Crescent Energy Q1 2026 Earnings Call - Permian Integration Exceeds Targets, Free Cash Flow Surges

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Ladies and gentlemen, greetings, welcome to the Crescent Energy First Quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference call, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Reid Gallagher from Investor Relations. Please go ahead.

Brandi Kendall, Chief Financial Officer, Crescent Energy3: Good morning, and thank you for joining Crescent’s first quarter 2026 conference call. Today’s prepared remarks will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall. Our Chief Operating Officer and Executive Vice President of Investments will also be available during Q&A. Today’s call may contain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, global geopolitical conflict, our business strategies, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We have no 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 of historical non-GAAP financial measures to the most directly comparable GAAP measures, please reference our Form 10-Q and earnings press release available under the investor section on our website. With that, I’ll hand it over to David.

David Rockecharlie, Chief Executive Officer, Crescent Energy: Good morning, and thank you for joining us. First, I’d like to say thank you to all of our investors, our talented colleagues, and everyone who has been part of our journey as the Crescent Energy team. Together, we have executed a consistent strategy, uniquely combining investing and operating expertise to deliver better returns, more free cash flow, and profitable growth. Today, Crescent Energy is a top 10 U.S. independent oil and gas producer with more scale, more focus, and more opportunity than ever before. On this solid foundation, we will continue to build tremendous value in the months and years ahead, and our update today gives us great confidence in Crescent’s future. Crescent delivered another strong quarter. We outperformed on production, generated meaningful free cash flow, and made significant progress integrating our Permian assets. As always, I want to begin with three key takeaways. First, strong execution drove outperformance.

We exceeded production expectations driven by faster cycle times and some key steps in optimization of our producing base. We further increased free cash flow through an opportunistic refinancing, lowering our cost of capital. Second, we are thrilled with our Permian acquisition, where our integration is ahead of plan, and we see meaningfully more upside every day. We’ve already exceeded our initial synergy target, capturing $120 million to date, and we are seeing early improvements in both well costs and production. Third, our differentiated combination of investing and operating expertise continues to deliver significant free cash flow, both in the quarter and in our future outlook. Let me now discuss the quarter in more detail.

We produced a record 341,000 barrels of oil equivalent per day for the quarter, including 140,000 barrels of oil per day, and generated $192 million of levered free cash flow. Importantly, first quarter production was above expectations on both total equivalent volumes and oil volumes, driven largely by base production outperformance and acceleration in the Permian from improved cycle times. While our development plan remains fundamentally unchanged, we are selectively accelerating volumes to capture higher near-term returns while continuing to drive operational efficiencies and lower well costs across our asset base. In the Eagle Ford, we continue to see steady efficiency gains. We continue to increase our use of simul-frac completions across our development, which is reducing costs and accelerating volumes.

At the same time, we’ve strengthened our 2026 development program through an active ground game, increasing lateral lengths and working interests. In the Permian, we’re off to a strong start in capturing early wins. The initial phase of our integration focused on stabilizing the assets. We have right-sized capital intensity and implemented our returns-driven operating approach. We are now focused on optimization and have seen impressive early results with $120 million in synergies captured to date, already exceeding our original target. To provide a few examples, we’ve improved the operational planning around our development program, efficiently increasing wells per pad and adding roughly 100,000 incremental lateral feet to our 2026 plan through offset acreage trades and land optimization. We’ve accelerated cycle times and are currently 100 producing days ahead on our 2026 development plan.

We’re already having success reducing well costs. From rebidding service contracts to changing fuel usage and facility design, we’ve achieved over $500,000 of savings per well versus the prior operator. These are not one-off wins. They reflect Crescent’s operating model and our track record of buying assets and making them better. Importantly, we still see meaningful upside from here. In the Uinta, we’ve had strong execution with well costs down roughly 20% year-over-year as we implement the same proven approach you’ve seen from us in the Eagle Ford. Implementing simul-frac, increasing efficiency, and extending laterals are just a few of the tools we’ve brought to the basin to optimize the capital program and increase well returns. Activity this year remains focused on our core Uteland Butte development.

Additionally, after strong results in additional formations across the basin and on our acreage, we are investing more capital towards the prudent delineation of our broader resource opportunity. With our meaningful cost improvements and the tremendous stacked resource potential across our position, we see significant opportunity for value creation ahead of us in the Uinta. Our minerals and royalties business has shown similar strong performance. Our portfolio of world-class resource and high-margin cash flow provides valuable exposure to cost-free organic growth. At current prices, we expect the portfolio to generate approximately $200 million of EBITDA this year, representing a meaningful increase versus our original guidance. Across the portfolio, the results are clear. We are executing well, improving our assets, and generating strong returns and significant cash flow.

Our unique combination of investing and operating skills delivered this quarter and Crescent Energy is better positioned than ever before to continue delivering impressive results and long-term value for investors. With that, I’ll turn the call over to Brandi.

Brandi Kendall, Chief Financial Officer, Crescent Energy: Thanks, David. Crescent delivered another quarter of strong financial results, generating approximately $690 million of Adjusted EBITDA and approximately $192 million of Levered Free Cash Flow. These results reflect both strong execution and a portfolio built to generate outsized free cash flow. During the quarter, we also improved our cost of capital with an opportunistic refinancing. We reduced interest expense, extended maturities, and further strengthened the balance sheet, all of which support higher free cash flow going forward. Our capital allocation framework remains consistent and disciplined. First, the dividend. We declared a $0.12 per share dividend for the quarter, continuing our long history of returning cash to shareholders. Second, we remain committed to maintaining a strong balance sheet.

We ended the quarter with approximately $2 billion of liquidity, no near-term debt maturities, and a clear pathway to lower absolute leverage over time. Third, our free cash flow provides significant flexibility. At current prices, we expect to generate approximately $1 billion of Levered Free Cash Flow in 2026, which gives us the ability to reduce debt, fund accretive M&A, and repurchase shares when appropriate. Our focus remains on long-term per share value creation. Our scale, cash flow profile, and balance sheet strength gives us multiple ways to achieve that. With that, I’ll turn the call back to David.

David Rockecharlie, Chief Executive Officer, Crescent Energy: Thanks, Brandi. Before we open the call for Q&A, I want to reiterate our key messages. First, our base business continues to outperform. We exceeded expectations on production, delivered strong financial results, and continued to improve the efficiency of our operations. Second, our Permian integration is ahead of plan. We’ve already exceeded our initial synergy target and see further upside ahead. Third, our differentiated combination of investing and operating expertise continues to deliver strong returns and significant free cash flow. Not long ago, Crescent was a new public company producing just over 100,000 barrels of oil equivalent per day. Since then, we’ve driven profitable growth, significant free cash flow, and meaningful operating efficiencies to create a top 10 U.S. independent oil and gas producer, delivering impressive results like you’ve seen today. Our strategy remains consistent and with more scale, more focus, and more opportunity than ever before.

We believe Crescent has never been better positioned to deliver impressive performance and long-term value in the months and years ahead. With that, we’ll open it up for Q&A. Operator?

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. Ladies and gentlemen, we will now begin the question and answer session. We take the first question from the line of Neal Dingmann from William Blair. Please go ahead.

Brandi Kendall, Chief Financial Officer, Crescent Energy0: Hi, morning, all. Nice quarter. David, my first question just on your operational efficiency and specifically how much upside are you already seeing on the Vital assets? It seems like you’re already very quickly seeing some upside there. Would love to hear a color there.

Joey, Executive Vice President of Operations, Crescent Energy: Hey, Neal, this is Joey. I’ll take that one. Yeah, we’ve really hit the ground running. The way I like to describe how we’ve attacked this is, you know, just taking our integration capabilities and moving from a defensive position to an offensive position as quickly as we can. I really like the way slide 7 frames it. You know, we wanted to stabilize as quickly as we could. Of course, slowing down the activity helps. I liken it to, you know, just the way they talk about football, slowing the game down. Slowing the game down helped us immensely. We’ve quickly moved into the optimization process.

Some of the first things that we did was rebid our services, which was incredibly timely. We had some 100% diesel fleets out there operating, and we were able through the bidding process to find some dynamically gas blending fleets, DGB fleets. If I were to talk about one lever, that would be the biggest one that we’ve really hit to reduce our costs. Displacing, you know, 55%-75% of the diesel, particularly in light of diesel costs currently and also with the gas prices that we’re getting in the Permian, it was just a huge win. You can see the impact of that on slide 12, which I really like as well, being able to get a $25 a foot reduction. So that was a big one.

You know, some of the things that are coming down the pipe, you know, it’s kind of the same playbook, different day, larger pads, implementing simul-frac. Previous operator had, I think, maybe done 1 or 2 pads towards the end and, you know, we’re doing as many pads as we can. I think we’re gonna be approaching 50% of our wells this year are gonna be with simul-frac. Just doing the things that we do, reducing cycle time, right-sizing artificial lift, reducing facility sizes. You know, the opportunities are plentiful, and I’m really proud of how well the team has hit the ground running.

Brandi Kendall, Chief Financial Officer, Crescent Energy0: Great. Just secondly, guys, you saw towards Diamondback boost activity, just wondering what it would take for you all to do something similar, maybe a rig or 2.

David Rockecharlie, Chief Executive Officer, Crescent Energy: Hey, Neal, it’s David. I’ll just start by taking a quick step back and again reiterating why we talk so much about investing and operating. Deployment of capital is investing, we’re really pleased with the M&A that’s taken place over the last 3 years. That’s dollars in the ground at, you know, 60-dollar oil price environment. We think in today’s environment, we should be grabbing as much cash flow as we can for the benefit of investors. We don’t see increasing rig activity into a, you know, higher price environment. We see producing barrels at really high margin and returning cash to the balance sheet and investors.

Brandi Kendall, Chief Financial Officer, Crescent Energy0: Thank you.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of Zach Parham from J.P. Morgan. Please go ahead.

Brandi Kendall, Chief Financial Officer, Crescent Energy4: Hey, guys. Thanks for taking my question. First, just wanted to ask, in the Permian, Waha spot today is around negative $4. Futures indicate that it gets quite a bit better later this year with new pipes coming online. I think Vital had quite a bit of Waha exposure, so I’m assuming that’s still the case with your Permian asset. How do you factor that into your operations? Do you think about holding back the timing of some turning lines or shutting in some higher GOR wells in the basin with where Waha is today?

Brandi Kendall, Chief Financial Officer, Crescent Energy: Hey, Zach, it’s Brandi. I would say as we sit here today, I mean, we are very well hedged from a Waha standpoint over the next probably 24 months in the, kind of the mid $2s. I feel like we have a lot of protection there.

Brandi Kendall, Chief Financial Officer, Crescent Energy4: Okay, thanks. Then David, maybe just following up on one thing you said in your prepared remarks, talking about the delineation of the broader resource opportunity in the Uinta. Can you just unpack that a little bit more? What other zones do you plan to test in the near term? What’s the timeline there? Just curious for some more color there.

Clay, Chief Operating Officer / Executive Vice President of Investments, Crescent Energy: Hey, it’s Clay. You know, I think as we mentioned in the remarks, you know, early in the year, we’ve been focused on the Uteland Butte. As we get to the back half of the year, you’ll see us, you know, continue to drill with confidence, but take passive delineation opportunities. You know, we mentioned the JV we had on the, you know, northeastern side of our acreage that we felt really good about the results and continue to lean into that. As you think about where we’re focused, I think you can see more of the same, right? As you think about the Upper Cube, you see the activity in the Upper Cube across the play and in the results we’ve seen early on our asset that we’re really excited about.

More to come, but excited about the opportunity set for us.

Brandi Kendall, Chief Financial Officer, Crescent Energy4: Thanks, Clay.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of John Freeman from Raymond James. Please go ahead.

John Freeman, Analyst, Raymond James: Good morning. Thanks. You know, when I look at the nice 1Q and then even though I know y’all haven’t officially changed your full year production guidance, just given the strong first quarter beat and the extra footage that y’all are adding, it seems likely that’s, you know, y’all are gonna do better than that original guide.

When I, when I break down the drivers of this kind of outperformance between the faster cycle times that y’all are mentioned in the Permian and then the kind of the base outperformance, which I assume is related to kind of this optimized workover program, is there any way you can kind of flesh that out between how much of this, at least in the 1Q upside, was driven by kind of the, just the base outperformance relative to kind of the improved cycle times?

Brandi Kendall, Chief Financial Officer, Crescent Energy: Hi, John. It’s Brandi. I’d say it’s roughly 50/50. Better cycle times in the Permian and then just optimizing the base.

John Freeman, Analyst, Raymond James: Perfect. Just the follow-up for me, as y’all have continued to kind of provide, you know, more details about Crescent Royalties, the last few quarters and continue to build out that business. When y’all look at the, kind of the leverage on Crescent Royalties Like obviously with Crescent E&P, you’ve got stated kinda leverage targets, things like that. I know royalties right now is about 1.9 times. Is that sort of the right ZIP code for that type of business? Is there any sort of targets that we should be thinking about with that business, similar to how we think about, you know, the E&P business?

Brandi Kendall, Chief Financial Officer, Crescent Energy: Hey, John, it’s Brandi. I’ll take this. We would expect to be 1.5 times or below on the minerals business as we exit the year. The asset base as we flagged in the materials at today’s commodity prices is generating close to $200 million of free cash flow. That free cash flow will go to the balance sheet there. I think similar zip code as we think about kind of the working interest business from a leverage perspective.

John Freeman, Analyst, Raymond James: Got it. Thanks. nice quarter.

David Rockecharlie, Chief Executive Officer, Crescent Energy: Yeah, thank you.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of Michael Furrow from Pickering Energy Partners. Please go ahead.

Michael Furrow, Analyst, Pickering Energy Partners: Hey, good morning. Thanks for taking our questions. I wanted to touch on the improved cycle times again and what they could mean for the overall broader business. Look, the efficiency gains are clearly positive, especially at current oil prices. You know, one caveat is that accelerated activity could put some honest pressure on the corporate decline rate. Now that said, it looks like the base production appears to be performing well. Could you walk us through some of the key drivers behind the base business outperformance and how you’re thinking about further optimizing that decline rate from here?

David Rockecharlie, Chief Executive Officer, Crescent Energy: Hey, it’s David. I’ll just start with better performance is better performance. We feel great about how things are going. And to your point, getting some barrels sooner, not gonna fundamentally change decline rate. We really focus on that as a business, as you know. I think we feel very comfortable with what I’ll call you know, capital discipline and our ability to kinda maintain the production base where we want it. I’ll turn it to Joey to just give some perspective on further outlook there. The punchline for me is that we’ve been able to integrate the business faster, and make change sooner, and that’s just getting us more value, quite simply sooner.

Joey, Executive Vice President of Operations, Crescent Energy: Yeah, Michael Furrow, I get your question that whenever you get faster things, you have the opportunity to bring more activity in and how does that impact capital. You know, the other thing I would point to is the significant reduction that we’re demonstrating on our well costs. A lot of this increased activity we’re paying for, you know, we’ve indicated even on the West Texas asset, a $500,000 per well reduction in well cost. I mean, that’ll go a long ways towards adding a little bit of activity. You know, through some of the other things we’ve talked about through acreage trades, adding 100,000 extra feet, not leaving stranded resource, all those things. I mean, at the end of the day, I like the way David said it.

Efficiency gains are definitely a positive, and then we just balance how the rest of the year plays out by doing everything we can to keep our well costs down.

Michael Furrow, Analyst, Pickering Energy Partners: Thanks for that. David, I agree with your statement, better performance is better performance. It looks like the market’s agreeing with that as well. Okay, as a follow-up, I just wanna piggyback off the same subject, the improved cycle times and efficiency gains. Look, you previously mentioned, David, that maximizing cash flows is the objective. Looking later in the year, you know, in the event that operations continue at this pace and the company’s sort of faced with a decision on whether to, you know, reach or extend the planned number of wells or capital for the year, do you think you’ll maintain this operational cadence and efficiencies by seeing both production and CapEx higher, or will activity and spending levels sort of be the governor here?

David Rockecharlie, Chief Executive Officer, Crescent Energy: Yeah. I think the short answer is that our focus on the corporate targets of decline rate, reinvestment rate, and returns are always gonna drive everything there. As you also know, given the new assets we brought in, we’ve sort of guided to, you know, the ability to kinda move, you know, up or down one rig throughout the year across the whole portfolio. I think that the long story short, the activity levels and the business plan are generally already baked in, and a higher price environment just means more cash flow. I don’t think you’ll see us change fundamentally anything as it relates to that, just given the flexibility we’ve already got at the margin.

Brandi Kendall, Chief Financial Officer, Crescent Energy: Michael, maybe what I’d add, no formal change to production or capital guidance for the full year. Given performance to date, and to David’s point, given where commodity prices are, we would expect to be between the mid and the high point on both production and capital.

Michael Furrow, Analyst, Pickering Energy Partners: All right. Thank you. That’s clear. Appreciate your time.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of Oliver Huang from TPH&Co. Please go ahead.

Brandi Kendall, Chief Financial Officer, Crescent Energy1: Good morning, all, and thanks for taking our questions. Just wanted to start out on the synergy side. Great to see you all exceeding the initial target already. As we kind of look forward, could you all just provide a composition of what remains to be achieved to hit the updated target from last quarter? Just trying to get some better insight to the line of sight there.

Brandi Kendall, Chief Financial Officer, Crescent Energy: Hey, Oliver, it’s Brandy. What we’ve captured to date is largely overhead cost of capital and starting to bring forward the operational synergies. I would say what’s left for us, I think there’s additional room for us to improve cost of capital. I’ll let Joey talk about what we’re focused on from an op standpoint, I think there’s also opportunities to further optimize our marketing efforts, not just in the Permian, but as we think more holistically across our portfolio.

Joey, Executive Vice President of Operations, Crescent Energy: Good morning, Oliver. Yeah, we’ve already talked about some of the capital opportunities that we’ve identified, particularly with DGB fleets and reducing our diesel usage. Again, the same points on larger pads, longer laterals, increasing our capital efficiency. You know, maybe a specific example of the way that we are looking at things different, focusing on value versus, you know, chasing volumes. Artificial lift is a perfect example of that, where maybe different to prior operators, rather than put in the largest ESP that we can to chase a high volume, we would have deference to putting in, you know, an appropriately sized ESP that’ll last longer, maybe all the way up till its next conversion.

You eliminate a workover and a change out of an ESP that could cost as much as $250,000. You know, you’re just not chasing those peak volumes. The other thing that it allows you to do, because you’re not chasing those peak volumes, is reduce your facility size. You know, just again, reducing CapEx. Some of the other things that we’ve identified are just the number of failures that we can eliminate that reduces our workover activity significantly. Because we had seen a tendency to work over some of the wells multiple times, and we’re focused on how can we get rid of all those capital workovers? You know, doing everything we can to attack LOE as well. You know, the opportunities there are pretty plentiful.

We’re looking forward to continuing the pace that we started at the beginning and continuing that through the year.

Brandi Kendall, Chief Financial Officer, Crescent Energy1: Okay. Awesome. That’s helpful color. Maybe just for a second question, just to stick with the, I guess, Permian. Just, could you please remind us when we might expect to see the first start to finish Crescent designed well, just given all the progress on the integration front? Just trying to get a sense for how much of all this that you all kind of talked through is being reflected in the well cost slides with respect to just the larger pad sizes, longer laterals, simul-frac usage?

Joey, Executive Vice President of Operations, Crescent Energy: Yeah, I would say, I mean, it’s gonna be a little bit of a journey. Obviously, we inherited a drill schedule. We’ve had the opportunity to make some modifications. You know, on the front end of this, it’s been primarily just what can we do operationally to reduce the cost of what we have. You know, the increased pad sizes and longer laterals, those are things that are gonna start to not play out till the latter part of the year and to early next year. Which to me is encouraging because we’ve had so much success early term on just hitting our operational efficiencies and reducing costs just through some pretty simple changes.

That just keeps me optimistic that some of these other things that are gonna be coming with time are, you know, just gonna keep the journey going. It’s gonna take a little bit of time for us to have our development plan fully implemented, you know, towards the end of the year into next year.

Brandi Kendall, Chief Financial Officer, Crescent Energy: Maybe just to add, we think there’s outperformance to the $500,000 reduction in well cost that we’ve captured.

Joey, Executive Vice President of Operations, Crescent Energy: Oh, correct. Yep.

Brandi Kendall, Chief Financial Officer, Crescent Energy1: Awesome. Thank you for the time.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of Phillip Jungwirth from BMO Capital Markets. Please go ahead.

Ajay Bakshani, Analyst, BMO Capital Markets: Hey, this is Ajay Bakshani. I’m for Phil. Great quarter, and thanks for taking our question. I know it’s early with the integration, and although you’ve already achieved quite a bit, can you talk about your initial assessment around Vital Energy inventory in terms of low risk versus total locations? How close are you to having a Crescent view of total inventory, and how are you viewing upside to Permian low risk locations and moving more wells to this category?

Clay, Chief Operating Officer / Executive Vice President of Investments, Crescent Energy: Hey, it’s Clay. You know, as you just heard from Joey, we’re really excited about where we are today. The focus on operational execution, and the ability to kind of put points on the board there is real, which you’ve heard from us. I think we continue to be excited about the overall, you know, inventory opportunity. You know, you heard in David’s prepared remarks our excitement about the acquisition overall and where we sit today. We’ve got a lot ahead of us there. I think it’ll be an ongoing evolution. If you look at where we sat when we announced the acquisition, we’re more encouraged on all fronts, including the inventory side.

Ajay Bakshani, Analyst, BMO Capital Markets: Great. Thanks. For my next one, just wondering how has the stronger commodity environment changed, if at all, how you approach the A&D market with Crescent Royalties? I bet you guys got, you know, those 2 deals off before the run-up. If you could also just touch on how you’re viewing A&D for Crescent E&P in this market as well, that’d be great. Thanks.

David Rockecharlie, Chief Executive Officer, Crescent Energy: You know, you mentioned it, we are really excited about what we accomplished across the business. You know, if you look at it over the last couple of years into a very different macro environment, we were able to kind of meaningfully scale the business creatively and kind of transform the opportunity set. Obviously, with the royalties business, with the Permian, you know, scale of Permian entry, but also meaningfully scaling our Eagle Ford business where we’re the third-largest producer today. When we think about go forward, you know, and you’ve heard from us, we call the opportunity set that internally that we see for the business has never been greater. You know, a ton of value creation opportunity at our control.

You know, when we look at the A&D market, obviously, a lot of volatility on the commodity side. You know, you haven’t seen an oil-weighted transaction get announced since the start of the conflict in, you know, mid to late February. You know, we continue to be disciplined evaluators of assets, and you would expect us to continue that in this market environment. That includes both across the base E&P business, but also the royalty asset. Clearly, with the portfolio we’ve built, we’ve never been in a better position of strength. We will be disciplined acquirers, we will be disciplined evaluators and really excited about the opportunities that we control today.

Ajay Bakshani, Analyst, BMO Capital Markets: Great. Thanks.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of John Abbott from Wolfe Research. Please go ahead.

John Abbott, Analyst, Wolfe Research: Hey, good morning, and thank you for taking our questions. Question is really early thoughts on 2027. Brandi Kendall’s already just mentioned that for 2026, you’ll be likely up in the upper half, mid to upper half, both CapEx and production guidance. I mean, if we continue to have strong commodity prices, sort of looking to 2027, what are the puts and takes as we sort of think the next year? You get to the 25% decline rate. You change potentially the reduction in the number of Permian rigs. I mean, Joey just talked about, you know, 50% fracs this year in the Permian. Maybe that could go higher. What are the puts and takes as we sort of think about 2027?

David Rockecharlie, Chief Executive Officer, Crescent Energy: Yeah. Hey, John, it’s David. Great question. Without, you know, getting into too much detail too early, I think you know us well enough to know that we’re gonna continue to just do more of the same and try to do it better. I think, you know, very steady focus on production levels. We talk about, you know, maintaining flat to very modest growth through the drill bit. We expect to continue to drive performance both on the production and D&C side, but also on the cost side. I think we just love to continue to generate significant free cash flow following all the core principles, decline rate, reinvestment rate, return on our capital, and strong free cash flow benefiting investors.

Call it more of the same in 2027 and, you know, hopefully a very stable and improving business continually.

John Abbott, Analyst, Wolfe Research: The next question is for Brandi. Brandi, I mean, $140 million working capital draw during the quarter. Is it correct to assume that sort of reverses over the course of the year? I mean, how are you sort of thinking about how would you fine-tune cash taxes if higher commodity prices persist?

Brandi Kendall, Chief Financial Officer, Crescent Energy: Great questions, John. Working capital, I would expect that to unwind next quarter, and I would say largely related to the A&D transactions that we closed on at the end of the fourth quarter. From a cash tax standpoint, I would say specifically with respect to 2026, we have significant tax assets to offset any expected taxable income. I would say over the longer term, we’d expect to become a cash taxpayer kind of in an $80-plus WTI environment.

John Abbott, Analyst, Wolfe Research: Appreciate it. Thank you very much for taking our question.

Brandi Kendall, Chief Financial Officer, Crescent Energy: Thank you.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of Hanwen Chang from Wells Fargo. Please go ahead.

Hanwen Chang, Analyst, Wells Fargo: Thanks for taking my questions. Could you walk through your current oil marketing exposure, specifically the split between MEH linked barrels versus WTI-based pricing? How much of the oil volumes are exposed to spot pricing? Thank you.

Brandi Kendall, Chief Financial Officer, Crescent Energy: Hey, Hanwen. I think your question’s coming from just our strong oil realizations this quarter. We did print 99% of WTI. I think that’s a function of the fact that we sell a lot of our South Texas crude based off of MEH, which is technically a waterborne crude. Given what’s happening in the Middle East, that is pricing at an incremental premium to how MEH has normally traded. I would say roughly 70%-75% of our crude across the business prices off of MEH.

Hanwen Chang, Analyst, Wells Fargo: Thanks. given your MEH exposure, how should we think about the second quarter versus the first quarter? you know, are you seeing potential for further upside, or is one Q closer to a high point?

Brandi Kendall, Chief Financial Officer, Crescent Energy: I mean, I think with respect to Q2 on oil realizations, I think it’s probably kind of in the ZIP code, where Q1 printed.

Hanwen Chang, Analyst, Wells Fargo: Thank you.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. We take the next question from the line of Charles Meade from Johnson Rice & Company. Please go ahead.

Charles Meade, Analyst, Johnson Rice & Company: Yes. Good morning, David, to you and the whole Crescent team there. I wanted to ask a question about your CapEx flexibility and really about reallocating or reallocating CapEx, you know, within the current capital budget you have perhaps to more oily assets. I think it seems like there’s an obvious place to do that would be by moving up dip in the Eagle Ford. I think there’s probably also an opportunity out in the Permian once we get some of these big pipelines come online and, you know, gas isn’t so negative anymore.

I think, like, for example, some of the stuff you have further west in Pecos would be, once gas goes positive, maybe there’s an opportunity to bring on some oil volumes out there. I wonder if you could talk about where you see those opportunities and how likely you are to act on them.

David Rockecharlie, Chief Executive Officer, Crescent Energy: Yeah, great question. I’ll start with a really simple answer of yes, your commentary is music to our ears. I think we pride ourselves on having flexibility within the portfolio. I think it’s one of the really valuable distinctive things about Crescent’s assets that we put together. Long story short, we’ve been able to manage that over the last few years, and this year is much the same. Meaning we are today about 90-plus % allocated to liquids oriented drilling, and we’ll continue to monitor opportunities for, you know, for the best returns across the portfolio. As you said, we have multiple places in the portfolio where we can allocate more or less capital to liquids than to gas.

We’re really just looking for the best returns and the best efficiency. We feel great about the program we have today, but we do continue to have flexibility to do exactly what you outlined, and I like how you said it. We’ll stay focused on that.

Charles Meade, Analyst, Johnson Rice & Company: Great. That’s it for me. Thanks.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. Ladies and gentlemen, as there are no further questions from the participants, I will now hand the conference over to David Rockecharlie for his closing comments.

David Rockecharlie, Chief Executive Officer, Crescent Energy: Great. As I said at the beginning of the call, I’d just like to thank again all the investors, you know, who have trusted us, all the colleagues here at Crescent who have helped build this company into what it is today and gonna help us take it forward, continue to improve every day. Everybody else who’s been along the ride here with us. We do think the best days are ahead for us. We’ve got a lot of work to do. We appreciate all the questions on this morning’s call.

You know, we’re gonna get back to work and look forward to having just a very strong series of updates, as I said in the beginning, over the coming months and years as we continue to build Crescent into an outstanding business.

Brandi Kendall, Chief Financial Officer, Crescent Energy2: Thank you. Ladies and gentlemen, the conference of Crescent Energy has now concluded. Thank you for your participation. You may now disconnect your line.