Execution Drives 5% Dividend Boost
Vitesse increased its 2Q24 quarterly dividend 5% to $0.525, reflecting a strong production outlook driven by the execution of management’s strategy to grow the asset base with near-term development acquisitions and organic growth projects that surpass its economic hurdle rates. The current yield is 8.7%. Vitesse’s business philosophy is built on the premise of compounding cash invested in oil-oriented producing assets in the Bakken play to sustain and grow the asset base in a fiscally conservative manner to support a fixed dividend. Management’s capital allocation framework revolves around returning cash to shareholders through the dividend policy. Near-term development acquisitions agreed to early in 2Q24 have added $40 million of incremental capital expenditures through the end of 2024 that are expected to contribute to production growth later in 2024 and early in 2025. Management increased FY24 production guidance to 13-14 MBOE/d (69-71% oil) from its initial outlook of 12.5-13.0 MBOE/d. Total capital expenditures are now expected to be $130-150 million, compared with the initial outlook of $90-100 million. Management estimates the maintenance capital requirement to hold production steady is ~$90 million. Management’s attraction to the Bakken play is based on the concept that drilling and completion technological innovation could drive increased oil recoveries from the unconventional reservoir and lower costs over time to expand the economic limits of the play. Operators are drilling three-mile laterals where acreage allows and experimenting with refracing older wells that may have been under stimulated to increase recoveries. Vitesse generated $39.1 million of adjusted EBITDA during 1Q24 on 12.6 MBOE/d (71% oil) of production. Oil accounted for 94% of total revenue. 1Q24 production was adversely affected by severe winter weather in January. Vitesse ended 1Q24 with $98 million outstanding on its RBL credit facility and a 0.6x leverage ratio based on annualized 1Q24 adjusted EBITDA. Elected commitments on the RBL are expected to increase to $245 million with the spring redetermination. Our updated FY24 and FY25 adjusted EBITDA estimates are $175.1 million and $200.7 million (Figures 1-5). Vitesse is currently trading at 4.8x and 4.2x our FY24 and FY25 estimates, respectively. Please join us on Tuesday, May 14, 2024, at 2:30 pm ET for a fireside chat with CEO Bob Gerrity and President Brian Cree where we will discuss the company’s income-oriented business model. Those interested can register for the event with the link accessible in our full report.
Water Tower Research is built on the foundation of democratizing information flow. We bridge the growing information gap between companies and investors through our investor engagement strategies and open-access research platform.
Our research analysts are Wall Street veterans with the experience and knowledge to work with companies and investors in tandem. We provide access to the information and content that anchors the due diligence process for both professional money managers and individual investors. We leverage traditional research distribution channels and the best of modern digital strategies and tactics to amplify this information flow globally to engage all categories of investors and stakeholders.
Information flow is the foundation for creating investor awareness, knowledge, and engagement. Our mission is to help companies and investors have the tools they need and achieve their goals.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.