Vitesse Energy (NYSE:VTS) reported third-quarter production of 16,824 barrels of oil equivalent per day, while highlighting its recently completed Denver-Julesburg Basin acquisition, a higher fourth-quarter activity outlook and a quarterly dividend declaration of $0.4375 per share.
The dividend, equivalent to $1.75 on an annualized basis, represents the company’s 16th consecutive quarterly payment since its January 2023 spin-off, President and Chief Executive Officer Jamie Benard said during the company’s earnings call.
Vitesse closed its DJ Basin acquisition in September. Benard said the transaction expands the company’s position in the basin alongside an operating partner and adds cash flow at what the company views as an accretive valuation. Chief Financial Officer Jimmy Henderson said the acquisition made only a limited contribution during the third quarter because it closed mid-month, adding only a few hundred BOE per day of production. Vitesse expects a full quarter of contribution beginning in the fourth quarter.
Financial Results and Balance Sheet
For the third quarter, Vitesse reported adjusted EBITDA of $39.3 million, adjusted net income of $2.5 million and free cash flow of $9.4 million after $26.9 million of development capital expenditures. The company recorded a GAAP net loss of $36.4 million, which Henderson attributed entirely to a $46.6 million non-cash unrealized loss on commodity derivative instruments.
Henderson said the unrealized derivatives loss did not affect operating cash flow or free cash flow during the quarter. He noted that if commodity prices remain above hedge levels, the contracts will settle in cash over time, while higher prices on the company’s underlying production would offset those settlements.
Total cash capital expenditures, net of divestitures, were $53 million in the quarter. That figure included a $25.9 million closing payment for the DJ Basin acquisition.
Vitesse ended the period with $190.5 million in total debt and a net-debt-to-trailing-12-month-adjusted-EBITDA ratio of 1.3 times, above its stated 1 times target. Henderson said the increase principally reflected revolver borrowings used to fund the September acquisition before its cash flow contribution had worked through the EBITDA calculation.
On a forward-looking basis, including a full quarter of DJ cash flow and expected fourth-quarter well activity, Henderson said leverage is at the company’s 1 times target and declining at current strip prices. In October, Vitesse amended its revolving credit facility, increasing elected commitments and its borrowing base from $275 million to $290 million. The company said the change brought total liquidity to about $100 million.
Production Guidance and Development Activity
Vitesse raised and narrowed its 2026 annual production guidance to a range of 16,600 to 17,200 BOE per day. It maintained projected oil content at 60% to 62% of annual production and set drilling and completion capital expenditure guidance at $80 million to $90 million. The capital guidance excludes acquisition spending, which the company said it evaluates separately on a deal-by-deal basis.
Third-quarter production had a 60% oil cut, and oil accounted for 92% of oil and natural gas revenue, according to Henderson.
As of Sept. 30, Vitesse had interests in 6.5 net wells in the drilling or completion phase and 13 net permitted locations ready for development. Operating partners began drilling 2 net wells and turned 2 net wells to production during the quarter, compared with 1.8 net wells spud and 1.7 net wells turned to production in the second quarter.
Benard said the company expects an acceleration in wells turned to production during the fourth quarter. Looking to 2027, he said Vitesse’s preliminary view is for flat to modest production growth relative to its current annual guidance, assuming commodity prices and the strip remain at current levels. He said capital spending next year could be similar to 2026 levels, though plans remain a work in progress.
Longer Laterals and Operating Costs
Vitesse said 70% of the authorizations for expenditure it has consented to this year are for wells with laterals of three miles or longer. Benard said extended laterals are intended to improve capital efficiency, reduce corporate baseline decline and lower the maintenance capital needed to sustain production.
Vice President of Finance and Corporate Development Ben Messier said the company’s current projections indicate maintenance capital expenditures could decline by about 10% over the next three to four years. He attributed that outlook both to the effect of longer laterals and to the aging of the company’s production base following fewer near-term development acquisitions than in prior years.
Benard also cited North Dakota regulators’ October update, which showed improving well cycle times even as completed lateral lengths reached nearly 14,000 feet in the third quarter. He said shorter cycle times benefit Vitesse by reducing the period between funding its share of a well and receiving cash flow from production.
Addressing lease operating expense, Benard said third-quarter costs were affected by mechanical failures on Vitesse’s operated assets during July and August. The company used a 24-hour workover rig crew to restore production, increasing costs in the quarter. Benard said he expects LOE per BOE to return to prior levels going forward.
Henderson said general and administrative costs could decline year over year in 2027 if other factors remain constant, citing the company’s ability to absorb acquisitions with its existing team. Vitesse has 33 full-time employees overseeing 8,732 productive wells, according to Benard.
Hedging and Capital Allocation
Based on the midpoint of updated guidance, Vitesse had hedged about 64% of its remaining 2026 oil production and 57% of its remaining 2026 natural gas production. Its oil hedge book extends through 2030, with swaps at a weighted average price of about $68 per barrel.
Messier said the company underwrites acquisitions at strip pricing or below and focuses on returns, net asset value per share and distributable cash flow accretion. He said Vitesse hedged 85% of the DJ acquisition’s proved developed producing volumes through 2030 when the transaction closed.
He added that Vitesse has recently added hedges for 2028 and 2029 and may continue to hedge further out the curve if prices support dividend coverage. Benard closed the call by reiterating the company’s commitment to shareholder returns, disciplined capital allocation, accretive growth and a conservative balance sheet.
About Vitesse Energy (NYSE:VTS)
Vitesse Energy, Inc is an independent energy company focused on owning non-operated interests in oil and natural gas wells. Rather than serving as the primary operator, Vitesse invests alongside exploration and production companies, allowing it to participate in well production while relying on operating partners to manage drilling and field activities.
The company’s portfolio is weighted toward oil-producing assets in the Williston Basin, including the Bakken and Three Forks formations in North Dakota and Montana.
