Vitesse Energy Stock

Greetings. Welcome to the Vitesse Energy Third Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to the Vice President of Finance and Corporate Development at Vitesse, Ben Messier. Thank you. You may begin.

Good morning, everyone, and thanks for joining. Today, we will be discussing our third quarter 2026 results. Our earnings release was issued and our 10-Q was filed yesterday after market close. Updated investor presentation can be found on the Vitesse website. I'm joined this morning by our President and CEO, Jamie Benard; and our CFO, Jamie 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.

In addition, today's discussion may reference to non-GAAP financial measures. For a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings release.

Now I will turn the call over to Vitesse's President and CEO, Jamie Benard.

Thanks, Ben. Good morning, everyone, and thanks for joining today's call. First, we're pleased to report that our Board declared a fourth quarter cash dividend of $0.4375 per share or $1.75 annualized. That marks the 16th consecutive quarterly dividend since the January 2023 spinoff without a single interruption. This is the direct output of a business model built around durability and discipline. The third quarter headline for Vitesse was the successful closing of the Denver Julesburg Basin acquisition in September, which expands our position in the DJ alongside a strong operating partner and adds meaningful cash flow and an [indiscernible] revaluation.

It's a prime example of our strategy in action, a consistent, disciplined deployment of capital in the DJ Basin deal reflects the same underwriting rigor applied to every transaction before it. Our underwriting discipline remains tight. We underwrite every well and every acquisition at strip pricing are lower, and we only invest capital when the return is clear thresholds. The result is a portfolio of 8,732 productive wells managed by a team of 33 full-time employees, approximately 265 productive wells per team member, that's a 64% increase since 2022 as the benefits of scale, deployment of artificial intelligence and continued improvement of internal processes pervaded the organization.

Turning to our development activity. As of September 30, we had 6.5 net wells in the drilling or completion phase and another 13.0 net permitted locations ready for development. During the third quarter, our operating partners began drilling 2.0 net wells and turned 2.0 net wells to production. That's a modest improvement from the 1.8 net wells spud and 1.7 net wells turned to production in the second quarter. We expect an acceleration of wells turned to production in the fourth quarter, which supports our revised production guidance and preliminary outlook for 2027.

With Vitesse holding an interest in roughly half of the drilling rigs in the Williston in recent quarters, and the Williston rig count increasing to 38% as of yesterday, we're well positioned to benefit as activity in the basin builds. The ongoing transition toward extended laterals across our acreage remains an important structural driver of capital efficiency. So far this year, 70% of the AFEs we've consented to, are wells 3 miles or longer. These extended laterals flatten our corporate baseline decline, and reduce the maintenance required to hold production flat. That directly supports the dividend.

Our operating partners are getting more efficient as well. In their October update, North Dakota regulators reported that well cycle times across the state are improving even as the average completed lateral length reached an all-time high of nearly 14,000 feet in the third quarter, roughly 20% above the 2025 average. That matters for a nonoperator. Faster cycle times shorten the time between when we fund our share of a well and when that well begins generating cash flow.

I'll now turn it over to our CFO, Jimmy Henderson, to walk through the financial results.

All right. Thanks, Jamie, and thanks, everybody, for joining us this morning. I just want to highlight a few key items from our third quarter financial results. As always referred to our earnings release and our 10-Q, both of which were filed last night for any further details. So production for the third quarter averaged 16,824 BOE per day with a 60% oil cut. As Jamie noted, our DJ Basin acquisition closed mid-September, so this quarter includes very limited contribution from that asset. We expect a full quarter of DJ production beginning in the fourth quarter and anticipate some acceleration of wells turned to production in Q4, consistent with our guidance.

Oil represented [ 2% ] of our oil and natural gas revenue in the quarter, which reflects the quality and oil weighting of our asset base. For the quarter, adjusted EBITDA was $39.3 million and adjusted net income was $2.5 million, while our GAAP net loss was $36.4 million. This GAAP net loss is entirely attributable to $46.6 million noncash unrealized loss on commodity derivative instruments. It had no impact on our operating cash flows or our free cash flow for the quarter. Of course, if prices remain above our hedge levels, these contracts will settle in cash over time, but the settlements are offset by higher prices we receive on the underlying barrels.

Free cash flow for the quarter was $9.4 million after $26.9 million of development capital expenditures. Net of divestitures, total cash capital expenditures were $53 million for the quarter, which includes $25.9 million of the closing payment for the DJ Basin acquisition.

Now on the balance sheet, we ended the quarter with total debt of $190.5 million resulting in net debt to trailing 12-month adjusted EBITDA ratio of 1.3x. I want to address that directly because I know it's above our stated target of 1x. The increase in leverage is primarily the result of the DJ Basin acquisition which again, closed in September and was funded by the drawing on our revolver. But the ongoing cash flows from the asset have not yet had time to work through the EBITDA. More importantly, on a forward-looking listing basis, incorporating a full quarter of DJ Basin cash flows and the acceleration of wells being turned to production in Q4, leverage is right at 1x target and declining at current strip prices.

In October, we amended our revolving credit facility, expanding our elected commitment and borrowing base from $275 million to $290 million, that expansion brings our total liquidity to approximately $100 million. Again, our simple capital structure keeps the dividend protected and the balance sheet ready to act on opportunities. On hedging, based on the midpoint of our revised guidance, we had approximately 64% of the remaining 2026 oil production hedge and approximately 57% of the remaining 2026 natural gas production hedged.

Our oil hedge book now extends into 2030, with swaps in place at a weighted average price of approximately $68 per barrel. That visibility supports our confidence in maintaining the quarterly dividend and managing leverage through the cycle. The remaining 36% of our 2026 oil production is unhedged and participate fully in the current price environment. Finally, we revised our 2026 annual guidance to reflect the DJ Basin acquisition and drilling completion activity for the remainder of the year. We narrowed the range and increased the midpoint of guidance for annual production to 16,600 to 17,200 BOE per day and drilling completion CapEx of $80 million to $90 million, reflecting the higher activity level anticipated in the fourth quarter in addition to another quarter of actual results.

Oil as a percentage of annual production remains unchanged at 60% to 62%. I'd also note that the capital expenditure guidance of $80 million to $90 million reflects drilling and completion CapEx spending only and does not include acquisition capital, which we evaluate and find separately on a deal-by-deal basis.

With that, let me turn the call back over to the operator for Q&A. Thank you.

[Operator Instructions] Our first question is from Jeff Grampp with Northland Capital Markets.

Jamie, you mentioned an acceleration in wells turned to sales in Q4, and it sounds like maybe we're looking into a sneak peak in '27. Curious with respect to '27, I know it's early, but any kind of preliminary views on kind of production trajectory, capital spending trends or anything else you care to comment on?

Yes, sure. Like I said in my comments, it's preliminary, but the crystal ball is showing us and our modeling is showing us that with the inflated commodity prices, it's incentivized operators to put capital on the ground perhaps sooner rather than later. You saw the modest increase in drilling rigs. So I think the industry is stayed appropriately disciplined as we navigate the geopolitical situation overseas. And as far as we're looking at a flat to modest increase in production for Vitesse next year.

Just to clarify, Jamie, is that relative to guide -- to the annual guide to kind of pro forma production today? I just want to get from the baseline there.

Yes, sir. Sorry for not clarifying that. That's exactly right.

Okay. And for my follow-up, on the longer lateral trends there, 1 benefit that you guys have highlighted is obviously the lower decline rate in addition to just the overall capital efficiency improvements. But have you guys looked at anything internally on like how much does the corporate decline rate benefit from that increased weighting to these long laterals versus what the decline rate may have been a year or 2 ago or how that maybe impacts what maintenance CapEx requirements are for the business?

Jeff, it's Ben. Yes, we have looked at it. We have the benefit of extended laterals in our corporate model, and you would expect maintenance CapEx over time to decline 10% or so over the next 3 or 4 years based on the projections we currently have. Obviously, the impact of that is both from the [indiscernible] of the extended laterals, but also the aging of our overall production as we have made fewer near-term development acquisitions in the last year than we made in previous year, we spent close to $30 million on that. So I think all of that is showing up in our outlook, and you would expect maintenance CapEx to lower given the preliminary results we're seeing from 3- and 4-mile laterals and what our operating partners are saying publicly, about the expected EUR per foot of those laterals.

Our next question is from Poe Fratt with Alliance Global Partners.

Just could you address the cost side? It looks like costs have gone up over the last 2 quarters or so. And I was just looking at third quarter LOE at like [ 12.40 ], where should we look at it going over the next couple of quarters?

Yes, Poe, this is Jamie. I'll take that one. And good question. That's something we've been highly focused on. So in July and August of the third quarter on our operated asset, we had some mechanical failures that seem to come back to back to back. So the production, the BOE number dropped and then what we went to, we went to a 24-hour workover rig crew, which is more costly to bring those barrels back on as soon as possible in the quarter. So the short answer to your question is, looking forward, I would anticipate the LOE, the dollars per BOE to come back down to where they were previously.

And there's ongoing throughout our non-op portfolio as wells that may have in a different commodity environment than a lower priority to bring back on are obviously being expedited by our operators to get as many barrels into sales as possible.

Great. That's helpful. On the G&A side?

Poe, are you there?

Yes. I was just wondering about G&A trends.

Okay. Poe, this is Jamie. Yes, I think on G&A that I think all things considered are held constant, I think we'd probably see some decrease as we go from year to year next year. But as Jamie spoke early on, the ability to scale up this asset is business with existing team adds a lot of leverage to the model, and that's our focus, and we'll continue to do acquisitions that we can assimilate quickly just like this DJ asset that we were brought in with no additional head count and very little from an integration standpoint. So that will continue to be an advantage for us going forward.

And then, Jamie, do you have a ballpark number of how much the DJ acquisition added in the third quarter?

Very little. Yes. How much the acquisition Delta, really, nothing because we...

Yes. So production. You said it was on for a month, but I was just wondering...

How much production it added, just [indiscernible].

Okay. And then you talked about sort of flat to slightly up for production in '27. CapEx, any sort of targets for CapEx at this point in time? I know it's always a work in progress.

Yes. Exactly, Poe. It's work in progress, but I would say it's going to be similar to what this year is turning out to be, again, commodity prices strip holding true to what it is today.

And then if I may, just 1 sort of high level. One of the things about Lucero acquisition and then bringing Jamie on is operated experience. And has the time line to start operating wells changed at all? Can you just sort of frame it out as far as when you might look at operating wells?

So we are currently operating 60 wells in the Williston Basin. So that's been going on since Lucero close. What we are doing is we're taking a deep dive looking at our acreage position as it relates to just like the common theme is across the basin is where can we extend laterals. So we're looking at our acreage position, whether we can -- whether looking at offset operators discussing with them, collaboration, et cetera, on extended laterals and really we want to optimize just like we do. Our operating capital dollars are competing the same as our non-op capital dollars. It's overall returns.

So -- but as the narrative has been consistently, it's another lever that we have. So we're taking a deep dive in. We've brought on some operated expertise, and we expect to be really having some clarity there on go-forward development here in the first quarter.

Yes. Sorry, that's what I meant drilling on operating basis.

[Operator Instructions] Our next question is from Noel Parks with Tuohy Brothers.

I was wondering, do you -- with the rig count matching up a bit in the basin. Is service capacity good adequate in the event account -- rig count keeps rising from here?

Are you talking about a drilling perspective?

Yes, exactly.

Yes. So we've seen the uptick has been modest. But thus far, there hasn't been any shortage of drilling capacity. I think that there's some macroeconomic drivers, costs such as diesel and things like that, that are -- but as far as a shortage of capacity for the larger operators that can sign up a rig for a 1-year contract, 2-year contract, obviously, that's advantageous. The smaller operators are more playing the spot market, which doesn't mean a shortage, it just becomes -- you're more subject to their schedule than your own at times, if that makes sense.

Absolutely. And to understand, not exactly the same space as the test, but we are seeing a royalty deal coming to market spin off from an operator. And just wondering, in deals with kind of this very dynamic backdrop we've had on the commodity side, where you see valuation trends going right now, sort of steady creeping up, weakening?

Noel, this is Ben. I think valuations move with strip prices. That seems to be how most people are underwriting at least the first few years of production on acquisitions. And then I think it varies what people use as assumptions in years 3 and beyond, oftentimes, we'll hold it flat at a long term 70 or 75, but Obviously, the most important variable in value of any oil and gas asset is typically strip prices. So you're still seeing more value being put on PDP than undeveloped really depending on the basin. I mean, you look at the Permian, they're probably going to get more undeveloped value there than you would in, say, the Powder River Basin, where there's a little more optionality down the road on the stacked pay. But in general, I would say that valuations move the strip prices. So EBITDA multiples remain constant, free cash flow yield remain constant, but dollars per net acre, dollar per location, dollar per BOE per day of production increase at a higher price deck. So it just depends on what metric you're viewing it as.

We take rate of return is the most important metric. We try to do deals that are both accretive to our NAV per share and also accretive to our distributable cash flow so that it either supports the dividend or allows us to increase the coverage on the dividend. And so that's sort of the matrix that we look at acquisitions through. But we underwrite it strip because we can hedge it and that's why we're currently hedged through 2030 as we close that DJ Basin acquisition in September and hedged 85% of the PDP through 2030 on that deal.

Great. And just related with hedging. We've -- with the conflict in Middle East having gone on now much of the year. We've only just recently started to see sort of the further outstrip, say, sort of months 13 to 24, really strengthen acknowledging the likelihood of long-term supply disruption effects on pricing. And I just wondered, is that having happened. Any shifts in -- or anything you might do a little bit differently looking at hedging for that period?

Well, when evaluating hedging our base asset, we consider sort of the price at which our dividend is funded by distributable cash flow. Sort of the extent that 2028 and 29 become more attractive and look like it can -- like we can protect coverage of the dividend, we're more likely to hedge. And so with prices up, you've noticed we're hedged further out in the curve than we have been in the rest of the time were public. And a big reason for that is we reduced the dividend earlier this year. So the breakeven WTI price is a little bit lower, and we can now hedge above that level even out into 2028 and 2029. So we've added some hedges beyond the DJ Basin acquisition within the last 1.5 weeks in 2028 and 2029. So continue to look for us to be active there as prices remain constructive.

There are no further questions at this time. I would like to turn the floor back over to Jamie Benard for closing comments.

Thanks, everyone, and thanks for joining today. I want to leave you all with this message. The test remains extremely committed to returning capital to stockholders through our durable disciplined capital allocation, accretive growth and strong and conservative balance sheet, that will remain unchanged. If you have any additional questions, please don't hesitate to reach out to Ben Messier directly. We look forward to connecting to you all at the Southwest IDEAS Conference in Dallas on November 18 or on our next quarterly earnings call. Thanks, everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to the Vitesse Energy Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to the Director, Investor Relations and Business Development at Vitesse, Ben Messier. You may begin.

Good morning, everyone, and thanks for joining. Today we will be discussing our second quarter 2026 results. Our 10-Q and earnings release were released yesterday after market close, and a newly redesigned investor presentation can be found on the Vitesse website. We encourage everyone to spend time with the new presentation. It lays out Vitesse's business model, capital allocation framework, and dividend philosophy in greater detail, and we will touch on many of these themes this morning. I'm joined this morning by our CEO and President, Jamie Benard, and our CFO, James 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.

In addition, 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-Q and earnings release. Now, I will turn the call over to Vitesse's CEO and President, Jamie Benard.

Thanks, Ben. Good morning, everyone, and thank you for joining today's call. I want to start this morning by addressing something directly. Over the past several months, following this year's resizing of our dividend and leadership transition, we've received a number of questions about whether Vitesse's strategy has changed. The answer is simple. It has not.

Our priorities are what they've always been, pay a durable dividend funded by free cash flow, allocate capital only where returns exceed our hurdle rates, and maintain a strong, conservative balance sheet. I'd like to spend a few minutes this morning on why we have such conviction in this strategy. The commitment starts with the dividend, which is our primary use of cash. Last week, our Board declared a third-quarter cash dividend at an annualized rate of $1.75 per share.

This marks the 15th consecutive quarter, every quarter since our January 2023 Spin-off, without interruption that we've declared a dividend, bringing the total cumulative dividends declared to $7.6375 per share. That's half our current share price returned to shareholders in under 4 years. I also want to be clear about how we think about the dividend, because it's the primary output of our entire business model, not a residual.

We size the dividend at a level that Free Cash Flow can cover and allow for economic reinvestment. The current dividend was set with exactly that durability in mind, and every dollar of reinvestment we make is screened to support it. We then hedge to protect cash flows. After the dividend, we allocate capital strictly by rate of return.

Priorities are organic CapEx on our existing acreage, then near-term drilling opportunities, then producing-property acquisitions. Throughout this process, we maintain a conservative balance sheet targeting a net debt-to-adjusted EBITDA ratio of less than 1x.

Our organic acreage conversion continues to drive results and is our highest-return opportunity. As of June 30, 2026, we had 19.4 net wells in our development pipeline, including 6.4 net wells that were either drilling or completing, and another 13 net locations that had been permitted for development. Every well proposal is a stand-alone election underwritten at Strip Prices through Luminis, our proprietary data platform. And since 2023, 93% of the wells proposed on our acreage have cleared our return hurdles. We also consistently evaluate and underwrite opportunities for acquiring larger producing properties.

Our combination of non-op expertise with operating capabilities provides enhanced flexibility in our investment strategy. We remain focused on pursuing only those opportunities that meet our rigorous return thresholds, are accretive to Net Asset Value and Distributable Cash Flow per share, and support the dividend. And we are selective at scale.

Since 2013, Vitesse has closed 175 acquisitions comprised of both near-term development and 5 larger producing property acquisitions, in total representing roughly $800 million of acquisition spend. Because field-level work sits on our operating partners, new non-op assets integrate into Luminis without materially increasing G&A costs, thereby further driving shareholder value. This is the heart of the non-op model, it is why the business is built for durability.

We own fractional interests in 7,868 productive wells across more than 30 leading operators in the Williston, Powder River, and DJ basins. An average working interest of roughly 3.6% per well. So, no single well can make or break Vitesse's results. And the returns have been there since 2022. Cash Return on Capital Invested has averaged approximately 14%, well above our weighted average cost of capital.

The trend towards 3- and 4-mile laterals in the Williston Basin continues across our acreage, driving greater efficiencies. These extended laterals reduce cost-per-foot for well participation while delivering higher EURs. Year-to-date 2026, 3-mile or longer laterals constitute 69% of our AFEs, resulting in an average lateral length of nearly 15,000 feet, marking a 38% increase from 2022. On a per-foot basis, these longer laterals cost approximately 25% less than traditional 2-mile laterals, significantly enhancing capital efficiency.

Just as important, longer laterals decline more slowly, which flattens out our corporate base decline, reducing the maintenance capital required to hold production flat and leaves more cash flow available for the dividend. And finally, our interests are aligned with yours. As shareholders ourselves, every capital allocation decision we make is guided by a single objective, creating durable long-term value per share through a sustainable dividend, disciplined capital allocation, and a strong balance sheet.

I'll now turn the call over to our CFO, Jimmy Henderson.

Good morning, everyone, and thanks, Jamie. I want to highlight just a few items from our financial results for the second quarter of 2026. You can refer to our earnings release and 10-Q, both of which were filed last night, for any further details. Production for the second quarter averaged 17,354 barrels of oil equivalent per day, a sequential increase of 9% from the first quarter, with a 60% oil cut. Oil production contributed 95% of total revenue in this quarter.

These results include contributions from the Powder River Basin Acquisition that we closed early in April. For the quarter, adjusted EBITDA was $40.2 million, and we had Adjusted Net Income of $1.8 million. GAAP Net Income was $33.1 million, driven by a $40.2 million of unrealized hedging gains.

As a reminder, this gain is due to the forward price of oil at June 30 and is a non-cash item. Despite the volatility of our Unrealized Gains and Losses, our cumulative realized hedge loss since Spin-off is less than 1% of total revenue during that period. Hedging creates a margin of safety around our dividend, which locks in a revenue floor through downturns in commodity prices. Free Cash Flow for the quarter was $16.3 million, after $21.1 million of development capital expenditures.

With our hedge book now extending into 2029, we remain well-positioned to support our $1.75 annualized dividend. As for the balance sheet, we ended the quarter with a Total Debt of $158.5 million, putting Net Debt-to-Adjusted EBITDA at just less than 1x on a last-quarter annualized basis, which is in line with our target. Total liquidity before internal cash flows sits at roughly $117 million.

I would also highlight the simplicity of our capital structure. It consists of our revolving credit facility and common shares. So no senior notes, no preferred stock, no convertibles. That simplicity is deliberate. It keeps the dividend protected and the balance sheet ready to act on opportunities. We also maintain a $60 million share-repurchase authorization, which provides some flexibility alongside the dividend.

We have opportunistically layered on additional oil hedges through the end of 2029 at a weighted-average price of approximately $67, which is supportive to our dividend. For the remainder of 2026, we have approximately 70% of our oil production hedged through swaps and collars with a weighted-average floor of $63.57 and a ceiling of $66.53 per barrel. We have approximately half our 2026 natural-gas production hedged through collars with a weighted-average floor of $3.73 and a ceiling of $4.90 per MMBtu.

Both percentages of hedged oil and natural gas volumes are based on our midpoint of the revised-annual guidance. We did revise our 2026 annual guidance for the remainder of the year by narrowing the ranges. Annual production has been narrowed to 16,300 to 17,200 Boe per day, with the tightened oil as a percentage of oil production now at 60% to 62%. We raised the bottom end of our total cash capital expenditure guidance, which now ranges from $65 million to $80 million for the year.

Taken together, a hedge book extending into 2029, leverage at target, ample liquidity, and simple capital-structure, we believe Vitesse is well positioned to fund the dividend through the cycle. With that, let me pass the call back to the operator for your questions.

[Operator Instructions] Our first question is from Jeff Grampp with Northland Capital Markets.

Hey, good morning, guys. I was curious, you know, last quarter, obviously, markets are dynamic and things can change from call to call given a few months' time. But you guys had mentioned operated activity as a potential vector for some organic growth CapEx. Any update there on contemplations there? And was that a factor at all with respect to the narrowing of the CapEx guide?

Hey Jeff, this is Jamie. I'll take that one. Yes, on the operated piece for development, we are in the heat of evaluating that. You know, when we talk about extended laterals, that's obviously the optimal situation. So we're looking at acreage that is operated by others around us to see if there's partnering opportunities to extend those laterals. And so, more to come there, and it's very much in the works right now.

Understood. That makes a lot of sense. And my follow-up, first off, I have a new slide deck that you guys put up. You know, on slide, I think it's 10, that you guys kind of talk about different investment buckets. And just curious to get an update, maybe in particular buckets 3 and 4 for near-term development acquisitions and producing property acquisitions. Like what's the latest on those markets? Obviously, very volatile commodity markets. So I imagine underwriting dynamics kind of change day to day, but is that affecting your ability to transact or having an impact on timing of deals you're looking at? Just any kind of updates in those particular markets would be interesting.

Thanks, Jeff. Yes, I'm glad you like the slide deck. We put it out for that exact reason. We get a lot of questions over the last 2.5 years since being public around the different buckets where we allocate capital and wanted to be clear on the differences between each one and where we source them and how we underwrite them. I would say the near-term development acquisition market has gotten a little bit more competitive in the last year or two. You can just tell from the dollars we spend each year on acquisitions that we're not spending quite as much as we have in prior years. Big reason for that is we kept our return hurdles high there, and we're hesitant to adjust those downwards. To the extent we can buy near-term drilling, it's a really, really economic use of our capital.

The producing property acquisitions, there was an article that came out about how deal flow slowed down in the second quarter. We did not find that to be true in the non-op specific part of the market. There were a lot of large packages that came to market in our backyard right after the Iran war started. So talking Powder River Basin, DJ Basin, Williston Basin, which obviously is where we have a lot of data with our Luminis system. And what's nice about these larger packages is they generate a lot of cash flow on day 1, and we tend to be able to buy those at sort of teens to low 20% free cash flow yields for the next few years. So obviously, very accretive to the dividend and coverage in general of that dividend. So that market has been very robust.

I think there are some soft spots in that market that are less competitive than other basins. And we're doing everything we can do to exploit that advantage that we have in data, and cost of capital, and access to deal flow.

[Operator Instructions] Our next question is from Noel Parks with Tuohy Brothers. Please proceed with your question.

Hi, good morning. I just wondered, with a full quarter now, a little more of the Powder River Basin acquisition under your belt, just wondered if you had any updated thoughts either in terms of maybe what you're most interested in pursuing out there, geologically, for example? And also if you have any sort of thoughts from sort of what's happening on the ground there as far as A&D?

Good morning, this is Jamie. I'll address that one. As far as the Powder River Basin goes, as Jimmy touched on, we're excited to have that one. We're fully implementing those assets and evaluating under the different sensitivities and market prices where those things will go. Again, getting that cash flow in-house was a big hurdle for us and happy that's done. Now we're going to start looking at the AFEs that come in and what we want to do with those, so more to follow on the DJ, Powder River as well.

Great. Obviously, just to add on to that, I would say, you know, we announced that Powder River Basin acquisition right around when the Iran war was starting. So underwritten at Strip Prices in the low $60s going into the $50s. So it's a little soon to do a full look-back analysis, but as we do that and running the Higher Strip, I mean that just looks like a very good deal at these prices and starting to see AFEs on that asset as we underwrite.

So that acquisition is going as planned, given we're only 3 to 4 months in. But I think in general, we're targeting basins where we have the information. So again, Williston, Powder River, DJ, we look everywhere. We want the exposure to other basins, but just feel a little more likely to win larger deals in the basin where we have assets currently.

Sure, absolutely. And I think, I don't know actually if you've talked much about the operator profile of the assets you acquired there. Is it essentially the handful of larger guys who are active out there or more maybe smaller under the radar, not real familiar about what's going on out there on the private side?

Yes, no, this is Jimmy. That package was definitely advantaged by primarily being operated by a couple of the bigger operators there, namely EOG and Continental. So very happy to be aligned with them and have them as partner operators on that asset. That's one of the reasons we liked it so much.

There are no further questions at this time. This concludes the question and answer session. I'd like to turn the floor back over to Jamie Benard for closing comments.

Well, thanks everyone for joining today. I just want to leave you with the same message we started with. Vitesse's strategy hasn't changed. We're going to remain committed to our core priorities, returning capital to stockholders through our durable dividend, disciplined capital allocation, identifying and pursuing accretive growth opportunities, and maintaining a strong and conservative balance sheet.

If you have any questions, please don't hesitate to reach out to Ben Messier directly. We look forward to connecting with you on an upcoming investor event, including EnerCom Denver and the Midwest IDEAS Conference later this month, or during our next quarterly earnings call.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to the Vitesse Energy First Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference 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 first quarter 2026 results. Our 10-Q 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 Benard; our CFO, Jimmy Henderson; and Brian Cree, our former President, who is with us in a senior adviser 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 a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings release.

Now I will turn the call over to Vitesse's CEO and President, Jamie Benard.

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 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 adviser 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.

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 have been permitted for development.

As we previously discussed, 3 and 4-mile development continues to increase across the Williston Basin. For Vitesse, 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.

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 10-Q, 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 a 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 noncash item. These hedges allow us to lock in the underlying returns as our asset is developed where 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 12-month adjusted EBITDA at just 0.82x.

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 Instructions] The first question comes from the line of Jeff Grampp with Northland Capital Markets.

Jamie, curious for you with this being your first earnings call and welcome and congrats. If you could just lay out at a high level, kind of what's your vision for Vitesse 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 grab on here with the company?

Sure. Thanks for the question. Well, what drew me to Vitesse is truly, it's alignment, alignment between my experience, my philosophy and the company strategy. I've spent most of my career across both operated and non-operated models and most recently with 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 Vitesse 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.

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 -- it will ebb and flow? Do you guys see this as maybe something more fundamental changing in terms of operators focusing more on Vitesse acreage? Just wondering if there's anything to read there.

Yes, 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 Vitesse 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 Vitesse has a lot of acreage.

Next question comes from the line of Chris Baker with Evercore ISI.

So I just want to start off maybe on a similar note, just in terms of the 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, sort of how you think that could maybe come together? And what sort of a reasonable outlook in terms of activity and what that could mean for service costs?

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 6-month period is that the operators are becoming much better, just as they have all along at bringing drilling costs down. So the 3- and 4-mile CapEx that we are seeing has continued to decline, especially in the last 3 months period of time. The operators are just getting really good and efficient at drilling 3 and 4-mile laterals. Now what that means for cost 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 off-line. 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 of 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.

That's great. And a follow-up, obviously, the dividend is pretty central for you all. I think the team obviously has evolved. But you 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&A like the PRB deal and the dividend, just to kind of maybe wrap it all into, I think, some interrelated and interrelated topic. Does the change in the macro outlook influence how you think about hedging going forward? Obviously, it provides a good amount of downside protection, but much different outlook in terms of -- at least from our perspective, the opportunity to see a higher for longer type environment starts to establish itself.

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, we're -- it's set at a level that's supported by where we're at on both of those things. But 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 accretive 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. It's 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 do all those things in a measured way.

Great. So it sounds like, if I'm hearing correctly, sort of no change to how you're thinking about hedging from here?

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 every since conflict in Iran started. Tried to maintain enough dry powder to keep adding to our position in a way that's supportive of our dividend and gives us the ability to add more as we go. It's very opportunistic, but very methodical at the same time.

Next question comes from the line of Poe Fratt with Alliance Global Partners.

Jamie, I'm not that familiar with your background, but could you highlight sort of any notable experience that you have on the acquisition front? And then also highlight where you have experienced outside of the Bakken as far as maybe that there might be some future direction in that way? And then if you could just sort of highlight -- 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?

Sure. Happy to address it. So on the M&A front, going back over the past years, I'd say it's north of $3 billion between the Permian Basin, the Marcellus, the Eagle Ford, both from the operated and the non-operated positions. It's where I've been focused. And then of late, the last two years, I've been leading an operated organization in -- 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, we're going to continue to look at all opportunities and start to hone in on what fits us best, and it's more about quality as opposed to quantity as far as opportunities come.

And then reading between the lines, so if AFEs continued at the same pace and you don't see a pickup, operators or other operators are sort of taking more of a wait-and-see attitude. How well positioned is the organization right now to move into the operated arena? How many locations do you have ready if you were to make that pivot?

Sure. We're in the middle of a comprehensive planning process for the reasons you just mentioned 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 constant -- the size of our inventory. We're going to measure twice and cut once. But as always, 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.

Yes. Poe, this is Brian. Let me just add to that is, 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 million to $80 million 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're going to remain disciplined. We're going to look at everything that goes on over the next few months and analyze what other opportunities come before us.

It's great to have that asset available for us to develop at the right time. The right time can be when we don't have as much CapEx coming 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 in what we see in AFEs and then make that decision as the year goes.

Great. It sounds like, Brian, though, it's more of the '27 of that from an impact to the production profile?

Yes. 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, you get those online, it's much more impactful to 2027 than it would be to 2026.

Great. That's helpful. And then if you could just address looking outside the basin. Obviously, the Powder River acquisition 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.

No, I think you have a pretty good understanding of that. We have looked at a lot more gas assets over the last year, 1.5 years than we had previously. But clearly, for us, 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. 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 the majority of our production and assets. 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.

Next question comes from the line of Noel Parks with Tuohy Brothers.

I was just wondering if -- you mentioned a moment ago that there was -- you're seeing a higher level of activity in workover rigs. And is there anything available that you consider where the -- I'm thinking in the Williston, for example, where the main value would really consist mostly of refracs. I'm just wondering if you -- if anybody has put things on the market like that? And if so, how you might approach valuing something like that?

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 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 go into a DSU that's got one or two wells that were drilled back in 2014 and '15. And now there's four, five, six additional wells being drilled, a lot of times. What we've seen is the operators are refracing 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 to 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 3 to 6 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 DUCs. And so that's where we've seen the enhanced activity level so far.

Great. 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 was wondering if you can 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 out of the other channels. 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?

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 it in the elevated price environment, which is why 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 to, I'd say, some PE-backed sellers are generally more open to taking shares, whereas a big public company probably wants cash. So we evaluate all of 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.

Great. And just a follow-up on that. I mean can you kind of give an idea of roughly what vintage of PE companies you're seeing selling kind of like roughly when they were started or raised their funds?

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 reach their internal hurdle rates that they need.

Next question comes from the line of Jeff Grampp with Northland Capital Markets.

Just had one follow-up. I'm 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.

Jeff this is Jimmy. I'll take a shot at that. Yes, 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 in flows of light sweet oil around the world is -- a lot of Canadian oils 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 yes, at least for the short, medium term here, we are pretty optimistic about what differentials will be experiencing. And the great thing about that is that's unhedged. So it's incremental to the realized pricing that we're getting after hedging effects. So it looks like it could set up for a pretty interesting second and third quarter here.

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.

Thank you all for your time today. As mentioned, Vitesse's priorities remain returning capital to stockholders, discipline, capital allocation, 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.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to Vitesse Energy Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] 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 announcements were released yesterday after market close and an updated investor presentation can be found on the Test website. I'm joined this morning by our Chairman and CEO, Robert Gerrity; our President, Brian Cree; and our CFO, Jamie 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.

In addition, today's discussion may reference non-GAAP financial measures. For a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-K and earnings release.

Now I will turn the call over to Vitesse's Chairman and CEO, Bob Gerrity.

Thank you, Ben. Good morning, everyone, and thanks for joining today's call. In 2025, we continue 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 '23. We are committed to continuing that track record of returning capital across commodity cycles.

We accomplished a great deal in '25. We continue 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 multiyear lawsuit and maintained a conservative balance sheet, all while navigating a volatile oil market.

Last Sunday, we signed a definitive agreement to acquire nonoperated assets in the Powder River Basin of Wyoming for $35 million of the 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 second quarter.

Last week, our Board declared a first 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 first 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.

Good morning, everyone, and 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 were 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 3 or 4-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.

PV10 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 2016, 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 hedge 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, and now I'll hand the call over to our CFO, Jimmy Henderson.

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 and 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 at 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. And at the end of the year, we had a total debt of $124.5 million, giving us net debt to adjusted EBITDA of 0.69x.

We are also providing guidance for 2026. On a 2-stream basis, we anticipate production in the range of 16,000 to 17,500 BOE per day for the full year of 2026 with an anticipated oil cut of 60% to 64%. Cash CapEx for the year is anticipated to be $50 million to $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, but 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 asset which will drive our CapEx spending higher.

With that, let me now pass the call back to the operator for Q&A.

[Operator Instructions] Our first question comes from Chris Baker with Evercore.

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

Yes. Thanks, Chris. Thanks for joining the call. So when we spun, we had -- we started with a $2 dividend and we were able to comfortably maintain that for this whole period. We -- well, let's step back in a second. Glenn, Brian and I founded the thing in 2010. And most other companies that got formed during that time aren't here anymore. And a large reason for that is they had too much debt.

So first and foremost in our mind is our balance sheet. And we want to make sure that, that is always conservative, which gives us an operating -- which gives us life. So that's the #1 goal. It was a Board decision to drop the dividend last week simply to preserve that balance sheet. So that's -- that took precedent, Chris.

And with regards to the capital spend, we spent a lot more capital last year than we had anticipated. And most of that was because our operators, especially [ Chord ], started drilling 3- and 4-mile laterals in areas where we had a high concentration of acreage. Very efficient capital spend. We're thrilled with the 3- and 4-mile laterals -- and we think that, 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. So we are taking a very conservative look at 2026. The capital, as Ben said, the capital that they're spending is -- has a terrific rate of return, especially now that the ASE costs have been reset.

So in terms of M&A in that landscape, '25 was the year that we've looked at more deals than we had at any time in our history. We were very disciplined on leaning into making acquisitions, both for -- primarily for shares and also for cash.

The landscape out there, Chris, is there is a lot of money chasing deals. And there's some 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. We would love to do more of those deals. But I'd tell you, capital discipline, clean balance sheet, return cash to the shareholders. that's how we view the world.

So M&A for '26, Chris, we've got a lot of different deals in the shop. We would love to do this $35 million deal in scale. But again, discipline.

That's great. And then 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 the top 2 or 3 variables that are kind of reflected in the high and low end of that range?

Well, personally, Brad, do you want to handle that one?

Sure. Absolutely. I'd love to. So Chris, obviously, a big chunk of our guidance is going to be based off of what we think operators are going to do. And as Bob mentioned, there's been a lot more development activity in our areas of the field where we own higher working interest. And so we look forward to seeing more of that.

But look, kthe rig count is in the upper 20s right now in the Bakken. And even though we have a very high percentage of those rigs running on our acreage we can't know exactly what our operators are going to do, especially given what happened over the weekend.

From our perspective, we would certainly welcome as much CapEx as our operators want to 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-20s in '23 and '24,

It's a situation as Bob mentioned, that there's a lot of capital competing for those acquisitions. We have remained very disciplined. And at this point in time, we just didn't want to feel like we should put too much emphasis on how much near-term development acquisitions we'll be able to make in 2026. But that -- 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.

Our next question comes from Lloyd Byrne with Jefferies Group.

You have John on for Lloyd. Just congrats on the deal cross team. It 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?

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 to $6 million of CapEx per year. It's a great asset. It comes with 29 net locations in the formations that are already approved and have nearby drilling activity, we believe there's upside to that if some of the stacked pay in the Cad River Basin like the Shannon and the Sussex end up coming to fruition.

So we think this asset blends really well with the rest of our story of having exposure to technology upside down the road. In terms of maintenance CapEx, I would say that, that hasn't really changed from the $85 million to $90 million range and 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 3 than 4-mile laterals. But for a current outlook, I would say, kind of $85 million to $90 million, which is why you see a really capital efficient [Audio Gap].

I think that makes sense. And then 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 like to hit in terms of a maximum? And then 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?

Yes. Look, we reset the dividend last week to a level that we're really happy with in this current commodity price environment. So the goal with our hedging program is to protect that and to reduce really volatility in our share price. So 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. But we would look to add more hedges, which would really max it out, depending on how that situation evolves.

And 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. And so we'll look to extend into 2027 as well as long as we're happy with the price level there.

Yes, John, this is Bob. Hedging has always been and will always be a fundamental core value of ours. So we love to be hedged out as far as we can, and we look at the hedge book pretty much every day.

Our next question comes from Jeff Gramp with New Orleans Capital Markets.

I was curious 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? And I'm curious how material of a benefit are those for your -- for the economics of your capital program?

I'll let Brian answer it a little bit more specifically, but cord 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. And we're seeing that.

Again, from an IRR standpoint, they're improved, but from an ROI standpoint, they're substantially improved. This is going to be the trend in the Bakken, and you're going to see a lot of company swapping acreage to be able to drill the 3-mile 4-mile wells. We've actually started seeing some new turns in 2-mile acreage to pick up a 4-mile lateral. So this is going to be a trend, Jeff.

Brian expand on that?

Good comments, Bob. Jeff, what I would say is that early on, we were cautious when they were drilling to 3 miles. We wanted to make sure that we felt like the story behind a flatter decline curve was actually going to be seen. And so 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. So we 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. And what I can tell you is that the operators are really starting to dial in the AFE costs. Early on, those AFE costs were really high for both 3-mile and 4 miles, they've come down substantially. -- the economics of the 3- and 4-mile development that we're seeing are really strong.

Great to hear. That's really helpful. And for my follow-up on the CapEx side of things, I just wanted to clarify on the guide, you guys have kind of a rough split of organic kind of D&C versus near-term acquisition assumptions. I thought maybe I heard you guys in the prepared remarks mentioned that there wasn't any kind of near-term acquisition assumptions in the CapEx guide? I just want to clarify kind of what's based and what's upside.

Yes, 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. And we hope to see that market return to something that makes sense for us, and we'll add to it as we go.

But right where we sit coming into the year, we just -- 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. But 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. And so we're hopeful. And we think that we will have near-term development activity as we go through the year. We just didn't want to start off with that in our guidance.

Our next question comes from Noel Parks with Tele Brothers.

Good morning I had a few questions about the transaction and the Powder River Basin. And 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. And I think of EOG having at time to place the powder kind of at the top of the heap of its plays and then not talked about it for a while.

So just I just wonder what you're seeing out there as far as ongoing development?

Sure, I'll take the -- this is Brian. I'll take the first crack at that. Again, I'm going to circle back to 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.

And over the last couple of 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, Dev and others that are absolutely working very hard to break the code. And EOG has, interestingly enough to us, probably spent more capital in the powder than they have in the Bakken where we think they still have some great development opportunities.

So 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 think that with the 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. But what's exciting to me is that all those undeveloped locations, so if that Niobrara and that Maury formation kind of technological breakthrough happens, we're going to have some great locations up there.

And speaking of the 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 and I think, I guess, Nanea, Mauri and then sort of Turner as being pretty variable.

So do you -- I mean, maybe in terms of inning towards that sort of cracking the code, do you sort of think particular entering that the industry is in with the power these days?

Yes, Noel, this is Bob. The very, very, very good question. We value this acquisition purely from a PDP standpoint. We put 0 value on the undeveloped even though we know that there is a lot of value there.

You're absolutely right. the powder is customization basin. Every -- just you can't do the same thing on every well. So that's why we leaned in strongly with Continental and EOG. And as Brian said, EOG spent a ton of money up here. And the wells that they've drilled that we're owners in now have done extremely well. But you can't value the undeveloped like you can with the Bakken, which is pretty much blanket formation.

So it's a very good question. We didn't value the undeveloped.

Okay. Great. And I guess just my last on. Among the -- well, maybe I'll talk a little bit about the transaction. It does seem notable that it is an all stock transaction. And 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 want to cash out and that's the motivation?

This is Jimmy. We see both, clearly. It just depends on the seller. In this case, very sophisticated sale, we saw value in our stock and become a shareholder for the foreseeable future. And so they saw upside.

Now obviously, we've negotiated this transaction prior to the dense over the weekend. And we do have sellers like that want to ride the upside of the shares they're getting and have exposure and aren't ready to cash out. But we -- there's always others that are more cash focused and want to get their returns, meet their hurdles, et cetera.

So we look at both. We love using stock in these kind of transactions because it's a very efficient use of our equity. But we're not dedicated to only that style transaction, but we're really good everything, frankly.

[Operator Instructions] There are no further questions at this time. At this point, I'd like to turn the call back over to Robert Gerrity for closing comments.

Again, thanks, everybody, for joining. Ben Messier is available to answer any other questions, and the management team would be happy to talk to anybody. So thank you very much for your support.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Greetings. Welcome to the Vitesse Energy Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference 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 financial and operating results for the third quarter of 2025 and increased production and capital expenditures guidance. Our 10-Q and earnings 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, let 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 a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings release.

Now I will turn the call over to Vitesse's Chairman and CEO, Bob Gerrity.

Thank you, Ben, and good morning, everybody. Thanks for joining. In the third quarter, we stuck to our strategy of disciplined capital allocation. We participated in an increasing number of 3- and 4-mile laterals drilled by our operating partners. And significantly, we successfully completed 2 Vitesse operated wells, as Brian will discuss. As a result, we increased our production and capital expenditure guidance for 2025.

Advancements in technology continue to enhance the value of our assets. Extended laterals are delivering strong economic results through lower drilling and completion cost per lateral foot. Drilling activity continues to progress further into the areas where Vitesse hold concentrated positions. Our original strategy of acquiring acreage outside the core of the Bakken is paying off as activity now moves into these areas, generating returns comparable to historically see those seen in the core. We estimate that we have over 2 million net lateral feet of development remaining on our asset, which translates to more than 200 net 2-mile equivalent wells.

The oil industry is highly cyclical. Our long-duration asset, low leverage and disciplined hedging positions us not only to withstand but to be opportunistic during market disruptions. We're your capital allocators and we'll continue to make the best decisions with our capital each quarter based on the opportunity set available. As a testament to our allocation decisions last week, our Board declared our fourth quarter dividend at an annual rate of $2.25 per share.

I will now hand the call over to our President, Brian Cree, to provide more detail on our operations.

Thanks, Bob. Good morning, everyone, and thanks for joining today's call.

In late September, Vitesse's operating team turned to production to gross, 1.9 net drilled but uncompleted wells acquired through the Lucero acquisition earlier this year. The wells are exceeding our initial oil and natural gas production expectations and were completed approximately $2 million or 15% under budget. We continue to contemplate the best time to advance a broader operated drilling plan, but we will only implement a development plan at a cadence and return thresholds that strengthen our dividend.

Production for the quarter averaged 18,163 barrels of oil equivalent per day. This brings our year-to-date production to 17,373 barrels of oil equivalent per day. As of September 30, 2025, we had 20.8 net wells in our development pipeline, including 5.6 net wells that were either drilling or completing and another 15.2 net locations that have been permitted for development. For 2025, we have approximately 60% of our remaining oil production hedged at nearly $70 per barrel and just under half of remaining 2025 natural gas production hedged with attractively priced collars at a weighted average floor of $3.73 and ceiling of $5.85 per MMBtu both percentages based on the midpoint of our revised guidance. Additionally, we have over 3,300 barrels per day and 12,700 MMBtu per day of our 2026 oil and natural gas production hedged at $66.43 per barrel and through a costless collar of $3.72 by $4.99 per MMBtu.

Thanks for your time. Now I'll turn the call over to our CFO, Jimmy Henderson.

Good morning, everyone. Just wanted to highlight a few items from our financial results for the third quarter of 2025. Please refer to our earnings release and 10-Q, which were filed last night for any further details.

Production for the quarter was 18,163 Boe per day with a 65% oil cut. For the quarter, adjusted EBITDA was $41.6 million, and adjusted net income was $3.8 million. GAAP net income was a loss of $1.3 million, and you can see that reconciliation in our press release. Cash CapEx, including acquisition costs for the quarter were $31.8 million. These costs were funded within our operating cash flows. At the end of the third quarter, we had total debt of $114 million and net debt of $108 million, giving us net debt to adjusted annualized EBITDA of 0.65x.

We increased our annual guidance for 2025 due to the completion of our 2 DUCs, as Brian discussed, and incremental organic well proposals primarily focused on 3- and 4-mile development. We now anticipate production in the range of 17,000 to 17,500 Boe per day for the full year with an anticipated oil cut of 65% to 67%. Cash CapEx for the year is now anticipated to be between $110 million and $125 million.

With that, let me turn the call over to the operator and open for Q&A.

[Operator Instructions] Our first question comes from the line of Jeff Grampp with Northland Capital Markets.

I was curious to start off on these longer laterals. I know that's something that you guys have kind of talked is directionally happening a bit more for a bit. But it seems like maybe a bit of a step change in terms of the proportion there. So I was just hoping to dive into that a bit more. Do you guys have any numbers on, I don't know, what percent of the program are these 3 and 4-mile laterals now? And can you remind us how that maybe compares to, I don't know, earlier this year or this time last year?

Jeff, it's Ben. I would say approximately over the course of the year, about half of our AFEs that we have received have been extended laterals. We don't see 1-mile laterals anymore, at least we haven't this year. So the remaining half has been 2-mile laterals.

Got it. Perfect. On the acquisition side, it looked like you guys were a bit more active there. It looked like perhaps maybe even the most active quarter since maybe a year or so ago. Is that -- you guys just refresh us what are you seeing on the acquisition market? Was this expected? Was this surprising? And what's kind of the outlook on the acquisition side? Is this a sign of more things to come?

Yes, Jeff, this is Brian. Obviously, as you know, we are always looking at near-term development opportunities, buying AFEs from those that they are looking to divest. And over the course of about the last year, it's just been a very competitive market. We've continued to be very disciplined with our rate of return approach on how we look at those. And you just keep banging away, and we've looked at hundreds and hundreds of opportunities. We continue to bid them as we have in the past, and we are fortunate to able to close a couple of deals in the third quarter.

And we'll continue to look at deals. The market is very strong. We're seeing lots of AFE opportunities. But again, we're being very disciplined with our approach in terms of how we're looking at making those acquisitions.

Just to clarify, I guess, there's nothing, I guess, dramatically different that you guys saw either from a competitiveness standpoint or your underwriting practices. It's just a function of some days you win the lottery, some days you don't, that kind of thing?

Yes. I think there's -- I think we are seeing more activity out there in terms of -- at least on our acreage, which is helpful because as we look at -- as we analyze those AFEs that are coming into our acreage position, it gives us an opportunity to be a little more, I don't want to use the word aggressive, but it gives us a little bit of a leg up when we're looking at buying in AFE opportunities on our existing acreage from others that are looking to sell them because we've done a ton of work on that, and it just gives us a little bit of a leg up.

Our next question comes from the line of Poe Fratt with Alliance Global Partners.

Yes. Just a follow-up on CapEx. Can you just highlight what acquisitions might be built into the fourth quarter CapEx range?

Poe, it's Ben here. We tend to budget conservatively on acquisitions. We don't know exactly when, as Jeff said, we're going to hit the lottery and win acquisitions in any given quarter. Currently, we have a few hundred grand budgeted for acquisitions in the fourth. We hope that we come across economic opportunities that allow us to deploy more capital there, which is part of the reason you see a $15 million range for the fourth quarter, which is a pretty wide range, but we leave some wiggle room to make attractive acquisitions if they present themselves.

Sounds good. And then on the operated inventory, you've finished the 2 DUCs that were -- that you talked about previously. What's sort of the line of sight on any of the operated inventory opportunities that you have looking out into 2026?

Well, as we've said previously, we've got somewhere around 15 net undeveloped locations that we picked up through the acquisition of Lucero. We continue to look at those, look at the best ways to drill those, look at the ability to make trades with other partners to improve the economics in those. And that's -- as Bob stated, and we've said we're definitely looking at a 2026 plan. But a lot of that's going to depend on where oil prices are and what else we're seeing in terms of CapEx from our partners.

So it's something that we're continuing to evaluate. We're kind of planning out a 2026 and 2027 operated program, but a lot of that will depend as we finalize our models and budgets for 2026.

That's helpful. And then when I look at the cost structure for the third quarter, the second quarter had a lot of noise just positive noise because of the settlement. Can you look at the third quarter cost structure run rate? And is that normal? Is that more normalized compared to the second quarter?

Yes, definitely, this is Jimmy. Definitely, exactly as you constructed that third quarter is a much better indicator of run rate for G&A, particularly LOE slightly higher than we expected, but we're -- we had some workovers as we've talked before, and I think that's kind of coming to an end. So it should be slightly lower there. And on, say, gas prices, we're probably in the range that we expect. Hopefully, we'll see a little bit better results going forward as oil prices and our NGL prices have some a little bit of life in the future. So hopefully, that helps you in your modeling.

Yes. Let me just add, this is Brian. Let me add to that. I mean, the LOE in the third quarter, look, I mean, we continue to look at all of the new wells that we acquired from Lucero, and I think we're making the right decisions in terms of when to spend money on those wells. And as Jimmy said, I think we've seen a lot less activity in the fourth quarter than we did in the third quarter. So I agree with Jimmy's comment there.

And then obviously, with the gas price differential, when you've got oil at $60 and NGLs where they are, that third quarter looks pretty tough from a gas price standpoint, but we typically see that improve quite a bit in the fourth quarter and first quarters as we're in those winter months.

Our next question comes from the line of Noel Parks with Tuohy Brothers.

Just a couple. One thing I was thinking about is we're still seeing a fair amount of uncertainty in the credit environment just as far as sort of yield curve and so forth. I just wonder, do you sort of see any signs of that being on producers minds as they look at their, say, 2026 budgets as far as just how inclined they are to be sort of either aggressive or hold back kind of, again, because of the funding environment?

Noel, this is Jimmy. There are a lot of factors play into what operators' plans are. Most notably, of course, is oil prices and consolidation is a big part of that as many of our operators have continued to consolidate the basin and they're working on their plans to how they're going to allocate capital and move rigs in or out. We're still -- we feel like things are going our way.

As Bob mentioned before, we're starting to see much more of our acreage getting developed, where we have a more concentrated position. So that probably plays more into the plans for next year and the interest rate environment that we're in. But it certainly helps that that's a positive move. But we're still hopeful to see operators put their budgets together for next year, and then we can have a better idea, better more line of sight to what our plans are going to be.

Great. And just wondering if you had any updated thoughts as far as you look at different opportunities and potentially different basins about the gas opportunities out there these days.

Yes, Noel, this is Bob. We look -- we're looking a lot. So I can't speak to any specific asset that we're looking for other than our lens is pretty wide at this point. And we would love to buy gas assets at the right price. Look, the M&A market now is pretty frenetic. But if you take a look at the Bakken, it's pretty quiet. So we're going to be looking at the Bakken first. And the fun part about the operators in the Bakken, they are very well funded. They're not stressed and the other than the Hess-Chevron transaction, which we think is certainly a net positive. And the core Enerplus, which is also a net positive.

There's -- we're looking at the Bakken first. Of the $1 billion of deals that we have in our deal shop right now, probably 1/3 of them are gas oriented. But it's a very frenetic market, Noel, and I can't handicap what's going to be the next deal we do.

We have reached the end of the question-and-answer session. I would like to turn the floor back to Bob Gerrity for closing remarks.

Thanks, and thanks for everybody for joining in. If you've got any follow-up questions, Ben Messier does a great job in answering those. So thanks, everybody, see you in a couple of months. Bye-bye.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.