestitures (likely DJ) Portfolio optimization

Management Commentary

  • “Our 2025 plan delivers approximately $1.1 billion of free cash flow at $70 WTI, a free cash flow yield of over 20%… we’re streamlining… with a 10% reduction in workforce” — CEO Chris Doyle .
  • “Our 2025 net debt target of $4.5 billion… decreasing interest expense by ≈$60 million annually… allows us to reach 1x leverage in late 2026” — CFO Marianella Foschi .
  • “We’re increasing our allocation of capital to the Delaware Basin… nearly all completions in the Permian will be simulfrac” — CEO Chris Doyle .
  • “First quarter [2025] oil will be the low point… 140–145 MBbl/d… then grow meaningfully through the middle part of the year as new TILs come online” — CEO Chris Doyle .
  • “Substantially all [Q4 LOE increase] was driven by Permian… DJ was flat q/q… expect per‑BOE costs to normalize between Q3 and Q4 levels” — CFO Marianella Foschi .

Q&A Highlights

  • Capital allocation: Management is prioritizing deleveraging in 2025; buybacks will be opportunistic until YE net debt < $4.5B; M&A remains disciplined given competitive Permian market .
  • Near-term volumes: Q1 oil trough from DJ declines/low TILs/weather/processing downtime; ~50–60 TILs in Q1 set up mid‑year growth; divestiture mix TBD, focus on assets worth more in others’ hands .
  • Permian program: More capital to Delaware after re‑permitting and longer laterals; Wolfcamp D now competing for capital (≈20% of 2025 Permian program) .
  • Costs: Q4 LOE jump driven by Permian winterization and workovers; expected to moderate; company executing 10% headcount reduction to reinforce low‑cost model .
  • Taxes/AMT: 2025 cash taxes guided to $10–$30MM; AMT not expected unless ~$80 oil .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 EPS and revenue, but the S&P API limit was exceeded at time of analysis; therefore, we cannot present vs-consensus comparisons. We will update if/when access is restored [functions.GetEstimates error].
  • Company qualitative color indicates “higher than expected revenues offset higher cash operating costs” in Q4, suggesting a top‑line outperformance vs internal expectations, but not necessarily vs Street .

Key Takeaways for Investors

  • 2025 is a deleveraging year: expect base dividend continuity, fewer variable returns and opportunistic buybacks while management targets YE net debt < $4.5B and ~1.0x leverage by late 2026 .
  • Near‑term volume trough then recovery: Q1 oil 140–145 MBbl/d before mid‑year ramp; watch TIL cadence and Delaware execution for 2H slope .
  • Structural efficiency tailwinds: simulfrac adoption, longer laterals, and cost cuts (10% workforce) support sustaining peer‑leading cost structure and ~$1.1B FCF at $70 WTI .
  • Portfolio optimization is active: $300MM Midland bolt‑on adds ~130 locations; $300MM divestiture plan (likely DJ‑weighted) aims to fund and extend Permian runway without equity .
  • Watch LOE normalization: Q4 LOE headwinds were weather/workover‑specific; management expects reversion toward Q3 run‑rate through 2025 .
  • Hedge book supports cash flows: ~40% oil hedged for 2025; Permian gas ~50% hedged for 2025/26, mitigating basis volatility .
  • Update needed on Street context: S&P consensus unavailable today; monitor subsequent research compendium for estimate revisions post guide and balance‑sheet shift [functions.GetEstimates error].

Appendices

Volumes and Prices by Region (select KPIs)

KPIQ3 2024Q4 2024
Oil volumes (MBbl/d) — DJ71 84
Oil volumes (MBbl/d) — Permian88 80
Total volumes (MBoe/d) — DJ159 176
Total volumes (MBoe/d) — Permian189 176
Avg realized oil price ($/Bbl)$75.46 $69.96
Avg realized gas price ($/Mcf)$0.17 $1.14
Avg realized NGL price ($/Bbl)$19.38 $21.47
Avg realized total ($/Boe)$39.70 $39.90

Non-GAAP references: Adjusted Net Income, Adjusted EBITDAX, and Adjusted Free Cash Flow are defined and reconciled in schedules within the Q4 2024 press release/8‑K .

Sources: Q4 2024 8‑K and press release –; Q4 2024 earnings call transcript – –; Q3 2024 8‑K –; Q2 2024 8‑K –; 2025 Outlook press release –; Dividend press release .