Good morning, and thank you for joining Crescent's first quarter 2022 earnings call. Our prepared remarks today will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall. Todd Salt, Chief Accounting Officer, Ben Conner and Clay Rinn, both Executive Vice Presidents, are also here today and available during the Q&A. Today's call may contain projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, the continued impact of COVID-19, geopolitical conflict, including in Russia and Ukraine, and our business strategy, and other factors that may cause actual results to differ from those expressed or implied in these statements and/or other disclosures. We disclaim any obligation to update any forward-looking statements after today's call. In addition, today's discussion may include disclosure regarding non-GAAP financial measures.
For reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Q and earnings press release available on our website. With that, I will turn it over to David.
Great. Thanks, Emily, and good morning, everyone. We appreciate you joining us today for our first quarter 2022 earnings call. This is our first quarter to report full consolidated results after our merger with Contango in December. We've been trading publicly as Crescent Energy for about five months, and we look forward to providing more details today on our results, as well as our outlook for the large and differentiated business we've built. We will also take your specific questions at the end of our introductory remarks. Q1 was another solid quarter for our business. We generated significant free cash flow and solid investment returns across our asset base. We maintained a strong balance sheet and remain focused on returning capital to shareholders through our fixed quarterly dividend. As a reminder, we paid our first dividend as a public company in March, equal to $0.12 per share.
Additionally, we are pleased to have closed the highly accretive acquisition of assets in the Uinta Basin at the end of the quarter. The Uinta assets significantly increased our scale and added high margin oil production at a very attractive purchase price. Our comments about 2022 include the Uinta acquisition for nine months, and I would note that given the March 30 closing date, the operating results of this material and compelling acquisition will not begin to be reflected in our financial results until the second quarter of this year. While performance is strong and Crescent continues to grow significantly, our strategy remains unchanged. We describe our strategy as focused on cash flow, risk management, and returns. We generate significant free cash flow from our large, diversified and low decline producing asset base.
We manage risk through a portfolio approach to asset selection and by maintaining our strong balance sheet supported by our hedge program. We seek to deliver strong returns on invested capital, both through internal development and complementary accretive acquisitions in order to drive profitable long-term growth for shareholders. This is the same strategy we have executed for the last decade in the private markets across multiple commodity cycles, and we're sticking to it. Turning to the market backdrop. Following years of under-investment in the oil and gas sector, we are in a period of unique volatility, which has been driven by the rapid recovery of global economies post-pandemic and exacerbated by the war in Ukraine. In terms of the conflict's impact on the commodity market, it does not fundamentally alter our view of an already tight global supply-demand balance, but it introduces additional volatility and upward price risk.
Today, oil and natural gas prices are approaching near record levels. To reflect today's commodity prices, we revised our 2022 guidance to $1.35 billion of adjusted EBITDA and $575 million of levered free cash flow at the midpoint, assuming $100 WTI and $6 Henry Hub. Again, this guidance includes the Uinta assets for 9 months of 2022. Our proved PV-10 at $3.31 NYMEX pricing totals $8.2 billion, and we have an industry-leading first year decline rate in the range of 20%. We believe this stability of production and cash flow is a key differentiator for Crescent. It lowers our capital intensity and allows us to pursue profitable growth through development of our large low-risk resource base and opportunistic and complementary acquisitions.
Consistent with our commitment to return cash to shareholders and in the context of closing the Uinta acquisition, today we declared $0.17 per share dividend payable in the second quarter, representing a 40% increase to last quarter's dividend. Our LTM net leverage remains low at 1.3 times, and we are generating significant free cash flow following the close of the Uinta acquisition. From an operational perspective, we continue to operate three rigs as we invest in the development of our high return multi-year inventory in our core Eagle Ford and Uinta positions. Crescent's large held by production resource base provides the ability to generate strong returns on capital invested while we maintain or moderately grow our production organically.
In addition to our stable base business, we continue to look for ways to drive shareholder value through opportunistic accretive acquisitions that add cash flow and NAV at attractive valuations. While the commodity price environment has changed quickly, we continue to see an attractive backdrop for industry consolidation as the supply of assets and subscale businesses for sale is increasing steadily, far outweighing buyer demand. As always, we will continue to be disciplined and focused on investment returns in connection with capital investments on our existing assets, as well as potential acquisitions. We believe we have proven our ability to capture attractive assets, integrate them into our portfolio, and apply our strong operating skills to find synergies and create value for shareholders.
Following our December 2021 merger with Contango and subsequent Uinta acquisition, we have made significant progress on business integration while also beginning to better position our large scale enterprise in the capital markets as a new public company. We anticipate completing our integration efforts and continuing to execute our capital market strategy throughout the remainder of 2022. Brandi will provide some more detail on both of these activities later on the call. I will now go into a little more detail on the highly accretive acquisition of our Uinta assets, as this is the most recent example of our strong M&A capabilities at work. The assets are a great addition to our existing Rockies footprint and will add substantial cash flow while maintaining our strong balance sheet.
The Uinta assets are 65% oil and nearly 100% operated with high margins and low operating costs, enhancing our overall asset portfolio in these areas. Consideration at closing in March was $690 million for assets with $1 billion of proved developed PV-10 at NYMEX pricing as of March 31st, and substantial development upside. We were able to move extremely quickly to capture these complementary assets in a unique situation due to our familiarity with the assets, our existing operating capabilities, and our strong balance sheet. In summary, this acquisition is consistent with our strategy to drive shareholder returns through significant free cash flow generation and profitable growth from strong returns on capital invested in low risk development and opportunistic acquisitions that are accretive to NAV.
Since closing the Uinta acquisition roughly six weeks ago, we've made significant progress integrating the operations of these assets. At close, we took over operations from EP Energy and have maintained their two rig development program. While still in the early days, the transition has been smooth thanks to our strong operational leadership and the talented field staff we gained in the acquisition. We are actively engaging with local agencies about our operating plans and practices, including on the permitting side. Continuing to discuss our assets and operations, I want to reiterate that ESG is an integral part of everything we do. We plan to issue our 2021 ESG report later this year, which will include short and long term ESG targets with a focus on EHS and emissions.
During the first quarter, we joined the Oil & Gas Methane Partnership 2.0 initiative or OGMP 2.0. We believe reducing methane emissions is critical to slowing the impact of climate change, and the first step to methane reduction is high quality measurement data. The rigorous OGMP 2.0 framework will aid our efforts to create targeted programs to reduce emissions, accurately report our data, and help us to be positioned as an industry leader in emissions reduction. We will continue to keep you updated on our progress in this area. I'll now turn the call over to Brandy to cover our first quarter 2022 financial results and 2022 outlook.
Thanks, David, and good morning, everyone. We're off to a great start in 2022. We remain focused on cash flow priorities 1A and 1B, shareholder returns and the balance sheet. As David mentioned, we announced a $0.17 per share dividend, which is a 40% increase to the prior quarter. Consistent with our dividend framework of 10% of adjusted EBITDAX, we intend to pay $0.17 per share quarterly for the remainder of the year, generating an attractive 4% yield based on recent trading prices. On the balance sheet, we exited the quarter with LTM leverage at 1.3 times. On March 30, we closed the Uinta Basin transaction for cash consideration of approximately $690 million.
In conjunction with the transaction, our lenders authorized an increase of the elected commitment amount under the existing revolving credit facility to $1.3 billion from $700 million. Additionally, we issued a $200 million tack-on during the quarter, with proceeds used to reduce RBL borrowings, consistent with our strategy of not being overly reliant on the bank RBL market. For the first quarter of 2022, we produced 120 net MBOE per day, in line with our previous guidance excluding Uinta, and generated $195 million of adjusted EBITDAX and $89 million of levered free cash flow. As a reminder, these results do not include the contribution from the Uinta assets since the transaction closed at the end of the quarter.
Operating expense, excluding production and other taxes of $15.97 per BOE were in line with guidance, adjusted for contractual commodity linked costs which increased in the higher commodity price environment. Recall that our guidance was originally set at $75 a barrel, roughly $20 a barrel less than the Q1 oil price. Twenty-five to fifty cents of our operating costs are contractually indexed to commodity prices, such as CO2 prices for our Wyoming tertiary recovery assets and certain gathering and processing costs. These higher contractual commodity-linked costs were more than offset by higher realized prices and improved margins. Our expectation for OpEx, excluding taxes per BOE for the remainder of the year is in line with our expectations, with the exception of these contractual commodity-linked costs.
As we increased our guided price deck from $75 per barrel to $100 per barrel for the remainder of the year, we increased our cash OPEX, excluding taxes, by $0.50 per BOE. Again, this increase in cost is expected to be offset by higher realized prices. Going forward and beginning in the second quarter, we expect the Uinta assets will reduce our operating expense, excluding production and other taxes per unit by over 10%. Adjusted recurring cash G&A totaled $1.69 per BOE, which is in line with previous expectations, excluding Uinta. Going forward, we expect recurring adjusted cash G&A to be roughly $1.50, as the Uinta assets add minimal G&A to our business.
This calculation excludes certain non-recurring expenses we incurred associated with the Contango merger, the Uinta acquisition, and the formation of Crescent Energy as a new public company. We expect an incremental $10 million-$15 million of one-time expenses for the remainder of 2022, including post-merger integration and other transaction-related costs. We invested roughly $85 million in the first quarter. The nine operated Eagle Ford wells we brought online during the quarter are showing promising early results with an expected payback of less than 12 months, and the potential to generate more than 3 times our investment at today's commodity prices. Our 2022 capital budget is unchanged at $600 million-$700 million, with more than 80% allocated to the operated development in the Eagle Ford and Uinta basins.
Like our peers, we are seeing inflationary pressures and potential for logistical and other process delays across the business. We are closely monitoring the changing landscape as the pressures change month to month. Our people and relationships are some of the best in the industry, and we continue to find new ideas to safely offset some of these pressures. Based on what we know today, we believe our capital range accurately incorporates expected inflation as our February guidance incorporated a 10%-15% increase in capital costs year-over-year. We are seeing additional pressure around 5% or so in cost inflation for the remainder of the year, but believe this is covered in our guidance range. Today, we are continuing to operate one rig in the Eagle Ford and two rigs in the Uinta.
Our planned second quarter wells are expected to commence production at the end of the quarter, which should drive modest growth in the back half of the year. We expect our capital spend cadence to be fairly even over the remainder of the year. Hedging is core to our risk management strategy, and we utilize hedging to achieve a couple of objectives. First, to protect the balance sheet. Second, to lock in expected returns when we commit capital to drilling or acquisitions. Third, to maintain exposure to future commodity prices. Consistent with this strategy, upon signing the Uinta transaction, we entered into additional oil swaps covering about 80% of our acquired Uinta PDP for a three-year period to protect our expected returns on capital invested.
Today, more than 50% of our current hedge book was entered into in connection with acquisitions, which means that our recent acquisitions are outperforming from a price perspective relative to how we underwrote them. For example, we hedged the Uinta acquisition at $70-$80 per barrel, and the current $100 per barrel oil price environment provides significant upside to our underwriting. We maintain attractive long-term exposure to future commodity prices, with only 12% of our proved developed reserves hedged today. However, we are more hedged today than our mid-sized E&P peers, with 60% hedged for the remainder of 2022. We note this makes our 2022 adjusted EBITDA understated relative to peers and meets the strength of our asset base.
Moving to our capital markets priorities, we continue to engage with the market to expand our followership, improve our float and increase equity research coverage. We recognize that the current market positioning and awareness of Crescent is not yet at a level consistent with peers of similar size. This is a key piece of our strategic plan for 2022, and we are committed to an active approach to building awareness of our story and accessibility to invest in the stock through increased liquidity over time. In summary, we believe Crescent is well positioned in today's market. We are focused on generating cash flow, making disciplined investments, maintaining a strong balance sheet, and returning cash to investors. With that, I'll turn the call back to David.
Thanks, Brandy. Before we take your questions, let me quickly summarize today's key highlights. First, we have a proven strategy to add value. We focus on cash flow, risk, and returns. We've been successfully executing this strategy for the last decade, and the results are apparent in our first quarter earnings update. Second, we are a large-scale business, with $1.35 billion of projected 2022 adjusted EBITDA at $100 oil, and proved PV-10 of $8.2 billion at the 3/31 strip pricing. Again, this EBITDA guidance includes the Uinta assets for nine months, 2022. We are continuing to run 3 operated rigs across our deep inventory of low risk and high return drilling opportunities. Scale is incredibly important to be competitive in today's E&P industry. Lastly, we have a proven track record of adding value through complementary acquisitions.
Experienced and talented professionals across our entire business are able to identify accretive opportunities. Operate safely, capture financial and operational synergies, and maintain our strong capital structure, as demonstrated once again this quarter with our acquisition of the Unita Basin assets. The accretive acquisition added substantial cash flow and a multi-year inventory of high return oil-weighted development. It increased our oil weighting and the percentage of production that is operated across our portfolio while maintaining a strong balance sheet. We were well-positioned to acquire this asset on an accelerated timeframe with our strong balance sheet and operating model that combines an investor mindset with deep operational expertise. We believe this transaction captures what Crescent is uniquely able to do with our disciplined cash flow-based operating model. Thanks again for joining us today and for your interest in our company. We will now be happy to take your questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Neal Dingmann with Truist Securities. Please proceed.
Good morning, all. I'm David Dow. That's the first call. My question is first maybe on a little bit on ops, specifically on the Uinta. I'm just wondering if you talk a little bit how integration has gone, and then a few other things on this Uinta. Can you speak to early results there? You know, are you seeing, you know, I know you got a couple rigs, so it might be too early, but just your thoughts on how the wells are looking versus, you know, when you all were sort of modeling, looking at the deal. Maybe just any more color you could talk about. You know, because I just don't think the market's fully appreciating that, so I'm looking at a small part of it, if you could.
Sure. Hey, Neal, it's Ben. Good question. As David mentioned in his opening remarks, you know, we're early into the integration, six weeks in. What we'd say is just we're very pleased with the organization in the field that we've taken over, and all the communications we've had with really all the stakeholders across the asset. We're still, you know, getting in and diving deeper relative to underwriting. What I'd say is performance is as we expected in terms of underwriting. The organization brought on 12 wells during the quarter. It's early in those results, but they look good.
I think what we're more excited about is the opportunities that we're seeing, that we thought just in terms of being able to get there and continue the program that EP had and seeing opportunities for further value creation. What I'd say is it's still early, but kind of as expected and we're excited about the outlook.
No, great to hear. My second probably for David or Brandi, just on share returns. You got a nice solid base there. Could you just talk plans for that? I mean, what do you think, you know, how much do you need to push that? How, you know, what do you think is appropriate versus continuing to use cash for scale? I'm just wondering how you think about balancing those two going forward.
Hey, Neal. Good morning. It's Brandi. I'd say no intention to increase our base dividend for the balance of the year. We plan to use the incremental free cash flow that we're generating at these higher prices to, you know, pay down debt or selectively pursue acquisitions. Expect to pay out at that $0.17 per share per quarter for the remainder of the year, which just as a reminder was a 40% increase versus Q1.
Okay. That's kind of what I thought. Then maybe if I can get one last one, then maybe for you, David. Just could you talk, obviously, top of year, I know there's inflation. I mean, my thought is not so much, I'm not too worried about just the pure inflation, but just, you know, can you talk about logistics, about the challenges of just making sure you can continue to get rigs, spreads, you know, drill pipe, casing, everything in the future? Just talk about, you know, you all lock things in. Just your confidence as you continue to run your active program.
Yeah. Hey, it's Ben again. Brandi can cover, you know, some of the numbers. I think she hit on it. Certainly experiencing, you know, an evolving and tighter market overall. What I'd say is that with the one rig in the Uinta and taking over a well-planned two-rig development, you know, overall it's an operation that we feel really confident about. I think we highlighted and forecasted kind of the inflation generally that we expected within our guidance. Where I'd say we've seen a little bit more tightness in the market that we're managing through is really around pipe and sand. Really just kind of managing ahead and through planning, just making sure that that doesn't impact, you know, the logistics and the overall planning of the operations.
I'd say we're managing through it, and it's well within our capital guidance, but I'd say those are the two heightened areas where we're seeing a little bit more pressure, month-over-month.
Very good. Thank you.
Our next question is from Joseph McKay with Wells Fargo. Please proceed.
Hey, guys. Thanks for taking the time for my questions. I was just wondering if you could talk about kinda some of the underlying assumptions for the Uinta, just in terms of location count. You know, would you characterize them as conservative? If so, what would offer some potential upside there, you know, in terms of location count or well performance moving forward?
Yeah. Hey, hey, it's Ben. First thing I would start out is that we were able to buy this asset at a pretty interesting valuation based on the underlying production. It certainly came with some high confidence development locations, which we're actively developing today. We are excited about the prospects of future resource. You know, I think we talked about it and when we announced the transaction, we see you know meaningful development opportunity across the asset base. You know, we're gonna be what I'd say is late followers on some of the exciting things that are happening in the basin, and we're focused really on UMB development, which has been kind of the primary focus area across the basin, across multiple operators.
I think as we, you know, continue to look forward, we'll continue to focus on those areas that have been meaningfully de-risked. Over time, as other operators continue to do work and as we see results and continue to, you know, do the good work on our asset base, I think there is, you know, some exciting resource optionality that, you know, we'll continue to follow and track over time. I think that's where you'd see it, you know, in our head at the current moment.
I'll maybe just add a point or so just with what Uinta does to the pro forma business. We hit on, right, we're running 1 rig in Eagle Ford and 2 rigs in Uinta. That does result in fairly even capital spend cadence for the remainder of the year. From a production standpoint, we averaged 120 MBOE per day in Q1 on a standalone basis. Ex Uinta and expect Q2 to be 15%-20% higher production-wise when you factor in Uinta. Just to give you context as to what the rest of the year kind of looks like for the pro forma business.
Gotcha. Thank you. That's very helpful. One more on the Uinta real quick. You know, some of your peers in-basin have kind of explored using rail as takeaway to get down to the Gulf Coast. I know it's kinda still early days for you guys in the asset, but do you have any thoughts around that, in terms, you know, on, in the longer term in terms of, in-basin pricing or, like, expanded takeaway options?
Yeah. To your point, I think we're still kind of early days in terms of becoming experts, but rail capacity has meaningfully grown in the basin, and Gulf Coast refiners really like the grade of crude there. I think that's a place where you'll continue to see growing takeaway capacity. Our volumes specifically, we do have contracted and for the most part, you know, are contracted to go to the local refinery, so we feel good about the visibility there. The optionality in the basin continues to grow as people continue to invest in takeaway capacity.
Maybe just specifically on diffs. As a broader business, we had really strong diffs for the quarter. They were high 90s. We do expect those to drop to lower 90s pro forma in Uinta starting in Q2.
Gotcha. Thank you very much. That's helpful. That's all for me.
Thanks, Joe.
At this time, we have no more questions in queue, so I would like to turn the conference back over to management for closing comments.
Great. Thank you all again for joining us this quarter and supporting the company. We appreciate it, and we look forward to keeping you all well informed and speaking again next quarter. Thank you.