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Crescent Energy Co (CRGY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 production hit a record 255 MBoe/d (38% oil, 56% liquids), generating $534.8M Adjusted EBITDAX, $384.4M operating cash flow, and $259.4M levered free cash flow; management emphasized the quarter’s free cash flow was “well above Wall Street expectations.”
  • Crescent reported a GAAP net loss of $169.9M in Q4 (non-cash items, impairments, derivatives), while Adjusted Net Income was $132.2M; realized prices and per‑Boe operating costs improved quarter-over-quarter.
  • 2025 outlook guides 254–264 MBoe/d, capex of $925–$1,025M (ex acquisitions), oil realizations mid ~90% of WTI, and adjusted operating expense of $12.25–$13.25/Boe, reflecting synergy capture and scale benefits; dividend maintained at $0.12/share.
  • Strategic catalysts: accelerating Eagle Ford synergy capture (> $100M realized), continued portfolio optimization (divested ~$50M in 2024, evaluating ~$250M pipeline), improved oil marketing realizations to mid‑90% and flexible capital allocation into dry gas amid favorable pricing.

What Went Well and What Went Wrong

  • What Went Well

    • Record quarterly production (255 MBoe/d) with strong well productivity and improved capital efficiency; Adjusted EBITDAX of $534.8M and levered FCF of $259.4M. “We exceeded expectations across both production and capital… generated approximately $260 million of free cash flow for the quarter, well above Wall Street expectations.”
    • Enhanced oil realizations to mid‑90% of WTI through scale and marketing synergies in Eagle Ford; management: “progress… gives us more flexibility… driving the increase in oil realizations from kind of the low 90s to the mid‑90s.”
    • Synergies ahead of plan: SilverBow synergies realized “in excess of $100M” and target range increased by ~15% on top of Q3’s increase; Uinta JV early results strong (three‑well pad ~1,500 bopd per well over first 30 days).

  • What Went Wrong

    • GAAP net loss in Q4 ($169.9M) driven by non‑cash items (impairment $161.5M; derivatives impacts) and higher G&A, reflecting merger/integration and equity comp; diluted EPS was $(0.70).
    • Nonrecurring/transaction expenses ($7.7M Q4) connected to SilverBow merger and capital markets; DD&A rose with acquired assets; LOE trends benefited from one‑offs (CO2 plant downtime), implying partial normalization in 2025.
    • Interest expense elevated ($69.4M Q4) amid a larger debt stack; net LTM leverage at 1.4x, within target but still above long‑term investment‑grade aspirations.

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Thousands)$1,310,756 $744,874 $875,289
Net Income (Loss) Attributable to Crescent ($USD Thousands)$13,379 $(9,945) $(118,040)
Diluted EPS (Class A) ($USD)$0.33 $(0.07) $(0.70)
Adjusted Net Income ($USD Thousands, non‑GAAP)$56,155 $81,972 $132,231
Adjusted EBITDAX ($USD Thousands, non‑GAAP)$319,774 $430,435 $534,777
Operating Cash Flow ($USD Thousands)$286,926 $367,956 $384,434
Levered Free Cash Flow ($USD Thousands, non‑GAAP)$146,933 $157,689 $259,422
Production (MBoe/d)165 219 255
Oil Mix (% of total)44% 39% 38%

Segment revenue breakdown

Revenue Component ($USD Thousands)Q4 2023Q3 2024Q4 2024
Oil$480,717 $548,430 $608,472
Natural Gas$84,894 $78,790 $139,850
NGLs$61,772 $87,253 $95,878
Midstream and other$30,345 $30,401 $31,089
Total Revenues$657,728 $744,874 $875,289

Realizations and per‑Boe expense

KPIQ2 2024Q3 2024Q4 2024
Total Realized Price ($/Boe, before derivatives)$41.27 $35.50 $35.99
Total Realized Price ($/Boe, after derivatives)$39.57 $35.76 $36.30
Operating Expense ($/Boe)$19.61 $16.23 $15.08
Adjusted Operating Expense ex Taxes ($/Boe)$15.17 $12.57 $11.37
Adjusted Recurring Cash G&A ($/Boe)$1.44 $1.13 $1.28
Production & Other Taxes ($/Boe)$2.08 $2.15 $2.38

Operating activity and capital

KPIQ2 2024Q3 2024Q4 2024
Gross Operated Wells Drilled12 (8 EF, 4 Uinta) 22 (17 EF, 5 Uinta) 22 (18 EF, 4 Uinta)
Gross Operated Wells Online11 (6 EF, 5 Uinta) 37 (27 EF, 10 Uinta) 20 (15 EF, 5 Uinta)
Capex (ex acquisitions, $MM)$120 $211 $221

Notes

  • Q4 realized prices exclude $34.5M received on settlement of acquired derivatives; after including these, total realized price would have been $37.77/Boe (disclosed).
  • Q4 GAAP loss includes impairment ($161.5M) and non‑cash derivative impacts.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Production (MBoe/d)FY 2025N/A254 – 264 New
% Oil / % Gas (%)FY 2025N/A41–40% oil / 41–43% gas New
Oil Realizations (% of WTI)FY 2025Low/mid ~90% (2H’24) Mid ~90% Raised (mix shift/marketing synergies)
Gas Realizations (% of Henry Hub)FY 2025Mid ~80% (2H’24) Low–Mid ~80% Maintained
Capex (ex acquisitions, $MM)FY 2025$425–$455 (Updated 2H’24) $925–$1,025 New FY guide (scale post acquisitions)
Adjusted Operating Expense ex Taxes ($/Boe)FY 2025$13.00–$14.00 (2H’24) $12.25–$13.25 Lowered
Production Taxes (% of commodity revenue)FY 20256.5%–7.5% (2H’24) 6.0%–7.0% Lowered (midpoint)
Cash Taxes (% of Adj. EBITDAX)FY 20252.0%–4.0% (2H’24) 2.0%–5.0% Slightly widened
DividendQ4 2024$0.12/share (Q3) $0.12/share (Q4, payable Mar 26, 2025) Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Eagle Ford synergy capture~$35M realized to‑date; target $65–$100M (closing ahead of schedule) Target increased >20%; $66M uplift realized within 3 months Realized >$100M at top end; target range increased ~15% further Accelerating
Capital efficiency & service costsGains in D&C costs; moderating service costs Continued improvements; successful rebidding of services Further D&C cost improvements; scale drives pricing efficiencies Improving
Oil realizationsLow/mid ~90% guide (2H’24) Focus on marketing scale Mid‑90% achieved; embedded in FY’25 guide Improving
Uinta delineationCore Uteland Butte focus Program expansion beyond core; prudent capital JV pad early results ~1,500 bopd/well; expanding intervals (Castle Peak, Black Shale, Douglas Creek) Broadening
Portfolio optimizationN/A~$50M divested YTD ~$50M 2024 divested; ~$250M divestiture pipeline under evaluation Scaling
Capital allocation flexibility (gas)Liquids‑weighted program in $75/$2.5 world N/AFlexing into dry gas (Webb County) to capitalize on higher gas prices More gas‑weighting

Management Commentary

  • “We exceeded expectations across both production and capital… generated approximately $260 million of free cash flow for the quarter, well above Wall Street expectations.” — CEO David Rockecharlie
  • “We’ve made… progress in the Eagle Ford… driving the increase in oil realizations from kind of the low 90s to the mid‑90s… captured on a go‑forward basis, reflected in our ’25 guidance.” — CFO Brandi Kendall
  • “SilverBow continues to outperform our expectations with realized annual synergies in excess of $100 million… we are increasing our target synergy range by approximately 15%.” — CEO David Rockecharlie
  • “2025 plan… 4–5 rigs… including dry gas assets in Webb County to capitalize on recent natural gas pricing tailwinds… production of 254–264 MBoe/d and $925–$1,025M capital.” — CEO David Rockecharlie

Q&A Highlights

  • Capital allocation: Flexing rigs into dry gas given favorable macro while maintaining returns discipline across oil/mixed windows in Eagle Ford.
  • Operating costs and oil realizations: Q4 OpEx outperformed (~$11.50/Boe adjusted), with some one‑offs (CO2 plant downtime), and sustainable marketing synergies lifting oil realizations to mid‑90% of WTI.
  • Scale and service costs: Larger portfolio enables more efficient procurement and operational optimization, improving service pricing and execution.
  • Divestitures: ~$250M pipeline of non‑core asset sales under evaluation, opportunistic timing in 2025 to streamline portfolio and enhance returns.
  • Investment grade path: Target to double production over time while maintaining investment‑grade credit metrics; focus on scale plus balance sheet strength.
  • Return of capital: Base dividend at $0.12/share; buybacks remain opportunistic when shares trade below intrinsic value; leverage targeted toward ~1.0x.

Estimates Context

  • S&P Global Wall Street consensus for Q4 2024 revenue and EPS could not be fetched due to SPGI daily request limit; as a result, we cannot quantify beat/miss versus consensus for revenue/EPS in this report. Management stated Q4 free cash flow was “well above Wall Street expectations.”
  • Where relevant, guidance comparisons use company‑provided ranges and prior guidance disclosures rather than consensus.

Key Takeaways for Investors

  • Free cash flow inflection: Q4 levered FCF of $259.4M, with per‑Boe cost improvements and stronger realizations; management indicated the result was well above Street expectations.
  • Structural margin drivers: Oil marketing synergies and scale have lifted realizations (mid‑90% of WTI) and lowered adjusted operating expense per Boe vs Q3; elements of Q4 OpEx outperformance included one‑offs.
  • 2025 setup: Production 254–264 MBoe/d with 4–5 rigs and flexible mix, positioning to maximize FCF through cycles; lower OpEx guidance supports margin durability.
  • Synergy momentum: SilverBow synergies now >$100M realized and targets raised again; integration benefits underpin improved costs and returns.
  • Portfolio optimization: ~$50M divested in 2024; ~$250M divestiture pipeline provides incremental balance sheet and focus benefits without sacrificing scale.
  • Capital returns framework: Base dividend maintained ($0.12/share); buybacks remain opportunistic while leverage trends toward the 1.0x target.
  • Strategic path to investment grade: Scale plus disciplined balance sheet management (net LTM leverage 1.4x, liquidity ~$2.1B at YE) keep the trajectory intact.