Greetings. Welcome to Crescent Energy First Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require ussd assistance during the conference, . Please note, this conference is being recorded. I would now turn the conference over to Emily Newport, Senior Vice President of Finance and Investor Relations. You may begin.

Good morning. And thanks you for joining CRGY First Quarter 2022 Earnings Call. Our prepared remarks today will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall, Chief Accounting Officer, Ben Conner and Clay Rynd, both Executive Vice President s are also here today, available during the Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the federal security clause. These statements are subject to risks and uncertainties, including commodity plus volatility to continue the impact of COVID-19, geopolitical conflicts, including in Russia and Ukraine and other strategy. And other factors that may cause actual results to defer from those expressed or implied in these statements and our other disclosures. We disclaim any obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures. For reconciliation, historical non-GAAP financial measures with most directly comparable GAAP measure, please reference our 10Q and earnings press release available on our website. With that, I will turn it over to David.

Great. Thank you, Emily. And good morning, everyone. We appreciate you joining us today for our first quarter 2022 earnings call. This is our first quarter to report full consolidated results after our merger with Contango in December. We've been trading publicly as Crescent Energy for about five months, and we look forward to providing more details today on our results, as well as our outlook for the large and differentiated business we built. We will also take your specific questions at the end of our introductory remarks. Q1 was another solid quarter for our business. We've generated significant free cash flow and solid investment returns across our asset base. We maintained a strong balance sheet and remain focused on returning capital to shareholders through our fixed quarterly dividend. As a reminder, we paid our first dividend as a public company in March equal to $0.12 per share. Additionally, we're pleased to have closed the highly accretive acquisition of assets in the Uinta Basin at the end of the quarter. The Uinta asset significantly increased our scale and added high-margin oil production at a very attractive purchase price. Our comments include the Uinta acquisition for nine months. And I would note that given the March 30 closing date, operating results of this material and compelling acquisition will not begin to be reflected in our financial results until the second quarter of Q2. While performance is strong and Crescent continues to grow significantly, our strategy remains unchanged. We describe our strategy as focused on cash flow, risk management, and returns. We generate significant free cash flow from our large diversified and low decline producing asset base. We manage risk through a portfolio approach to asset selection and by maintaining our strong balance sheet supported by our hedge program. And we seek…

Thanks, David. And good morning, everyone. We're off to a great start in 2022. We remain focused on cash flow priorities 1A and 1B, shareholder returns, and the balance sheet. As David mentioned, we announced a $0.17 per share dividend, which is a 40% increase to the prior quarter. Consistent with our dividend framework of 10% of adjusted EBITDA, we intend to pay $0.17 per share quarterly for the remainder of the year, generating an attractive 4% yield based on recent trading price. On the balance sheet, we exited the quarter with LTM leverage at 1.3 times. On March 30th, we closed the Uinta Basin transaction for cash consideration of approximately $690 million. In conjunction with the transaction, our lenders authorized an increase of the elected commitment amount under the existing revolving credit facility to $1.3 billion from $700 million. Additionally, we issued $200 million tack-on during the quarter with proceeds used to reduce RBL borrowings consistent with our strategy of not being overly reliant on the bank's RBL market. For the first quarter of 2022, we produced 120 net MBoe per day in-line with our previous guidance, excluding Uinta, and generated $195 million of adjusted EBITDAX and $89 million of leverage-free cash flow. As a reminder, these results do not include the contribution from the Uinta assets since the transaction closed at the end of the quarter. Operating expense, excluding production and other taxes of 1597 per MBoe were in line with guidance adjusted for contractual commodity link costs, costs which increased in the higher commodity. Recall that our guidance was originally set at $75 barrel, roughly $20 a barrel less than the Q1 oil price. About $0.25 to $0.50 of our operating costs are contractually index declined prices such as CO2 prices for our Wyoming tertiary recovery assets…

Thanks, Brandi. Before we take your questions, let me quickly summarize today's key highlights. First, we have a proven strategy to add value. We focus on cash flow, risk, and returns. We've been successfully executing this strategy for the last decade, and the results are apparent in our first-quarter earnings update. Second, we are a large-scale business with $1.35 billion of projected 2022 adjusted EBITDA at a $100 oil, improved EP $8.2 billion at the 3-31 strip pricing. Again, this EBITDA guidance includes the Uinta assets or nine months, 2022. We're continuing to run three operated rigs across our deep inventory of low risk and high return drilling opportunities. Scale is incredibly important to be competitive in today's E&P industry. Lastly, we have a proven track record of adding value to complementary acquisitions. Experienced and talented professionals across our entire business are able to identify accretive opportunities, operate safely, capture financial and operational synergies, and maintain our strong capital structure as demonstrated once again this quarter with our acquisition of the assets. The accretive acquisition added substantial cash flow in a multi-year inventory of high return oil-weighted development. It increased our oil waiting and the percentage of production that is operated across our portfolio on maintaining a strong balance sheet. We were well positioned to acquire this asset on an accelerated timeframe with our strong balance sheet and operating model that combines investor mindset with deep operational expertise. We believe this transaction captures what Crescent is uniquely able to do with our disciplined cash flow based operating model. Thanks again for joining us today and for your interest in our company. We will now be happy to take your questions.

Thank you. If you would like to ask your question . A confirmation till will indicate your line is in the question queue. if you would like to move your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Neal Dingmann with Truist Securities, please proceed.

congrats on the first call. My question is first maybe little bit on ops, specifically on the Uinta. Can you talk a little bit how integration has gone and then a few other things on this Uinta. Can you speak to early results there? Are you seeing -- I know you've got a couple of rigs, so it might be too early, but just your thoughts on how the wells are looking versus when you all were modeling looking at the deal, maybe just any more color you could talk about. As I said, I just don't think the market's fully appreciating that, so might you share more color if you could?

Sure. Hey, Neal, it's been a good question. As David mentioned in his opening remarks, we're early into the integration, six weeks in, so what we'd say is just we're very pleased with the organization in the field that we've taken over, and all the communications we've had with really all the stakeholders across the asset. We're still getting in and diving deeper relative to underwriting. What I'd say is performance is as we expected in terms of underwriting. The organization brought on 12 wells during the quarter. It's early in those results, but they look good, and I think what we're more excited about is the opportunities that we're seeing, that we thought, just in terms of being able to get there and continue the program had and seeing opportunities for further value creations. So what I'd say is it's still early, but as expected, and we're excited about the outlook.

Gregg than David and Brandi just don't. Shareholder returns, you got a nice selling base for you to just talk plans for that and what do you think how much needed pushed out? What do you think is appropriate versus continuing used cash for scale? And just wondering how you think about balancing those two going forward.

Hey, Neal. Good morning, it's Brandi. So, I'd say no intention to increase our base dividend for the balance of the year and we plan to use incremental or the incremental free cash flow that we're generating at these higher prices for you to pay down debt or selectively pursue acquisitions that expect to pay out at that $0.17 per share per quarter for the remainder of the year, which as a reminder, was a 40% increase versus Q1.

Okay, we'll settle with that. And maybe if I can get one last one and then maybe the year then, just can you talk now, obviously, Tom, through your on August inflation, I mean, my thought is not so much on some two months -- I'm too worried about just a pure inflation, but just you talked about logistics and the challenges, I'm just making sure you can continue to get rigs, spreads. Drill, pipe, AC, and everything in the future. Just talked about your lock things in what does your confidence as you continue to run nanometer enter program?

And again, Brandi can cover some of the numbers. I think she hit on it, but certainly experiencing an evolving and tighter market overall. What I say is that with the one rig in the Eagle Ford and taking over a well-planned two rig development. Overall, it's an operation that we feel really confident about. And I think we highlighted and forecasted the inflation generally that we expected within our guidance. So I'll say we've seen a little bit more tightness in the market that we're managing through, is really around pipe and sand. And so really just kind of managing ahead and through planning, just making sure that that doesn't impact the logistics and the overall plenty of the operations. So I'd say we're managing through it and it's well within our capital guidance, but I'd say those are the two heightened areas where we're seeing a little bit more pressure multiple month.

Thank you

Our next question is from Joseph Mackay with Wells Fargo, please proceed.

Hey, guys. Thanks for taking the time for my questions. I was just wondering if you could talk about kind of some of the underlying assumptions for the Uinta just in terms of location count, would you characterize them as conservative? And if so, what would offer some potential upside there in terms of location counter well performance moving forward.

Yeah. Hey. It's been -- first thing I would start out is that we were able to buy this asset at a pretty interesting valuation based on the underlying production and it certainly came with some high confidence development locations, which we're actively developing today. We are excited about the prospects of future resource and I think we talked about it when we announced the transaction, we see meaningful development opportunity across the asset base. But we're going to be what I'd say is late followers and some of the exciting things that are happening in the base. And then we're focused really on the development, which has been the primary focus area across the basin, across multiple Operator. So I think as we continue to look forward, will continue to focus on those areas that have been meaningfully de -risked. But over time, as other operators continue to do work, and as we see results and continue to do good work on our asset base, I think there is some exciting resource optionality that will continue to follow and track over time. So I think that's where you see it in our hedge at the current moment.

Let me just add a point or so just with what Uinta does to that proforma business than we had on. We're running 1-rig and you go forward in 2-rigs in Uinta. That does result in fairly even capital spend cadence for the remainder of the year. From a production standpoint, we averaged 120 per day in Q1 on a standalone basis at Uinta and expect Q2 to be 15% to 20% higher production lines when you factor in Uinta, that give you a context as to what the rest of the year looks like for that proforma business.

Got you. Thank you. That's very helpful. Then, one more on the Uinta real quick. Some of your peers in basin have explored using rail as takeaway to get down to the Gulf Coasts. I know it's still early days realizing the asset, but do you have any thoughts around that on the longer term in terms of in-basin pricing or like expanded takeaway options?

Yeah. To your point, I think we're still early days in terms of becoming experts, but rail capacity has meaningfully grown in the basin, and Gulf Coast refiners really like the there. So I think that's a place where you will continue to see growing takeaway capacity. Our volume, specifically, we do have contracted, and for the most part, are contracted to go to the local refinery. So we feel good about the visibility there, but the optionality in the basin continues to grow as people continue to invest in takeaway capacity.

And then, maybe just specifically on debt, so as a broader business, we had really strong debts for the quarter. They were high 90s. We do expect those to drop to lower 90s pro forma for the Uinta starting in Q2.

Got you. Thank you very much. That's helpful. That's all for me.

Thank you.

At this time, we have no more questions in queue, so I would like to turn the conference back over to management for closing comments.

Great. Thank you all again for joining us this quarter and supporting the company. We appreciate it, and we look forward to keeping you all well informed, and speaking again next quarter. Thank you.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.