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Vitesse Energy, Inc. (VTS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong sequential growth with production up 27% q/q to 18,950 Boe/d and Adjusted EBITDA rising to $61.1M; results were supported by a $24M legal settlement and expanded hedging, while 2025 guidance was reaffirmed at 15–17k Boe/d and $80–$110M capex .
  • GAAP revenue was $81.8M; including realized hedge gains, “revenue incl. hedges” was ~$87.0M; GAAP diluted EPS was $0.60. Versus S&P Global consensus, VTS posted broad beats on revenue and EPS in Q2 (see Estimates Context) .
  • Management resolved a multi-year dispute with a key operator, received $24M cash, moved to take virtually all gas in kind, and executed long-term gas gathering/processing agreements—improving forward realizations and reducing G&A run-rate noise from legal expenses .
  • Catalysts: execution on accretive acquisitions (near-term development and larger “chunkier” non-op assets), visibility on H2 activity/curtailments, and hedging support for the dividend maintained at $0.5625 per quarter ($2.25 annualized) .

What Went Well and What Went Wrong

What Went Well

  • Production increased 27% q/q to 18,950 Boe/d, driven by the full integration of the Lucero assets and organic activity; oil mix was 65% .
  • Legal dispute resolved: $24M cash payment recorded, gas taken in kind, and long-term agreements signed—management cited ~$2.5–3.0M run-rate improvement vs historical basis in H1 as a guidepost; “we successfully settled a multiyear lawsuit…entered long term gas gathering, processing and marketing agreements” .
  • Enhanced hedge book: ~71% of remaining 2025 oil hedged at ~$69.83/bbl and ~49% of 2025 gas hedged with ~$3.73 floor collars; extended oil hedges through 2026, supporting dividend stability .

What Went Wrong

  • LOE per Boe rose to $11.38 (vs $10.28 in Q1), reflecting field work and operated asset integration; management noted some LOE spend lifted Q2 volumes but intends to normalize the operated properties’ cost base .
  • G&A optics noisy: reported G&A was $0.18/boe in Q2 due to offsetting previously expensed litigation costs; normalized G&A was ~$3.47/boe, with management expecting leverage to reduce G&A per Boe as scale grows .
  • Guidance held steady despite a strong Q2, implying potential H2 moderation from timing/curtailments; management cited basin activity dynamics and chose not to adjust the range upward yet .

Financial Results

Income Statement and Profitability (GAAP/non-GAAP)

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD Millions)$59.8 $66.171 $81.755
Revenue incl. Realized Hedges ($USD Millions)$59.8 $66.9 $87.0
Net Income ($USD Millions)$(5.125) $2.668 $24.659
Diluted EPS ($USD)—$0.08 $0.60
Adjusted EBITDA ($USD Millions)$36.975 $39.883 $61.132

Notes: Q2 “revenue incl. hedges” approximates GAAP revenue plus realized derivative gains ($81.755M + $5.271M ≈ $87.0M) .

Margins (computed from cited GAAP figures)

Margin MetricQ4 2024Q1 2025Q2 2025
EBITDA Margin %61.8% (36.975/59.8) 60.2% (39.883/66.171) 74.8% (61.132/81.755)
Net Income Margin %-8.6% (-5.125/59.8) 4.0% (2.668/66.171) 30.1% (24.659/81.755)
EBIT Margin % (Operating Income/Revenue)—8.1% (5.380/66.171) 22.8% (18.656/81.755)

KPIs

KPIQ4 2024Q1 2025Q2 2025
Production (Boe/d)12,945 14,971 18,950
Oil % of Production68% 68% 65%
Combined Volumes (MBoe)—1,347 1,724
LOE ($/Boe)$10.00 $10.28 $11.38
G&A ($/Boe) reported$6.87 $9.00 $0.18
G&A ($/Boe) normalized$5.00 $4.38 $3.47
Realized Oil Price with Hedges ($/Bbl)$69.51 $64.93 $64.21
Oil Hedged (% of production)60% 65% 58%
Net Debt ($USD Millions)$114.033 $112.505 $104.038
Net Debt / Adjusted EBITDA (x)0.73 0.71 0.43

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annual Production (Boe/d)FY 202517,000–18,000 (issued Mar 11, 2025) 15,000–17,000 (revised May 5, 2025; reaffirmed Aug 4, 2025) Lowered (Q1), Maintained (Q2)
Oil % of Annual ProductionFY 202566%–70% 64%–68% Lowered (Q1), Maintained (Q2)
Total Capital Expenditures ($M)FY 2025$130–$150 $80–$110 Lowered (Q1), Maintained (Q2)
Quarterly Dividend ($/share)Q3 2025$0.5625 (declared) $0.5625 (payable Sep 30, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 & Q1’25)Current Period (Q2’25)Trend
Hedging & Dividend Support53–65% 2025 oil hedged; dividend increased to $0.5625 in Mar; maintaining capital discipline ~71% 2025 oil at ~$69.83; ~49% 2025 gas collars; added 2026 hedges; reiterates dividend support Strengthening hedge coverage; dividend stability sustained
Legal Settlement & Gas MarketingLitigation expenses elevated in Q1; guidance revised partly due to price volatility $24M settlement; gas taken in kind; long-term GPM contracts; ~$2.5–3.0M run-rate improvement guidepost Structural improvement to gas realizations and G&A noise
Capex Discipline & ActivityFY25 capex cut from $130–150M to $80–110M; deferred DUCs; paused ~$20M acquisitions Capex $35.6M in Q2; maintained FY25 capex guidance; watching AFE activity amid mid-60s oil Disciplined spend; activity improving but cautious
Acquisition PipelineQ3’24 noted near-term development deals; continued evaluation “Most deal flow ever” in larger assets; high hurdles; dividend-accretive focus Active pipeline; selective execution
Basin/Operator DynamicsPreliminary 2025 outlook; Bakken efficiency improving Some operator-curtailments; optimism on longer laterals, refracs boosting capital efficiency Operational tailwinds but episodic curtailments
Macro & TechnologyCited oil price volatility; risk factors (Middle East/Ukraine) Positioned for subdued oil markets; notes tech/monitoring and AI indirectly via basin efficiency discussion Preparedness for macro swings; tech efficiency narrative building

Management Commentary

  • CEO: “We fully integrated the Lucero assets, successfully settled a multi-year lawsuit … and used our free cash flow to pay down debt… we added oil hedges in 2025 and 2026 at price levels that support our dividend.”
  • CEO (call): “Positioned to deliver in a subdued oil price market… operated leg provides another lever… additional hedges added… Board declared our third quarter dividend at an annual rate of $2.25 per share.”
  • President: “Production averaged just under 19,000 Boe/d, up 27% from Q1… we received a one-time $24M cash payment… entered long-term processing and marketing agreements… hedged ~71% of remaining 2025 oil and ~50% gas.”
  • CFO: “Adjusted EBITDA was $61.1M, adjusted net income $18.4M, GAAP net income $24.7M… debt decreased to $106M, net debt to annualized adjusted EBITDA ~0.4x… 2025 guidance unchanged.”

Q&A Highlights

  • Production trajectory and guidance: Management maintained FY25 guidance despite a strong Q2, citing visibility and operator activity; low end of guidance is “minimal chance,” but curtailments and oil price declines would be needed to reach it .
  • LOE and G&A run-rate: LOE up due to early operational work on Lucero assets; reported G&A benefited from legal cost offsets; normalized G&A mid-$3/boe with expectation to decline as scale grows .
  • Gas in-kind and GPM: Bespoke agreements expected to improve realizations; guidepost suggests ~$2.5–3.0M improvement for H1 indicative of forward run-rate benefits .
  • Acquisitions: “Most deal flow ever” in larger assets; high return hurdles, dividend-accretive filter; cautious optimism for H2 .
  • Basin dynamics: Encouraged by Chevron/Hess implications and continued Bakken efficiency improvements (longer laterals, refracs) while acknowledging episodic operator curtailments .

Estimates Context

MetricQ2 2024Q1 2025Q2 2025
Primary EPS Consensus Mean$0.29667*$0.18*$0.22333*
Primary EPS Actual (S&P)$0.35350*$0.22770*$0.44964*
Revenue Consensus Mean ($USD)$64.73075M*$65.060M*$70.67967M*
Revenue Actual (S&P) ($USD)$61.172M*$60.398M*$75.575M*
EBITDA Consensus Mean ($USD)$42.3052M*$39.58767M*$41.45267M*
EBITDA Actual (S&P) ($USD)$42.508M*$36.371M*$71.683M*

Values retrieved from S&P Global.*

Observations:

  • Q2 2025 beats: Revenue actual $75.6M vs $70.7M consensus; Primary EPS actual $0.4496 vs $0.2233 consensus; EBITDA actual $71.7M vs $41.5M consensus. Note: Company-reported GAAP revenue is $81.8M and Adjusted EBITDA $61.1M due to presentation differences (e.g., realized hedges and settlement accounting) .
  • Forward: S&P consensus for Q3 2025 EPS ~$0.08 and revenue ~$65.7M; Q4 2025 EPS ~$0.095 and revenue ~$67.1M—implying moderation post Q2’s outsized items and activity timing.*

Key Takeaways for Investors

  • Q2 was a strong quarter with significant beats vs consensus, aided by settlement proceeds, improved hedging, and Lucero integration; normalized G&A and LOE should improve as integration and field work concludes .
  • The legal settlement and gas-in-kind shift should structurally improve gas realizations and reduce future G&A noise; management provided a ~$2.5–3.0M run-rate improvement guidepost for H1 .
  • Guidance reaffirmed despite strong Q2, signaling prudence amid operator curtailments and basin timing; watch H2 volumes vs AFE trends and oil price trajectory for potential guidance updates .
  • Balance sheet strengthened: net debt fell to ~$104M; net debt/annualized adj. EBITDA is ~0.43x, giving ample flexibility to pursue accretive non-op deals under strict return hurdles .
  • Hedging is a key pillar supporting the $2.25 annual dividend; ~71% of remaining 2025 oil and ~49% gas hedged, with meaningful 2026 coverage added .
  • Watch acquisition cadence: management sees unprecedented larger-deal flow but will remain selective; a dividend-accretive transaction is a potential upside catalyst .
  • Trading implications: near term, the settlement-driven beat and improved hedge profile are positive; medium term, execution on acquisitions and stabilization of LOE/G&A will drive re-rating, while H2 volumes and macro oil prices are key swing factors .