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    CRGY
    Earnings call· Dec 2025(Q4 FY25)

    Crescent Energy Q4 FY25 earnings call CRGY

    Feb 26, 2026 Source

    Executive summary

    Crescent Energy Q4 FY25 — Transformational Year with Strong Free Cash Flow and Increased Permian Synergies

    Crescent Energy completed a transformational FY25, significantly upgrading its portfolio through strategic M&A and divesting non-core assets. The company delivered strong Q4 free cash flow and operational outperformance, entering 2026 with enhanced scale and focus across its three premier basins. Management highlighted the compelling value proposition, including the newly spotlighted Crescent Royalties platform, and remains committed to disciplined capital allocation and shareholder returns.

    Highlights

    5

    • Generated significant levered free cash flow of $239 million in Q4 FY25.

    • Exceeded production and capital expectations in FY25, demonstrating operational durability.

    • Executed $5 billion in transactions in FY25, including $4 billion of acquisitions at less than 3x EBITDA and $1 billion of divestitures at over 5x EBITDA.

    • Increased Permian synergy target by 100% due to seamless integration and identified efficiencies.

    • Formed Crescent Royalties, a world-class minerals platform contributing approximately $160 million of annual cash flow.

    Concerns

    2

    • Permian oil production is expected to trend flat through 2026 due to no new wells brought online since early October.

    • Corporate base decline rate is in the high 20s post-merger, above the long-term target of 25% or below.

    Guidance & targets

    6
    CategoryTargetConfidence
    Rig program
    6- to 7-rig program
    high materiality
    High
    Eagle Ford rigs
    Four rigs
    medium materiality
    High
    Uinta rigs
    One rig
    medium materiality
    High
    Permian rigs
    1- to 2-rig program
    medium materiality
    High
    Minerals business leverage
    below 1.5x
    medium materiality
    High
    Corporate base decline rate
    25% or below
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Eagle Ford
    The company has built a top 3 position in the Eagle Ford over multiple years, generating strong returns and significant annual synergies. The 2026 plan includes four rigs in the Eagle Ford, spanning multiple phase windows for flexibility.
    Position: Top 3 producerSynergies: Hundreds of millions of annual synergies
    		————
    Permian
    The entry into the Permian was a defining step. Integration has progressed seamlessly, and conviction in value creation has increased, leading to a doubled synergy target. A disciplined 1- to 2-rig program is planned for 2026, rightsizing capital and operational intensity.
    Synergy Target Increase: 100% higher than underwritten
    		————

    Operational metrics

    22
    Production volume
    268,000 boe/d
    Q4

    Total production for the quarter.

    Oil production volume
    106,000 bbl/d
    Q4

    Oil production for the quarter.

    Drilling and completion cost per foot reduction
    15%YoY
    2025

    Reduction achieved year-over-year, driven by efficiencies, extended laterals, and simulfrac.

    Adjusted EBITDA
    $536 million
    Q4

    Generated in the fourth quarter.

    Capital expenditures
    $226 million
    Q4

    For the fourth quarter.

    Dividend per share
    $0.12
    Q4

    Declared for the quarter.

    Annualized dividend yield
    approximate 5%
    Q4

    Based on the declared quarterly dividend.

    Debt repaid
    more than $700 million
    Q4

    Repaid during the quarter, contributing to balance sheet strengthening.

    Minerals portfolio annual cash flow
    $160 million
    annual

    Contribution from the newly formed Crescent Royalties platform.

    Synergies captured to date (Vital acquisition)
    $40 million plus
    current

    Largely from overhead, duplicative public company expenses, and cost of capital synergies.

    Synergy target increase (Vital acquisition)
    100%
    current

    Increase in the original synergy target, with 50% op-related and 50% from additional overhead, marketing, and cost of capital.

    Permian well cost (Midland)
    $700 per foot
    current

    Current well cost in the Midland Basin, with management seeing opportunity for reduction.

    Permian well cost (Delaware)
    $875 per foot
    current

    Current well cost in the Delaware Basin, with management seeing opportunity for reduction.

    Corporate base decline rate (post-merger pro forma)
    high 20s
    current

    Current base decline rate across the broader business post-merger and divestitures, with a target to reduce to 25% or below.

    Permian implied oil rate
    nearly 70,000 bbl/d
    Q4

    Implied oil rate for the Permian in Q4, reflecting base business outperformance despite no new wells from Vital since early October.

    Permian oil rate
    61,000 bbl/d
    Q3

    Oil rate for the Permian in Q3, provided for comparison.

    Wells per pad increase
    increased
    future

    Strategy to increase wells per pad in the Permian, allowing for simulfrac implementation.

    Simulfrac percentage
    up to 70%
    future

    Expected percentage of pads in South Texas that will utilize simulfrac, driven by increased pad sizes.

    Maintenance CapEx long term
    $1.3 billion to $1.4 billion
    long term annual

    Estimated annual maintenance capital expenditures to sustain approximately 130,000 barrels per day of production.

    Long-term oil production (maintenance CapEx)
    130,000 barrels per day
    long term

    Estimated long-term oil production level sustainable with $1.3 billion to $1.4 billion in annual maintenance CapEx.

    Vital oil base decline (prior year)
    42%
    FY24

    Oil base decline rate for Vital assets in the prior year.

    Vital BOE base decline (prior year)
    36%
    FY24

    BOE base decline rate for Vital assets in the prior year.

    Industry KPIs

    3
    MetricValueDetails
    D c efficiency rig activity15%%
    Basin level production volume—
    FCF shareholder distributions$239 millionUSD

    Orderbook & backlog

    1
    Share buyback authorization$400 millionQ4 FY25

    increased

    Upsized and extended authorization, providing flexibility for opportunistic repurchases.

    Deals & partnerships

    3
    MultipleAcquisition of various assetsover $4 billion

    Part of nearly $5 billion in total transactions in 2025, contributing to portfolio upgrade.

    MultipleDivestiture of noncore assetsnearly $1 billion

    Part of nearly $5 billion in total transactions in 2025, recycling capital into higher-return assets.

    InternalFormation of world-class minerals platform

    Formation of Crescent Royalties, a dedicated capital structure for the company's minerals business, enhancing strategic flexibility and value recognition.

    Risks & headwinds

    3
    Commodity price volatilitycurrent

    discussed

    Mitigation: The company maintains operational and capital allocation flexibility, with the ability to allocate capital across both oil and gas weighted inventory to enhance durability of returns.

    Permian oil production flat cadence2026

    Expected to trend flat through 2026

    Mitigation: This is primarily due to the acquired Vital assets not bringing on new wells since early October. Management is focused on integration and synergy capture rather than immediate production growth.

    Corporate base decline ratecurrent

    High 20s post-merger

    Mitigation: The company expects to reduce its corporate base decline rate to its target of 25% or below over the next 12 to 18 months through operational efficiencies and capital allocation.

    What to watch in Q1 FY26

    5

    Permian Synergy Capture

    2026
    Current$40M+ captured, target $190M annual
    TargetContinued progress towards $190M annual synergy target

    Why it matters

    Successful integration and synergy realization are key to Permian acquisition value creation and overall financial performance.

    In your release, you stated that Crescent had already hit $40 million plus in synergies from the deal, and it's causing you to double your annual target of about $190 million.

    Q&A highlights

    10

    Where is Crescent Royalties in its value creation process, given its perceived undervaluation, and what options are open/closed for eventual monetization?

    Management emphasized the significant embedded value in their world-class minerals portfolio, which has grown at 20% annually over the last five years. They are committed to unlocking this value for shareholders in 2026 and see clear pathways for continued accretive growth.

    “I think the most important place to start is that this has been a core business of ours. We've built a scale portfolio over the last 15 years. It's world-class assets and there is significant embedded value in the company, and we want to make sure that investors and Crescent understand what they are.”

    asked by Bertrand Donnes · answered by David Rockecharlie

    2 min read5 chapters

    Detailed Narrative

    01

    2025 Portfolio Transformation

    Crescent Energy executed a transformational year in 2025, completing nearly $5 billion in transactions. This included over $4 billion of acquisitions at less than 3x EBITDA and divesting nearly $1 billion of noncore assets at over 5x EBITDA. This strategic activity materially upgraded the quality and scale of the company's portfolio, focusing operations on three premier basins: the Eagle Ford, Permian, and Uinta.

    02

    Operational Excellence and Efficiency Gains

    The company demonstrated strong operational performance, achieving a 15% reduction in drilling and completion cost per foot year-over-year in 2025. These efficiencies were driven by increased drilling and completion efficiencies, extended lateral lengths, and expanded use of simulfrac operations across its footprint, contributing to full-year CapEx outperformance. Management plans to apply this proven playbook to newly acquired Permian assets.

    03

    Permian Integration and Enhanced Synergies

    Integration of the new Permian assets has progressed seamlessly, increasing management's conviction in the value creation opportunity. The original synergy target for the Permian acquisition has been doubled, reflecting clear visibility into incremental operational efficiencies, overhead optimization, marketing improvements, and additional balance sheet opportunities as the Crescent playbook is implemented.

    04

    Launch of Crescent Royalties Platform

    Crescent Energy announced the formation of Crescent Royalties, a dedicated platform for its world-class minerals business. This platform, built over nearly 15 years, contributes approximately $160 million of annual cash flow and is anchored by a core position in the Eagle Ford. The formation enhances strategic flexibility and creates additional pathways for long-term value recognition, with plans for continued value-accretive scaling.

    05

    Disciplined Capital Allocation Framework

    The company's free cash flow generation supports an 'all-of-the-above' return to capital framework. This includes substantial coverage of its $0.12 per share fixed dividend (equating to an approximate 5% annualized yield), significant balance sheet strengthening through debt repayment (over $700 million in Q4), and flexibility for opportunistic share repurchases, supported by an increased $400 million buyback authorization.

    AI-generated summary of the company’s earnings call. Not investment advice.