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Estimate Update

We are updating our 4Q23 and FY24 estimates to reflect actual 4Q23 reference prices and lower estimated FY24 natural gas prices. Our 4Q23 NYMEX reference prices averaged $78.32/bbl for oil and $2.92/MMBtu for natural gas compared with our $85.00 and $3.00/MMBtu estimates. We have lowered our average FY24 natural gas price estimate to $2.66/MMBtu from $3.44/MMBtu. We are currently modeling average FY24 oil prices of $80/bbl. Oil accounts for 67% of our 4Q23 average production estimate of 12,500 BOE/d and 94% of our updated revenue estimate. Our FY23 production estimate is ~11,600 BOE/d, near the midpoint of management’s last guidance update (November 1, 2023) of 11,500-11,600 BOE/d. The range implies 4Q23 average production of ~12,500 BOE/d. Vitesse closed several acquisitions early in 4Q23 that are expected to contribute to 4Q23 and FY24 volume growth. Management’s FY24 production guidance, issued November 1, 2023, was 12,500-13,500 BOE/d (67-71% oil). Our current FY24 production estimate remains 13,000 BOE/d. Oil accounts for 69% of our FY24 production estimate and 94% of our revenue estimate. Our current estimates are summarized in Figures 1 to 3. For 4Q23, our current adjusted EBITDA estimate is $39.7 million. For FY24, our adjusted EBITDA estimate is $178.6 million. Vitesse’s first priority is returning cash to shareholders through a fixed dividend. Capital allocation decisions start with funding the dividend and investing surplus cash flow in the highest-return opportunity among the company’s organic growth opportunities, acquisitions, and debt reduction. Our current modeling suggests Vitesse could generate significant cash flow in FY24 to fund the dividend and opportunistically grow the asset base (see Figure 4). Vitesse is currently trading at 3.6x our FY24 adjusted EBITDA estimate and a 10.0% dividend yield based on the current annualized dividend of $2.00 per share.