Tulsa’s Vital Energy says it not only had record total and oil production in the fourth quarter of 2023 and for the entire year, but it intends to invest nearly $850 million to increase its 2024 oil production.
The Fourth quarter net income totaled $281.4 million and adjusted net income was $76.1 million with $233.7 million in cash flows from operating activities. It compared to the third quarter financial report that showed net income of $4.9 million, Adjusted Net Income1 of $95.8 million and cash flows from operating activities of $214.2 million.
The fourth quarter consolidated EBITDAX was $304.2 million. Vital also showed it had increased oil production in the fourth quarter of 4% or 53.1 thousand barrels a day. Its total production went up 7% or 113.7 thousand barrels of oil equivalent per day.
Its oil production for 2023 increased 17% for total production and 22% for oil production. And it appears the company could see even greater production, based on its intent to spend more on exploration. It plans to invest $750 million-$850 million
Vital Energy plans to invest $750 – $850 million in 2024, excluding non-budgeted acquisitions and leasehold expenditures, operating four drilling rigs throughout the year and averaging 1.7 completions crews. Capital investments are expected to peak in the first quarter due to higher working interest on wells being TIL’d during the quarter.
For all of 2023, Vital had net income of $695.1 million and adjusted net income of $325 million and cash flows of $813 million from its operating activities.
“Operationally, we exceeded expectations and delivered Company-record production for lower-than-expected capital. Continued capital discipline maximized our cash flows from operating activities and Adjusted Free Cash Flow and allowed us to strengthen our balance sheet,” stated Jason Pigott, President and Chief Executive Officer.
He said the company’s strategy to build long-term value is clear and proven and put the company in a stronger position.
“We now have the scale and inventory to sustainably maximize cash flows from operating activities and generate Adjusted Free Cash Flow. In 2024, we are focused on adding inventory through targeted leasing and bolt-on acquisitions and delineating additional formations in and around our existing positions.”
Fourth-Quarter 2023 Financial and Operations Summary
Financial Results. The Company reported net income of $281.4 million, or $9.44 per diluted share, and Adjusted Net Income of $76.1 million, or $2.55 per adjusted diluted share. Cash flows from operating activities were $233.7 million and Consolidated EBITDAX was $304.2 million.
Production. Consistent with preliminary volumes disclosed in January, Vital Energy’s fourth quarter total and oil production set Company records, averaging 113,747 BOE/d and 53,070 BO/d, respectively. Production volumes benefited from outperformance of new wells across the Company’s leasehold.
Capital Investments. Total capital investments, excluding non-budgeted acquisitions and leasehold expenditures, were $184 million, consistent with preliminary amounts disclosed in January. Vital Energy turned-in-line (“TIL”) 15 wells during fourth-quarter 2023. Investments included $143 million for drilling and completions, $27 million in infrastructure investments (including Vital Midstream Services), $8 million in other capitalized costs and $6 million in land, exploration and data related costs.
Operating Expenses. Lease operating expenses (“LOE”) during the period were $8.33 per BOE, in line with expectations.
General and Administrative Expenses. General and administrative (“G&A”) expenses, excluding long-term incentive plan (“LTIP”) and transaction expenses, for fourth-quarter 2023 were $2.12 per BOE. Cash LTIP expenses, reflecting the price decline of Vital Energy’s common stock during the fourth quarter of 2023, were $(0.09) per BOE. Non-cash LTIP expenses were lower than expectations at $0.22 per BOE.
Liquidity. At December 31, 2023, the Company had $135 million drawn on its $1.25 billion senior secured credit facility and cash and cash equivalents of $14 million.
2024 Outlook
Capital Investments. The Company’s 2024 development plan is designed to maximize Adjusted Free Cash Flow, enhance capital efficiency and organically add high-return locations. Vital Energy plans to invest $750 – $850 million in 2024, excluding non-budgeted acquisitions and leasehold expenditures, operating four drilling rigs throughout the year and averaging 1.7 completions crews. Capital investments are expected to peak in the first quarter due to higher working interest on wells being TIL’d during the quarter.
Production. The Company expects total production of 116.5 – 121.5 MBOE/d and oil production of 55.0 – 59.0 MBO/d for full-year 2024.
Oil-Weighted Inventory