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    VTS
    Earnings call· Jun 2026(Q2 FY26)

    Vitesse Energy Q2 FY26 earnings call VTS

    Aug 4, 2026 Source

    Executive summary

    Vitesse Energy Q2 FY26 — Strong Production Growth and Durable Dividend

    Vitesse Energy reported strong Q2 FY26 results, driven by increased production and the contribution from the Powder River Basin acquisition, while maintaining its commitment to a durable dividend funded by free cash flow. The company continues to prioritize disciplined capital allocation, focusing on high-return organic projects and accretive acquisitions, supported by a conservative balance sheet and strategic hedging. The non-op model, enhanced by longer laterals and data-driven underwriting, underpins its long-term value creation strategy.

    Highlights

    5

    • Production averaged 17,354 BOE per day, a sequential increase of 9% from Q1.

    • Declared 15th consecutive quarterly dividend, totaling $7.6375 per share since spinoff.

    • Net debt to adjusted EBITDA at just under one times, in line with target.

    • Extended laterals (3+ miles) constitute 69% of AFEs, reducing cost per foot by 25%.

    • Powder River Basin acquisition closed in April contributed to results and is performing well.

    Concerns

    2

    • Volatility of unrealized hedging gains, though cumulative realized hedge loss since spinoff is less than 1% of total revenue.

    • The near-term development acquisition market has become more competitive.

    Guidance & targets

    4
    CategoryTargetConfidence
    Annualized Dividend
    $1.75 per share
    high materiality
    High
    Annual Production
    16,300 to 17,200 BOE per day
    high materiality
    High
    Oil Cut Percentage
    60 to 62%
    medium materiality
    High
    Total Cash Capital Expenditure
    $65 to $80 million
    high materiality
    High

    Operational metrics

    22
    Adjusted EBITDA
    $40.2 million
    Q2 FY26
    Adjusted Net Income
    $33.1 million
    Q2 FY26

    Driven by $40.2 million of unrealized hedging gains, which is a non-cash item.

    Development Capital Expenditures
    $21.1 million
    Q2 FY26
    Total Debt
    $158.5 million
    Q2 FY26
    Net Debt to Adjusted EBITDA
    less than one times
    Q2 FY26

    In line with target.

    Total Liquidity
    $117 million
    Q2 FY26
    Share Repurchase Authorization
    $60 million
    Q2 FY26

    Provides flexibility alongside the dividend.

    Oil Production Hedged
    70%
    Remainder 2026

    Based on midpoint of revised annual guidance.

    Natural Gas Production Hedged
    50%
    Remainder 2026

    Based on midpoint of revised annual guidance.

    Oil Hedges Extended
    $67
    through 2029

    Opportunistically layered on additional oil hedges, supportive to the dividend.

    Cash Return on Capital Invested
    14%well above our weighted average cost of capital
    since 2022
    Net Wells in Development Pipeline
    19.4
    as of June 30, 2026

    Includes 6.4 net wells drilling or completing and 13 net permitted locations.

    Net Wells Drilling or Completing
    6.4
    as of June 30, 2026

    Part of the 19.4 net wells in the development pipeline.

    Permitted Locations
    13
    as of June 30, 2026

    Part of the 19.4 net wells in the development pipeline.

    Wells Clearing Return Hurdles
    93%
    since 2023

    Underwritten at strip prices through Luminous, our proprietary data platform.

    Productive Wells
    7,868
    Q2 FY26

    Fractional interest across more than 30 leading operators.

    Average Working Interest per Well
    3.6%
    Q2 FY26
    Cumulative Acquisition Spend
    $800 million
    since 2013

    Comprised of both near-term development and five larger producing property acquisitions.

    Cumulative Acquisitions Closed
    175
    since 2013
    Average Lateral Length
    15,000 feet38% increase from 2022
    YTD 2026

    Driven by the trend towards three and four-mile laterals in the Williston Basin.

    Longer Laterals (3+ mile) as % of AFEs
    69%
    YTD 2026

    Constitutes 69% of AFEs, driving greater efficiencies.

    Longer Lateral Cost Reduction
    25%
    YTD 2026

    Significantly enhancing capital efficiency.

    Industry KPIs

    3
    MetricValueDetails
    D c efficiency rig activity15,000 feetfeet
    Basin level production volume17,354BOE per day
    FCF shareholder distributions$16.3 millionUSD

    Deals & partnerships

    1
    Multiple sellers (implied)Acquisition of producing assets in the Powder River Basin.

    The acquisition was closed early in April 2026 and included in Q2 FY26 results.

    Risks & headwinds

    2
    Volatility of unrealized hedging gains/lossesQ2 FY26 and since spinoff

    $40.2 million of unrealized hedging gains in Q2 FY26; cumulative realized hedge loss since spinoff less than 1% of total revenue

    Mitigation: Hedging strategy creates a margin of safety and locks in a revenue floor through downturns in commodity prices.

    Increased competition in near-term development acquisition marketLast year or two

    Market has gotten 'a little bit more competitive in the last year or two'

    Mitigation: Maintaining high return hurdles and disciplined capital allocation; hesitant to adjust return hurdles downwards.

    What to watch in Q3 FY26

    4

    Operated development opportunities

    next quarter
    Currentin the heat of evaluating that
    TargetDecision or progress on partnering opportunities for extended laterals

    Why it matters

    Could provide a new vector for organic growth capex and enhance capital efficiency.

    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... by others around us to see if there's partnering opportunities to extend those laterals. to come there that's very much in the works right now.

    Q&A highlights

    4

    Update on contemplations for operated activity as a vector for organic growth capex and its impact on the narrowed CapEx guide.

    Vitesse is actively evaluating operated development, specifically looking for partnering opportunities to extend laterals, which are considered optimal. This is currently in the works.

    “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... by others around us to see if there's partnering opportunities to extend those laterals. to come there that's very much in the works right now.”

    asked by Jeff Grampp · answered by Unknown Speaker

    2 min read5 chapters

    Detailed Narrative

    01

    Durable Dividend Strategy

    Vitesse reiterated its core strategy of funding a durable dividend through free cash flow, with the Q3 FY26 dividend declared at an annualized rate of $1.75 per share, marking the 15th consecutive quarter of payments. The dividend is considered the primary output of the business model, sized for durability and supported by economic reinvestment and hedging to protect cash flows.

    02

    Disciplined Capital Allocation

    The company employs a strict rate-of-return approach to capital allocation, prioritizing organic CapEx on existing acreage, followed by near-term drilling opportunities and producing property acquisitions. All investments are screened to exceed hurdle rates and support the dividend, with 93% of wells proposed since 2023 clearing these return thresholds.

    03

    Non-Operated Model Efficiency

    Vitesse's non-operated model, owning fractional interests in 7,868 productive wells, allows for enhanced flexibility and capital efficiency. New non-op assets integrate without materially increasing G&A costs, leveraging the proprietary Luminous data platform for underwriting. This model has delivered an average cash return on capital invested of approximately 14% since 2022.

    04

    Impact of Longer Laterals

    The trend towards three and four-mile laterals, particularly in the Williston Basin, is significantly enhancing capital efficiency. These extended laterals now constitute 69% of year-to-date AFEs, resulting in an average lateral length of nearly 15,000 feet (a 38% increase from 2022) and reducing cost per foot by approximately 25% compared to traditional two-mile laterals. Longer laterals also contribute to a slower base decline, reducing maintenance capital needs.

    05

    Strategic Acquisitions and Balance Sheet

    The Powder River Basin acquisition, closed in April, contributed to Q2 results and is performing well, acquired at attractive strip prices. Vitesse maintains a conservative balance sheet, targeting a net debt to adjusted EBITDA ratio of less than one times📎, which was achieved at $158.5 million total debt. Total liquidity stands at approximately $117 million, supporting the ability to act on opportunities and fund the dividend through commodity cycles.

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