Strategy Underlying Vitesse's "Velocity of Capital Compounding" Model
We hosted a fireside chat with President Brian Cree, CFO Jimmy Henderson, and Director of Investor Relations and Business Development Ben Messier on May 14, 2024, to discuss the company’s strategy to drive value utilizing a return-of-capital business model. This report contains a transcript of the conversation, which can be accessed on demand. Link is accessible in our full report. Vitesse’s return-of-capital strategy is based on a disciplined capital allocation framework, which prioritizes funding a fixed dividend followed by investing in organic development and near-term development (NTD) acquisitions to maintain and grow the underlying asset base. Vitesse was founded on the thesis that evolving technology would ultimately expand the economic limits of unconventional oilfields like the Bakken. Management’s early acquisition efforts concentrated on non-operated interests in acreage that was ahead of the drill bit where technological improvements could materially lift economic returns in the future. The fruit of that strategy is an inventory of more than 200 net undeveloped locations, which are the foundation of the company’s organic capital program. Vitesse routinely has upwards of 20 gross horizontal wells in process at any given time. Vitesse announced a 5% increase to the quarterly dividend on May 6, 2024, reflecting management’s confidence that organic development and the NTD acquisitions announced late in 2023 and earlier this year provide confidence in the company’s cash flow profile in future periods. The $0.525 dividend equates to a ~9.0% current yield. Management considers Vitesse’s proprietary Luminis integrated data management system as a single source of truth. Luminis is a repository for all of the data collected from Vitesse’s ownership in more than 7,000 gross producing wells in the Bakken. It is the single source of data for all corporate functions, including engineering, geology, land, accounting and finance. The system is vital to Vitesse’s forecasting and allows management to quickly evaluate and high-grade investment opportunities. Management is committed to maintaining a conservative leverage profile to support the company’s growth and dividends. Management targets a leverage ratio of ~0.5x.
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