8-K: Crescent Energy Announces Preliminary Hedge Settlement Results for Q3 2024

Crescent Energy anticipates a net cash inflow of $31 million from hedge settlements for the third quarter of 2024 and a net cash outflow of $17 million for the first nine months of 2024.

Summary

• Crescent Energy expects to report a total cash inflow of $31 million from hedge settlements for the three months ended September 30, 2024.
• The company also anticipates a total cash outflow of $17 million from hedge settlements for the nine months ended September 30, 2024.
• These figures are preliminary and subject to change.
• The hedge settlements include $5 million net cash received on settlement of derivatives for the quarter and $26 million from settlement of acquired derivative contracts related to the SilverBow Merger.
• For the nine-month period, there was a net cash outflow of $43 million on settlement of derivatives and a $26 million inflow from settlement of acquired derivative contracts.
• The settlement of acquired derivative contracts will be reported as positive adjustments on the Statements of Cash Flows and as additions to Adjusted EBITDAX.
• Final results will be reported in the company's Quarterly Report on Form 10-Q for the period ended September 30, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive due to the expected cash inflow in Q3, but the overall nine-month result is negative. The preliminary nature of the results and the associated risks temper any strong positive sentiment.

Positives

• The company expects a net cash inflow of $31 million from hedge settlements in Q3 2024.
• The settlement of acquired derivative contracts will positively impact the Statements of Cash Flows and Adjusted EBITDAX.

Negatives

• The company anticipates a net cash outflow of $17 million from hedge settlements for the first nine months of 2024.
• There was a net cash outflow of $43 million on settlement of derivatives for the nine-month period.

Risks

• The reported figures are preliminary and subject to change.
• Actual final results could differ materially from current expectations due to various assumptions, risks, and uncertainties.

Future Outlook

Final dollar amounts for the three and nine months ended September 30, 2024 will be reported in Crescent's Quarterly Report on Form 10-Q for the period ended September 30, 2024.

Management Comments

• The dollar amounts included in this Current Report on Form 8-K are preliminary and subject to change.
• These statements are based on current expectations but remain subject to a number of assumptions, risks and uncertainties.
• Brandi Kendall, Chief Financial Officer, signed the report on behalf of the company.

Industry Context

This announcement provides insight into Crescent Energy's hedging strategy and its impact on cash flow, which is a key factor for oil and gas companies. The results are particularly relevant given the volatility in commodity prices.

Comparison to Industry Standards

• It is difficult to make a direct comparison without knowing the specific hedging strategies of other companies.
• However, many oil and gas companies use hedging to manage price risk, and the results of these strategies can vary widely based on market conditions and the specific instruments used.
• Companies like EOG Resources, Pioneer Natural Resources, and Devon Energy also engage in hedging activities, but their specific results would be detailed in their respective financial reports.
• The impact of the SilverBow Merger on Crescent's derivative portfolio is a unique factor that needs to be considered when comparing to other companies.

Stakeholder Impact

• Shareholders will be interested in the impact of hedging on the company's cash flow and profitability.
• Creditors will assess the company's financial health based on these results.
• Employees may be indirectly affected by the company's financial performance.

Next Steps

• Crescent will report final results in its Quarterly Report on Form 10-Q for the period ended September 30, 2024.

Key Dates

Keywords

Hedge Settlements, Derivatives, Cash Flow, Adjusted EBITDAX, SilverBow Merger, Financial Results, Oil and Gas, Energy