Vital Energy, Inc. reported second-quarter 2025 financial and operating results showing the company suffered an even larger net loss than it did in the first quarter. But the firm still recorded a significant cash flow from operating activites.
The Tulsa-based firm had a $582.6 million net loss and adjusted net income of $76.1 million along with cash flow from operating activities of $252.3 million. It had consolidated EBITDAX of $338.1 million and adjusted free cash flow of $36.1 million.
It compared to Vital’s first quarter net loss of $18.8 million, adjusted net income of $89.5 million and cash flow of $351.0 million from operating activities.
“Our second quarter results demonstrate our ongoing efforts to lower costs and optimize our assets, with the ultimate goal of enhancing returns,” stated Jason Pigott, President and CEO.
“”We have made substantial progress to sustainably reduce operating, personnel and corporate costs as we streamline our business and strengthen our balance sheet. Additionally, we continue to lead the industry in the application of optimized well designs, completing our first J-Hook wells and commencing drilling on a section to be fully developed with 12 horseshoe wells. We remain committed to the capital and cost discipline that will allow us to generate sustainable Adjusted Free Cash Flow from our high-quality asset base.”
Vital’s general and administrative expenses of $23.8 million were below the guidance set by the company leadership. It also recorded second quarter production of 137.9 thousand barrels of oil equivalent a day and oil production of 62,100 barrels of oil a day. It also remains on schedule to turn in line all 38 second-half 2025 wells by early October. The company also managed to divest 3,800 net non-core acres in Crane and Upton counties, Texas for $6.5 million with the proceeds aimed at debt reduction.
Second-Quarter 2025 Financial and Operations Summary
Financial Results. The Company had a net loss of $582.6 million, or $(15.43) per diluted share. Results were impacted by a non-cash pre-tax impairment loss on oil and gas properties of $427.0 million and a valuation allowance against the Company’s federal net deferred tax asset of $237.9 million. Adjusted Net Income was $76.1 million, or $2.02 per adjusted diluted share. Cash flows from operating activities were $252.3 million and Consolidated EBITDAX was $338.1 million.
The impairment was related to the full cost ceiling limitation, driven primarily by the decline in the trailing 12-month SEC mandated oil price calculation, and excludes the value of the Company’s commodity derivative positions and only includes the 171 proved undeveloped locations in the Company’s current proved reserves out of approximately 920 inventory locations at the beginning of the year, net of divestitures. Additionally, as a result of the full cost ceiling impairment and the expectation of future impairments, a valuation allowance against the Company’s net deferred tax asset was recorded.
Production. Vital Energy’s total and oil production averaged 137,864 BOE/d and 62,140 BO/d, respectively. Weather and temporary curtailments related to the installation of additional production equipment negatively impacted average daily production by 780 BOE/d, 500 BO/d of which was oil.
Capital Investments. Total capital investments, excluding non-budgeted acquisitions and leasehold expenditures, were $257 million, including approximately $13 million related to drilling cost overruns and $11 million to accelerate development activity into the second quarter. Second quarter investments included $216 million in drilling and completions, $27 million in infrastructure investments, $8 million in other capitalized costs and $6 million in land, exploration and data-related costs.
Operating Expenses. LOE was 6% lower than the midpoint of guidance at $107.8 million, driven by lower than expected costs on the recently acquired Point Energy assets and ongoing cost optimization across the Midland and Delaware basins that reduced field power generation and chemicals costs.
G&A Expenses. Total G&A expenses were 7% below the midpoint of guidance at $23.8 million as the Company continued to reduce employee and professional costs.
Adjusted Free Cash Flow and Net Debt. Adjusted Free Cash Flow was $36 million, with sustainable expense reductions largely offsetting drilling outspend. Net Debt1 increased by $8 million during the quarter as the Company’s net changes in operating assets and liabilities decreased by $41 million.
Liquidity. At June 30, 2025, the Company had $745 million outstanding on its $1.4 billion senior secured credit facility and cash and cash equivalents of $30 million.
2025 Outlook
Production. Planned completion of 38 wells in late third quarter/early fourth quarter is expected to meaningfully increase production volumes. Total and oil production ranges for full-year 2025 were narrowed to account for actual second-quarter 2025 volumes and are expected to be 136.5-139.5 MBOE/d and 63.3-65.3 MBO/d, respectively.
Capital Investments. Vital Energy reduced expectations for third quarter investments by $25 million to $235-$265 million, in part reflecting the acceleration of capital into the second quarter. Guidance for the fourth quarter is unchanged. Full-year 2025 capital expectations were narrowed to $850-$900 million.
Operating Expenses. The Company expects recent improvements in operating expenses to be sustainable. Third quarter LOE is expected to be $109-$115 million and decline to $107-$113 million in the fourth quarter of 2025.
G&A Expenses. In June, Vital Energy reduced its combined employee and contractor headcount by approximately 10%, resulting in sustainably lower G&A expense. Total G&A for both the third and fourth quarters of 2025 is expected to decline approximately 12% from second-quarter 2025 to a range of $20.0-$22.0 million.
Non-core Divestitures. In July 2025, Vital Energy closed on the sale of approximately 3,800 net acres in Crane and Upton counties for $6.5 million. The sale included five of the Company’s inventory locations in the Barnett formation with no impact to production. Year-to-date, Vital Energy has closed on non-core asset sales totaling $27 million.
Adjusted Free Cash Flow and Net Debt. For full-year 2025, the Company expects to generate approximately $305 million of Adjusted Free Cash Flow at current oil prices of ~$67 per barrel WTI, inclusive of hedging proceeds, and reduce Net Debt by approximately $310 million. The estimated Net Debt reduction includes proceeds from non-core asset sales and increases in debt from working capital changes and organizational restructuring expenses. Through the first half of 2025, Vital Energy reduced Net Debt by $125 million. The Company expects to reduce Net Debt by approximately $25 million in the third quarter of 2025 and approximately $160 million in the fourth quarter.
