クレセント・エナジー（CRGY）2026年第3四半期決算説明会：フリーキャッシュフローとイーグルフォードの成長

主なポイント

• クレセント・エナジーの2026年第3四半期の生産量は、日量約13万4,000バレルの原油を含め、日量約32万8,000石油換算バレル（boe）となりました。調整後EBITDAは7億8,600万ドル、フリーキャッシュフローは3億6,700万ドルでした。
• 四半期設備投資額は約3億2,600万ドルとなりました。当期末時点の流動性は約20億ドル、純レバレッジ比率は約1.5倍でした。
• パーミアン盆地における年換算のシナジー効果は、1億500万ドルの追加創出を経て約2億9,500万ドルに達しました。同社は、当初の9,000万ドル〜1億ドルのレンジに対し、シナジー合計の目標を3億ドル超へと引き上げました。
• デボン・エナジーによるイーグルフォード資産の買収手続き（完了待ち）により、横掘り（ラテラル）長10,000フィート換算で600カ所を超える純掘削候補地が追加されます。クレセントはこの取引から年間1億4,000万ドルのシナジー効果を見込んでいます。
• 経営陣は、原油価格を1バレル＝70ドルと仮定した場合、統合後のプロフォーマベースでの生産量が日量約40万boe、15年分以上の掘削資産を保有し、5年間で75億ドルを超えるレバード・フリーキャッシュフローを創出すると見込んでいます。
• 1株あたり0.12ドルの定額四半期配当を実施した後のフリーキャッシュフローの主な使途は、負債返済となります。買収後のプロフォーマベースで、クレセントは連結レバレッジ比率を2027年末までに約1.5倍、2028年末までに約1.0倍とすることを目標としています。

主要財務データ

事業および動向

クレセントは、井戸掘削コストの削減により採算の取れる掘削資産（インベントリ）が拡大していると述べました。2023年以降、イーグルフォードでの井戸コスト削減は25%に達し、ユインタでは前年比約20%の削減を記録しました。昨年末に同社が操業を引き継いで以来、パーミアンでのコスト削減は20%〜25%に達しています。

経営陣によると、井戸あたりのコストが100万ドル削減されるごとに、原油の損益分岐価格が1バレルあたり約5〜10ドル下がります。これまでに達成された削減により、損益分岐価格が50ドル未満の掘削資産は2倍に増加し、60ドル未満の資産は約50%増加しました。

パーミアンでは、原油、ガス、水に関する契約の再契約により、約4,000万ドルの追加シナジー効果が生じました。これらの契約は2027年1月から業績に影響を与え始める見込みです。また、一部の輸送量がワハからメキシコ湾岸市場へ移行することに伴い、集荷・処理・輸送コストの削減や、ガスおよびNGLの販売実現価格改善の可能性があると経営陣は見ています。

デボンの買収取引完了により、クレセントはイーグルフォードで第2位のオペレーターとなります。買収する資産により600カ所以上の純掘削候補地が追加され、特定済みの年間シナジー効果として1億4,000万ドルが見込まれます。

クレセント・ロイヤルティーズは、プロフォーマベースで年換算約2億5,000万ドルのEBITDAを創出すると予想されています。そのEBITDAの約40%（現在は約10%）はクレセント自社操業資産によるものであり、開発とキャッシュフローの見通しがより明確になります。

経営陣によるガイダンス

クレセントは、デボンのイーグルフォード取引後も18億ドルの今後の資本枠組みを維持しました。この枠組みには、既存事業の効率化と、買収資産からの1億ドルに上る掘削・完井シナジー見込みが含まれています。

経営陣は引き続き、生産維持から低成長を目指す事業モデルに基づいた計画を立てています。買収完了後の最初の優先事項は統合と安定化となります。時間の経過とともに、事業パフォーマンスや市場状況に応じて、既存のイーグルフォード資産から、新しく取得したイーグルフォード資産、パーミアン、ユインタへと一部の資本がシフトする可能性があります。

同社はインフレにもかかわらず、2027年も井戸掘削コストが下がり続けると見込んでいます。経営陣は、さらなる効率化の機会として、横掘り（ラテラル）の長尺化、同時水圧破砕（サイマルフラック）活用の拡大、電化、サプライチェーンの見直しを挙げました。

クレセントは計画していた2027年の追加原油ヘッジプログラムを完了しました。買収後のプロフォーマベースで、2027年上半期の原油生産量の約60%、下半期の約50%がヘッジされています。2028年上半期の原油生産量の約20%は1バレルあたり75ドルを超える価格でヘッジされており、経営陣は状況に応じて2028年のヘッジを追加する可能性があります。

リスクと注目点

• デボンのイーグルフォード買収はまだ完了しておらず、取引の完了、統合、およびシナジーの実現が重要な執行上の変動要素となります。
• 経営陣は、鋼材や軽油で想定される5%〜7%の値上がりなどインフレ圧力を認めているものの、業務の効率化がこれらの圧力を相殺すると見込んでいます。
• 商品価格（コモディティ価格）の変動は、キャッシュ創出やデレバレッジ（負債削減）のペースに影響を与える可能性があります。クレセントは原油ヘッジを活用して、短期的なキャッシュフローの見通しを向上させています。
• 同社はまた、地政学的リスク、ビジネス戦略の実行、買収に関連する要因を不確実性の要因として挙げています。
• オースティン・チョーク層における機会はイーグルフォードの地域によって異なり、生産性の高い着掘層（ランディングゾーン）の数も地域ごとに異なります。

アナリスト質疑応答の要点

資本配分：経営陣は、デボンとの取引によってクレセントの基本戦略が変更されることはないと予想しています。開発資本は引き続き、維持から低成長の枠組みの中でリターンに応じて配分されます。定額配当を実施した後のフリーキャッシュフローの主な使途は依然として負債削減ですが、経営陣は機動的な自社株買いも魅力的な選択肢となり得ると考えています。

シナジーの可能性：クレセントは発表されたイーグルフォードのシナジー達成を見込んでおり、さらなる上積みの可能性もあると見ています。しかし、経営陣は、クレセントがパーミアンに進出した際のより慎重な前提とは異なり、デボンの初期目標にはすでに営業上のシナジーが含まれていると指摘しました。

クレセント・ロイヤルティーズ：経営陣は、プラットフォームの価値を明確にし、クレセントの信用プロファイルを裏付ける選択肢を含め、株主にとって最善となる成果を検討しています。決算発表の電話会見では、特定の取引構造についての確約はなされませんでした。

ベース生産の最適化：クレセントは、4,700基を超えるイーグルフォードの井戸と4,000基を超えるパーミアンの井戸において、営業利益率の向上に取り組んでいます。注力分野には、人工採油（人工リフト）の最適化、自動化、化学薬品、発電機、サプライチェーン管理が含まれます。

掘削資産の拡大：経営陣は、さらなるコスト削減、ラテラルの長尺化、オースティン・チョークを含む追加の層の開発により、損益分岐価格50ドル未満および60ドル未満の掘削資産が拡大すると見込んでいます。同社は2027年上半期に掘削資産に関する追加の更新情報を提供する予定です。

ポートフォリオ戦略：クレセントは、以前発表した資産売却計画が完了したと発表しました。経営陣は、上流事業における新たな売却候補資産の選定よりも、現在保有している資産の改善に注力しています。

業績説明会（決算電話会議）文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to the Crescent Energy Q3 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Reid Gallagher, Investor Relations. Reid, please go ahead.

Reid Gallagher

Good morning, and thank you for joining Crescent's Third Quarter 2026 Conference Call. Today's prepared remarks will come from our CEO, David Rockecharlie; and our CFO, Brandi Kendall. Our Chief Operating Officer and Executive Vice President of Investments will also be available during Q&A.

Today's call may contain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, global geopolitical conflict, our business strategies, the pending acquisition of Devon Energy's Eagle Ford assets and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We have no obligation to update any forward-looking statements after today's call.

In addition, today's discussion may include disclosure regarding non-GAAP financial measures. For reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP measures, please reference our 10-Q and earnings release available in the Investors section of our website.

With that, I'll hand it over to David.

David Rockecharlie

Good morning, and thank you to everyone for joining us. Crescent delivered another strong quarter, and I want to begin by thanking everyone on Team Crescent for the consistent focus and execution behind our performance. We are proud of the business we've built and excited about where Crescent stands today. We've assembled high-quality assets, deep inventory and a talented team with a proven track record of consistently improving the assets we own.

Our business generates substantial free cash flow today, and we will continue to deliver. We have significant opportunity across our portfolio to create significant incremental value from here. With that, let me highlight three key takeaways for today's call.

First, Crescent has undergone a significant portfolio transformation and is a fundamentally better business than it was 5 years ago at IPO. With a proven track record of investing and operating execution, we have improved asset quality, build scale in our core basins, deepened our inventory and strengthened our financial profile. Today, we are a top 10 independent with a world-class Eagle Ford position.

Second, our market-leading operational execution continues to drive strong results and differentiated value creation. We delivered higher production, lower capital and higher free cash flow than market expectations this quarter. Across our portfolio, structurally lower well costs are expanding our economic inventory and our lower operating costs are increasing both margins and free cash flow. Our Permian transformation has demonstrated the repeatability of our model with approximately $295 million of annualized synergies captured versus our original target of $90 million to $100 million.

And finally, we have significant embedded upside across the business, all within our control. With continued operational improvement, our growing Crescent Royalties platform, the recently announced Devon Eagle Ford acquisition and our clear path to rapid deleveraging, we see multiple compelling opportunities to compound value creation.

Before discussing the quarter in more detail, I would like to put our progress in perspective. Since our IPO, we've transformed Crescent. We've assembled a much larger and higher quality asset base while meaningfully improving the underlying cash flow capacity of the business. Pro forma for the announced Eagle Ford acquisition, Crescent produces approximately 400,000 barrels of oil equivalent per day, has 15-plus years of inventory and is positioned to generate more than $7.5 billion of levered free cash flow over the next 5 years, assuming an oil price of $70 per barrel.

We've built this business through consistent investing and operating execution and our third quarter results demonstrate the consistency and strength of our model. The transformation in the Permian is a particularly compelling example of our operating playbook in action where results continue to exceed our original expectations.

Since our second quarter update, we've captured $105 million of incremental annual synergies, bringing the total to approximately $295 million, nearly 3x the high end of our original target and representing more than $1 billion of value on a 5-year PV-10 basis. The result is an asset base that looks materially different than it did at announcement. Our total synergy target is now more than $300 million, and that value creation is coming from strong execution, lower costs and better commercial outcomes.

Our Permian success is just a single example of our consistent execution. In each of our core basins, efficiency gains, longer laterals and increased final frac utilization are translating into structurally lower well costs. With 25% savings in the Eagle Ford since 2023 and approximately 20% savings year-over-year in the Uinta, in addition to the 20% to 25% savings in the Permian since taking over operations late last year.

Illustratively, $1 million of savings per well can [indiscernible] oil breakevens by approximately $5 to $10 per barrel. So those savings represent a dramatic step change in inventory quality and significantly extend our runway of economic locations. With our realized savings to date, we have doubled sub-$50 breakeven inventory and increased sub-$60 breakeven inventory by nearly 50%. In addition to our inventory expansion, we have driven a similar transformation of the financial profile of our business.

Our operating costs, margins and free cash flow per share at all improved at market-leading rates. That rate of change reflects our ability to consistently improve the assets we own and create substantial incremental value.

Our track record of investing and operating execution is why we see significant opportunity in the Eagle Ford acquisition. This is a rare opportunity to add scale in Tier 1 inventory in our backyard where we have differentiated knowledge and a proven ability to create value. The assets add more than 600 net locations on a 10,000-foot basis and will make Crescent the second largest operator in the Eagle Ford.

The $140 million of identified annual synergies are grounded in our track record, supported by the same operational and commercial improvements we've executed repeatedly across Crescent.

The acquisition also transforms our market-leading Royalties platform, bringing the pro forma business to approximately $250 million of annualized EBITDA. Just as important, approximately 40% of pro forma EBITDA will come from Crescent operated assets, up from approximately 10% today, giving us significantly greater visibility into future development and cash flow. This combination of scale, development visibility and exposure to cost-free organic growth is a differentiated source of cash flow and value within Crescent.

Taken together, our third quarter results and the announced acquisition are a clear example of the Crescent model. We love our current asset portfolio that we have built over the last 5 years through successful and consistent execution. We have a substantial opportunity to create additional value through the assets we own and the announced Eagle Ford acquisition. Our near-term focus is to continue to execute on our high-quality asset base, generate free cash flow, reduce debt and deliver value to our shareholders.

With that, I'll turn the call over to Brandi.

Brandi Kendall

Thanks, David. Crescent delivered another quarter of strong results. We produced approximately 328,000 barrels of oil equivalent per day during the quarter, including approximately 134,000 barrels of oil per day. It generated approximately $786 million of adjusted EBITDA and $367 million of free cash flow.

Production came in above expectations. Capital of approximately $326 million was 9% better than expectations and levered free cash flow was 23% above expectations. We ended the quarter with approximately $2 billion of liquidity and net leverage of approximately 1.5x. Our fixed quarterly dividend remains $0.12 per share, and our capital allocation framework continues to prioritize long-term per share value creation.

As we discussed last month, the recently announced Eagle Ford acquisition is consistent with that framework. The transaction adds significant Tier 1 inventory and we have structured the financing to support rapid deleveraging and to preserve balance sheet strength. We expect approximately $1 billion of pro forma liquidity at closing, providing meaningful flexibility as we execute against our deleveraging plan.

We successfully executed approximately $1.15 billion of equity financing and secured efficient low-cost in an approximate 6% cost of capital. The strong investor support and constructive rating us response further reinforced the quality of the transaction and our financing strategy. Our hedge position is an important part of our deleveraging plan.

Alongside the Eagle Ford acquisition, we fully executed our planned incremental 2027 oil hedges and have begun layering on 2028 hedges at attractive pricing. Pro forma for the acquisition, approximately 60% of our oil production is hedged in the first half of 2027, approximately 50% in the second half and approximately 20% in the first half of 2028, enhancing near-term cash flow visibility during the initial debt reduction period.

Our near-term capital allocation priorities remain clear. First, the fixed dividend, which remains an important component of our shareholder return framework. Second, following the recent Eagle Ford acquisition, debt reduction will be our primary use of free cash flow after the fixed dividend. We are targeting approximately 1.5x consolidated leverage at year-end 2027, at approximately 1x at year-end 2028, pro forma for the acquisition.

Importantly, commodity prices have increased since we announced the acquisition, providing an opportunity to delever faster than the initial targets we outlined. And third, preserve financial flexibility for additional shareholder returns and attractive investments over time, with any such decisions consistent with our deleveraging objectives.

The combination of strong free cash flow generation, substantial pro forma liquidity at closing, no near-term maturities and a clear path to lower leverage puts Crescent in a strong financial position and supports our continued progress towards an investment grade credit rating.

With that, I'll turn the call back to David.

David Rockecharlie

Thanks, Brandi. This quarter's performance and the transformation we've made since our IPO demonstrate the strength of the Crescent model. With market-leading execution, we have built a fundamentally better business, expanded our economic inventory, improved our operating cost structure and significantly increased our free cash flow capacity. We have assembled an exceptional asset base anchored by a world-class Eagle Ford position, alongside significant opportunities across Permian, Uinta and Crescent Royalties.

Importantly, the next phase of Crescent's value creation is within our control. We see substantial opportunity for further value embedded in our asset base. Our focus is on execution, continuing to improve well economics, integrating Eagle Ford assets, capturing synergies and generating free cash flow. With this differentiated upside, we believe Crescent has never been better positioned to create long-term value for shareholders.

With that, we'll open it up for Q&A. Operator?

Operator

[Operator Instructions] Your first question comes from the line of Neal Dingmann with William Blair.

質疑応答

Neal Dingmann

My first question is on capital allocation. Specifically, could you speak to how this may or may not change post the Devon Eagle Ford close, especially given how much larger operations are now than a year ago?

David Rockecharlie

Neal, it's David. Great question. I'll just start by saying we love the assets that we have, and we're currently actively developing oil across the whole portfolio. And so we don't expect that to change. To your point, the Devon Eagle Ford acquisition, it's an asset in our own backyard and it slots right in to what we're doing. So importantly, we see more development opportunity across every asset that we own, and we'll continue to allocate based on returns. And then fundamentally, as you know, we like to make sure we're running basically a maintenance to a low growth program. So I don't think fundamental change in capital spending or reinvestment rate, but just a lot more opportunity.

Neal Dingmann

Perfect. And then just my second, just on the strategic plan going forward, just wondering now with the larger size, David, would you say the strategic growth plan has changed at all?

David Rockecharlie

No, no change to strategy or growth plan, but I think probably worth reiterating some of the key points we just made. Number one objective is focused on operational execution. It's working for us. We're generating more value across the business, more cash flow, more profit across every asset. And the other thing we've been able to do over a number of years is scale the portfolio that also focuses. So I think it should be pretty clear really where we see the opportunity in our existing asset base and call it offset assets down the road. But importantly, and also highlight, we think opportunistic stock buybacks are an excellent way to buy more of what we already know and love.

Operator

Your next question comes from the line of John Freeman with Raymond James.

John Freeman

When we sort of look back on the fact that you've been able to triple or more than triple the initial synergy target on the Vital deal, I'm not trying to set up too high of a bar before the Devon deal even closes. But if you're just sort of looking back over the last 12 months, and you're like, okay, I had this original target on vital, you end up doing 3x that, and you sort of apply it to Devon, like where you see potential opportunities above and beyond this initial target, not saying they occur. But if we're going to look back in 12 months and you're going to end up beating this target what are some likely areas where that could occur?

David Rockecharlie

John, it's David. I'll start. Two things, again, just to know about us and about the Permian acquisition and Shell. As you'll recall, we've been executing on a number of the slides we put forward this quarter demonstrate what I'll call, multiyear market-leading execution on the cost side, both on D&C and regular way operations. So we think that is a core skill set of the company. We took that into the Permian, but it was a basin entry for us. And so, as you'll remember, we had very limited operational synergies that we put forward at that time really at just respect to the opportunity that we saw out there and the time line we might not take it would take. So long story short. Resounding success, playbook transferred really well from the core Eagle Ford out into the Permian. But what we would say is two things about the Permian. One still have more to do. So we're excited about that. The other thing is a lot of what we've captured is just starting to roll into the financial statement.

So we think we're going to see more performance improvement from things we've already accomplished that are just starting to show up contractually and financially. And then secondly, we'll do more with those assets is our view over time. And then coming back now to the original question on the Eagle Ford, this is our backyard. We've executed here for a long time. We absolutely believe we're going to achieve the synergies we put forward and more. But we are putting forward operational synergies upfront. So I think Devon was an outstanding example of what we can do when we've built a scale position. And the Permian, obviously offered some incremental upside just because we were a little bit, I'll call it, cautious stepping in there, but we feel great about it now.

John Freeman

That's great. And then moving to the new sort of marketing slide that you've got Slide 11 in the deck, trying to understand sort of kind of what sort of the future opportunities are versus what you've already achieved? And then obviously, that slide focuses on gas. But post the Devon deal closing, are there also opportunities to improve NGL realizations as well?

Brandi Kendall

John, it's Brandi. So what we highlighted as part of the incremental synergy capture this quarter on the Permian assets was $40 million of effectively just successful recontracting across oil, gas, water contracts. So those are all contracts that are across the line that should start flowing through the financial statement starting in January of next year. I think there is incremental upside, especially as you think about us now having access on a portion of our volume to take it out of a more constrained Waha market into the Gulf Coast. So I think that's incremental upside to what we laid out. So a couple of things, expect structurally lower GP&T costs, but then also stronger gas and NGL realizations over time.

Operator

The next question comes from the line of Charles Meade with Johnson Rice.

Charles Meade

David, on the Crescent Royalties, I know you -- as it was a couple of quarters ago that you introduced this as kind of a stand-alone and you've taken a step here towards potential IPO. And I wonder when I look at it, I think it can do two things, at least two things, more than two things. But two of the things you could do for you are you can accelerate your deleveraging. The other thing you could do is it could give you a public mark on that piece of your business that could help your overall -- your CRDi share price. But I wonder if you could talk about from your perspective, what are the potential benefits from taking this step? And what the relative priority is for you, like whether you're more focused on getting a good mark or more focused on accelerating the deleveraging or perhaps something else?

David Rockecharlie

Yes. Charles, thank you. It's a great question. I'll just start by saying this is obviously consistent with the strategy we outlined in the first quarter. And really earlier this year, what we discussed was finding the best outcome for shareholders over a 12- to 18-month period. And then later talked about accelerating that time line. So hopefully, this is just seen as, number one, we're hard at work focused on best outcome.

To your point, our view is that best outcome will achieve all of those things, which is making the business opportunity more clear, making the value opportunity more clear and certainly, anything we do around this highly cash-generative business should be credit accretive as well. So the priority is just best outcome for us, and we're going to find the best way to do that.

Charles Meade

Okay. That's helpful. And then looking at 4Q, you guys had a really strong 3Q and -- operations-wise, you noted that in your prepared comments. I understand the reasons why with the pending acquisition close, you're not going to update any 4Q guide. But maybe you could -- perhaps you could offer kind of a characterization that the -- the strength we saw in 3Q, is that -- was that due to some one-off factors or maybe at the other than end of the spectrum, is that some kind of durable operational improvement that we should expect to show up again in 4Q?

David Rockecharlie

The simple answer is no one-off making durable change to the business. And as you heard from Brandi, a lot of the things we're doing are going to start showing up sequentially quarter over quarter over quarter.

Operator

Your next question comes from the line of Noah Hungness with Wells Fargo.

Noah Hungness

I guess my first question here, on your guys' asset detailed slides, it looks like well costs have been more or less flat down this year. Are you thinking about well cost next year on the stand-alone CRT Y assets? And are there any inflationary pressures that may be working their way through the system?

Jerome Hall

Noah, it's Joey. Thanks for the question. We would expect to continue to see well costs go down in 2027. But to your point, we do expect inflationary pressures, no question about it. And I would also just characterize that, particularly when you're talking about on the Vital side of things, we've really taken the big chunks out. So we'll just be looking at more operational efficiencies. But we have a huge opportunity on the Devon assets, so we expect for those full costs to go down.

On the inflation part, inflation is very real. I would say, as an industry, we're looking at like 5% to 7% steel and diesel, very big drivers. But whenever you're talking about Crescent, we're just a different company now. We're bigger and we're developing different than we have in the past, and it's hard for inflation to erode significant gains in capital efficiency, which is what we're experiencing. So we're going to keep executing our playbook. We're going to continue drilling longer laterals like, in particular, in the Permian, we still have opportunity to use more signal frac. We have some electrification opportunities. So inflation can make a den in these things, but it's not going to curve us from continuing to make continual improvements in well costs.

Also still working on the supply chain side. In a lot of instances, we're allowing service providers to provide things like fuel and sand and chemicals and things like that. We're looking at taking those on ourselves, which, of course, you know that would have a pretty significant markup. So that's another opportunity. So I just feel like inflation is real, but the opportunities are more. So I would expect us to continue to drive down well cost.

Brandi Kendall

And maybe what I'll add there is that alongside the Eagle Ford transaction announcement from a couple of weeks ago, we laid out a capital framework of $1.8 billion going forward. That framework still holds and reflects the current service cost environment that we're in.

Noah Hungness

And just a clarification question then. The $1.8 billion, does that include the -- does that include kind of the operational improvements that would have seen like the updated synergy number that you threw out here at 3Q?

Brandi Kendall

That's right. It includes the efficiencies that we're capturing on the legacy Crescent business, but also the $100 million of expected D&C synergies related to the Devon Eagle Ford assets.

Noah Hungness

That's helpful. And then for my second question. You guys continued to layer on hedges and take advantage of the strength that we're seeing in the forward curve here. Just how are you thinking about the maximum amount of production that you want to hedge? And I'm thinking both for 2027, given the strength there, but also how strong 2028 has been as well. Is there more that you would be interested in hedging in '28, too?

Brandi Kendall

No. It's Brandi. So with as we're there, and we've executed everything we wanted to execute as it relates to the '27 oil program. As you saw in the materials, we've had roughly 20% of the first half of 2028 at a kind of $75-plus range. I think we'll look to continue to kind of opportunistically add a bit more there. But in totality, we feel really great about the deleveraging pathway and hedges that we've executed to protect that.

Operator

Your next question comes from the line of Michael Furrow with Pickering Energy Partners.

Michael Furrow

Just kind of following up on John's question. Look, I think it's safe to say at this point, the Vital deal has just been a knockout transaction given the rapid synergy realizations. To your point, David, look, we understand that there may have been more to do in the Permian assets than with the Devon assets. But I'd imagine the process of really scrutinizing in other operators' methods forces you to look internally at your own operations, but maybe through a new perspective. So -- is there anything that the company has identified through that process of realizing synergies that you're looking to apply to the legacy Crescent assets just in general?

David Rockecharlie

Yes. It's David. No, I'll let Joey follow on as needed. I think it's a great opportunity, to your point. So long story short, we came in knowing what we could do. And in particular, just the scale and opportunity. We've had to build a business across 1 million now gross acres versus this, which is a great position, but much smaller. We certainly bringing a lot of tools to to the party. But all that said, we think the existing business will certainly run well, and we learn something every time. So we do believe we're going to be able to slot this into our existing operations and get incremental benefits to scale, but we do always learn things, and you might just talk about how we're thinking about integration and for next year.

Jerome Hall

Yes. Michael, I'll give you some specific examples. One of the things we're really trying to get up the curve on to improve our operating costs as the automation state-of-the-art business. And both vital and in particular, Devon have done a tremendous job over their lifetime of getting automation in the place where we want it to be. And in particular, Devon, we're looking forward to learning from them and using the systems that they put in place to help us operate our feel better. But to say that -- I know we talk about synergies all the time, but I would say from Vital, there were several things that we took on from them in regards to supply chain and inventory management and things like that, we've taken on board and allowed us to improve our own operations because we're on our own learning curve as well. When you look at the history of the company, we've been a conglomeration of multiple acquisitions, and we're just now starting the journey, particularly on the LOE side of improving our operations. So yes, both of those organizations have helped us tremendously.

Michael Furrow

Great. Appreciate the response. Just a quick follow-up on the Uinta. Look, that asset has been on a slight growth trajectory this year. I think spending has been a little under $100 million. It reflects pretty strong capital efficiency. So I believe the expectation is to continue with the 1-rig program next year, but would you expect to see continued slight growth in 2027?

David Rockecharlie

Yes. It's David. As you know, one of the key things we did up there was much like we did in the Permian. We slowed down, took assessment of what others have been doing and have now, as you noted, been executing a very good program. And long story short, there's just so much resource potential up there. One, it's well known across our acreage, but it's also being actively developed by offset operators. So we'd expect to have continued activity and also continued inventory expansion and depth being created over time. So yes, we're very excited about that asset.

Operator

Your next question comes from the line of Ajay Bakshani with BMO Capital Markets.

Ajay Bakshani

Your presentation shows roughly 6 years of inventory below $50 a barrel and 10 years below $60 at current well costs. I was just wondering how do those economic buckets map the low-risk in total locations disclosed by basin? Are the sub-$60 wells primarily low risk? Or do they include inventory that still need delineation? And how large is that next tranche at $60 to $70 breakeven that could move below $60 with further cost reductions?

David Rockecharlie

Yes. This is David. The short answer is, we've -- I'll call it conformed to industry disclosure rather than really changing what we're doing. We view our inventory as things that deliver 2x our money or better. We have a really long runway of that. And long story short, this is just a rebucketing into that sub-$50 and sub-$60 kind of vocabulary. So -- one, we expect to continue to grow growth of those categories through both operational execution, which we still see significant upside there on the cost side. But also as we've expanded our acreage footprint over many years and gotten more concentrated in the portfolio, we're seeing obviously incremental zones that we can develop, but also incremental lateral feet that we can bring into a program as we push together acreage in meaningful ways now that we've got a really scaled position across all 3 of these patients. So I think it's just more of everything more sub-$50, more sub-$60 and also just more overall as we continue to execute.

Ajay Bakshani

Great. And for my follow-up. How are you thinking about capital allocation across Julian Karnes Counties after you closed the Eagle Ford transaction. Do you see one area more advanced than the other on returns in inventory? And is there any weighting between the two in terms of synergies?

David Rockecharlie

Yes. I think too early to say. Again, we look at the Eagle Ford as an entire position. But as you know, those are both two great opportunities within our Eagle Ford portfolio. So we have not closed on that acquisition yet. But again, I think we'll see huge opportunity both in those areas and also across the rest of the company, and we'll continue to provide more detail on that as we get the assets closed and integrated. But excited definitely about what we're bringing in, but also equally about what we hope to get.

Operator

Your next question comes from the line of Gabe Daoud with Truist Securities.

Gabe Daoud

Was hoping, David, maybe we could just start with bigger picture, you have the minerals strategic lever that you could potentially pull. But I was just curious about the upstream portfolio as it stands today, would you think about or how do you think about the portfolio moving forward? Is there anything that maybe stands out from a divestiture candidate standpoint?

David Rockecharlie

Yes. Great question. The short answer, as we said earlier, we love the portfolio we've got. We think every part of the portfolio has upside in it, and we're -- it's our job to go execute and capture that for the benefit of shareholders. So the short answer is the divestiture program that we announced last year is done, and we're really focused on getting the most out of the assets we own today.

Gabe Daoud

Okay. Got it. That makes sense. And then just as a follow-up maybe for Joey. I think there were maybe a few pads where Crescent kind of drilled and completed start to finish on the Permian asset. I was just curious if you can maybe remind us some of the differences maybe on the completion or facing side and even the drilling side versus the prior operator? And maybe any kind of commentary around expected productivity uplift, if any, from some of these changes?

Jerome Hall

Yes. Gabe, thanks for the question. Just as a reminder, a lot of the program we inherited from Vital, we executed in the early part of the year, including quite a few DUCs. I can't remember how many DUCs there were, but there was a pretty significant number of DUCs. And I would say that the Crescent influence really started to thread into latter part of Q3 and into Q4.

At this point in time, we have made some recent changes on volumes, both for capital efficiency in some instances, reduced and some cases increased. And on the spacing side, there's a couple of pads where we actually added a well that would not have been a part of the Vital drilling program. So just a complete development plan change. And of course, the most significant opportunity we've deployed is increasing lateral lengths. Our land team did a tremendous job right out of the gate, getting some trades done so we could increase lateral length. So I would say the biggest improvement you could expect is just on a capital efficiency perspective. But whenever we're talking about productivity changes and such, I wouldn't expect to see some of that take effect until we get into 2027 whenever we fully baked this as a Crescent plan.

Operator

Your next question comes from the line of John Abbott with Wolf Research.

John Abbott

I think this question will go to Brandi. So when the Devon acquisition of the -- when the Devon Eagle Ford assets are acquired, it's going to benefit the mineral business. My question is, how do we think about the pro forma capital structure for Crescent minerals, right? Does Crescent sell the minerals -- does Crescent sell the minerals to Crescent Minerals? How does that kind of work there, Brandi?

David Rockecharlie

Yes. John, it's David. I'll start. The short answer is everything is part of Crescent today. So we're -- we look at the business on a holistic basis. As you know, we have split out the minerals. But the way we think about leverage across the company, the way we think about managing the business, all the same, no fundamental changes there. So to your point, depending on the direction we take with the minerals business, we'll certainly have to continue to think about the 2 pieces of the puzzle here. But long story short, we run the business fundamentally the same and don't intend to change that.

John Abbott

Appreciate it. Okay. Then the follow-up question here is there was a lot of discussion last quarter organically. We talked about the Austin Chalk -- of course, winter we were doing our dodeineation. And also at the same time, you are further getting a grasp around. First part of the question is, how do we think about the disclosure on the inventory? And then in your deck, you have $1 million well cost reduction and improving the oil breakeven by either $5 or $10 per barrel. How do we think about that distribution? Is more of the opportunities towards $10 per barrel, towards $5 a barrel, or is it split in the middle like at $7.50 per barrel?

David Rockecharlie

Yes. The easy thing I even put it in the mill. We'll start there. More broadly, though, hopefully, what you're seeing and, call it, in public data and also hearing from us is, we see significant opportunity in each of the areas where we operate to continue to expand inventory, and that's both moving -- existing, what I'll call formations where we're actively developing down the cost curve and into that sub-50% range. And also, as you know, we've got incremental zones in the Uinta in the Midland and Delaware and in the Eagle Ford and the most notable of those in terms of active development from us today is the Austin Chalk. It's about 40% of our Shop Texas program. So I think, long story short is we will continue to provide updates on how that is all going. And in particular, I think you were asking it this way, would you expect us to be talking about that in the first half of '27. The short answer is, yes.

Operator

Your next question comes from the line of Oliver Huang with TPH Research.

Hsu-Lei Huang

Maybe just a quick follow-up to the prior question on the Chalk. It's certainly been a big part of the development program over the last few quarters, particularly on the western side of your position. Could you speak to views around the horizon as we look to your legacy Central Eagle Ford position where development there has been more Lower Eagle Ford centric and even maybe further eased down into corn into it?

David Rockecharlie

Yes. The short -- this is David. The short answer is we see Chalk opportunity across the whole position that we've built across the Eagle Ford. We would also highlight that it does, I'll call it, required different approaches depending on where you are, no surprise. So in some areas, we see multiple opportunities in landing zones within the Chalk and in other places, there may only be one zone that we see is currently productive. So long story short is we are actively and economically developing, Chalk, across the entire Eagle Ford position we have. And we expect that to continue to be a big part of our program, and we would expect if anything there to be more development going forward and more opportunity than we've quantified not less.

Hsu-Lei Huang

Got you. That makes sense. And maybe for my second question, just on gas marketing. I know you all talked about some of the capture out on the Permian side of your portfolio. But just any thoughts around gas marketing, looking ahead out of the Eagle Ford Aguadulce area, just given the impacts of Traverse coming online, Rio brand starting to ramp. Just thinking between this and your low nitrogen gas, just how we should be thinking about the magnitude of the opportunity set to drive gas realizations higher as we kind of look ahead over the next couple of years?

Brandi Kendall

Oliver, it's Brandi. So we talked specifically about the opportunity around our Permian molecules just getting that out of the Waha basin and into the Gulf Coast, and whether that's into AD or to the Katy market. I think there's going to be a lot for us to do over time to help meet the structural demand increases that we're seeing from an LNG standpoint and a power perspective. So you can't necessarily quantify it today. But as you mentioned, we're one of the largest gas producers. We also produce a lot of low nitrogen gas, which I think will continue to trade at a premium over time as that fills LNG demand. So expect us to continue to kind of update you guys as we're making more progress there, but really happy with some of the gas marketing benefits that we've captured thus far.

Operator

Your next question comes from the line of Michael Scialla with Stephens.

Michael Scialla

An answer to earlier question, you said there was nothing unusual about third quarter. I would follow up on that, specifically on CapEx, which came in a little bit below what we are thinking. As we look into fourth quarter, if we just ignore the timing of the Devon close, is it fair to assume that CapEx should be kind of flattish with that $326 million you spent in third quarter? Or the timing of completions push that one way or the other?

Brandi Kendall

Yes. Mike, if you mentioned the business is performing really well. You heard talked about continued capital efficiencies, which is showing up in Q3 on a full year basis, we would expect to end up below the midpoint of the full year capital guidance.

Michael Scialla

Okay. And then you've talked a lot about improving the breakeven of the undeveloped inventory. Is there anything worth noting on things you're working on to optimize the producing assets, anything to lower the decline rate?

Jerome Hall

Michael, thanks for that question. Yes, we have a very intense effort on improving what we refer to as the base production. We've evaluated -- we have over 4,700 wells in the Eagle Ford and over 4,000 wells in the Permian, which to me represents 8,700 opportunities to get that denominator up. Our teams are working very diligently in both areas focused on [indiscernible] the artificial and rightsizing artificial lift, optimizing artificial lift supply chain. Again, this is one of the opportunities we have to significantly impact the business due to our scale and supply chain working on things such as chemicals, generators, I mean, the list just goes on and on. But yes, we're equally focused on improving the margins on the base production as we are on improving well cost.

And we have lots of opportunity there. We know that in the Permian that were below the P50 in both the Midland and the Delaware. So a huge opportunity there. And we know we're about P50, and the Eagle Ford as well, so significant opportunity to improve cost there. So yes, we have an intense effort to -- improvements in those areas as well.

Operator

Your next question comes from the line of Arun Jayaram with JPMorgan.

Arun Jayaram

I was wondering if you could give us some insights on how you're thinking about 2027, obviously, post the close of the Devon Eagle Ford transaction. You guys had outlined, call it a maintenance program of $1.8 billion of capital for 170,000 barrels a day or so of oil. Can you give us maybe some -- a little bit of color on how you're thinking about capital allocation between the different basins as you see on a go-forward basis?

David Rockecharlie

Yes, great question. As you know, the sort of simple starting point is our #1 focus is on operational execution and around the acquisition get closed, get integrated and get stabilized. So the simple starting point is, we've got the majority of the company's rigs running today on our existing Eagle Ford assets. We would plan to bring the Devon assets in just at the current pace where there's a couple of rigs. But then if you said, once I feel comfortable that everything has been integrated and stabilized where should capital allocation go, well, obviously to the best performing areas, but also to areas where we think we can improve efficiency. And so in that context, the new Eagle Ford, the Permian and the Uinta would call it, the undercapitalized relative to the overall allocation today, just given we've been on a stabilization path in the Permian, delineation path in Uinta and an integration path for the new Eagle Ford.

So long story short, we'd expect steady state as a planning case, but you could see some incremental capital come out of the existing Eagle Ford to go to all three of those other places just depending on how the market and execution looks.

Arun Jayaram

Appreciate that. And my follow-up, David, I know the company reiterated its pro forma EBITDA guide for minerals at $250 million. There was some quarter-to-quarter fluctuations in production from 13% to 11% in the quarter. Could you just talk a little bit about that? And again, I know it's -- there's always going to be some volatility on the quarterly numbers, but maybe just a comment on the sequential trends and expectations, I guess, for 4Q?

David Rockecharlie

Yes. Just a high-performing business, and I'll call it just ordinary quarter-to-quarter movement, no change to outlook or expectations.

Operator

Your next question comes from the line of Peyton Dorne with UBS.

Peyton Dorne

Just a quick one. But in the Permian, I know you've been rightsizing the capital intensity and the pace of TIL slowed a bit in 3Q. So I wonder if you could just provide a bit more color on where you see the maintenance production kind of shaping up into year-end? And how you're thinking about activity in the Permian kind of as we look out to 2027?

Brandi Kendall

Peyton, I'm happy to start. As we talked about previously, we expect to exit the year on a status quo across it standpoint -- 130.

[Technical Difficulty]

Operator

I'll turn the call back to David Rockecharlie, CEO, for closing remarks.

David Rockecharlie

Great. Thank you all again. In particular, thank you to all of my colleagues here at Crescent that are executing every day. We're delivering quarter-over-quarter and multiyear market-leading performance. So we're very excited about the opportunity ahead, and we thank all of you for their support, and we'll continue to keep you updated.

Operator

This concludes today's call. Thank you for attending.