Blog: CRESCENT ENERGY CO : Results of Operations and Financial Condition, Regulation FD Disclosure, Other Events, Financial Statements and Exhibits (form 8-K) – Marketscreener.com

Item 2.02. Results of Operations and Financial Condition.



On January 25, 2023, in connection with the Notes Offering (as defined below),
Crescent Energy Company (NYSE: CRGY) ("CRGY" or "our," "us," or "we") provided
certain updated disclosures to potential investors, the relevant excerpts of
which are set forth below.

Certain preliminary data for Q4 2022


As of the date of this current report, we have not finalized our financial and
operational results for the year ended December 31, 2022. However, based on
preliminary information, we estimate that, for the year ended December 31, 2022,
our production ranged from 137 to 139 thousand barrels of oil equivalent per day
("MBoe/d").

This preliminary estimate is derived from our internal records and is based on
the most current information available to management. This estimate is
preliminary and inherently uncertain. Our normal reporting processes with
respect to the foregoing preliminary estimate have not been fully completed. Our
independent auditors have not completed an audit or review of such preliminary
estimate or of any other data as of, or for a period ended, December 31, 2022
included in this Current Report. During the course of our and our auditors'
review on this preliminary estimate and any other such data, we could identify
items that would require us to make adjustments and that could affect our final
results. Any such adjustments could be material. This preliminary estimate
should not be viewed as indicative of our financial condition or results as of
or for any future period. Actual results could differ from the estimates, trends
and expectations discussed herein, and such differences could be material.

In addition, the information contained in Item 8.01 of this Current Report is
incorporated into this Item 2.02 by reference.


The information in this Item 2.02 shall not be deemed to be "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, and is not
incorporated by reference into any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act.


Item 7.01. Regulation FD Disclosure.



On January 25, 2023, Crescent Energy Finance LLC ("CE Finance"), a subsidiary of
CRGY, issued a news release announcing that, subject to market conditions, CE
Finance intends to offer (the "Notes Offering") for sale in a private placement
pursuant to Rule 144A and Regulation S under the Securities Act, to eligible
purchasers $400 million aggregate principal amount of Senior Notes due 2028. A
copy of the news release is attached hereto as Exhibit 99.1 and incorporated
herein by reference.

In addition, the information contained in Item 2.02 and Item 8.01 of this
Current Report is incorporated into this Item 7.01 by reference.


The information contained in this Item 7.01, including Exhibit 99.1, shall not
be deemed to be "filed" for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liabilities of that section, and is not incorporated by
reference into any filing under the Securities Act, or the Exchange Act.


Item 8.01 Other Events.



On January 25, 2023, in connection with the Notes Offering, CRGY provided
certain updated disclosures to potential investors, the relevant excerpts of
which are set forth below in substantially the form in which they were provided
in the Notes Offering.

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Our free cash flow-focused portfolio includes a balanced set of oil and natural
gas assets in proven onshore U.S. basins with substantial existing production, a
low decline rate and an acreage position that is 96% held by production.

                                     ******

Based on forecasts used in our reserve report, our provided developed producing
("PDP") reserves as of December 31, 2022 have estimated average five-year and
ten-year annual decline rates of approximately 13% and 10%, respectively, and an
estimated 2023 PDP decline rate of 22%. The relatively higher decline rate in
2023 is due primarily to the high initial production profiles of certain more
recently drilled PDP wells acquired in the Uinta Acquisition (as defined below),
which we expect to decrease over time as wellbore pressure gradually declines
and stabilizes. As a result of this overall low decline profile, we require
relatively minimal capital expenditures to maintain our production and cash
flows. Our properties located in the Eagle Ford, the Rockies and Barnett
represent approximately 84% of our proved reserves as of December 31, 2022, and
provide us with diversification from both a regional location and commodity
price perspective, which provides us certain downside protection as it relates
to commodity-specific pressures, isolated infrastructure constraints or severe
weather events. The table below illustrates the aggregate reserve volumes and
weighted average decline profiles associated with our proved assets as of
December 31, 2022.

                  Net Proved          % Oil &            Net PD
Operating Area   Reserves (1)       Liquids (1)       Reserves (1)
                    (MMBoe)                              (MMBoe)
Eagle Ford                 147                81 %               79
Rockies                    222                53 %              192
Barnett                    111                20 %              111
Other (2)                   94                67 %               78

Total                      573                56 %              460




(1) Our reserves were determined using average first-day-of-the-month prices for

the prior 12 months in accordance with guidance from the U.S. Securities and

Exchange Commission (the “SEC”). For oil and natural gas liquids (“NGL”)

volumes, the average West Texas Intermediate (“WTI”) posted price of $93.67

per barrel as of December 31, 2022, was adjusted for items such as gravity,

quality, local conditions, gathering, transportation fees and distance from

market. For natural gas volumes, the average Henry Hub Index spot price of

$6.36 per one million British thermal unit (“MMBtu”) as of December 31, 2022,

was similarly adjusted for items such as quality, local conditions,

gathering, transportation fees and distance from market. All prices are held

constant throughout the lives of the properties. The average adjusted product

prices over the remaining lives of the properties are $89.87 per barrel of

oil, $5.80 per 1,000 cubic feet (“Mcf”) of natural gas and $37.98 per barrel

of NGLs.

(2) Includes working interest properties located in Mid-Con, California, Permian

    as well as diversified mineral and royalty interests.


                                     ******

As of December 31, 2022, we have identified 247 net locations as proved
undeveloped reserves (“PUD”) drilling locations as of December 31, 2022,
representing approximately $1.7 billion of reinvestment potential.

                                     ******

As of December 31, 2022, our derivative portfolio had an aggregate notional
value of approximately $1.4 billion. We determine the fair value of our oil and
natural gas commodity derivatives using valuation techniques that utilize market
quotes and pricing analysis. Inputs include publicly available prices and
forward price curves generated from a compilation of data gathered from third
parties.

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The following table details our net volume positions by commodity as of
December 31, 2022.

                                                                   Weighted
Production Period                            Volumes               Average               Fair Value
                                         (in thousands)                                (in thousands)
Crude oil swaps (Bbls):
WTI
2023                                               9,710        $        60.00        $        (180,441 )
2024                                               5,721                 63.82                  (54,455 )
Brent
2023                                                 527                 52.52                  (15,690 )
2024                                                 276                 68.65                   (2,536 )
Crude oil collars - WTI (Bbls):
2023                                               1,155          48.68- 57.87                  (24,467 )
Natural gas swaps (MMBtu):
2023                                              62,248                  2.73                  (92,657 )
2024                                               9,604                  4.14                   (1,139 )
NGL swaps (Bbls):
2023                                               1,379                 40.80                   15,710
Crude oil basis swaps (Bbls):
2023                                               2,461                  1.15                       23
Natural gas basis swaps (MMBtu):
2023                                               8,202                 (0.43 )                    980
Calendar Month Average roll swaps
(Bbls):
2023                                               2,736                  0.05                     (896 )
Natural gas collars (MMBtu):
2023                                                 550            2.63- 3.01                     (659 )
2024                                              18,300            3.38- 4.56                   (5,607 )

Total                                                                                 $        (361,834 )



                                     ******

Summary reserve data based on SEC Pricing


The following table provides our historical reserves, the pre-tax undiscounted
present value of such reserves ("PV-0") and the pre-tax present value of such
reserves discounted at ten percent ("PV-10") as of December 31, 2022, in each
case prepared in accordance with SEC Pricing. SEC Pricing means the price per
barrel ("Bbl") for oil or per MMBtu for natural gas as calculated from the
unweighted arithmetic average first day of the month prices for the prior 12
months, as adjusted by lease for quality, transportation fees, geographical
differentials, marketing bonuses or deductions and other factors affecting the
price received at the wellhead. The reserve estimates presented in the tables
below are based primarily on a reserve report prepared by Ryder Scott Company,
LP ("Ryder Scott"). In preparing its report, Ryder Scott evaluated properties
representing approximately 97% of our PV-10 and 98% of our total proved reserves
as of December 31, 2022. Our internal technical staff evaluated the remaining
properties.

                                               As of
                                            December 31,
                                              2022 (1)
Net Proved Reserves:
Oil (MBbls)                                       243,082
Natural gas (MMcf)                              1,506,535
NGLs (MBbls)                                       78,621
Total Proved Reserves (MBoe)                      572,793
PV-0 (millions) (2)                        $       17,170
PV-10 (millions) (2)                       $        9,602
Net Proved Developed Reserves:
Oil (MBbls)                                       160,113
Natural gas (MMcf)                              1,398,770
NGLs (MBbls)                                       66,803
Total Proved Developed Reserves (MBoe)            460,046
PV-0 (millions) (2)                        $       12,330
PV-10 (millions) (2)                       $        7,132
Net Proved Undeveloped Reserves:
Oil (MBbls)                                        82,969
Natural gas (MMcf)                                107,765
NGLs (MBbls)                                       11,818
Total Proved Undeveloped Reserves (MBoe)          112,747
PV-0 (millions) (2)                        $        4,840
PV-10 (millions) (2)                       $        2,470



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(1) Our reserves, PV-0 and PV-10 were determined using SEC Pricing. For oil and

NGL volumes, the average WTI posted price of $93.67 per barrel as of

December 31, 2022, was adjusted for items such as gravity, quality, local

conditions, gathering, transportation fees and distance from market. For

natural gas volumes, the average Henry Hub Index spot price of $6.36 per

MMBtu as of December 31, 2022, was similarly adjusted for items such as

quality, local conditions, gathering, transportation fees and distance from

market. All prices are held constant throughout the lives of the properties.

The average adjusted product prices over the remaining lives of the

properties are $89.87 per barrel of oil, $5.80 per Mcf of natural gas and

$37.98 per barrel of NGLs as of December 31, 2022. As of December 31, 2022,

approximately $3,452 million, $3,564 million, $911 million and $1,674 million

of the net proved PV-10 shown above, and approximately $1,907 million, $2,902

million, $911 million and $1,412 million of the net proved developed PV-10

shown above, relate to properties in the Eagle Ford, Rockies, Barnett and

other operating areas, respectively.

(2) Present value (discounted at PV-0 and PV-10) is not a financial measure

calculated in accordance with GAAP because it does not include the effects of

income taxes on future net revenues. Neither PV-0 nor PV-10 represent an

estimate of the fair market value of our oil and natural gas properties. Our

PV-0 measurement does not provide a discount rate to estimated future cash

flows. PV-0 therefore does not reflect the risk associated with future cash

flow projections like PV-10 does. PV-0 should therefore only be evaluated in

connection with an evaluation of our PV-10 of discounted future net cash

flows. We believe that the presentation of PV-0 and PV-10 is relevant and

useful to our investors about the future net cash flows of our reserves in

the absence of a comparable measure such as standardized measure. We and

others in our industry use PV-0 and PV-10 as a measure to compare the

relative size and value of proved reserves held by companies without regard

to the specific tax characteristics of such entities. Investors should be

cautioned that neither of PV-0 and PV-10 represent an estimate of the fair

    market value of our proved reserves. The most directly comparable GAAP
    financial measure is standardized measure of discounted future net cash
    flows. Our standardized measure includes the effects of income taxes on
    future net revenues; however, neither such income tax effects nor such
    standardized measure is presented in this Current Report on Form 8-K, as

certain tax estimates necessary for purposes of calculating such measures are

unavailable to management as of the date hereof and a reconciliation thereto

would not be available without unreasonable efforts.

Summary reserve data based on NYMEX pricing


The following table provides our historical reserves, PV-0 and PV-10 as of
December 31, 2022 using NYMEX pricing. We have included this reserve sensitivity
in order to provide an additional method of presentation of the fair value of
our assets and the cash flows that we expect to generate from those assets based
on the market's forward-looking pricing expectations as of December 31, 2022.
The historical 12-month pricing average does not reflect the oil and natural gas
futures. We believe that the use of forward prices provides investors with
additional useful information about our reserves, as the forward prices are
based on the market's forward-looking expectations of oil and natural gas prices
as of a certain date, although we caution investors that this information should
be viewed as a helpful alternative, not a substitute, for the data presented
. . .


Item 9.01 Financial Statements and Exhibits.



(d)  Exhibits.

Exhibit     Description

23.1          Consent of Ryder Scott Company, LP.

99.1          Press Release, dated January 25, 2023.

99.2          Report of Ryder Scott Company, LP.

104         Cover Page Interactive Data File (embedded within the Inline XBRL
            document).



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