Vitesse Energy (NYSE:VTS) said its second-quarter results reflected higher production following its early-April Powder River Basin acquisition, while management reiterated that its strategy remains centered on a free-cash-flow-funded dividend, return-focused investments and conservative leverage.
Chief Executive Officer and President Jamie Benard addressed investor questions surrounding the company’s dividend resizing and leadership transition earlier this year, saying the company’s underlying strategy has not changed.
Vitesse’s board last week declared a third-quarter cash dividend at an annualized rate of $1.75 per share. Benard said the declaration marked the company’s 15th consecutive quarterly dividend since its January 2023 spin-off. Cumulative dividends declared have totaled $7.6375 per share, he said.
Second-Quarter Production and Financial Results
Chief Financial Officer Jimmy Henderson said second-quarter production averaged 17,354 barrels of oil equivalent per day, up 9% sequentially from the first quarter. Oil represented 60% of production and contributed 95% of total revenue during the quarter.
The results included contributions from the Powder River Basin acquisition completed in early April, Henderson said.
- Adjusted EBITDA totaled $40.2 million.
- Adjusted net income was $1.8 million.
- GAAP net income was $33.1 million, including $40.2 million in unrealized hedging gains.
- Free cash flow was $16.3 million after $21.1 million of development capital expenditures.
Henderson said the unrealized hedging gain was a non-cash item tied to forward oil prices as of June 30. He added that Vitesse’s cumulative realized hedge loss since its spin-off has been less than 1% of revenue over that period.
Management described hedging as a means of protecting the company’s cash flows and dividend through commodity-price downturns. The company’s hedge book now extends into 2029.
Guidance Narrowed and Capital Spending Range Updated
Vitesse narrowed its 2026 production outlook to a range of 16,300 to 17,200 BOE per day. The company also tightened its oil mix outlook to 60% to 62% of production.
The company raised the bottom end of its total cash capital expenditure guidance, which now calls for $65 million to $80 million in spending for the full year.
For the remainder of 2026, Vitesse has approximately 70% of anticipated oil production hedged through swaps and collars, with a weighted average floor price of $63.57 per barrel and a ceiling of $66.53 per barrel. About half of expected natural gas output is hedged through collars with a weighted average floor of $3.73 per MMBtu and a ceiling of $4.90 per MMBtu, according to Henderson.
The company ended the quarter with $158.5 million of total debt and net debt to adjusted EBITDA of just under one times on a last-quarter annualized basis. That is in line with its leverage target of less than one times, Henderson said. Total liquidity before internal cash flows was approximately $117 million.
Development Pipeline and Longer Laterals
Benard said Vitesse had 19.4 net wells in its development pipeline as of June 30, including 6.4 net wells being drilled or completed and 13 net permitted locations.
The company evaluates each well proposal as a standalone investment through its Luminis data platform, underwriting opportunities using strip prices. Since 2023, 93% of wells proposed on Vitesse acreage have met the company’s return requirements, according to Benard.
Management also highlighted the increasing use of three- and four-mile laterals in the Williston Basin. Year to date, wells with laterals of three miles or more represented 69% of Vitesse’s authorizations for expenditure, producing an average lateral length of nearly 15,000 feet, up 38% from 2022.
Benard said these longer laterals cost approximately 25% less per foot than traditional two-mile laterals while offering higher estimated ultimate recoveries and slower declines. Those factors can lower maintenance capital needs and leave more cash flow available for dividends, he said.
Acquisition Activity Remains Selective
During the question-and-answer session, Director of Investor Relations and Business Development Ben Messier said the market for near-term development acquisitions has become more competitive over the past one to two years. Vitesse has maintained its return thresholds rather than lowering them to pursue more deals, he said.
Messier said the market for larger producing-property acquisitions in Vitesse’s core operating areas has remained robust. The company focuses on assets in the Williston, Powder River and DJ basins, where it has accumulated data through its Luminis platform.
He said larger producing-property packages can provide cash flow immediately and have generally been available at free-cash-flow yields in the teens to low 20% range for the next several years.
Vitesse has completed 175 acquisitions since 2013, representing about $800 million in aggregate acquisition spending, according to Benard. The company owns fractional interests in 7,868 productive wells operated by more than 30 operators across the Williston, Powder River and DJ basins.
Regarding the recently acquired Powder River assets, Henderson said the package is primarily operated by EOG and Continental. Management said the acquisition was performing as expected in its first several months, with the company beginning to receive and evaluate drilling proposals associated with the assets.
About Vitesse Energy (NYSE:VTS)
Vitesse Energy (NYSE: VTS) is an independent exploration and production company primarily focused on onshore oil and gas assets in the United States. Headquartered in Calgary, Alberta, the company identifies, acquires and develops low-decline, shallow to intermediate depth vertical wells, targeting predictable production profiles and stable cash flows. Vitesse leverages a lean operational model to optimize well performance and reduce unit operating costs across its asset base.
The company’s core operations are concentrated in the Arkoma Basin of eastern Oklahoma and the Ark-La-Tex region, where it holds acreage positions in multiple formations.
