Improved Free Cash Flow Conversion and Balance Sheet Strengthening
Vistra expects to increase its free cash flow conversion rate to at or above 60% over the medium term, up from 55-60%.
This improvement is driven by higher EBITDA, tax benefits from the recent legislation, and operational efficiencies.
The company aims to deleverage quickly, targeting a net leverage ratio below 3x, with plans to achieve investment-grade credit ratings within 12-18 months.
Adjusted free cash flow funded the fixed quarterly dividend of $0.20 per share, repaid the remaining credit facility balance, and resulted in cash on hand exceeding $100 million at June 30.
Cash production margin remained resilient despite a lower commodity price environment, with the Uinta Basin margin exceeding Midland Basin margin for the second quarter.
Net debt to adjusted EBITDAX was 1.2x, with pro forma leverage including full 12 months of Uinta EBITDAX estimated just under 1.1x.
Oil production was 115,700 barrels per day, representing over 55% of total production.
Operating costs decreased by 7% per BOE sequentially due to lower LOE and production taxes.
SM Energy delivered record production volumes totaling 209,000 barrels of oil equivalent per day, exceeding the midpoint of guidance by 5%.
The company beat consensus estimates for adjusted net income, adjusted EBITDAX, and adjusted free cash flow.
Transportation expense per BOE increased by 5% sequentially due to a higher production mix from the Uinta Basin.
Dafinchi