Crescent Energy Q3 Free Cash Flow Reaches $367 Million

Crescent Energy (NYSE: CRGY) generated $366.7 million of levered free cash flow in the third quarter of 2026 as higher production and lower per-unit costs supported a sharp year-over-year increase in non-GAAP earnings. The oil and gas producer also lifted its Permian annual synergy target to more than $300 million, underscoring the operating improvements it expects to carry into its pending acquisition of Devon Energy’s Eagle Ford assets.

For the three months ended Sept. 30, Crescent reported average production of 328,000 barrels of oil equivalent per day, up from 253,000 boe/d a year earlier but down from 335,000 boe/d in the second quarter. Oil production increased to 134,000 barrels per day from 103,000 barrels per day a year earlier. Liquids represented 63% of total output, including 41% from oil.

Adjusted EBITDAX rose to $785.8 million from $486.5 million in the prior-year quarter. Levered free cash flow increased to $366.7 million from $204.5 million, after $326.1 million of development spending. Both measures are non-GAAP.

On a GAAP basis, Crescent recorded a net loss of $591,000, compared with a loss of $10.3 million a year earlier. The latest quarter included a $245 million non-cash loss on derivatives, $40.1 million of transaction and nonrecurring expenses, and $33.7 million from settlements of acquired derivative contracts.

Lower costs support cash generation

Crescent’s average realized price before derivative settlements was $44.38 per boe, up from $35.87 a year earlier. After derivative settlements, the realized price was $39.84 per boe, compared with $36.81 in the third quarter of 2025.

Operating expense declined to $14.41 per boe from $16.65, while adjusted operating expense excluding production and other taxes fell to $11.35 per boe from $12.83. General and administrative expense decreased to $65.3 million from $74.3 million, although adjusted recurring cash G&A rose to $39.8 million from $30.8 million.

The company said structural drilling and completion cost reductions are lowering development breakevens and expanding its economic inventory. Eagle Ford well costs have fallen by more than 25% since 2023, Permian well costs are 20% to 25% below those of the prior operator, and Uinta well costs are down about 20% year over year. Crescent estimates it now has roughly six years of maintenance-level drilling inventory with oil breakevens below $50 per barrel and about 10 years below $60 per barrel.

Permian synergies exceed earlier targets

Crescent increased its Permian annual synergy target to more than $300 million, compared with an original target of $90 million to $100 million. The company said it had captured approximately $295 million of annualized synergies by the third quarter, representing an estimated five-year PV-10 of about $1.14 billion.

The captured savings include about $95 million annually from drilling and completion improvements, $60 million from lower lease operating costs, $40 million from marketing initiatives and $100 million from corporate efficiencies. Crescent attributed the gains to longer laterals, improved field efficiency, service rebidding, artificial-lift optimization, contract renegotiation and lower overhead.

Permian production averaged 117,000 boe/d in the quarter, with oil accounting for 42%. Capital spending totaled $73 million. Crescent said lower well costs and more efficient field operations have improved development economics across the position.

The Eagle Ford remained Crescent’s largest operating area, producing 166,000 boe/d excluding royalties, with capital spending of $222 million. The company highlighted workovers and artificial-lift optimization as drivers of base-production performance. Uinta output was 29,000 boe/d, including 56% oil, on capital spending of $35 million.

Devon transaction expands Eagle Ford position

Crescent’s pending acquisition of Devon Energy’s Eagle Ford assets is expected to add approximately 68,000 boe/d of production, with oil representing 55% to 60%, as well as more than 600 net 10,000-foot-equivalent drilling locations. The company has identified about $140 million of potential annual synergies from the transaction.

On a pro forma basis, Crescent expects the expanded Eagle Ford business to produce approximately 234,000 boe/d and hold more than 1,800 gross locations. Total company production would be about 400,000 boe/d, while the royalties business would generate roughly $250 million of annualized run-rate EBITDA, according to the presentation.

Crescent expects approximately $1 billion of liquidity when the Devon transaction closes. Management is targeting pro forma net leverage of about 1.5 times by year-end 2027 and approximately 1.0 times by year-end 2028, supported by free cash flow and expanded hedge coverage. At Sept. 30, Crescent had $4.71 billion of net debt, approximately $2 billion of liquidity and total consolidated net leverage of 1.5 times.

The company maintained a fixed quarterly dividend of $0.12 per share, subject to board approval.

Crescent said it had completed its planned incremental 2027 oil hedges and had begun adding 2028 protection. The hedging program is intended to improve cash-flow visibility and support debt reduction, though actual results remain exposed to commodity prices, operating performance and transaction execution.

Key uncertainties identified by the company include its ability to complete and integrate the Devon transaction, achieve anticipated synergies, reduce leverage and manage regulatory, interest-rate and geopolitical risks. Crescent also cautioned that acquisitions may not deliver the expected financial benefits and could prove dilutive.