On Tuesday, Vitesse Energy (NYSE:VTS) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Vitesse Energy reported a 7% year-over-year increase in production to 15,962 barrels of oil equivalent per day, with oil contributing 89% of total revenue.
The company closed a Powder River Basin acquisition in early April, expected to add 1,400 barrels per day, funded with equity to maintain balance sheet flexibility.
For Q1 2026, adjusted EBITDA was $33.4 million, with an adjusted net loss of $300,000 due to a $48.2 million unrealized hedge loss.
Vitesse Energy declared a second-quarter cash dividend at an annualized rate of $1.75 per share, with 73% of 2026 oil production hedged at favorable prices.
Management reiterated a focus on disciplined capital allocation, returning capital to shareholders, and maintaining a conservative balance sheet, with no change to previously issued guidance.
Full Transcript
OPERATOR
Greetings welcome to the Vitesse Energy first quarter 2026 earnings call. this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to the Director Industry Relations and Business Development at Vitesse, Ben Mesier. Thank you. You may begin.
Ben Mesier (Director Industry Relations and Business Development)
Good morning everyone and thanks for joining. Today we will be discussing our first quarter 2026 results. Our 10Q and earnings release 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 CEO and President Jamie Bernard, our CFO Jimi Henderson and Brian Cree, our former President who is with us in a Senior Advisor capacity. 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. In addition, today's discussion may reference non GAAP financial measures for reconciliation of historical non GAAP financial measures to the most directly GAAP measure. Please reference our 10Q and earnings release. Now I will turn the call over to Vitessea's CEO and President Jamie Benard.
Jamie Bernard (CEO and President)
Thank you Ben Good morning everyone and thank you for joining today's call. It's a privilege to begin my tenure as CEO and President of the Vitesse as of last Friday. I want to thank the group for their hard work getting us to where we are today and I look forward to building on the strong foundation already in place. I want to thank Brian Cree in particular for his commitment to ensuring a seamless handoff and for his continued partnership as a Senior advisor. Through this transition. Vitesse's primary objective of returning capital to stockholders has not changed. Our board reaffirmed that commitment last week in declaring our second quarter cash dividend at an annualized rate of $1.75 per share. Our fundamental strategy remains consistent disciplined capital allocation towards high rate of return opportunities. This includes organic development of our long duration asset base, purchases of near term development opportunities and accretive acquisitions. We will continue to maintain a conservative balance sheet and hedge at prices that support our dividend. The Powder River Basin acquisition that closed in early April is a good example of that strategy in action. It is accretive in all key financial metrics and funded with equity to preserve balance sheet flexibility. You should expect more of the same discipline going forward. I'll now turn the call over to Brian Cree to provide more detail on our results and operations.
Brian Cree (Senior Advisor, Former President)
Good morning everyone and thanks Jamie. I've been fortunate to serve as President of Vitesse over the past 13 years. We've accomplished a great deal together. I'm most proud of the strength of our team and the culture we've built. Jamie, you're in good hands and I look forward to working alongside you through this transition. Production for the first quarter averaged 15,962 barrels of oil equivalent per day, up 7% year over year and above our internal expectations. Oil production contributed 89% of total oil and natural gas revenue in the quarter. These results do not yet include any contribution from the Powder River Basin acquisition, which closed in early April. This acquisition is anticipated to add an average of 1,400 net barrels of oil equivalent per day over the remainder of 2026 and was closed without issue for 1.9 million shares of Vitesse common stock. Our underlying asset continues to be developed at a consistent and robust pace. As of March 31, 2026, we had 19.9 net wells in our development pipeline, including 6.2 net wells that were either drilling or completing, and another 13.7 net locations that had been permitted for development. As we previously discussed, 3 and 4 mile development continues to increase across the Williston Basin for Vitessee 72% of our year to date AFES have been for these extended laterals and drilling activity continues to progress further into areas where we hold concentrated acreage positions. As of last week, 67% of the 28 rigs drilling in the Williston were on Vitesse acreage. With the continued hostilities in the Middle east, we have opportunistically layered on additional oil hedges through the end of 2028 at levels supportive to our dividend. For the remainder of 2026, we have approximately 73% of our oil production hedged through swaps and collars with a weighted average floor of $64.68 and ceiling of $67.20 per barrel. We have approximately 50% of our 2026 natural gas production hedged through collars with a weighted average floor of $3.73 and ceiling of $4.91 per MMBtu. Both percentages of hedged oil and natural gas volumes are based on the midpoint of our annual guidance. Thank you for your time. Now I'll hand the call over to Our cfo, Jimmy Henderson.
Jimmy Henderson
Good morning everyone. Before I get into the first quarter performance, I want to welcome Jamie to the team. I'm excited about the company's future and look forward to working together. With that, I want to highlight a few items from our financial results for the first quarter of 2026. Please refer to our earnings release and 10Q which were filed last night for any further details. As Brian mentioned, production for the quarter was right at 16,000 boe per day with the 63% oil cut for the quarter, adjusted EBITDA was 33.4 million and we had an adjusted net loss of 300,000 GAAP. Net loss was 42.3 million driven by a 48.2 million unrealized hedge loss. As a reminder, this loss is due to forward prices as of March 31 and is a non cash item. These hedges allow us to lock in the underlying returns as our asset is developed or properties are acquired, which in turn support our dividend and our balance sheet. Free cash flow for the quarter was 12 million after 18.7 million of development capital expenditures net of divestitures. With the Powder River Basin acquisition contributing for the remainder of 2026 and our hedge book now extending through 2028, we remain very well positioned to support our $1.75 annualized dividend. As for the balance sheet, we ended the quarter with total debt of $144.5 million, putting net debt to our trailing twelve month adjusted EBITDA at just 0.82 times. In April, we amended our revolving credit facility expanding availability by 25 million. The elected commitment amount and borrowing base now sit at 275 million with total liquidity before internal cash flows of roughly 130 million. Our previously issued guidance has not changed and incorporates the Powder River Basin acquisition as previously mentioned. We are optimistic that the development pace could increase in the current environment, but at this time, our operators continue to be diligent as we've seen through the industry as a whole. In closing, I want to recognize the team's execution this quarter. Leadership transitions are important moments for any organization, but what ensures continuity is the strength of the people across the business. We are entering this next chapter from a position of strength, fully aligned on strategy and ready to execute. With that, let me now pass the call back to the operator for questions.
OPERATOR
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press * one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press * two. If you would like to remove your questions from the queue for participants using speaker equipment, it may be necessary to pick up your handsets before pressing the * keys. One moment please, while we poll for questions. The first question comes from the line of Jeff Cramp with Nordland Capital Markets. Please go ahead.
Jeff Cramp
Morning, everyone. Hey, Jeff. Hey, Jamie. Curious for you with this being your first earnings call and welcome and congrats. If you could just lay out, you know, at a high level, you know, kind of what's your vision for Vitessa over the coming years and maybe what attracted you to the company and what you perhaps see as the main opportunities you're planning on spending time on as you kind of get up to speed and hit the ground running here with the company.
Jamie Bernard (CEO and President)
Thanks. Sure. Thanks for the question. Well, what drew me to Vitess is truly its alignment. Alignment between my experience, my philosophy and the company's strategy. I've spent most of my career across both operated and non operated models and most recently with a a very heavy focus in the Williston Basin. So I understand where value is created and where it's lost. That shaped a very disciplined approach to capital allocation. And you know, Vitess already embodies that discipline. Strong returns, conservative balance sheet, clear commitment to returning capital to stockholders. That's a model I believe in. So this isn't about coming in to change direction. It's about leaning into a strategy that works and helping scale it very thoughtfully.
Jeff Cramp
Great, I appreciate that. And for my follow up, this is the market share, if you will. Your percentage of rigs in the Bakken seems to be maintained at a super high clip. I think you guys had typically talked about being in kind of that 30 to 50% range. And I think this is the second quarter above 60%. Is this just kind of at 11 flow? something more fundamental changing in terms of operators, focusing more on the test acreage? Just wondering if there's anything to read there.
Brian Cree (Senior Advisor, Former President)
Yeah, Jeff, this is Brian. I'll try to handle that one. Look, as we've talked about in the past, a lot of the development that's going on in the Williston right now is really focusing on the 3 mile and 4 mile development. And where those development areas seem to be trending toward is just areas of the field where Vitess has a larger acreage position. So I think that's what we're seeing. Obviously it can always ebb and flow. It always will. This is a very high level for us at this point in time. But it is consistent with kind of what we've been seeing, which is that 3 and 4 mile development being in areas where Fates has a lot of acreage.
Jeff Cramp
Understood. I pushed the details, Brian. I'll turn it back.
OPERATOR
Thank you. Next question comes on the line of Chris Baker with Evercore isi, please go ahead.
Chris Baker
Hey, good morning guys. So, you know, I just want to start off maybe, you know, on a similar note just in terms of the, you know, significant exposure you all have to rigs in the Bakken. Could you maybe just talk about what you guys have seen over the past quarter or two in terms of afes and then you kind of touched on this earlier in terms of with higher prices at some point likely to see an acceleration in activity. Just kind of curious as you guys think about service costs or the potential for service cost inflation in the back half of the year, how you think that could maybe come together and what's sort of a reasonable outlook in terms of activity and what that could mean for service costs.
Brian Cree (Senior Advisor, Former President)
Chris, this is Brian. I'll start with that. As I mentioned over the last few quarters a lot of our development activity has been focused on the extended laterals. And what we have seen over that last probably six month period is that the operators are becoming much better just as they have all along at bringing drilling costs down. So the three and four mile CapEx that we are seeing has continued to decline especially in the last three months period of time. The operators are just getting really, really good and efficient at drilling 3 and 4 mile laterals. Now what that means for costs on a go forward basis, obviously with oil prices where they are, it's something we're going to continue to watch and it's going to really be a combination of what those operators do. From a rig count standpoint, we have not really seen a lot of increased activity at this point in time. Our operators seem to be very disciplined about their approach to adding rigs. Clearly in the field right now there is a higher level of activity on workover rigs, maybe some increased frac crews. So it does appear that our operators are looking to try to bring back production as quickly as they can. Wells that may have been offline, they're trying to get them back online. But that being said, we have not seen an increase in the amount of rigs drilling. We've heard some comments that maybe there's a couple more rigs to be added in the next quarter, but we just haven't seen that big increase. And so certainly there's Going to be some costs that go up as a result of just what's been going on, fuel costs, whatnot. But in terms of where the larger costs of drilling and completion will occur is if the activity levels go up substantially.
Chris Baker
That's great, thanks. The follow up, I just, you know, obviously the dividend is pretty central for you all. I think, you know, the team obviously has evolved but you know, did a good job last quarter of, I guess, resetting the outlook and really kind of reflecting, I think, what was a much different macro outlook at the start of the year. Since then we've seen prices come up quite a bit. Again, to think that we're talking about incremental activity is certainly a big shift in the outlook. Just curious as you guys think about the hedge program, opportunities for further sort of accretive M and A, like the PRV deal and you know, and the dividend just to kind of maybe wrap it all into, I think some interrelated, you know, interrelated topic, you know, does the, does the change in the macro outlook influence how you think about hedging going forward? You know, obviously provides a good amount of downside protection, but, you know, much different outlook in terms of, at least from our perspective, the opportunity to see a higher for longer type environment start to establish itself.
Jimmy Henderson
Hi Chris, this is Jimmy. I'll take a stab at that. There's a handful of questions embedded in that that are all very germane to our strategy and what we think about on a daily basis. I think starting off with a core tenet of ours is the dividend and we believe it's set at a level now that we're very comfortable with. We don't want to be super reactive to short term volatility and near term commodity prices. So we want to be very careful about setting that level. And we've always maintained that as a fixed dividend that we don't want to be moving up and down. So we'll continue to have that discussion quarter by quarter with our board, obviously with our hedging position and our activity level coming into this year. It's set at a level that's supported by where we're at on both of those things. So we'll continue to evaluate it as we go through the year and into next year. Definitely it all really comes back to sort of how you laid out capital allocation. We want to continue to invest in the company and do creative transactions that create value for our shareholders for the long term. So we want to be able to have enough dry powder to invest in Acquisitions continue to fund drilling on our acreage is a very high return proposition. So we want to continue to do that. So really it's the same as it's always been. The strategy of capital allocation is what we're all about and we want to be able to, to do all those things in a measured way.
Chris Baker
Great, thanks. So it sounds like if I'm hearing correctly, sort of no change to how you're thinking about hedging from here.
Jimmy Henderson
Well, we've been very opportunistic about putting hedges on, as you can see in our press release last night. We've just very methodically added hedges ever since conflict in Iran started. Try to maintain enough dry powder to keep adding to our position in a way that's supportive of our dividend and gives us ability to add more as we go. It's very opportunistic but very methodical at the same time.
Chris Baker
Great, thank you.
OPERATOR
Thank you. Next question comes from the line of PO frat with Alliance Global Partners. Please go ahead.
Poe
Yeah, good morning. Hey, Jamie, I'm not that familiar with your background, but could you highlight sort of any notable, you know, experience that you have on the acquisition front and then also highlight where you have experience outside the Bakken as far as maybe that, you know, there might be some future, you know, direction in that, in that way. And then if you could just sort of highlight, you know, you talked pretty broadly about adding value, but can you be a little more specific on which prong of the strategy you think you can make the most impact on near term?
Jamie Bernard (CEO and President)
Sure. Happy to address it. So on the MA front, going back over the past 10, 15 years, I'd say it's north of $3 billion between the Permian Basin, the Marcellus, the Eagle Ford, both in the operated and the non operated positions is where I've been focused. And then of late the last two years I've been leading an operated organization primarily in the Williston Basin as well as the Permian Basin. So as far as avenues to create value, to be more specific, like we said, this isn't a change in direction. This is methodically adding value consistent with the existing strategy and with the experience in the Williston Basin and other basins as well, you know, we're going to continue to look at all opportunities and, you know, start to hone in on what fits us best. And it's more about quality as opposed to quantity as far as opportunities come.
Poe
And then reading between the lines, you know, so if AFVs, you know, continued at the same pace and you don't See, a pickup operators are, other operators are sort of, you know, taking more of a wait and see attitude. How well positioned is the organization right now to move into the operated arena? You know, how many locations do you have ready if you were to make that pivot?
Jamie Bernard (CEO and President)
We're in the middle of a comprehensive planning process for the reasons you just mentioned, you know, with permitting. And it's four locations right now that we're contemplating. That said, we're not going to mobilize anything until we've done a very concentrate, you know, the size of our inventory. We're going to measure twice and cut once. But as always, you know, it comes down to capital discipline and how those opportunities compete against other activity throughout the portfolio. So it's nice to have that feather in our cap, but it's still going to be competing against other activity.
Brian Cree (Senior Advisor, Former President)
Yeah, PO, this is Brian. Let me just add to that. Obviously one of the great things about the Lucero acquisition is it gave us that operated asset, it gave us that flexibility to allocate capital to either our operated properties or our non operated properties. And our guidance for this year, the 50 to 80 million dollars of CapEx did not assume any operated development. So with oil prices in the 60s at the time that we set that budget and that guidance, it didn't really make sense to us to spend our capital on those operator development opportunities and we wanted to hold those in our inventory. Obviously now with the change in prices, it's something that, as Jamie said, we are planning for, we are looking at, we are preparing to be able to take advantage of the higher prices. But again, we are going to remain disciplined. We are going to look at everything that goes on over the next few months and analyze what other opportunities come before us. It is great to have, it's great to have that asset available for us to develop at the right time. You know, the right time can be when we don't have as much capex coming in in other areas or it can be when the rates of return are really high. And clearly the rates of return on these properties are very strong. But we'll continue to evaluate what other operators bring our way and what we see in afes and then make that decision as the year goes.
Poe
Great. It sounds like Brian though, it's more of a 27 event from an impact to, you know, production profile.
Brian Cree (Senior Advisor, Former President)
Yeah, I think Poe, if we drill these wells it would likely be sometime in the fall. So by the time you drill and complete those to get those online, it's much more impactful to 2027 than it would be to 2026.
Poe
Great, that's helpful. And then if you could just address looking outside the basin, you know, obviously the Powder river acquisition is, you know, is an example of that. But if you could look at more broadly, where else are you looking? I heard that Jamie mentioned the Marcellus, and my sense is you wouldn't go into the Marcellus, but maybe, correct me if I'm wrong there.
Brian Cree (Senior Advisor, Former President)
No, I think, you know, I think you have a pretty good understanding of that. We have, we have looked at a lot more gas assets over the last year, year and a half than we had previously. But clearly for us, you know, there's a, there's a great pipeline of acquisition opportunities. What I think is most prevalent for us at this point in time is that several of the opportunities we're looking at are right in our core asset area. And that's a little different. You know, we've always looked at all kinds of different basins, whether it be oil or gas. But right now we're seeing a lot of good opportunities, both in the Williston and the dj where we have, you know, the majority of our, of our production and assets and, and a couple in the Powder also, where we just completed one. So it's kind of cool that we have the opportunity to look at things that are right in our backyard. But we will continue to look at other basins and I think Jamie's experience coming in in those other basins is something that we'll continue to try to leverage on.
Poe
Great. Very helpful. Thanks.
OPERATOR
Thank you. Next question comes from the line of Noel Parks with Tui Brothers. Please go ahead.
Noel Parks
Hi, good morning. I was just wondering if you mentioned You're seeing a higher level activity in workover rigs and. Is there anything available that you consider where the. I'm thinking in the Willston, for example, where the main value would really consist mostly of refracts. I was just wondering if anybody has put things on the market like that and if so, how you might approach valuing something like that.
Brian Cree (Senior Advisor, Former President)
Well, clearly Refracs is something that we have always been high on and believe will be a needle mover in the Williston Basin over time. It's interesting, you know, when prices are lower like they were in the 60s, you don't have as many companies completing wells. And right now a lot of the refrac opportunities have been kind of in connection with additional development to where, you know, you go into a DSU that's got one or two wells that were drilled back in 2014. And 15. And now there's, you know, four, five, six additional wells being drilled. A lot of times what we've seen as the operators are refracking those wells, I think that will continue. We have not seen an uptick in refracs at this point in time like we have seen in the workover category. I think I heard the NDIC say the other day that they've seen about a 20% increase in workover rigs going on. I just think that that is the quickest way to get production online take advantage of the current prices. And I think, look, the industry is just trying to figure out what's going to happen in Iran and where those prices are going to be in three to six months. And again, the workover activity is the quickest way, along with just getting fracs done on any wells that have been drilled that were kind of ducks. And so that's where we've seen the enhanced activity level so far.
Noel Parks
Great, thanks. And I apologize if you've touched on this already, but I wonder if you could, for the transactions you see or reviewed or pursued, I just wonder if you could kind of maybe characterize what the types of sellers are that you see coming to the market. Sometimes, of course, higher prices does get a few people And I guess I'm just wondering sort of maybe what sort of the pace and quality of deals is that you're reviewing these days?
Ben Mesier (Director Industry Relations and Business Development)
Hey Noel, it's Ben. It's always a mix. I would say right now about 80% of the transactions we're evaluating are private equity backed portfolio companies that frankly are trying to monetize in the elevated price environment. Which is why, you know, making acquisitions goes hand in hand with hedging to ensure that we can lock in whatever returns we underwrite. There are one or two larger public companies right now that are bringing assets to market that are in our wheelhouse. So I think that impacts kind of the cash stock mix too. I'd say some PE back sellers are generally more open to taking shares, whereas a big public company probably wants cash. So we evaluate all these things when making acquisitions. I mean, the goal remains the same regardless of the seller. It's got to be accretive. It needs to keep our balance sheet conservative and it needs to be an attractive asset.
Noel Parks
Great. And just to follow up on that, can you kind of give an idea of roughly what vintage of PE companies you're seeing selling? You know, kind of like roughly when they were started or raised their funds?
Ben Mesier (Director Industry Relations and Business Development)
A lot of the assets we're Evaluating right now. We also evaluated last year in different forms. So I think they're PE backed assets that are reaching the end of their fund life for the most part and are happy to see the higher prices to try to, you know, reach their internal hurdle rates that they need.
Noel Parks
Interesting. Thanks a lot.
OPERATOR
Thank you. Next question comes from the line of Jeff Grant with Nordrant Capital Markets. Please go ahead.
Jeff Grant
Thanks guys. Just had one follow up, seeing some commentary regarding some pretty interesting pricing dynamics going on in a lot of basins. Bakken specifically. Just kind of curious what you guys are seeing with respect to oil dips and it's perhaps hard to forecast much beyond maybe a quarter or two, but just wondering how that might influence realizations for Q2 and in the near term.
Jimmy Henderson
Hey Jeff, this is Jimmy. I'll take a shot at that. Yeah, we're definitely seeing some cash prices that are better than what? Better than wti frankly. Pretty evident when you look at the index that's pegged on the Dakota Access pipelines. The DAPL dip has been positive here in the spring months of the year and early summer. So we do expect to see much improvement in our differentials that we realize for physical oil cells for at least the next few months. And obviously that's a result of sort of changing inflows of light sweet oil around the world is a lot of Canadian oil is being called to the west and being exported that's reduced the flows down to the midwest of the U.S. and so there's been a big call on oil coming out of the Bakken to meet the needs of refineries in the Midwest and even on down to the goal. So yeah, at least for the short medium term here we pretty optimistic about what differentials we'll be experiencing. And great thing about that is that's unhedged so it's incremental to the realized pricing that we're getting after a hedging effect. So looks like a good setup for pretty interesting second and third quarter here.
Jeff Grant
Great, I appreciate those details Jimmy. I'll turn back.
OPERATOR
Thank you ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Jamie Benard for closing comments.
Jamie Bernard (CEO and President)
Thank you all for your time today. As mentioned, Vitessa's priorities remain returning capital to stockholders, discipline capital allocation and pursuing accretive growth opportunities and maintaining a conservative balance sheet. So should you have any additional questions, please feel free to contact Ben Messier directly. And we look forward to speaking with you at one of our investor events. Or on next quarter's earnings call.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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