Good morning. My name is Krista, and I'll be your conference Operator today. At this time, I would like to welcome everyone to the Civitas Resources Midland Basin Acquisition conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I will now turn the conference over to John Renz. John, you may begin your conference. Thanks, Operator, and good morning, everyone, and thanks for joining us today. I'm joined today by our CEO, Chris Doyle, CFO, Marianella Foschi, COO, Hodge Walker, and Jeff Kelly, the most recent addition to our senior team as Chief Transformation Officer. Today, we announced a highly accretive bolt-on to our growing Permian Basin position, and we posted some informational slides on our website that we plan to reference. Please note that today we plan to make forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from our projections. Please read our full disclosures regarding forward-looking statements in our 10-Q and other SEC filings. We may also refer to certain non-GAAP financial metrics. Reconciliations to certain non-GAAP metrics can be found in our news release, our second quarter earnings release, and our SEC filings. After Chris's brief prepared remarks, we will all be available to take your questions. As always, please limit your time to one question and one follow-up, as this allows us to get to more of your questions. Now I'll turn the call over to Chris. Good morning, everyone, and thank you for joining us. We're excited to share our thoughts on today's announcement and look forward to addressing your questions shortly. Let me first start by recognizing the Vencer team. Just as we saw with Tap Rock and Hibernia, this Vencer team has created a very strong business. I want to congratulate them on their hard work, their dedication, and their well-earned success. We look forward to working with this team and integrating these assets into Civitas. You know, for us, our North Star has been and will always be our business model, and this transaction advances our key strategic pillars. It's a fantastic bolt-on that increases the depth of our Permian position, adds, adds significant free cash flow, and importantly, maintains our, our strong balance sheet. We're adding premium scale that fits well with our current Midland position, as well as our broader Permian position, and we're able to achieve that scale and capture these assets at a very attractive price, just 2.8x 2024 EBITDAX, which compares favorably to recent Permian transactions. We see approximately 400 high-quality, high-value locations, but use less than half of those to underwrite the economics of this transaction. The $2.1 billion purchase price includes approximately 7.3 million shares of common stock to be issued to Vencer and about $1.55 billion of cash. We plan to fund the cash portion of the transaction with debt and equity financings. Pro forma, we expect to generate about $1.8 billion in free cash flow next year, assuming $80 oil and $3.50 gas. This will further enhance our industry-leading shareholder return program, which has delivered $1.3 billion to shareholders since early last year. We'll maintain our strong balance sheet and expect our leverage ratio to be below one turn by the end of 2024. Our long, long-term leverage target of three-quarters of a turn is unchanged. Higher cash flow and expected proceeds from non-core asset sales will push our leverage ratio closer to our long-term target in the coming quarters. Now, turning to the assets, Vencer adds about 44,000 net acres and enhances our strong position in the Midland Basin. The assets currently produce about 62,000 BOE per day, of which about half is oil. Pro forma for this transaction, our estimated 2024 Permian production will be about 170,000 BOE per day, and total company production will range between 325,000 and 345,000 BOE per day. We've updated our outlook slide in today's deck. Bottom line, this extends the duration of our proven business model by adding high-value locations in Midland, Martin, and Upton counties. And in total, Civitas will now have about 1,200 locations in the Permian, which equals about a decade at our planned pace of operations. Before taking your questions, let me wrap up with these three key takeaways. First, scale matters. Depth and quality of inventory matter. Civitas has scale with quality inventory in both the Permian and DJ basins. Second, value matters. We captured this deal at a very attractive valuation and allow us to maintain a strong balance sheet. Incremental free cash will be used to achieve our leverage targets less than a turn by the end of 2024 and our long-term leverage target of three-quarters of a turn. Finally, duration matters. This deal further extends the duration and durability of our proven business model. We're confident in our ability to generate significant cash through cycle and continue to provide unparalleled returns to our shareholders. Civitas is stronger today. We've added scale, quality, and duration at a compelling value that complements our already strong business. Operator, we're now happy to take questions. If you would like to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Neal Dingmann from Truist Securities. Please go ahead. Morning, Chris and team. Congrats on what appears to be a solid deal. Chris, my first question is around the origination of the deal, specifically, maybe just talk around, was Vencer a marketed deal? And, you know, back when you, you know, announced the close of the Tap Rock and the other deals, had you already been looking at this? I'm just curious, you know, sort of that timing, you know, market, all that sort of things on this. Sure. Thanks, thanks for the, the question, Neil. You know, as we thought about how, how to create long-term shareholder value in this business, we started with our business model. I think the two super important components of that business model, that really fuels that model, is scale and depth and quality of inventory. As we look to continue to build scale within the DJ, what was really lacking beyond our own assets, was that depth and quality. And so we started looking at other basins, and we focused in on the three lowest breakeven basins, as we talked about on the last call. As we thought about potential entry points into the Permian, whether it's the Delaware or Midland, we had a short list of, of, targets. Hibernia and Tap Rock were obviously on that list. Vencer was also on that list. We brought in Hibernia and Tap Rock. Vencer had died. We've had conversations with them for some time. Like any good transaction, this thing died multiple times. The team has been very, very disciplined and worked alongside Vitol and Vencer to see if a transaction made sense. We stuck to our guns. We were able to pull it over the finish line. Really excited that we were able to do it. This was not a marketed transaction. They were getting ready to head into a potential transaction later in the year. The quality relationship that we built with the counterparty here allowed us to get this over the finish line before they went to market. We're super excited about the quality asset that we pulled in at the value that we did so. Great. Looks very interesting. And then second question is just on assumed activity. You all mentioned, you suggest, I think, around 62,000 BOE per day today, and then I think it's around 50 or 60 for next year for Vencer. So just wondering, could you speak to, you know, how many rigs this assumes? Maybe, you're the guys, speak to, you know, the number of wells in progress, DUCs, you know, all those sort of things that, that, might impact how you're thinking about sort of activity between, the 62 today and kind of what you're thinking about for the year. Sure. So, Vencer's been running about three rigs this year as they were preparing for a potential monetization. Production was growing a little bit. As we look out into 2024 and we realign to our business model that focuses on optimizing for free cash, protecting our balance sheet and getting that cash back to shareholders, we're going to let activity moderate a bit. And what we've assumed in our outlook is those three rigs go down to two in 2024, and we'll average just a little over two in this asset. I'll tell you with that moderate moderation of activity, you'll see production range between 50 and 60, as we've indicated in our outlook. That 50% oil cut will drop a little bit into just above sort of mid-40s for this asset. It's a very simple capital plan today that we've outlined in the outlook. Two rigs with the addition of Vencer, that complements the two rigs on the Midland side and two rigs on the Delaware side, so six total, and then the two rigs in the DJ. That's our initial outlook. What I'm excited about, and this is one of the true values of this transaction, is the quality of the inventory that Vencer brings to the table. And I point you to slide six in our deck. You can see how this compares to not only recent transactions, but also to the broader Midland performance. This is really high-quality inventory. It might, it might call for more capital. I'm super excited about the competition that we're lining up with scaled positions, super high quality, low breakeven inventory in the DJ, on the Delaware side, and now even a more scaled position on the Midland side. So in terms of wells in progress, et cetera, really, this doesn't come with a big DUC backlog or anything like that. It does come with 15-20 wells, which is really just operational inventory, and we'll seek to optimize that as we've done in every other part of our business. No, it looks to be a good deal. Thanks, Chris. Thanks, Neal. Your next question comes from the line of Tim Rezvan from KeyBanc. Please go ahead. Good morning, folks. Thanks for taking the question. I know you reiterated the desire for $300 million of non-core asset sales. How does this, this acquisition, you know, which kind of will likely increase gross debt, how does that make you rethink either the timing or amount of asset sales, and would you expand that to maybe non-core Permian as well? So I'll start with how this could potentially impact how we're thinking about non-core asset sales. I think the biggest thing, Tim, is we've just pulled in 400 high quality sticks that go to the front of the line, or many of them go to the front of the line. And so non-core assets that simply do not compete for capital, whether it's within the DJ or the Permian, that hurdle is getting more and more difficult, which is exactly what we want as a leadership team and for our shareholders, is to drive that capital competition. You know, we've been very pleased. We're right in the middle of the non-core asset sale process. We've been very pleased with what we've seen in terms of participation. We're gonna let value lead this decision, however. And whether that means leaning in a little bit or holding off, we'll let the market decide that. But I'll tell you, we have built a tremendous portfolio now balanced between the DJ and the Permian, 1,006 in the DJ, 1,200 in the Permian, and those things are going to be competing for capital to allow us to optimize and, as we think about strategic capital allocation over the next 3-5 years. So I think we'll have more insight, more guidance on that, as we approach closer to the end of the year. But we're really happy with participation today. Okay, okay. We'll, we'll stay tuned. Thank you. And then it seemed intuitive that when you announced this first set of deals in June, that you weren't done. Obviously, you didn't kinda have that called decade of inventory. Now, as you work towards closing on this, should we think that you will continue to be you know, opportunistically acquisitive, assuming that you can still find you know, accretive opportunities? How do you think about kind of the next you know, one, two years on the M&A side? You know, as we've demonstrated as a company, to your point, we're very opportunistic, but importantly, we're very disciplined. This transaction died just about as many times as I've ever seen a transaction die, and it died because we were very disciplined with how we saw value, and very happy with the position that we had created with the two previous transactions. When we're head down, focused on integrating these assets, the Permian assets, and super excited to share sort of early results with you guys on our next call, but how integration is going, it was going to take a very compelling opportunity to pull our eyes away from that, and Vencer was that compelling opportunity. Ultimately, just as with the divestment process, we're gonna let value lead the way here. I'll tell you, we have approached that decade of duration. That's an important target for us. But depth and quality of inventory and duration really drives long-term shareholder value. I love where this company is from a diversity and a scale perspective, and the inventory of quality opportunities we have in now the three lowest break-even basins in North America. It's gonna have to be quite compelling to get us to add to that. But to your point, we're very opportunistic, but we're also very, very disciplined. Okay, I appreciate the color. Thank you. Thanks, Tim. Your next question comes from the line of Phillips Johnston from Capital One. Please go ahead. Hey, guys. Thank you and congrats. Can you maybe give us some color on the next 12-month PDP decline rate on these assets, and how that might compare to your overall standalone company decline rate? Sure. Thanks, Phillips. So as we look at a January close, we'll enter the year with these assets, in particular, in the low thirties base decline, about 33%. That's really in line with the DJ base decline. The assets that we acquired earlier in the year were a little bit higher base decline than that, but this is, I'd say, accretive to overall base decline. And so we're excited about that. Makes for a very an opportunity to further optimize our 2024 plan. Yeah. Okay. And just, just to clarify on your answer to Neal's question about the activity for next year. Would the two-rig program essentially stabilize production at that sort of 2024 guidance rate of 50,000-60,000 a day, kind of exiting the year and looking out into 2025? That's correct. Okay, got it. And what's the average working interest on these locations, by the way? We have about average across the entire position is about 80% working interest. Very high in our eyes on this position that would drives further value, about 80%. Okay. Thanks, Chris. Thank you. Your next question comes from the line of Leo Mariani from Roth MKM. Please go ahead. Hey, guys, just a few questions on some of the incremental, you know, numbers here. Can you talk about the kind of cost structure of the Vencer assets, kind of compared to the previous Tap Rock, Hibernia assets? Are you guys adding any incremental, you know, G&A with this deal? And then obviously, I think with the previous Hibernia Tap Rock deal, you guys talked about kind of halving the share buyback program. Does this deal also maybe push back that share buyback program a little bit as you prioritize debt? Just kind of talk through some of those numbers would be helpful. Sure. I'll kick us off and then kick it over to Marianella. So on the cost structure basis, these assets on the Midland side are very consistent with how we underwrote and how we saw Hibernia and how Hibernia's cost structure is set up. That's slightly accretive to the overall Permian picture and to the company picture, but very consistent with how we saw Hibernia. On the incremental G&A side, we are adding $15 million-$20 million of annual G&A. We see that as overall accretive for the assets that we're bringing in. And then finally, on the share buybacks, we still have $480 million under the $500 million authorization in place, and that's really driven by a couple things. One, we like having the opportunity to have that out there to be opportunistic. You've seen us pull down shares at very compelling values. We like to have that flexibility. And it's also a realization that this is a business that is going to spin off $1.8 billion of free cash flow next year. And so we feel like we can have the industry-leading dividend program, in addition to delevering, in addition to a potential buyback. So we like to have an all-of-the-above approach, and so we've maintained that buyback out there. Hey, Leo, this is Marianella. Just in terms of modeling health, so if you look at $80 oil, this deal is about high single digits-... call it 8%-10% accretive to our margins. In large part, that comes from the lower cost structure. So the cost structure of these assets is a little bit lower than our current company as a whole, especially when you think about the deals that we just did, including the Delaware asset, which has a higher cost structure as well. This one being all Midland, the cost structure a little bit more, it's a little lower. So when you look at G&A as well, we have our current company, previous deal is about $1.30 per BOE of G&A. With the additional headcount and the expected additions to G&A, I think that's gonna come in about $0.70-$0.80 per BOE. So that's another aspect of accretion to the cost structure once we add in the additional overhead. It's gonna be an additional expansion to the margins. Okay. That's, that's helpful color, guys. And then just, one more from me here. Obviously, you've got the, the $1.55 billion, you know, cash component, which I guess could go to, to $1.5 billion. You know, on the, the previous Tap Rock deal, you guys were pretty aggressive in, in getting bonds, you know, kind of out there, you know, right away. You know, should we assume, that we're gonna see something similar, in terms of the, the kind of secondary financing for this, in terms of getting some, some bonds out there and, and perhaps, an equity slug, you know, as well, to kind of get this financing taken care of sooner rather than later? Leo, this is Marianella again. We really can't speak to the timing right now. I will say this, the signing and closing timing is fairly long relative to the last deal. We have about 90 days. We have a lot of flexibility in our capital structure right now. You know, we have a $500 million deferred payment that's part of this transaction, so that's gonna give us optionality even beyond closing. I mean, from our perspective, we preserve that flexibility with where our leverage sits and where our liquidity sits, and we plan to optimize the deal and the financing in a way that's out of the gate, slightly accretive to our leverage profile, which was the governor in how we thought about financing this transaction. Just over time, the accretion is gonna be even further because as we materialize, the cash flow from this transaction will be very accretive to the leverage profile. But as we thought about financing, again, key was making sure it was leverage neutral, at least at close, and then over time, that will be accretive as well. But really can't speak to the timing. We'll continue to exercise the flexibility in a way that's beneficial to our company's strategy and our core pillars. Okay, thank you. Thanks, Leo. Your next question comes from the line of Noel Parks from Tuohy Brothers. Please go ahead. Hi, good morning. Morning, Noel. Just a couple of things. I was wondering, you talk about in the release, a certain number of locations that you expect a 40% IRR at, at $75 oil. And I was just wondering, as, as the distribution of, returns across the locations, you have-- you look like you're newly in, Martin and Glasscock with this acquisition. Just wondering, is there, is product mix the main variable as you, as you look at the, returns on locations, or, or is it more, you know, just rock at a particular location? Yeah, I think, you know, what we pointed to is 400 gross development locations, mainly in the Spraberry and Wolfcamp, 40% of those having IRR in excess of 40% at $70 oil. This is a high-quality asset. It gives you exposure to some of the best rock, north to south, in the Midland Basin. As we think about how we will develop this asset, you're gonna have more dense wells, certainly in the north, in Martin and Midland County. You'll start to upspace as you go south, more consistent with how we underwrote Hibernia. And so this gives you opportunities to really flex, whether it's rock quality, or oil, and flex capital allocation and really optimize for a better 2024 and beyond solution. It's one of the things we really like about this, beyond just the operational synergies of plug and play with the Hibernia assets on the Midland side. I think what you'll see if you pull historical performance for these assets is really a head nod to the Vencer team that has driven additional capital efficiency, and that's really by upspacing and taking a very deliberate view on how to optimize development here. We'll continue that, and look forward to pulling the value out of those 400 gross oil locations onto our portfolio. Great. Thanks a lot. And, since you mentioned it, it was quite a long courtship, back and forth, before you reached an agreement. Just curious about where there were some of the differences of opinion, whether it was just price deck to use or, you know, valuing upside or PDP, any... Just interested in what issues you're able to overcome to get you to this. Sure. I would tell you that we're very disciplined, some might say stubborn. As we saw commodity prices strengthen over the past little while, certainly that put pressure on how we viewed value because we were steadfast in how we were underwriting this asset and every other asset. We take a long-term view. We are not influenced by the rapid run-up in commodity prices, and that makes deals very difficult. We continued to dig in on the asset, but our views of value were fairly consistent at the beginning of the year as they were today. And that's a credit to how we look at value long term for our shareholders. Ultimately, you know, you build a relationship with a counterparty, you build trust, and we're able to get this over the finish line. But that disciplined approach, but also opportunistically getting out in front of a potential competitive process, I think was key to delivering what I think is a super compelling value for our shareholders. Great. Thanks a lot. Thanks, Noel. Your next question comes from the line of Kevin MacCurdy from Pickering Energy Partners. Please go ahead. Hey, good morning. Congratulations on the acquisition. It certainly looks to fit your strategic pillars. Thanks, Kevin. Following up on Noah's question, will the initial activity be split between the north and the south, or do you plan to mainly focus on the north? So we'll look I'll tell you that 2024 outlook, we'll look to access all parts of the asset. I think one thing that I'm excited about, and I think we touched on it a little bit earlier, is I wouldn't tell you our 2024 outlook is the optimal view, is the fully optimized capital program. So you might see, just given the asset quality here, you might see us pull more capital into the Vencer assets. I will tell you currently, they're active more in the southern part of their position. We'll continue. We'll look to continue that, but also sprinkle in some northern activity as well. Great. And I know it's early days for Civitas in Midland, but have you identified any operational synergies between your assets and the Vencer assets? I mean, it does sound like you plan to space well, similar to what Vencer was doing. Is that correct? Yeah, I think, you know, as broader industry has really looked at optimizing returns, and that's through optimizing development and upspacing. We're big believers in that. We've seen that in the DJ. We've seen it in past lives as well, and industry has caught on to how best to develop this rock. I would say, with the performance enhancements that the Vencer teams delivered really is on the backs of that. And we'll look to continue to perform and drive further performance enhancements into the program. Thank you, Chris. Thanks, Kevin. Again, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Phillips Johnston from Capital One. Please go ahead. Hey, just, one more quick one, sorry. As we look at Vencer, it looks like most of the wells in the property since 2021 were drilled in sort of the Martin, Glasscock area. Is that correct, or are there some wells in Upton and Reagan that show up under a different operator's name? It sounds like from your comments earlier that you said the current mix of wells is split a little bit more towards the south, so I'm just trying to reconcile that. Yeah, they've got a lot of their activity in the south currently, and so that makes... We're comfortable with how we've underwritten the asset. Certainly, the Martin, Midland County's fantastic rock. It's more dense development, but they've been active in the south as well. Okay, sounds good. So as we look at sort of the cum curve on slide six, would you think that would sort of be a representative of the, you know, average well that you'll be drilling over the next couple of years or so as that mix sort of increases more towards the south? Yeah, I think that's fair. There's one thing, and going back to Kevin's question, I wanted to hit on it, and it really relates to your question as well. As we think about how we're allocating capital, you know, what we've seen currently to date in the Midland, and it applies to Delaware as well, is there is real resource here that may not have been part of the underwriting case, but we're starting to see extremely compelling results. I'll point to the Wolfcamp D as an example in the South. And so some of the early days integration that we're seeing, we're pulling learnings across the basin, even from the DJ, and unlocking additional resource. So the only thing that gives me a little bit of pause, Phillips, is saying, "Hey, as we think about optimizing capital and deploying additional capital, we could look at some of the zones that provide really strong returns, but may not have been part of the underwriting case." We're gonna be super focused on how do we deliver, how do we deliver the most optimal capital program over the next 3-5-year timeframe. And we'll do so, and that may mean leaning in more on these assets, it may be leaning in on Hibernia or Tap Rock or in the DJ. But we'll take a very strong look at how best to optimize strategic capital allocation. I think the other thing that I wanted to, to touch on, and, and again, this is, this is very strong in, in our DNA, and it's strong in the DNA of the, the companies that we've acquired, is this view of continuous improvement. I think the industry does a phenomenal job of, of continuing to, to build a better mousetrap. And some of the learnings that we've seen, just early days in the first quarter of taking a little bit of a different approach, on some of the Midland Basin assets or even the Delaware assets, pulling learnings in from the DJ and across all three, basins. There's real value here, and it's hard, it's hard to put a hard number, or to underwrite any type of, of synergies that come from having three very strong, high quality, deep, inventory basins, but that's what we've got. And early days, a quarter in, I'm super excited about, about the teams pulling together and, and really coming up with a, with a better solution. So, I'm, I'm very confident in saying that how we see 2024, 2025 and beyond, is only gonna get stronger. And so, and that's not just us. Again, that's, that's overall industry. Okay, great. I appreciate the call. Thanks, Chris. Thanks, Phillips. We have no further questions in the queue at this time. Chris Doyle, I'll turn the call to you for closing remarks. All right. Thank you. Thank you again for joining us. We appreciate your continued interest in Civitas, and we look forward to sharing our results and sharing our continued progress on our next quarterly call. Have a wonderful rest of your day, and please be safe. This concludes today's conference call. Thank you for your participation, and you may now disconnect.