Vital Energy Inc. has reported net income of $294.811 million in the second quarter on revenue of $335.062 million and record production of 44,360 barrels of crude oil per day..
The Oklahoma state-owned company’s earnings after deductions represented an increase from $113.93 million in the prior three-month period and $262.546 million in the second quarter of 2022, according to filings with the Commission of the US Securities and Exchange Commission (SEC).
The oil and gas producer, which operates in the Permian Basin, generated $248.888 billion in cash from operations in the second quarter of 2023.
Despite achieving record output, Vital said sales of oil bought in the April-June period had slowed due to lower prices, leading to a $13.513 billion quarterly drop in revenue for sales of purchased oil. But its total oil sales volume rose to 4,037 barrels from 3,467 barrels quarterly.
Second-quarter earnings were negatively impacted by higher inflation and interest rates. “Drilling and completion costs and costs for oilfield services, equipment and materials are moderating but remain at elevated levels in the second quarter of 2023 along with labor tightening, persistent supply chain disruptions and the resulting limited availability of certain materials and manufactured products. using those materials and high levels of inflation,” Vital said in its quarterly report to the SEC.
“In addition to the effect of these inflationary pressures on our operating and capital costs, higher interest rates have increased our costs of borrowing debt under our Senior Secured Credit Facility and may limit our our ability to access the debt capital markets.
“Further increases in interest rates have the potential to further increase our borrowing costs.”
Vital spent a net $526.985 million on the acquisition of oil and natural gas assets between April and June.
Completed a joint purchase with Northern Oil and Gas Inc. of assets held by Forge Energy II Delaware LLC on June 30 for $397.2 million. The oil and gas properties include approximately 34,000 net acres in the Delaware Basin.
On April 3, Vital closed on the purchase from Driftwood Energy Operating LLC of approximately 11,200 net acres in the Midland Basin for $201.3 million.
Vital closed the first half of 2023 with $71.696 million in cash and cash equivalents, while its current liabilities stood at $433.745 million.
It beat the Zacks Consensus Estimate of $4.07 a share and closed higher on Tuesday in its quarterly report on the New York Stock Exchange at $54.61 from $53.79 in previous session
Vital did not repurchase any shares during the first two quarters of 2023, but has redemption volumes worth $162.7 million remaining under a repurchase program authorized on May 31, 2022.
It expects to spend $665-695 million in capital for the full year. “However, we will continue to monitor commodity prices and service costs and adjust activity levels to proactively manage our cash flows and preserve liquidity,” Vital said in its quarterly filing .
“As of June 30, 2023, we were operating three drilling rigs and one completions rig,” he said. “We used a second completion team for part of the third quarter of 2023 and again expect to use a second completion team in late fourth quarter of 2023 to optimize completion activities in the Midland and Delaware basins.”
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