Vitesse Energy at Midwest Ideas Conference: Strategic Focus on Dividends

On Wednesday, 27 August 2025, Vitesse Energy (NYSE:VTS) presented at the 16th Annual Midwest Ideas Conference, showcasing its strategic focus on non-operated oil and gas development in the Bakken play of North Dakota. The company emphasized its commitment to returning capital to shareholders through a fixed dividend, while also highlighting its conservative financial strategy and technological advancements. Despite a significant increase in production, Vitesse prioritizes dividends over expansion, maintaining a stable financial footing with a low debt ratio.

Key Takeaways

• Vitesse Energy prioritizes a fixed dividend yielding around 9% annually, with a focus on shareholder returns.
• Production increased by 46% in the second quarter of 2024 compared to 2023, reaching 19 Mboe per day.
• The company maintains a conservative balance sheet with a debt to EBITDA ratio of 0.6 times.
• Technological advancements, including AI and extended-reach laterals, are leveraged to enhance well productivity.
• Over 95% of production is concentrated in the Bakken play, with 80% of assets undeveloped, offering future growth opportunities.

Financial Results

• Dividend: Vitesse Energy offers a fixed dividend of $2.25 per share annually, yielding approximately 9%.
• Production: Second quarter production reached 19 Mboe per day, marking a 46% increase from 2023.
• Capital Expenditure: Maintenance CapEx stands at $95 million, representing a 50% reinvestment rate to maintain production levels.
• Debt Management: The company targets a debt to EBITDA ratio of less than 1, currently at 0.6.

Operational Updates

• Asset Base: Concentrated in North Dakota’s Bakken play, with participation in over 7,000 wells and an average ownership of 2.5-3%. A significant 80% of assets remain undeveloped.
• Drilling Costs: Costs have decreased by 26% since 2014, from $973 to $716 per lateral foot, adjusted for inflation, a 46% reduction.
• Production Efficiency: First-year production improved from 12 barrels of oil equivalent per lateral foot in 2014 to 21 barrels in 2024.
• Hedging Strategy: 70% of 2025 oil production is hedged at around $70 per barrel, and 50% of 2026 production at $66.43.

Future Outlook

• Strategic Focus: Vitesse aims to maintain its dividend policy while reinvesting in strategic acquisitions, primarily in the Bakken.
• Technological Advancements: The company continues to explore AI capabilities to enhance data analysis and decision-making.
• Market Dynamics: The non-operated market faces increased competition from private equity and family offices.

Q&A Highlights

• Capital Allocation: Vitesse can adjust acquisition activity based on market conditions, reducing activity if prices decline.
• AFE Approval: The company approves over 90% of AFEs, with the option to sell if not approved.
• M&A Advantage: Vitesse leverages its deep understanding of the Bakken and the ability to use stock as currency for acquisitions.

In conclusion, Vitesse Energy’s presentation at the Midwest Ideas Conference underscored its commitment to a stable dividend strategy and conservative financial management. Readers are encouraged to refer to the full transcript for a detailed overview.

Full transcript - 16th Annual Midwest Ideas Conference:

Jeff Elliott, Three Part Advisors, Three Part Advisors: Welcome everyone. Jeff Elliott with Three Part Advisors. Thanks for coming to check out Vitesse Energy. VTS is the ticker. They’re based out of Denver, Colorado.

With us here from the company today, we have Jimmy Henderson, CFO and Ben Messier, VP of Corporate Development and Investor Relations. Vitesse is actually a client of three part advisors. So if anybody would like a follow-up meeting or a call with management, I’m happy to help set that up. So just give me a shout. And with that, I’ll just turn it over to Jimmy.

Jimmy Henderson, CFO, Vitesse Energy: Alright. Thanks, Jeff. Thanks to Three Part Advisors for setting us up another great conference, great lineup of investors so far today. So I really appreciate what you guys do for us. So, yeah, as Jeff said, Vitesse Energy, we’re primarily a nonoperated participator in oil and gas development, mostly in the Bakken Play of North Dakota.

So that’s kind of our bailiwick where we got started and still over 95% of our production in our asset base is in North Dakota with a little bit, the remainder in Colorado and, up into Wyoming, but, primarily a a Bakken player. As non operated owner, what we do is participate in other operators’ wells. So think of it as being an ETF across the entire Bakken play as we’re exposed to just about every operator that’s up there. We’re under over 7,000 wells and have an average somewhere around two and a half, 3% ownership. So it’s just kind of a differentiated story about how we play in the oil and gas world.

Earlier this year, we closed on an acquisition of company Lucero Energy, which gave us a little bit of operated position. So we do have capability to operate if need be. Just another lever to pull should should opportunities present themselves. So we’ll get into all of that here in a little bit more detail in one minute. But just from a high level, we’d kinda like to walk through how we think about the investment criteria for us.

So we because of the maturity of the asset and how we’ve participated, we generate significant free cash flow. So we take advantage of that by returning a large dividend to shareholders. Right now, we’re yielding right around 9% given our current stock price with a dividend of $2.25 per year. So that’s really our focus and our mantra about how we return capital to shareholders. Every decision that we make, how we invest money internally is how well it supports or allows us to grow the dividend.

And we talked a little bit about that and how we thought about that in the Lucero acquisition in a bit. Again, we are a dividend payer. And most very importantly, from an asset standpoint, it’s a long duration asset with, still 80% of our assets undeveloped. So even though the Bakken itself is very developed, call it, mature basin, we still have a lot of locations left on the map that will get drilled over the next twenty years or so. We’re very excited about how technology has improved on drilling, completing these wells.

Most significantly, we’re seeing three, four mile lateral wells. So we’re going down a mile, mile and a half, and then going out three miles, four miles. Just incredible technology that’s just changed the face of shell plays and particularly in the Bakken. So many years of development on our existing platform, and then we constantly are acquiring interest in additional wellbores and buying people out of their own their positions so that we can add to that existing platform that we have. That’s we’ve done over 200 of these small acquisitions, spent over $750,000,000 doing that and building what we have today.

We’ve also done larger acquisitions. We’ve done four major acquisitions in the life of the company. The most recent one was the Lucero Energy. It’s about a $200,000,000 acquisition using our equity as currency. It was a little bit different because it did come with operated properties, but pretty limited operating requirements.

Most significantly, it came with free cash flow that allows us to increase our dividend and continue to support that as well as cash on the balance sheet that kept our leverage really good position going forward, which is the next tenet of the company’s strategy, trying to be keep the balance sheet in a very conservative position. The only components of our capital structure is our equity and the use of our reserves based lending revolver. We have always targeted less than one times debt to EBITDA. Right now, we’re pro form a 0.6 times, so very good position from a debt standpoint. It gives us ability to support our dividend through thick and thin, continue to fund our capital requirements and continue to keep growing the company.

We also protect ourselves by hedging. Dan will get into specifics of our hedging program, but we’re very careful. Any acquisition we do, we want to hedge out as best we can. And again, everything’s protecting the dividend and be able to reinvest capital as needed. Very process oriented.

By that, we’re really talking about taking all the data that comes in from participating in these thousands of wells and putting it into a very robust database that allows us to very carefully and accurately underwrite acquisitions that we’re acquiring within the basin. So we’re kind of a huge database that we’re bringing in information from the public, whether it’s from the North Dakota Industrial Commission website or Enveris or other public sources and adding that onto our proprietary data about how operators behave and how they write down to how they bill and how quickly they require payment, how they perform versus AFE cost. So a lot of information goes into that and allows us to very carefully analyze any investment dollar that we make. And then lastly, I’ll point out the strong investor alignment. About 25% of our outstanding shares are from insiders.

If you’re not familiar with the story about Vitesse, we were originally essentially a wholly owned subsidiary of Jefferies Financial, and they spun us out in January 2023. And we’ve and so all the shareholders of Jefferies became shareholders of Atez, which a lot of that has turned and and changed hands, but a big chunk of that was owned by the Jefferies executive team who are now our biggest shareholders individually. So no other no other ties directly to Jefferies now other than those individuals that are top shareholders and two of those are on our board. So they’re long term money and very interested in the long term success of the company, and it really sets us apart from a lot of our peers that came out of private equity hands or different methods of going public. With that, let me turn it over to Ben to talk about some details on the asset base and some good statistics about how things have performed.

Ben Messier, VP of Corporate Development and Investor Relations, Vitesse Energy: Thank you, Jimmy. So Jimmy just gave a good highlight of our company today and reasons you might invest in us. I figured it would be interesting to talk about our founding thesis back in 2010 and how we got to where we are today with such a unique asset base. So the company actually started with our CEO and his wife sitting around their kitchen table aggregating small undeveloped interests in the Bakken, which you can see on that map on the left. And the thesis back then was that technology has always improved in oil and gas since the first well was drilled, and it will continue to improve with time.

So they focused on buying undeveloped acreage outside of what was then considered the core of

Jimmy Henderson, CFO, Vitesse Energy: the

Ben Messier, VP of Corporate Development and Investor Relations, Vitesse Energy: Bakken. And the idea was that the basin would get deeper, denser, cheaper, better, expanded with time. I would add that they probably should have also included longer, which we’ll get into. That was one that has also panned out. So in 2014, Jefferies Financial Group funded Vitesse with a $450,000,000 investment, And that’s what it grew to through 2018 as we made incremental acquisitions in the basin.

And so you can see, with time, drilling has expanded out into the undeveloped acreage that we bought. So I thought it would be interesting to go back and see exactly how this thesis has played out over the last fifteen years. So deeper, the idea was that additional benches would become viable. In 2010, most of the drilling was focused on the Middle Bakken and Upper 3 Forks. Since then, quite a few Middle 3 Forks and Lower 3 Forks wells have been drilled.

Continental even drilled a well in the Winnipeg formation earlier this year, which is deeper than all those other benches. So I’d say of the five, this one still has the most room to pan out as most of the drilling there has been exploratory and sort of trying to prove up a concept. Denser, so just each of these drilling and spacing units, the idea was that you would jam more wells in there and kind of maximize the NPV of those DSUs. And so in 2014, it was estimated about 1,000 foot spacing was the norm in the basin. And over the last year or so, you’ll see more like 700 foot spacing.

And they got quite a bit denser than that in sort of the 2018 to 2020 time frame and backed off a little bit. And so they feel like they’ve kind of optimized the ideal spacing given the current frac designs. So the next two categories to me are the most interesting because this is what directly impacts economics, cheaper and better. So cheaper back in 2014, it cost about $973 per lateral foot to drill a well. And so far in 2025, the well proposals we received averaged $716 per lateral foot.

So that’s a 26% decline since 2014. Adjusted for inflation, that’s a 46% decline in drilling and completion costs. So that’s half the equation of why returns continue to improve. The other part that’s pretty impactful is better. So we like to look at first year production as a proxy for how much oil is going to come out of the ground in these wells.

And in 2014, in the Bakken, you’d see about 12 barrels of oil equivalent per lateral foot. And in 2024, all the wells drilled in the Bakken produced 21 barrels of oil equivalent per lateral foot in their first year of production. So quite the acceleration of cash flow and the improving of IRR metrics due to that. Expanded, I think nothing displays that better than these maps here. The black vertical lines represent producing wells in the basin.

You can see as it’s expanded outside the core into Vitessa’s acreage, we’ve benefited from really what used to be called Tier two and Tier three acreage producing like the old Tier one acreage used to produce in terms of returns. So we expect this to continue over the next thirty years of our inventory life. If you’re seeing a lot more four mile laterals, three mile lateral wells that will drill into the ground than horizontally four miles now. And back in 2010, it was a lot of one mile lateral wells. So that tends to just make the drilling quite a bit more economic.

You’re even seeing some U-turn laterals where they’ll drill out a mile, do a U-turn and then come back another mile. And those are producing as effectively as well as normal two mile lateral wells will. So innovations continue to improve. We expect that to continue to happen over the next thirty years. And because our asset is so undeveloped, you’d expect us to benefit sort of disproportionately to that.

Jimmy Henderson, CFO, Vitesse Energy: Sure. Just the 21 per lateral foot thousand in the first year? Yes. And what’s the total EUR for like a three mile lateral?

Ben Messier, VP of Corporate Development and Investor Relations, Vitesse Energy: I don’t think total EURs have gone up quite as much as the first year production. Think they’ve certainly increased. But a lot of it’s just accelerating production into the first year, which benefits IRR and allows us to compound capital quicker. For a three mile lateral, on average, maybe 1,000 MBOE, would you say something like that? It just depends, right?

It varies depending on part of the building. Sorry, yes, 1,000,000. One MMBoe. Right. I’ll carry on here.

So part of the reason we were able to come up with so much undeveloped acreage is just the way we were founded by Jefferies. So they were long term capital. We were held within their merchant bank on their balance sheet. And it wasn’t like your typical private equity buy and flip model where you buy acreage, drill it as quickly as possible and flip it in five years. We truly did have long term capital that was more sort of focused on ROI over the life of the assets.

So because we bought all of this undeveloped acreage, you can see on this map on the right, we have quite a bit of running room. Our assets extremely diversified across 7,500 plus producing wells in pretty much every operator in the basin with Cord having our most undeveloped acreage among all our operators. And then the other top ones are Continental, Devon, Chevron, EOG, ConocoPhillips. So even though we’re a $1,000,000,000 market cap company, we have exposure to these large cap operators that have a lot of drilling efficiencies and really great technology on their side. So you’ll see also, Jimmy mentioned the Lucero acquisition we made in March, and that’s the red squares on the right.

And so that just gives us optionality to defer capital to that in years where our non op AFEs are a little bit light. So it’s nice to have that as a leg to the stool, but we’re still primarily focused on non op. Then you’ll see our asset as a whole. Here are some highlights. In the second quarter, we actually had 19 Mboe per day

That was a 46% production increase over 2024. So we like to say that our product is our dividend, not production. And so we’re happy to let production decline if there aren’t economic opportunities to invest in. And we do things to protect free cash flow, not necessarily production growth for growth’s sake. So another nice feature of our asset is that we have extremely low maintenance CapEx of about $95,000,000 to hold our production flat at the midpoint of our guidance.

And that represents about a 50% reinvestment rate, which is low compared to many of our peers. So that allows us to support the dividend wherever we can. All right. And I’ll hand it back to Jimmy to talk about our capital allocation framework. Yes.

Jimmy Henderson, CFO, Vitesse Energy: This is kind of the heart of how we run the company and think about what our investment strategy is. As we’ve hit on several times now, the fixed dividend is our mantra and how we kind of ground ourselves in all of our investment decisions. We are at $2.25 per share right now, which I think I mentioned is right around a nine a little over 9% yield in the current stock price. And we’ve really decided on the fixed dividend as being the return of capital to the shareholders as opposed to a variable dividend or a return or a share repurchase program. We do have capital allocated to share repurchase should it come into be opportunistic and that’s kind of how here on the right on this demonstration.

If opportunity presented itself, we would buy back stock. But frankly, our best investment to date has been to use the dividend and use the excess cash flow to reinvest back into the ground and continue to grow the company. The capital investments that we make, we separate those into organic CapEx or near term development acquisitions. So the organic CapEx is just when we get an AFE or the operator drills on a drilling spacing unit that encompasses our existing acreage position and those very high return to the acreage was bought years and years ago. So it’s really about the return, the well level returns that we achieve there.

Almost always slam dunk AFE approval on those opportunities. Because of the operator base that we have and the right the wide geographic position, we kinda know about what level of activity we’re gonna have from year to year. Nice thing about the Bakken for this kind of model is it says as a mature basin, as we say, it’s the rig count is not changing tremendously from year to year. So we see slight variations, but generally, we kind of know about how many rigs are going to run and how many are likely to be on our acreage. So first order of business for us is funding organic CapEx.

Then we add to that with near term development acquisitions. So there’s a very robust market of people selling their position in other people’s wells, whether it’s an operator selling their non op position in another operator’s wells or it’s a small, family office or or a family that has still has mineral interest, they get an AFE from the operator. They won’t they won’t foot the bill, so they’ll sell their position, and we can model that based on the information that we have for the entire basin and achieve a good rate of return while by buying them out of their position. So we’ll do a lot of these, what we just, NTD acquisitions over the years. I think we’ve done 200 to this point in our life.

And then we have the bigger chunkier asset acquisitions. We throw this Lucero acquisition into that bucket where we’re looking for a bigger step change, more incremental transformative type transactions. We’ve done four of those in the life of the company. We did one earlier this year with that acquisition. We really like to do one of these a year, two of these a year maybe, but they take a long time to get to the finish line.

All the stars have to align from seller standpoint, but that’s something that we’re very focused in. A large part of the team is working on that. Primarily in the Bakken, most likely is where we’re gonna find these things because we know it well and we can unearth opportunities. But we do look at other basins. I think that’s a benefit of being non op.

We don’t necessarily need the ability, technical capability to operate in another basin to step out. We can just make sure we’re aligning ourselves with a good operator and we can go into another basin. As of yet, we really haven’t done that, but we’ve looked at a lot of different situations and learned a lot about just about every other basin in The U. S. So I wouldn’t be surprised to see that happen eventually.

And as I mentioned before, share buybacks should we have the opportunity. Frankly, we’ve we’ve traded pretty well, very well since emerging from out from under Jefferies. We thought we would have a period of time where we could buy back shares as those as, our shares churned and, unnatural owners of, oil and gas company that were previously Jefferies shareholders might divest, but we’ve traded up consistently since then. So we’ve allocated very little actual capital to that. And last but not definitely not least is debt pay down.

I think we’ve said before, we want to keep our debt levels low, very conservative balance sheet, again, supporting our dividend and making sure we can make investments as required to support the rest of the model. Luminous, as I mentioned before, is the database that we have where we have all the information that we can scrape from public providers to our own proprietary information. And the best example is how it supports our NTD acquisitions. So we can let it when we’re presented with a AFE opportunity to buy somebody out of a well, we can literally draw a circle around that location and look at how wells have performed, whether it’s cost, EURs, first year production and from our proprietary data, how the operator has performed versus AFE. Are they consistently over or under?

So we can factor that all into the underwriting. Just tremendous asset that the company has developed over over the years. Now we’re layering on top of that AI capabilities. So to make it even even more intuitive and usable, we’re we’re kind of in the experimental phase of that, but it’s it’s already pretty amazing what AI can can pull out of and what kind of considerations AI can can bring much quicker than our engineering team can can pull the data out and and work with it. So making some good strides there.

It’s it’s affecting everything that we do. So it’s it’s for real. Chatbot, we’ve got on here that we it’s similar to AI. We’ve developed our own internal capability that anybody within the company can access the company’s proprietary chatbot and and use it similar to AI. I can say I I personally can analyze financial statements, compare our results to others.

I can compare contracts whether that we have with external parties against other similar contracts, pick out the differences. Just a really nice tool to help each individual do their job better. And lastly, we’ll talk about modeling. We’re very dependent on our modeling as we wanna make sure that we’re paying out the best cash flow that we can through the dividend and maintaining that payout ratio. We do a lot of modeling, make sure that in what what do we do in a $60 environment, what do we do in a $75 environment, have a very a good plan for for all outcomes.

So very intense focus on on modeling the company using all this information that comes out of this database. Now, back to Ben for talking about hedging.

Ben Messier, VP of Corporate Development and Investor Relations, Vitesse Energy: All right. So we’ve talked about a number of ways we manage risk through the diversification of our asset, through keeping leverage low. And then I’d say the third pillar to that is our heavy hedge book that we have. Our goal is to really reduce risk adjusted returns of our stock price. And so you’ll see our volatility is lowest among our peer group at 35%.

So I think it is showing up in our day to day price movements. But we hedge extremely heavy with the goal of protecting the dividend. You’ll see we have maximum oil production hedged in 2025, equating to about 70% of our remaining production for the year, right around $70 a price that works extremely well for our business. And then in 2026, we’ve got about half of that hedged at $66.43 Oil historically has represented about 90% of our revenues. So these are by far the most important hedges, but we do hedge the other streams, natural gas and NGL.

You’ll notice we use natural gas callers in our hedges, whereas we use swaps for oil. The reason for that is there’s really good call SKU in many months for natural gas. So there are many months where you’ll have 200% upside relative to downside when compared to a swap for the same time period. So we like having a $3.74 floor and ceilings around $5 and above $5 all the way through the 2027. That’s strong natural gas prices relative to what we’ve seen historically.

And then we’ve started swapping NGLs. Jimmy talks about the different ways we used AI. I actually used AI to analyze a multivariate regression to determine what particular NGL streams to hedge and how much of each stream to hedge because we don’t actually have like we’re a two stream reporter, so we report oil and natural gas production and NGL is just a subset of our natural gas production. So it took a little bit of work to figure out an appropriate amount of NGL hedges to get in there. But that was one tangible way that AI has helped our business.

Now I’ll hand it back to Jimmy to give us some closing remarks.

Jimmy Henderson, CFO, Vitesse Energy: So I think we’ve done a pretty good job of hitting on all these points. But again, it’s a long term, long duration asset. From the beginning, Bob and his wife, Gwen, set this up to really provide a long term annuitized cash flow stream and that’s proving to to play out. And I think it’s it’s grown much larger than anyone expected, but it’s been an amazing buildup of a beautiful asset and continues to pay off with the high yield now showing 10% here, now trading closer to 9%. Again, inflation protected with the oil weighted asset and providing outside beta to inflation.

We think oil is a great investment for that. And again, levered to technology as we’ve talked about with not only technology in the field through longer laterals and coming in and redeveloping existing areas, but also applying data analysis to our investment decisions. So all very important to what the test is. And with that, we have a little time for q and a. Any questions?

Jeff? John? Yes, sir. That’s right. Yep.

Yes, you’ve got it. We do have the other leg now with having a small operated position that came with the Lucero acquisition. So we can allocate capital to drilling our own wells, but that’s pretty small sliver of the pie. But you’re exactly right. When we think about our capital program as we saw even in this year, when we frankly went through Liberation Day and we thought prices were going to be lower from the end of the year, we cut back on our acquisition activity.

So you’re exactly right. We kind of base load with organic activity that we know is going to occur, and then we can reduce. We’ll just do fewer acquisitions or raise our hurdle rate on acquisitions so we naturally do less. That’s exactly right. I think that’s a benefit of being non op is we can be very flexible.

We can just do less of that with you’re an operator. It’s kind of hard to cut back because you got to drop rigs that you have commitments on or completion crews that you have contracted out. So it’s very difficult for the operators to be that nimble where we can just quickly ramp or or shut things down. But, yeah, you’ve you’ve got it exactly. And are there examples of getting AFB in your, like Yep.

You don’t see it? Pretty rare. I think I think we, we’ll sign 90 plus percent of them, but occasionally, we will get one. And, usually, it’s the combination of being a geographic area that we’re not sure about being operated by an operator that we’re not sure about. Very, very rare, but occasionally.

And usually, we can sell that position just like we’re buying others. We can usually sell that off so we don’t lose it completely and maybe keep a small interest or an override so we can see how it actually performs. But, yeah, that that happens. Yeah. Thank you.

Can you provide comments on the M and A market due to the proliferation of private equity capital chasing non op strategies? Yes. It’s definitely gotten more competitive, whether it’s private equity or it’s a lot of and at the smart the lower end of the spectrum, it’s family office money that’s that’s buying non op. I think we have an advantage because if it’s in the Bakken, definitely because it’s we know it really well and we can underwrite it carefully and we we know the players. And in the right situations, we can use our equity as currency.

So that gives the seller the upside if, you know, they don’t wanna sell on a $65 world and have exposure to upside should oil prices recover. They can take our equity and participate that way. We’ve had those discussions a lot. So they they don’t wanna just sell for cash and be done. So that gives us an an advantage.

But, yeah, definitely, the non op model has become much more favored. I think probably partly because of our success and others like Northern and others that have done well. I think some of the negatives about the model have gone away and more people are entering the arena. But we we still feel like we have an advantage over over them or, you know, in certain most circumstances, especially now in this price environment. But, yeah, it’s it’s become, there’s a lot more players in the market now for sure.

Yeah. Great. Well, thank you for your time and support. And, again, thanks guys from three part advisers for having us. Appreciate it as

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