Sign in

You're signed outSign in or to get full access.

VE

Vital Energy, Inc. (VTLE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a mixed print: Adjusted diluted EPS of $2.37 beat Wall Street consensus $2.12*, while revenue of $512.18M missed consensus $530.38M*; EBITDA of $378.17M* exceeded $342.66M* consensus .*
  • Operating execution was strong: LOE fell to $103.5M ($8.20/BOE), below guidance, driving higher cash generation; Consolidated EBITDAX reached $359.7M and Adjusted Free Cash Flow was $64.5M .
  • Balance sheet progress continued: Net Debt declined by $133.5M–$135M in the quarter via free cash flow, working capital changes, and a $20.5M non-core asset sale .
  • 2025 outlook reiterated for production and capital; company now expects ~$265M Adjusted FCF at ~$59 WTI and ~$300M Net Debt reduction for FY25, supported by hedges covering ~90% of expected oil volumes at ~$70.61/bbl .

What Went Well and What Went Wrong

What Went Well

  • Cost discipline and efficiency gains: LOE cut to $103.5M ($8.20/BOE), 12% below guidance midpoint; G&A $22.7M below guidance . “Our drilling and completions teams continue to set records for speed and efficiency… cycle time records for both two‑mile and three‑mile wells” .
  • Balance sheet: Net Debt reduced ~$133.5M–$135M; CFO also highlighted strong cash flow and hedging adding >$20M to revenues; non-core divestiture added $20.5M cash .
  • Operational execution and innovation: 23 TILs in Delaware drove volumes; >50% of 2025 completions simul‑frac; two “J‑Hook” wells proved concept, lowering breakevens for ~135 wells by ~$5/bbl .

What Went Wrong

  • GAAP optics: Non-cash impairment of $158.2M led to GAAP net loss of $18.8M; management warned SEC‑pricing could drive “a couple of hundred million dollars” non-cash write‑down next quarter if strip holds .
  • Revenue miss vs consensus despite volume strength; borrowing base and elected commitment reduced to $1.4B from $1.5B, modestly tightening liquidity .
  • Gas realizations backdrop: WAHA realizations improved but still weak (≈40% of Henry Hub); mitigation via basis swaps continues .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$457.74*$533.03*$512.18
GAAP Diluted EPS ($)$5.73*$(9.60)*$(0.50)
Adjusted Diluted EPS ($)$1.61*$2.30*$2.37
EBITDA ($USD Millions)$500.72*$253.02*$378.17*
EBITDA Margin (%)109.03%*47.35%*73.84%*
Net Income ($USD Millions)$215.30*$(359.39)*$(18.84)

Notes: *Values retrieved from S&P Global.

KPIsQ1 2024Q1 2025
Average Daily Sales Volumes (BOE/d)124,719 140,159
Average Daily Oil Sales Volumes (Bbl/d)58,534 64,893
LOE ($USD Millions)$105.73 $103.49
LOE ($/BOE)$9.32 $8.20
G&A ($USD Millions)$29.36 $22.68
Cash from Operations ($USD Millions)$158.59 $350.99
Consolidated EBITDAX ($USD Millions)$301.33 $359.68
Adjusted Free Cash Flow ($USD Millions)$43.35 $64.49
Net Debt ($USD Millions)$2,440.40 $2,306.93

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Production (MBOE/d)FY 2025135–140 Reiterated midpoints Maintained
Oil Production (MBO/d)FY 202562.5–66.5 Reiterated midpoints Maintained
Capital Investments ($MM)FY 2025$825–$925 Reiterated midpoints Maintained
Adjusted Free Cash Flow ($MM) & AssumptionsFY 2025~$330 at $70 WTI ~$265 at ~$59 WTI Lowered (price-driven)
Net Debt Reduction ($MM)FY 2025N/A (focus on deleveraging) ~$300 including non-core sale Introduced target
Borrowing Base ($B)Current$1.5 prior$1.4 elected commitment after redetermination Lowered
Oil Hedge Coverage (% of expected oil)Remainder of 2025~75% typical; 2/3 hedged for ‘25 (context) ~90% swapped at ~$70.61/bbl Raised
Q2 Production (MBOE/d)Q2 2025—133–139 New quarterly
Q2 Oil Production (MBO/d)Q2 2025—61–65 New quarterly
Q2 Capital Investments ($MM)Q2 2025—$215–$245 New quarterly
Q2 LOE ($MM)Q2 2025—$112–$118 New quarterly
Q2 Price RealizationsQ2 2025—Oil 101% WTI; NGL 24% WTI; Gas 14% Henry Hub New quarterly
Q2 Derivative Settlements ($MM)Q2 2025—Oil $69; NGL $3; Gas $21 New quarterly
Q2 DD&A ($MM)Q2 2025—$180–$190 New quarterly
Q2 G&A ex-LTIP ($MM)Q2 2025—$21.0–$22.5 New quarterly

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Hedging & FCF/deleveraging88% hedged for rest of 2024; ~2/3 for 2025; emphasis on FCF to debt reduction January net debt down $50M; expect ~$100M 1Q paydown; focus on debt reduction ~90% of 2025 oil hedged at ~$70.61; ~$265M Adjusted FCF at ~$59 WTI; target ~$300M Net Debt reduction Improving certainty
Operational efficiency (simul‑frac, cycle times)Rapid D&C $/ft reduction; cycle times down to 16 days best High‑grading to Delaware (75% of 2025 capex) >50% completions simul‑frac; set cycle time records; reinforced Delaware capital efficiency (+30% YoY) Improving
Tariffs/service costsHedged power; tariff monitoring OCTG secured through most of ‘25; minimal 2025 tariff exposure “Little impact from tariff‑related price increases” offset by service price concessions Favorable
Gas basis (WAHA)——WAHA realizations ≈40% of Henry Hub; basis improving as activity softens; mitigation via swaps Improving but low
2026 outlook & breakevens——Corporate breakeven ~$57 → ~$53 if services −10%; path toward ~$50 with LOE/G&A cuts; 2026 volumes/capex flat Becoming more resilient
Asset portfolio optimizationPoint asset outperformance; inventory expansion Upton tests disappointed; shifting capital to higher return packages Non-core sale ($20.5M); continued portfolio review; minimal production impact Active pruning

Management Commentary

  • “Our key financial results exceeded street expectations… reduce net debt by $135 million… hedge position adding more than $20 million to revenues… non‑core asset sale generated an incremental $20.5 million.”
  • “90% of our oil is hedged at $70.61 per barrel WTI… generate about $265 million in adjusted free cash flow and reduce net debt by $300 million including non-core assets sold to date.”
  • “We set cycle time records for both two‑mile and three‑mile wells… improve our Delaware Basin year‑over‑year capital efficiency by 30%.”
  • “LOE amounted to $121 million in Q4 last year. We now anticipate it will be around $115 million per quarter for the remainder of 2025; G&A… below $22 million per quarter for the duration of 2025.”
  • “We have now drilled and completed our first two J‑Hook wells… potential to lower the breakeven for 135 wells by $5 per barrel.”

Q&A Highlights

  • Maintenance capital and breakevens: Corporate breakeven ~$57/bbl today; −10% service costs could reduce to ~$53; additional LOE/G&A cuts push toward ~$50 .
  • LOE initiatives/run-rate: Q1 LOE $103M benefited from a $6M adjustment; underlying run-rate ≈$110M; expect $110–$115M/quarter for 2025 .
  • Hedging cadence: Added ~20 kbbl/d hedges for H2 in upper‑50s; approach ~75% hedged a year ahead, flex to ~90% near-term; Q4 could be a company production record .
  • 2026 trajectory: Expect FY26 volumes and capital flat YoY; contract roll-offs enable cost savings .
  • WAHA basis: Realizations ≈40% of Henry Hub; basis improving linked to activity reductions; flexible out‑of‑basin vs swaps strategy .
  • Impairments: Expect non‑cash write-down “a couple hundred million dollars” next quarter if prices hold; reserves unchanged—mechanical SEC pricing effect .

Estimates Context

  • Q1 2025 beat/miss vs S&P Global consensus: Adjusted diluted EPS $2.37 vs $2.12* (beat), Revenue $512.18M vs $530.38M* (miss), EBITDA $378.17M* vs $342.66M* (beat) .*
  • Estimate implications: Cost performance and hedging suggest upward revisions to EBITDA and FCF trajectories; GAAP optics (impairments) are mechanical and should not materially impact Adjusted EPS estimates, but revenue sensitivity to realizations may temper topline forecasts .
MetricConsensusActualSurprise
Primary EPS ($)2.12*2.37 +0.25
Revenue ($USD Millions)530.38*512.18 −18.20
EBITDA ($USD Millions)342.66*378.17*+35.51*

Notes: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Adjusted EPS beat and EBITDA outperformance underscore improving capital efficiency and cost control; headline GAAP loss driven by non‑cash impairment should not alter FCF trajectory .
  • Strong hedge coverage (~90% at ~$70.61 WTI) materially derisks FY25 cash flows; management targets ~$265M Adjusted FCF at ~$59 WTI and ~$300M Net Debt reduction .
  • Operating momentum (simul‑frac, shaped wells, cycle time records) is reducing breakevens and expanding high‑quality inventory, setting a path toward ~$50 corporate breakeven into 2026 .
  • Liquidity modestly tighter post redetermination ($1.4B elected commitment), but cash generation plus asset pruning support deleveraging; monitor future redeterminations and pricing .
  • Gas basis remains a watch‑item; WAHA improved but still low—hedging and optionality help mitigate .
  • Near‑term trading catalysts: Continued cost beats (LOE/G&A), Q2 guidance delivery, hedge disclosures, and any updates on impairment magnitude could drive sentiment .
  • Medium‑term thesis: Balance sheet repair via FCF, operational excellence lowering breakevens, and capital allocation to highest‑return Delaware packages create resilience across price cycles .
Disclosures: Asterisked values were retrieved from S&P Global consensus/financials tools.