Vitesse Energy Q4 and Full Year 2025 Earnings Call - Dividend cut to preserve balance sheet while adding Powder River assets and hedging 64% of 2026 oil

Ben Messier, Director of Investor Relations and Business Development, Vitesse Energy: Welcome to Vitesse Energy Fourth Quarter and Full Year 2025 earnings call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. Please note this conference call is being recorded. I will now turn the conference over to the Director of Investor Relations and Business Development at Vitesse, Ben Messier. Thank you. You may begin.

Good morning, everyone, and thanks for joining. Today, we will be discussing our 2025 results and our expectations for 2026. Our 10-K earnings release and acquisition announcement were released yesterday after market close, and an updated investor presentation can be found on the Vitesse website. I’m joined this morning by our Chairman and CEO, Bob Gerrity, our President, Brian Cree, and our CFO, Jimmy Henderson. Before we begin, please be reminded that this call may contain estimates, projections and other forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. Please review our earnings release and risk factors discussed in our filings with the SEC for additional information.

Today’s discussion may reference non-GAAP financial measures. For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-K and earnings release. I will turn the call over to Vitesse’s Chairman and CEO, Bob Gerrity.

Bob Gerrity, Chairman and CEO, Vitesse Energy: Thank you, Ben. Good morning, everyone, and thanks for joining today’s call. In 2025, we continued to return capital to shareholders. We distributed $2.25 per share during the year and have now paid $6.325 per share since our spin-off in January of 2023. We are committed to continuing that track record of returning capital across commodity cycles. We accomplished a great deal in 2025. We continued to convert our undeveloped asset base to producing wells, closed and fully integrated the Lucero acquisition, which is performing as expected. We successfully settled a multi-year lawsuit and maintained a conservative balance sheet, all while navigating a volatile oil market. Last Sunday, we signed a definitive agreement to acquire non-operated assets in the Powder River Basin of Wyoming for $35 million of Vitesse shares, effective January 1, 2026.

These assets consist of over 6,000 net acres and 29 net undeveloped locations, producing an anticipated average of 1,400 net BOE per day in 2026, with EOG and Continental serving as the primary operators. We expect to close this accretive acquisition at the beginning of the 2nd quarter. Last week, our board declared a 1st quarter dividend at an annual rate of $1.75 per share. With the majority of our 2026 oil production hedged at prices that support this distribution and a capital efficient drilling program, we believe this dividend allows us to allocate capital to high return investment opportunities while keeping our balance sheet conservative. For the 1st time, our 2025 dividends were classified as return of capital for tax purposes. We expect the majority of our 2026 dividends to be treated the same.

I will now turn the call over to my partner and company president, Brian Cree, to provide more detail on our operations.

Ben Messier, Director of Investor Relations and Business Development, Vitesse Energy: Good morning, everyone. Thanks, Bob. Production for the quarter averaged 17,653 barrels of oil equivalent per day, bringing our annual production to 17,444 barrels of oil equivalent per day. As of December 31, 2025, we had 22 net wells in our development pipeline, including 6.1 net wells that we’re either drilling or completing, and another 15.9 net locations that have been permitted for development. Since the beginning of 2025, over half of our AFEs received have been three or four mile laterals, leading to our highly capital efficient guidance for 2026. At year-end, total proved reserves were 47.8 million barrels of oil equivalent, up 19% from 2024, driven primarily by the Lucero acquisition. PV-10 was $472.7 million, with 88% proved developed.

The year-over-year reserve value was impacted by a nearly $10 per barrel decline in SEC pricing for oil. We also believe our acreage includes extensive locations not currently classified as proved under SEC guidelines. With the hostilities in the Middle East over the weekend and continuing, we opportunistically layered on hedges. For 2026, we have approximately 64% of our oil production hedged through swaps and collars. Our swaps have a weighted average fixed price of $64.95 per barrel, and our collars have a weighted average floor of $58.64 and a ceiling of $67.50 per barrel. For gas, we had just under half of 2026 natural gas production hedged with attractively priced collars at a weighted average floor of $3.73 and a ceiling of $4.91 per MMBtu.

Both percentages of hedged oil and gas are based on the midpoint of our annual guidance. Thanks for your time. Now I’ll hand the call over to our CFO, Jimmy Henderson.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Good morning, everyone. Thanks, Brian. I want to highlight a few items from our financial results for the fourth quarter and full year of 2025. Please refer to the earnings release in 10-K, which were filed last night for further details. As Brian mentioned, our production for the year was near the top end of our guidance, 17,444 BOE per day, with a 65% oil cut. For the year, the Adjusted EBITDA was $179.3 million, and adjusted net income was $30.4 million, while GAAP net income was $25.3 million. Free cash flow for the year was $48.9 million after development capital expenditures of $121 million. You can see the reconciliation in our press release filed last night.

Cash CapEx and acquisition costs for the quarter were $29.8 million, bringing the full year cash cost to $127.7 million, which was just above our guidance, mainly due to the timing of capital expenditure payments. These costs were funded all within our operating cash flows. At the end of the year, we had a total debt of $124.5 million, giving us net debt to Adjusted EBITDA of 0.69 times. We are also providing guidance for 2026. On a two-stream basis, we anticipate production in the range of 16,000-17,500 BOE per day for the full year of 2026, with an anticipated oil cut of 60%-64%. Cash CapEx for the year is anticipated to be $50 million-$80 million.

This decrease from 2025 reflects both the commodity price-driven reduction in operator activity and their focus on drilling their most economic inventory and the timing of capital payments as we’ve accelerated some payments of certain accrued development costs into 2025. This guidance includes the Powder River Basin acquisition discussed earlier. It excludes the impact of any additional near-term development acquisitions, which we are continually evaluating and pursuing once they meet our return hurdles. With the recent uptick in oil prices, we are hopeful to see even more development on our assets, which will drive our CapEx spending higher. With that, let me now pass the call back to the operator for Q&A.

Conference Call Operator, Moderator: Thank you. At this time, we’ll be conducting a question-and-answer session. If you’d like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you’d like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Chris Baker with Evercore. Your line is now live.

Chris Baker, Analyst, Evercore: Morning. Just hoping, Bob, you could maybe step back and just walk through the updated sort of decision tree. Obviously, the dividend getting reset lower, you know, along with lower capital. Looks like it’s about free cash flow neutral this year, but just maybe frame up how those moves kind of, you know, support the sustainability, and then it sounds like our platform for continued M&A here would be great. Thanks.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Yeah. Thanks, Chris. Thanks for joining the call. When we spun, we started with a $2 dividend, and we were able to comfortably maintain that, you know, through this whole period. Well, let’s step back a second. When Brian and I founded this thing in 2010, most other companies that got formed during that time aren’t here anymore. A large reason for that is they had too much debt. First and foremost in our mind is our balance sheet. We wanna make sure that that is always conservative, you know, which gives us an operating... Which gives us life. That’s the number one goal. It was a board decision to drop the dividend last week simply to preserve that balance sheet.

That’s, you know, that took precedent, Chris. With regards to the capital spend, we spent a lot more capital last year than we had anticipated. Most of that was because our operators, especially Chord Energy, started drilling 3 and 4-mile laterals.

Bob Gerrity, Chairman and CEO, Vitesse Energy: In areas where we had a high concentration of acreage. Very efficient, you know, capital spend. We’re thrilled with the three and four-mile laterals, and we think that trend will increase continuously. That said, we do not have really good visibility of what the capital spend will be from the operators in 2026. We are taking a very conservative look at 2026. You know, the capital, as Ben said, the capital that they’re spending is, it has a terrific rate of return, especially now that the AFE costs have been re-reset. In terms of M&A in that landscape, 25 was the year that we looked at more deals than we had at any time in our history.

We were very disciplined on leaning into, you know, making acquisitions, primarily for shares and also for cash. The landscape out there, Chris, is there is a lot of money chasing deals. There’s some, you know, ABS financing, there’s some private financing that makes the deal landscape very competitive. We don’t know if that’s going to continue. We were able to do this $35 million deal with a very sophisticated seller over the weekend. I tell you, capital discipline, clean balance sheet, return cash to the shareholders, that’s how we, you know, view the world. M&A for 2026, Chris, we’ve got a lot of different deals in the shop.

We would love to do this $35 million deal in scale. Again, discipline.

Chris Baker, Analyst, Evercore: That’s great. Thanks, Bob. You know, to your point, obviously a lot of volatility makes sense to set a pretty wide range in terms of production expectations for the year. Can you just maybe drill down in terms of, you know, the top two or three variables that, you know, are kind of reflected in the high and low end of that range?

Bob Gerrity, Chairman and CEO, Vitesse Energy: Well, personally, Brian, you wanna handle that one?

Ben Messier, Director of Investor Relations and Business Development, Vitesse Energy: Sure. Absolutely. I’d love to. Chris, obviously a big chunk of our guidance is gonna be based off of what we think operators are gonna do. As Bob mentioned, there’s been a lot more development activity in our areas of the field where we own higher working interests, so we look forward to seeing more of that. Look, the rig count is in the upper twenties right now in the Bakken. Even though we have a very high percentage of those rigs running on our acreage, we can’t know exactly what our operators are gonna do, especially given what happened over the weekend. You know, from our perspective, we would certainly welcome as much CapEx as our operators wanna provide.

If you look at 2025, we had a very high CapEx profile. A lot of that had to do with some of the large near-term development acquisitions we made in the fall of 2024 that carried into 2025. If you look at our activity in 2025 from an acquisition standpoint of near-term development, I think we spent $6 million compared to mid-twenties in 2023 and 2024. You know, it’s a situation as Bob mentioned, that there’s a lot of capital competing for those acquisitions. We have remained very disciplined. At this point in time, we just didn’t wanna feel like we should put too much emphasis on how much near-term development acquisitions we’d be able to make in 2026.

That’s, you know, the combination of how much can we acquire from near-term development and how much will our operators continue to accelerate drilling if these prices remain higher is why we have a pretty good range.

Chris Baker, Analyst, Evercore: Great. Thank you both.

Bob Gerrity, Chairman and CEO, Vitesse Energy: Thanks, Chris.

Conference Call Operator, Moderator: Our next question comes from Lloyd Byrne with Jefferies Group. Your line is now live. Lloyd, are you there? Are you muted?

John, Analyst, Jefferies Group: Sorry about that. I was on mute. You have John on for Lloyd. Just congrats on getting the deal across team. Seems like it was at a pretty attractive valuation. Just wanted to get some further details on whether what sort of activity you anticipate for this year on that acreage, and then just sort of like what the what you would anticipate any sort of changes to your maintenance run rate would be from the additional production activity. Thanks.

Bob Gerrity, Chairman and CEO, Vitesse Energy: Hi, John. You’ve got Ben here. Thanks for joining our call. Look, we expect this asset we acquired in the Powder River Basin to have fairly flat production for the next few years with anywhere from $4 million-$6 million of CapEx per year. It’s a great asset. It comes with 29 net locations in the formations that are already proved and have nearby drilling activity. We believe there’s upside to that if, you know, some of the stacked pay in the Powder River Basin, like the Shannon and the Sussex, end up coming to fruition. We think this asset blends really well with the rest of our story of having e-exposure to technology upside down the road. In terms of maintenance CapEx.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: I would say that that hasn’t really changed from the $85 million-$90 million range to call that to hold our Q4 production from 2025 flat. As things get more efficient with time, I’d expect that to go down as we see more of these three and four-mile laterals. You know, for a current outlook, I would say kinda $85 million-$90 million, which is why you see a really capital efficient program this year at the midpoint, with slight production decline from last year. Again, it just depends what production level you’re trying to hold flat.

John, Analyst, Jefferies Group: I think that makes sense. Thanks. Just on the update from the hedge book was pretty positive. Just sort of thoughts around what we’re looking at from here. Is there a goal that you guys would like to hit in terms of a maximum? As you get more capital efficient, does that number change going forward? Lower reinvestment rate, you might not need to cover as much of your base capital. Thanks.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Yeah, look, you know, we’ve reset the dividend last week to a, you know, a level that we’re really happy with in this current commodity price environment. The goal with our hedging program is to protect that and to reduce really volatility in our share price. We have some room in 2026 on our PDP capacity. Again, we can only hedge up to 85% of our PDP at any given time, so we’re being patient with the last remaining piece of that really to see what happens with the Strait and the situation in Iran. We would look to add more hedges, which would really max it out just depending on how that situation evolves.

Then we were fortunate to add hedges on Sunday, right when the market opened, really through the end of 2027 and got good prices on that. So we’ll look to extend into 2027 as well as long as, you know, we’re happy with the price level there.

John, Analyst, Jefferies Group: Great. Thank you.

Bob Gerrity, Chairman and CEO, Vitesse Energy: Yeah, John, this is Bob. It has always been and will always be a fundamental core value of ours. We love to be hedged out as far as we can, and we look at the hedge book pretty much every day, so.

John, Analyst, Jefferies Group: Great. Appreciate the color.

Conference Call Operator, Moderator: Our next question comes from Jeff Grampp with Northland Capital Markets. Your line is now live.

Jeff Grampp, Analyst, Northland Capital Markets: Morning, guys.

Bob Gerrity, Chairman and CEO, Vitesse Energy: Hey, Jeff.

Jeff Grampp, Analyst, Northland Capital Markets: I was curious. Hey, Bob, on the increased proportion of these 4-mile laterals that you guys are seeing, I was curious if you have any data or longevity of production histories from some of those to kind of quantify, I guess, in terms of the better economics, I don’t know, in terms of rate of return or F&D cost basis. Like, do we have that data? I’m curious how material of a benefit are those for your for the economics of your capital program?

Bob Gerrity, Chairman and CEO, Vitesse Energy: I’ll let Brian answer it a little bit more, specifically, but Chord Energy themselves say that the economics that they’re getting in the 3- and 4-mile laterals in the outer part of the field are as good or better than their 2-mile laterals in the core. We’re seeing that. Again, from an IRR standpoint, they’re improved, but from an ROI standpoint, they’re substantially improved. This is gonna be the trend in the Bakken, and you’re gonna see a lot of companies swapping acreage to be able to drill the 3-mile, 4-mile wells. We’ve actually started seeing some U-turns in 2-mile acreage to pick up a 4-mile lateral. This is gonna be a trend, Jeff. Brian, you wanna expand on that?

Ben Messier, Director of Investor Relations and Business Development, Vitesse Energy: Yeah. Good, good comments, Bob. Jeff, what I would say is that, you know, early on, we were cautious when they were drilling the 3 miles. We wanted to make sure that we felt like, you know, the story behind a flatter decline curve was actually gonna be seen. For us, that certainly played out for the 3 mile. The 4-mile development is pretty new in the Bakken. The first wells came on in the beginning of 2025. We have been watching the production from a lot of those wells. We were in some of those very early on and they look really good. We, you know, probably less cautious on the 4 mile than we were on the 3 mile. We think that those 4-mile results so far have looked good.

What I can tell you is that the operators are really starting to dial in the LOE costs. Early on, those LOE costs were really high for both 3 mile and 4 mile. They’ve come down substantially. The economics of the three- and four-mile development that we’re seeing are really strong.

Jeff Grampp, Analyst, Northland Capital Markets: Great to hear. That’s really helpful. Thank you. For my follow-up on the CapEx side of things, I just wanted to clarify on the guide, do you guys have kind of a rough split of organic kinda D&C versus near-term acquisition assumptions? I thought maybe I heard you guys in the prepared remarks mention that there wasn’t any kinda near-term acquisition assumptions in the CapEx guide. I just wanna clarify kinda what’s base and what’s upside.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Yeah, Jeff, this is Jimmy. That’s correct. We have very minimal near-term development CapEx built into the budget. I think Brian described it pretty well. We just. It’s been so competitive, and we’re very disciplined about the rate of returns that we target. We hope to see that market return to something that makes sense for us, we’ll add to it as we go. Right where we sit coming into the year, we didn’t want to give guidance, assuming that we’d be able to return to what we’ve seen in the past in that market. We’re a very active participant. Our team is very well-oiled machine looking at those transactions. We have weekly meetings to walk through everything that’s available.

We’re hopeful, and we think that we will have near-term development activity as we go through the year. We just didn’t wanna start off with that in our guidance.

Jeff Grampp, Analyst, Northland Capital Markets: Understood. That’s really helpful. All right, thank you guys for the time.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Thanks.

Conference Call Operator, Moderator: Our next question comes from Noel Parks with Tuohy Brothers. Your line is now live.

Noel Parks, Analyst, Tuohy Brothers: Hi, good morning.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Hey, Noel.

Noel Parks, Analyst, Tuohy Brothers: Hey. I had a few questions about the transaction in the Powder River Basin. I was wondering if you could just sort of talk a little bit about the state of play out there. You mentioned in the release that EOG and Continental are among the operators. I think of EOG having, at times, placed the Powder kind of at the top of the heap of its plays and then, you know, not talked about it for a while. Just wonder what you’re seeing out there as far as, you know, ongoing development.

Ben Messier, Director of Investor Relations and Business Development, Vitesse Energy: Sure. This is Brian. I’ll take the first crack at that. You know, again, I’m gonna circle back to, you know, our review of acquisitions and near-term development opportunities. I think what I would tell you is that every week we’re probably looking at an AFE opportunity or some type of development opportunity in the Powder River Basin. Over the last couple years, we haven’t added to that Powder River Basin position because it’s been challenging. This is a PDP acquisition that has some great potential upside. There are really good operators like you just mentioned, EOG, Continental, Devon, others that are absolutely working very hard to break the code.

EOG has, you know, interestingly enough to us, has probably spent more capital in the Powder than they have in the Bakken, where we think they still have some great development opportunities. This was a great chance for us to add to our exposure to the Powder River Basin with a good PDP profile, pretty flat. Ben mentioned that he thinks that, you know, with the continued development that we’ve got right now built into it, which again, I think is conservative, that we should be able to remain pretty flat on the production basis there. What’s exciting to me is that all those undeveloped locations. If that Niobrara and that Mowry formation, kind of technological breakthrough happens, we’re gonna have some great locations up there.

Noel Parks, Analyst, Tuohy Brothers: Gotcha. Thanks. Speaking of the technological learning curve, my impression is that the play, I guess it depends on area to a degree, but featured a lot of customization, I believe, on the completion side, as well as to work sort of which formations work where, I think of, I guess, Niobrara, Mowry, and then sort of Turner as being pretty variable. Do you I mean, maybe in terms of inning towards that, sort of cracking the code, do you sort of think what the particular inning that the industry is in with the Powder these days?

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Yeah, Noel, this is Bob. Very good question. We valued this acquisition purely from a PDP standpoint.

Noel Parks, Analyst, Tuohy Brothers: Wow.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: We put zero value on the undeveloped, even though we know that there is a lot of value there. You’re absolutely right. The Powder is a customization basin. Just you can’t do the same thing on every well. That’s why, we, you know, leaned in strongly with Continental and EOG. As Brian said, EOG spent a ton of money up here. The wells that they’ve drilled that we’re owners in now have done extremely well. You can’t value the undeveloped like you can with the Bakken, which is pretty much a blanket formation. It’s a very good question. We didn’t value the undeveloped.

Noel Parks, Analyst, Tuohy Brothers: Okay, great. I guess just my last one. Well, maybe I’ll talk a little bit about the transaction. It does seem notable that it is an all-stock transaction. I just wondered, of those you see, potential transactions you’re seeing these days, are they? Are you seeing sellers increasingly willing to accept stock, or is it more of sort of a traditional, they have an interest they wanna cash out and that’s their motivation?

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Hey, Noel, this is Jimmy. you know, we see both, clearly. It just depends on the seller. In this case, very sophisticated seller that saw value in our stock and become a shareholder for the foreseeable future. They saw upside. Now, you know, obviously, we negotiated a lot this transaction prior to the events over the weekend. We, you know, we do have sellers like that that want to ride the upside of the shares they’re getting and have exposure and aren’t ready to cash out. There’s always others that are more cash focused and wanna get their returns, meet their hurdles, et cetera. We look at both. We love using stock in these kind of transactions ’cause it’s a very efficient use of our equity.

We’re not dedicated to only that style of transaction. We look at everything, frankly.

Noel Parks, Analyst, Tuohy Brothers: Great. Thanks a lot.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Thanks, Noel.

Conference Call Operator, Moderator: Just a reminder, if you’d like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. There are no further questions at this time. At this point, I’d like to turn the call back over to Bob Gerrity for closing comments.

Jimmy Henderson, Chief Financial Officer, Vitesse Energy: Thanks everybody for joining. Ben Messier is available to answer any other questions, and the management team would be happy to talk to anybody. Thank you very much for your support.

Conference Call Operator, Moderator: This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.