Hello, everyone. Thank you for joining us, and welcome to the Crescent Energy Q3 2026 earnings conference call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Reid Gallagher, Investor Relations. Reid, please go ahead.
Good morning, and thank you for joining Crescent's third quarter 2026 conference call. Today's prepared remarks will come from our CEO, David Rockecharlie, and our CFO, Brandi Kendall. Our Chief Operating Officer and Executive Vice President of Investments will also be available during Q&A. Today's call may contain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties, including commodity price volatility, global geopolitical conflict, our business strategies, the pending acquisition of Devon Energy's Eagle Ford assets, and other factors that may cause actual results to differ from those expressed or implied in these statements and our other disclosures. We have no 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 reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP measures, please reference our Form 10-Q and earnings release available in the investor section of our website. With that, I'll hand it over to David.
Good morning, and thank you to everyone for joining us. Crescent delivered another strong quarter, and I want to begin by thanking everyone on Team Crescent for the consistent focus and execution behind our performance. We are proud of the business we've built and excited about where Crescent stands today. We've assembled high-quality assets, deep inventory, and a talented team with a proven track record of consistently improving the assets we own. Our business generates substantial free cash flow today, and we will continue to deliver. We have significant opportunity across our portfolio to create significant incremental value from here. With that, let me highlight three key takeaways for today's call. First, Crescent has undergone a significant portfolio transformation and is a fundamentally better business than it was five years ago at IPO.
With a proven track record of investing and operating execution, we have improved asset quality, built scale in our core basins, deepened our inventory, and strengthened our financial profile. Today, we are a top 10 independent with a world-class Eagle Ford position. Our market-leading operational execution continues to drive strong results and differentiated value creation. We delivered higher production, lower capital, and higher free cash flow than market expectations this quarter. Across our portfolio, structurally lower well costs are expanding our economic inventory, and our lower operating costs are increasing both margins and free cash flow. Our Permian transformation has demonstrated the repeatability of our model, with approximately $295 million of annualized synergies captured versus our original target of $90 million-$100 million. Finally, we have significant embedded upside across the business, all within our control.
With continued operational improvement, our growing Crescent Royalties platform, the recently announced Devon Eagle Ford acquisition, and our clear path to rapid deleveraging, we see multiple compelling opportunities to compound value creation. Before discussing the quarter in more detail, I would like to put our progress in perspective. Since our IPO, we have transformed Crescent. We have assembled a much larger and higher-quality asset base while meaningfully improving the underlying cash flow capacity of the business. Pro forma for the announced Eagle Ford acquisition, Crescent produces approximately 400,000 barrels of oil equivalent per day, has 15+ years of inventory, and is positioned to generate more than $7.5 billion of levered free cash flow over the next five years, assuming an oil price of $70 per barrel. We built this business through consistent investing and operating execution, and our third quarter results demonstrate the consistency and strength of our model.
The transformation in the Permian is a particularly compelling example of our operating playbook in action, where results continue to exceed our original expectations. Since our second quarter update, we have captured $105 million of incremental annual synergies, bringing the total to approximately $295 million, nearly three times the high end of our original target and representing more than $1 billion of value on a five-year PV-10 basis. The result is an asset base that looks materially different than it did at announcement. Our total synergy target is now more than $300 million, and that value creation is coming from strong execution, lower costs, and better commercial outcomes. Our Permian success is just a single example of our consistent execution.
In each of our core basins, efficiency gains, longer laterals, and increased simul-frac utilization are translating into structurally lower well costs, with 25% savings in the Eagle Ford since 2023 and approximately 20% savings year-over-year in the Uinta, in addition to the 20%-25% savings in the Permian since taking over operations late last year. Illustratively, $1 million of savings per well can reduce oil breakevens by approximately $5-$10 per barrel. So those savings represent a dramatic step change in inventory quality and significantly extend our runway of economic locations. With our realized savings to date, we have doubled sub-$50 breakeven inventory and increased sub-$60 breakeven inventory by nearly 50%. In addition to our inventory expansion, we have driven a similar transformation of the financial profile of our business.
Our operating costs, margins, and free cash flow per share have all improved at market-leading rates. That rate of change reflects our ability to consistently improve the assets we own and create substantial incremental value. Our track record of investing and operating execution is why we see significant opportunity in the Eagle Ford acquisition. This is a rare opportunity to add scale and Tier 1 inventory in our backyard, where we have differentiated knowledge and a proven ability to create value. The assets add more than 600 net locations on a 10,000-ft basis and will make Crescent the second-largest operator in the Eagle Ford. The $140 million of identified annual synergies are grounded in our track record, supported by the same operational and commercial improvements we've executed repeatedly across Crescent.
The acquisition also transforms our market-leading royalties platform, bringing the pro forma business to approximately $250 million of annualized EBITDAX. Just as important, approximately 40% of pro forma EBITDAX will come from Crescent-operated assets, up from approximately 10% today, giving us significantly greater visibility into future development and cash flow. This combination of scale, development visibility, and exposure to cost-free organic growth is a differentiated source of cash flow and value within Crescent. Taken together, our third quarter results and the announced acquisition are a clear example of the Crescent model. We love our current asset portfolio that we have built over the last five years through successful and consistent execution. We have a substantial opportunity to create additional value through the assets we own and the announced Eagle Ford acquisition.
Our near-term focus is to continue to execute on our high-quality asset base, generate free cash flow, reduce debt, and deliver value to our shareholders. With that, I'll turn the call over to Brandi.
Thanks, David. Crescent delivered another quarter of strong results. We produced approximately 328,000 barrels of oil equivalent per day during the quarter, including approximately 134,000 barrels of oil per day. It generated approximately $786 million of adjusted EBITDAX and $367 million of levered free cash flow. Production came in above expectations. Capital of approximately $326 million was 9% better than expectations, and levered free cash flow was 23% above expectations. We ended the quarter with approximately $2 billion of liquidity and net leverage of approximately 1.5x . Our fixed quarterly dividend remains $0.12 per share, and our capital allocation framework continues to prioritize long-term per-share value creation. As we discussed last month, the recently announced Eagle Ford acquisition is consistent with that framework. The transaction adds significant Tier 1 inventory, and we have structured the financing to support rapid deleveraging and to preserve balance sheet strength.
We expect approximately $1 billion of pro forma liquidity at closing, providing meaningful flexibility as we execute against our deleveraging plan. We successfully executed approximately $1.15 billion of equity financing and secured efficient, low-cost debt financing at approximate 6% cost of capital. The strong investor support and constructive rating agency response further reinforce the quality of the transaction and our financing strategy. Our hedge position is an important part of our deleveraging plan. Alongside the Eagle Ford acquisition, we fully executed our planned incremental 2027 oil hedges and have begun layering on 2028 hedges at attractive pricing. Pro forma for the acquisition, approximately 60% of our oil production is hedged in the first half of 2027, approximately 50% in the second half, and approximately 20% in the first half of 2028, enhancing near-term cash flow visibility during the initial debt reduction period.
Our near-term capital allocation priorities remain clear. First, the fixed dividend, which remains an important component of our shareholder return framework. Second, following the recent Eagle Ford acquisition, debt reduction will be our primary use of free cash flow after the fixed dividend. We are targeting approximately 1.5x consolidated leverage at year-end 2027 and approximately one times at year-end 2028, pro forma for the acquisition. Importantly, commodity prices have increased since we announced the acquisition, providing an opportunity to delever faster than the initial targets we outlined. Third, preserve financial flexibility for additional shareholder returns and attractive investments over time, with any such decisions consistent with our deleveraging objectives.
The combination of strong free cash flow generation, substantial pro forma liquidity at closing, no near-term maturities, and a clear path to lower leverage puts Crescent in a strong financial position and supports our continued progress toward an investment-grade credit rating. With that, I'll turn the call back to David.
Thanks, Brandi. This quarter's performance and the transformation we've made since our IPO demonstrate the strength of the Crescent model. With market-leading execution, we have built a fundamentally better business, expanded our economic inventory, improved our operating cost structure, and significantly increased our free cash flow capacity. We have assembled an exceptional asset base anchored by a world-class Eagle Ford position, alongside significant opportunities across Permian, Uinta, and Crescent Royalties. The next phase of Crescent's value creation is within our control. We see substantial opportunity for further value embedded in our asset base. Our focus is on execution, continuing to improve well economics, integrating Eagle Ford assets, capturing synergies, and generating free cash flow. With this differentiated upside, we believe Crescent has never been better positioned to create long-term value for shareholders. With that, we'll open it up for Q&A. Operator?
We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Neal Dingmann with William Blair. Please go ahead. Your line is now open.
Morning, all. My first question's on capital allocation specifically. Could you speak to how this may or may not change post the Devon Eagle Ford close, especially given how much larger operations are now than a year ago?
Yeah. Hey, Neal. It's David. Great question. I'll just start by saying we love the assets that we have, and we're currently actively developing oil across the whole portfolio, and so we don't expect that to change. To your point, the Devon Eagle Ford acquisition, it's an asset in our own backyard, and it slots right in to what we're doing. So importantly, we see more development opportunity across every asset that we own, and we'll continue to allocate based on returns. Then fundamentally, as you know, we like to make sure we're running basically a maintenance to a low growth program. So I don't think fundamental change in capital spending or reinvestment rate, but just a lot more opportunity.
Perfect. Then just my second, just on the strategic plan going forward, just wondering now with a larger size, David, would you say the strategic growth plan has changed at all? Thank you.
No, no change to strategy or growth plan. I think probably worth reiterating some of the key points we just made. Number one objective is focus on operational execution. It is working for us. We are generating more value across the business, more cash flow, more profit across every asset. The other thing we have been able to do over a number of years is scale the portfolio but also focus it. I think it should be pretty clear really where we see the opportunity in our existing asset base and call it offset assets down the road. Importantly, and also highlight, we think opportunistic stock buybacks are an excellent way to buy more of what we already know and love.
Thank you.
Your next question comes from the line of John Freeman with Raymond James. Please go ahead. Your line is now open.
Thank you. When we sort of look back on the fact that you all have been able to triple or more than triple the initial synergy target on the Vital deal, I am not trying to set up too high of a bar before the Devon deal even closes. If you are just sort of looking back over the last 12 months and you are like, "Okay, I had this original target on Vital," you end up doing 3x that, and you sort of apply it to Devon, like where you see potential opportunities above and beyond this initial target. Not saying they occur, but if we were going to look back in 12 months and you were going to end up beating this target, what are some likely areas where that could occur?
Yeah. Hey, John. It's David. I'll start. Two things again just to know about us and about the Permian acquisition itself. As you'll recall, we've been executing, and a number of the slides we put forward this quarter demonstrate what I'll call multi-year market-leading execution on the cost side, both on D&C and regular way operations. We think that is the core skill set of the company. We took that into the Permian, but it was a basin entry for us. As you'll remember, we had very limited operational synergies that we put forward at that time, really out of just respect for the opportunity that we saw out there and the timeline we might thought it would take. Long story short, resounding success. Playbook transferred really well from the core Eagle Ford out into the Permian.
What we would say is two things about the Permian. One, still have more to do, so we're excited about that. The other thing is a lot of what we've captured is just starting to roll into the financial statement. We think we're going to see more performance improvement from things we've already accomplished that are just starting to show up contractually and financially. Secondly, we'll do more with those assets is our view over time. Coming back now to the original question on the Eagle Ford, this is our backyard. We've executed here for a long time. We absolutely believe we're going to achieve the synergies we put forward and more, but we are putting forward operational synergies upfront. I think Devon Energy was an outstanding example of what we can do.
When we built the scale position, the Permian obviously offered some incremental upside just because we were a little bit, I'll call it cautious stepping in there, but we feel great about it now.
That's great. Moving to the new sort of marketing slide that y'all have got, slide 11 in the deck. Trying to understand sort of, kind of what sort of the future opportunities are versus what y'all have already achieved. Obviously, that slide focuses on gas, but post the Devon Energy deal closing, are there also opportunities to improve NGL realizations as well?
Hey, John. It's Brandi. What we highlighted as part of the incremental synergy capture this quarter on the Permian assets was $40 million of effectively just successful re-contracting across oil, gas, water contracts. Those are all contracts that are across the line that should start flowing through the financial statements, starting in January of next year. I think there is incremental upside, especially as you think about us now having access on a portion of our volume to take it out of a more constrained Waha market into the Gulf Coast. I think that's incremental upside to what we laid out. A couple things. Expect structurally lower GP&T costs, but then also stronger gas and NGL realizations over time.
That's great. Thank you both.
Your next question comes from the line of Charles Meade with Johnson Rice. Please go ahead. Your line is now open.
Good morning, David and Brandi, and to the rest of the Crescent team there as well. David, on the Crescent Royalties, I know you, it was a couple of quarters ago that you introduced this as kind of a standalone, and you've taken a step here towards a potential IPO. I wonder, when I look at it, I think that it can do two things, at least two things, more than two things, but two of the things it could do for you are, it could accelerate your deleveraging. The other thing it could do is it could give you a public mark on that piece of your business that could help your overall CRGY share price. But I wonder if you could talk about from your perspective, what are the potential benefits from taking this step and what the relative priority is for you?
Like, whether you are more focused on getting a good mark or more focused on accelerating the deleveraging or perhaps something else.
Yeah. Hey, Charles. Thanks. It is a great question. I will just start by saying this is obviously consistent with the strategy we outlined in the first quarter. Earlier this year, what we discussed was finding the best outcome for shareholders over a 12-18 month period. Then I later talked about accelerating that timeline. Hopefully this is just seen as, number one, we are hard at work focused on best outcome. To your point, our view is that best outcome will achieve all of those things, which is making the business opportunity more clear, making the value opportunity more clear, and certainly anything we do around this highly cash-generative business should be credit accretive as well. The priority is just best outcome for us, and we are going to find the best way to do that.
Okay. That is helpful. Then, looking at 4Q, you guys had a really strong 3Q operations-wise, and you noted that in your prepared comments. I understand the reasons why with the pending acquisition close, you are not going to update any 4Q guide, but perhaps you could offer kind of a characterization that the strength we saw in 3Q, was that due to some one-off factors? Or maybe at the other end of the spectrum, is that some kind of durable operational improvement that we should expect to show up again in 4Q?
Simple answer is no one-offs, making durable change to the business. As you heard from Brandi, a lot of the things we are doing are going to start showing up sequentially quarter- over- quarter- over- quarter.
That's great detail. Thank you.
Thank you.
Your next question comes from the line of Noah Hungness with Wells Fargo. Please go ahead. Your line is open.
Morning. I guess for my first question here, on your guys' asset detail slides, it looks like well costs have been more or less flat to down this year. Are you thinking about well costs next year on the standalone CRGY assets, and are there any inflationary pressures that may be working their way through the system?
Good morning, Noah. It's Joey. Thanks for the question. We would expect to continue to see well costs go down in 2027. To your point, we do expect inflationary pressures, no question about it. I would also just characterize that, particularly when you're talking about on the Vital side of things, we've really taken the big chunks out, so we'll just be looking at more operational efficiencies. We have huge opportunity on the Devon assets, so we expect for those well costs to go down. On the inflation part, inflation's very real. I would say as an industry, we're looking at like 5%-7% steel and diesel, very big drivers. Whenever you're talking about Crescent, we're just a different company now. We're bigger and we're developing different than we have in the past.
It's hard for inflation to erode significant gains in capital efficiency, which is what we're experiencing. So we're going to keep executing our playbook. We're going to continue drilling longer laterals. In particular in the Permian, we still have opportunity to use more simul-frac. We have some electrification opportunities. So inflation can make a dent in these things, but it's not going to curb us from continuing to make continual improvements in well costs. Also still working on the supply chain side. In a lot of instances, we were allowing service providers to provide things like fuel and sand and chemicals and things like that. We're looking at taking those on ourselves, which of course, you know that would have a pretty significant markup, so that's another opportunity.
I just feel like inflation is real, but the opportunities are more, so I would expect us to continue to drive down well cost.
Maybe what I'll add there is that alongside the Eagle Ford transaction announcement from a couple weeks ago, we laid out a capital framework of $1.8 billion going forward. That framework still holds and reflects the current service cost environment that we're in.
And just a clarification question then. So the $1.8 billion, does that include the operational improvements that we have seen, like the upside and synergy numbers that you threw out here at 3Q?
That is right. It includes the efficiencies that we are capturing on the legacy Crescent business, but also the $100 million of expected D&C synergies related to the Devon Eagle Ford assets.
That is helpful. For my second question, you guys continued to layer on hedges and take advantage of the strength that we are seeing in the forward curve here. Just how are you thinking about the maximum amount of production if you want to hedge? I am thinking both for 2027, given the strength there, but also how strong 2028 has been as well. Is there more that you would be interested in hedging in 2028 too?
Noah, it is Brandi. We are there and we have executed everything we wanted to execute as it relates to the 2027 oil program. As you saw in the materials, we have hedged roughly 20% of the first half of 2028 at a kind of $75+ range. I think we will look to continue to opportunistically add a bit more there. In totality, feel really great about the deleveraging pathway and the hedges that we have executed to protect that.
Great. Thank you.
Your next question comes from the line of Michael Furrow with Pickering Energy Partners. Please go ahead.
Hi. Good morning. Thanks for taking our questions. Just kind of following up on John's question. Look, I think it's safe to say at this point, the Vital deal has just been a knockout transaction given the rapid synergy realizations. To your point, David, look, we understand that there may have been more to do in the Permian assets than with the Devon assets, but I'd imagine the process of really scrutinizing another operator's methods forces you to look internally at your own operations, but maybe through a new perspective. Is there anything that the company has identified through that process of realizing synergies that you're looking to apply to the legacy Crescent assets, just in general?
Yeah. Hey, it's David, and I'll let Joey follow on as needed. I think it's a great opportunity, to your point. Long story short, we came in knowing what we could do, and in particular, just the scale and the opportunity we've had to build a business across a million now gross acres, versus this, which is a great position, but much smaller. We certainly are bringing a lot of tools to the party. All that said, we think the existing business was certainly run well, and we learn something every time. We do believe we're going to be able to slot this into our existing operations and get incremental benefits of scale, but we do always learn things. Joey, you might just talk about how we're thinking about integration and moving forward next year.
Yeah, Michael, I will give you some specific examples. One of the things we are really trying to get up the curve on to improve our operating costs is the automation SCADA part of the business. Both Vital and in particular Devon, have done a tremendous job over their lifetime of getting automation in the place where we want it to be. In particular, Devon, we are looking forward to learning from them and using the systems that they put in place to help us operate our field better.
But to say that, I know we talk about synergies all the time, but I would say from Vital, there were several things that we took on from them in regards to supply chain and inventory management and things like that we have taken on board and allowed us to improve our own operations because we are on our own learning curve as well. When you look at the history of the company, we have been a conglomeration of multiple acquisitions, and we are just now starting the journey, particularly on the LOE side of improving our operations. Both of those organizations have helped us tremendously.
Great. Appreciate the response. Just a quick follow-up on the Uinta. That asset has been on a slight growth trajectory this year. I think spending has been a little under $100 million. It reflects pretty strong capital efficiency. So, I believe the expectation is to continue with the one-rig program next year. But would you expect to see continued slight growth in 2027?
Yeah. Hey, it is David. As you know, one of the key things we did up there was, much like we did in the Permian, we slowed down, took assessment of what others had been doing, and have now, as you noted, been executing a very good program. Long story short, there is just so much resource potential up there. One, it is well-known across our acreage, but it is also being actively developed by offset operators. So, we would expect to have continued activity and also continued inventory expansion and depth being created over time. So yes, we are very excited about that asset.
All right. Thanks for your time.
Your next question comes from the line of Ajay Bakshani with BMO Capital Markets. Please go ahead.
Good morning, and thanks for taking our question. Your presentation shows roughly six years of inventory below $50 a barrel and 10 years below $60 at current well costs. I was just wondering, how do those economic buckets map the low risk and total locations disclosed by basin? Are the sub-$60 wells primarily low risk, or do they include inventory that still needs delineation? How large is that next tranche at $60-$70 breakeven that could move below $60 with further cost reductions?
Yeah. This is David. The short answer is we've, I'll call it conformed to industry disclosure rather than really changing what we're doing. We view our inventory as things that deliver 2x our money or better. We have a really long runway of that. Long story short, this is just a re-bucketing into that sub-$50 and sub-$60 kind of vocabulary. One, we expect to continue to grow both of those categories through both operational execution, which we still see significant upside there on the cost side. Also, as we've expanded our acreage footprint over many years and gotten more concentrated in the portfolio, we're seeing obviously incremental zones that we can develop, but also incremental lateral feet that we can bring into a program as we piece together acreage in meaningful ways now that we've got a really scaled position across all three of these basins.
I think it is just more of everything, more sub-50, more sub-60, and also just more overall as we continue to execute.
Great. Thanks. For my follow-up, how are you thinking about capital allocation across DeWitt and Karnes Counties after you close the Eagle Ford transaction? Do you see one area as more advantaged than the other on returns and inventory, and is there any weighting between the two in terms of synergies?
Yeah, I think too early to say. Again, we look at the Eagle Ford as an entire position, but as you note, those are both two great opportunities within our Eagle Ford portfolio. We have not closed on that acquisition yet, but again, I think we will see huge opportunity both in those areas and also across the rest of the company, and we will continue to provide more detail on that as we get the assets closed and integrated. But excited definitely about what we are bringing in, but also equally about what we have already got.
Awesome. Thanks.
Your next question comes from the line of Gabe Daoud with Truist Securities. Please go ahead.
Thanks, operator. Hey, everyone. Thanks for taking my questions. Was hoping, David, maybe we could just start with bigger picture. You have the minerals strategic lever that you could potentially pull, but was just curious about the upstream portfolio as it stands today. Would you think about, or how do you think about the portfolio moving forward? Is there anything that maybe stands out from a divestiture candidate standpoint?
Yeah. Great question. The short answer, as we said earlier, we love the portfolio we've got. We think every part of the portfolio has upside in it, and it's our job to go execute and capture that for the benefit of shareholders. So, the short answer is the divestiture program that we announced last year is done, and we're really focused on getting the most out of the assets we own today.
Okay, got it. Thanks, David. That makes sense. And then, just as a follow-up maybe for Joey, I think there were maybe a few pads where Crescent had kind of drilled and completed start to finish on the Permian asset. Was just curious if you can maybe remind us some of the differences maybe on the completion or spacing side, and even the drilling side versus the prior operator, and maybe any kind of commentary around expected productivity uplift, if any, from some of these changes.
Yeah, Gabe, thanks for the question. Just as a reminder, a lot of the program we inherited from Vital, we executed in the early part of the year, including quite a few DUCs. I cannot remember how many DUCs there were, but there was a pretty significant number of DUCs. The Crescent influence really started to thread into the latter part of Q3 and into Q4. At this point in time, we have made some completion changes on volumes, both for capital efficiency, in some instances reduced, and in some cases increased. On the spacing side, there is a couple of pads where we actually added a well that would not have been a part of the Vital drilling program, so just a complete development plan change. Then, of course, the most significant opportunity we have deployed is increasing lateral lengths.
Our land team did a tremendous job right out of the gate, getting some trades done so we could increase lateral length. I would say the biggest improvement you could expect is just on a capital efficiency perspective. But whenever we are talking about productivity changes and such, I would not expect to see some of that take effect until we get into 2027, whenever we fully bake this as a Crescent plan.
Got it. Understood. Okay. Thanks, Joey. Thanks, everyone.
Your next question comes from the line of John Abbott with Wolfe Research. Please go ahead.
Good morning. I think this question will go to Brandi. When the Devon Eagle Ford assets are acquired, it is going to benefit the mineral business. My question is, how do we think about the pro forma capital structure for Crescent Royalty? Does Crescent sell the minerals to Crescent Royalty? How does that kind of work there, Brandi?
Yeah. Hey, John. It is David. I will start. The short answer is everything is part of Crescent today. So we look at the business on a holistic basis. As you know, we have split out the minerals. But the way we think about leverage across the company, the way we think about managing the business, all the same. No fundamental changes there. So, to your point, depending on the direction we take with the minerals business, we will certainly have to continue to think about the two pieces of the puzzle here. But long story short, we run the business fundamentally the same and do not intend to change that.
Appreciate it. Okay, the follow-up question here is there was a lot of discussion last quarter about organically. We talked about the Austin Chalk and, of course, Uinta, we were doing our delineation. At the same time, you are further getting a grasp around. First part of the question is, how do we think about the disclosure on the inventory? In your deck, you have a $1 million well cost reduction and improving the oil break-even by either $5 or $10 per barrel. How do we think about that distribution? Is more of the opportunities towards $10 per barrel or towards $5 per barrel, or is it split in the middle, like at $7.5 per barrel?
Yeah, the easy thing, I usually split it in the middle. We will start there. More broadly though, hopefully what you are seeing and call it in public data and also hearing from us is, we see significant opportunity in each of the areas where we operate to continue to expand inventory. That is both moving existing, what I will call, formations, where we are actively developing down the cost curve and into that sub 50 range. Also, as you know, we have got incremental zones in the Uinta, in the Midland and Delaware, and in the Eagle Ford. The most notable of those in terms of active development from us today is the Austin Chalk. It is about 40% of our South Texas program. So, I think long story short is we will continue to provide updates on how that is all going.
In particular, I think you were asking it this way, would you expect us to be talking about that in the first half of 2027? The short answer is yes.
Appreciate the color there, David. Thank you.
Your next question comes from the line of Oliver Huang with TPH Research. Please go ahead.
Good morning, David and Brandi, and thanks for taking our questions. Maybe just a quick follow-up to the prior question on the chalk. It's certainly been a big part of the development program over the last few quarters, particularly on the western side of your position. Could you speak to views around the horizon as we look to your legacy central Eagle Ford position, where development there has been more lower Eagle Ford-centric and even maybe further east down into Karnes and DeWitt?
Yeah, this is David. The short answer is, we see chalk opportunity across the whole position that we have built across the Eagle Ford. We would also highlight that it does, I will call it require different approaches depending on where you are. No surprise. So, in some areas, we see multiple opportunities and landing zones within the chalk, and in other places, there may only be one zone that we see is currently productive. So, long story short is we are actively and economically developing chalk across the entire Eagle Ford position we have, and we expect that to continue to be a big part of our program, and we would expect, if anything, there to be more development going forward and more opportunity than we have quantified, not less.
Got you. That makes sense. And maybe for my second question, just on gas marketing. I know you all talked about some of the capture out on the Permian side of your portfolio, but just any thoughts around gas marketing looking ahead out of the Eagle Ford, Agua Dulce area, just given the impacts of Traverse coming online, Rio Grande starting to ramp. Just thinking between this and your low nitrogen gas, just how we should be thinking about the magnitude of the opportunity set to drive gas realizations higher as we kind of look ahead over the next couple of years?
Hey, Oliver. It is Brandi. So we talked specifically about the opportunity around our Permian molecules of getting that out of the Waha Hub and into the Gulf Coast, and whether that is into AD or to the Katy markets. I think there is going to be a lot for us to do over time to help meet the structural demand increases that we are seeing from an LNG standpoint and a power perspective. So, can not necessarily quantify it today. But as you mentioned, we are one of the largest gas producers.
We also produce a lot of low nitrogen gas, which I think will continue to trade at a premium over time as that fills LNG demand. So, expect us to continue to kind of update you guys as we are making more progress there, but really happy with some of the gas marketing benefits that we have captured thus far.
Makes sense. Thanks for the time.
Your next question comes from the line of Michael Scialla with Stephens. Please go ahead.
Good morning. In answer to an earlier question, you said there was nothing unusual about Q3. I wanted to follow up on that, specifically on CapEx, which came in a little bit below what we were thinking. As we look into Q4, if we just ignore the timing of the Devon close, is it fair to assume that CapEx should be kind of flattish with that $326 million you spent in Q3, or did the timing of completions push that one way or the other?
Mike, as you mentioned, the business is performing really well. You heard Joey talk about continued capital efficiencies, which is showing up in Q3. On a full year basis, we would expect to end up below the midpoint of the full year capital guidance.
Okay, thanks for that. You have talked a lot about improving the breakeven of the undeveloped inventory. Is there anything worth noting on things you are working on to optimize the proved developed producing assets? Anything to lower the decline rate?
Hey, Michael. Thanks for that question. Yes, we have a very intense effort on improving what we refer to as the base production. We have evaluated, we have over 4,700 wells in the Eagle Ford and over 4,000 wells in the Permian, which to me represents 8,700 opportunities to get that denominator up. Our teams are working very diligently in both areas, focused on particularly artificial lift and right-sizing artificial lift, optimizing artificial lift. Supply chain, again, this is one of the opportunities we have to significantly impact the business due to our scale. Supply chain, working on things such as chemicals, generators. I mean, the list just goes on and on. Yes, we are equally as focused on improving the margins on the base production as we are on improving well costs. We have lots of opportunity there.
We know that in the Permian that we are below the P50 in both the Midland and the Delaware, so huge opportunity there. We know we are about a P50 in the Eagle Ford as well, so significant opportunity to improve costs there. Yes, we have an intense effort to see improvements in those areas as well.
Appreciate that, Joey. Thank you.
Your next question comes from the line of Arun Jayaram with JPMorgan. Please go ahead.
Yeah. Good morning, David. I was wondering if you could give us some insights on how you're thinking about 2027. Obviously, post the close of the Devon Eagle Ford transaction, you guys had outlined a maintenance program of $1.8 billion of capital for 170,000 barrels a day or so of oil. Could you give us maybe a little bit of color on how you're thinking about capital allocation between the different basins, as you see on a go-forward basis?
Yeah. Hey, great question. As you know, the simple starting point is our number one focus is on operational execution and around the acquisition. It's get closed, get integrated, and get stabilized. The simple starting point is we've got the majority of the company's rigs running today on our existing Eagle Ford assets. We would plan to bring the Devon assets in just at the current pace where there's a couple of rigs. But then if you said, once I feel comfortable that everything's been integrated and stabilized, where should capital allocation go? Well, obviously to the best performing areas, but also to areas where we think we can improve efficiency.
In that context, the new Eagle Ford, the Permian, and the Uinta would call it the under-capitalized relative to the overall allocation today, just given we've been on a stabilization path in the Permian, delineation path in Uinta, and an integration path for the new Eagle Ford. Long story short, we'd expect steady state as a planning case, but you could see some incremental capital come out of the existing Eagle Ford and go to all three of those other places, just depending on how the market and execution looks.
Appreciate that. My follow-up, David, I know the company reiterated its pro forma EBITDAX guide for minerals at $250 million. There was some quarter-to-quarter fluctuations in production from 13 to 11 in the quarter. Could you just talk a little bit about that? Again, I know there's always going to be some volatility on the quarterly numbers, but maybe just comment on the sequential trends and expectations, I guess, for Q4.
Yeah, just a high-performing business, and I'll call it just ordinary quarter-to-quarter movement. No change to outlook or expectation.
Okay, great. Thank you.
Your next question comes from the line of Peyton Dorne with UBS. Please go ahead.
Hey, good morning, everybody. Thanks for having me on. Just a quick one, but in the Permian, I know you've been right-sizing the capital intensity, and the pace of TILs slowed a bit in 3Q. So, I wonder if you could just provide a bit more color on where you see the maintenance production kind of shaping up into year-end and how you're thinking about activity in the Permian kind of as we look out to 2027. Thank you.
Hey, Peyton. I am happy to start. As we talked about previously, we expect to exit the year on a status quo Crescent standpoint at 130 MBo/d on oil. That still holds, and that aligns with the pro forma 170 maintenance on a pro forma business standpoint. Again, we expect to kind of hit that level, not just in totality of the business, but also in the Permian as we are exiting this year.
Okay. That is helpful. Thank you.
We have reached the end of the Q&A session. I will now turn the call back to David Rockecharlie, CEO, for closing remarks. Please go ahead.
Great. Thank you all again. Particular thank you to all of my colleagues here at Crescent that are executing every day. We are delivering quarter-over-quarter and multi-year market-leading performance. We are very excited about the opportunity ahead, and we thank all of you for the support, and we will continue to keep you updated.
This concludes today's call. Thank you for attending. You may now disconnect.