Vitesse Energy Announces Acquisitions, Revised Guidance, and Hedging Strategy
Vitesse Energy, Inc. (NYSE:VTS) has made several significant announcements that are expected to have a positive impact on the company’s future growth and financial performance. The company has successfully completed acquisitions in the Williston Basin of North Dakota, which will result in approximately $50 million of acquisition and related development capital expenditures. These acquisitions are expected to increase production and cash flows, providing substantial benefits in the fourth quarter of 2023 and throughout 2024.
The acquisitions were made through Vitesse’s Near-Term Development (NTD) acquisition program and were underwritten above the company’s internal rate of return hurdle. Taking advantage of higher oil prices, Vitesse has also hedged its fourth-quarter 2023 and 2024 oil production associated with these acquisitions, further enhancing the expected rates of return.
Bob Gerrity, Chairman and CEO of Vitesse, expressed his optimism about these acquisitions, stating that they are expected to be accretive to the company’s free cash flow, which supports their dividend policy. Vitesse Energy is focused on returning capital to stockholders through owning financial interests as a non-operator in oil and gas wells drilled by leading US operators.
In light of these acquisitions, Vitesse has revised its 2023 guidance and provided a preliminary outlook for 2024. The company now expects oil and gas production in the fourth quarter of 2023 to average between 12,300 and 13,000 barrels of oil equivalent (Boe) per day, up from approximately 11,000 Boe per day in the third quarter. This revision results in a full-year 2023 production range of 11,500 to 11,700 Boe per day. Total capital expenditures for 2023 are now projected to be in the range of $110 to $130 million.
Looking ahead to 2024, Vitesse estimates a production range of 12,500 to 13,500 Boe per day and total capital spending, including NTD acquisitions, of $90 to $110 million.
To mitigate risks associated with oil price fluctuations, Vitesse has added to its oil hedges for both 2023 and 2024. The company has increased its weighted average price for oil swaps, providing stability and predictability for future revenues. Based on the midpoint of its revised 2023 oil guidance and preliminary 2024 outlook, Vitesse has hedged 51% of its estimated fourth-quarter 2023 oil production and 41% of its preliminary 2024 oil production.
Vitesse Energy’s strategic acquisitions, revised guidance, and hedging strategy demonstrate the company’s commitment to maximizing shareholder value and capitalizing on favorable market conditions. With a focus on prudent financial management and strong operational execution, Vitesse is well-positioned for continued growth and success in the oil and gas industry.