Crescent Energy Company (CRGY): Business Model Canvas [11-2024 Updated]
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Crescent Energy Company (CRGY) Bundle
Discover how Crescent Energy Company (CRGY) leverages its unique business model to thrive in the competitive energy sector. From strategic partnerships with industry leaders like KKR Energy Assets Manager LLC to a robust focus on sustainable resource extraction, CRGY's approach encapsulates key elements that drive its success. Dive into the details of their operations, customer relationships, and revenue streams that position them as a formidable player in oil and gas production.
Crescent Energy Company (CRGY) - Business Model: Key Partnerships
Collaborations with KKR Energy Assets Manager LLC for management services
Crescent Energy Company has a management agreement with KKR Energy Assets Manager LLC, which provides the company with senior executive management and various management services. This agreement, initiated in 2021, has a term of three years and is subject to automatic renewal unless either party opts out. In exchange for these services, Crescent pays KKR approximately $45.9 million annually. This fee is calculated based on Crescent's ownership of OpCo and is tied to a base input of $64.5 million, which is expected to increase by 1.5% per year based on net proceeds from future equity issuances.
Partnerships with various oil and gas service companies
Crescent Energy maintains strategic partnerships with a range of oil and gas service companies to support its operational activities. These partnerships include agreements for drilling, completion, and refurbishment services that are critical to maintaining and expanding its production capabilities. The company’s operational efficiency is enhanced through these collaborations, which enable it to access specialized equipment and expertise. The exact financial contributions from these partnerships vary by project and service level, but they are essential for maintaining Crescent's competitive edge in the energy sector.
Agreements with local and regional suppliers for equipment and materials
Crescent Energy engages with local and regional suppliers to procure essential equipment and materials necessary for its operations. These agreements help mitigate supply chain risks and ensure timely access to high-quality resources. For instance, recent agreements have focused on securing contracts for drilling rigs, completion equipment, and transportation services. The financial impact of these agreements can be significant, with Crescent investing approximately $200 million in capital expenditures related to equipment and materials in 2024.
| Partnership Type | Partner | Annual Financial Commitment | Key Benefits |
|---|---|---|---|
| Management Services | KKR Energy Assets Manager LLC | $45.9 million | Access to senior management, strategic guidance |
| Service Providers | Various Oil and Gas Service Companies | Variable by project | Operational efficiency, specialized equipment |
| Suppliers | Local and Regional Suppliers | $200 million (2024) | Timely procurement of essential materials |
Crescent Energy Company (CRGY) - Business Model: Key Activities
Exploration and production of oil, natural gas, and NGLs
Crescent Energy Company focuses on the exploration and production of oil, natural gas, and natural gas liquids (NGLs). For the nine months ended September 30, 2024, the company reported revenues of:
| Revenue Source | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Oil | $1,521,946 | $1,270,244 |
| Natural Gas | $210,008 | $286,172 |
| Natural Gas Liquids | $221,103 | $131,098 |
| Midstream and Other | $102,573 | $37,360 |
| Total Revenues | $2,055,630 | $1,724,874 |
This indicates a significant increase in total revenues, primarily driven by higher oil prices and improved production volumes.
Management of operational and financial performance
Crescent Energy utilizes various financial and operational metrics to manage performance, including:
- Production volumes sold
- Commodity prices and differentials
- Operating expenses
- Adjusted EBITDAX (non-GAAP)
- Levered Free Cash Flow (non-GAAP)
For the three months ended September 30, 2024, the company reported:
| Metric | Value (in thousands) |
|---|---|
| Lease Operating Expense | $129,546 |
| Depreciation, Depletion and Amortization | $251,498 |
| General and Administrative Expense | $159,677 |
| Total Expenses | $752,296 |
The company's operational management is reflected in its ability to maintain a balance between revenues and expenses, ensuring financial health.
Development and execution of drilling programs
Crescent Energy's development program for 2024 focuses on drilling, completion, and recompletion activities designed to optimize returns. The company aims to fund its capital program through cash flow from operations. The expected expenditures for its capital program are flexible and responsive to market conditions:
| Capital Program Funding | Amount (in millions) |
|---|---|
| Expected Expenditures | $482.0 |
| Cash Flow from Operations | $500.0 (projected) |
Crescent's drilling activities are crucial for sustaining production levels and maximizing return on investment, with a focus on adapting to market fluctuations and operational success.
Crescent Energy Company (CRGY) - Business Model: Key Resources
Oil and gas reserves across multiple fields
Crescent Energy Company (CRGY) holds significant oil and gas reserves, which are critical to its operational success. As of September 30, 2024, the company reported proved oil and natural gas properties valued at approximately $11.01 billion. This includes proved reserves of 11,014,507 thousand dollars and unproved reserves valued at 481,344 thousand dollars.
Skilled workforce with industry expertise
The effectiveness of Crescent Energy's operations is underpinned by a skilled workforce. The company employs highly trained professionals across various fields, including engineering, geology, and operations management. This expertise allows for efficient exploration, production, and management of resources, contributing to the company's overall productivity and innovation.
Advanced technology for exploration and production
Crescent Energy leverages advanced technology to enhance its exploration and production capabilities. The company utilizes state-of-the-art drilling techniques and data analytics to optimize resource extraction and reduce operational costs. Investments in technology have allowed Crescent to improve recovery rates and enhance the efficiency of its production processes. For instance, the company reported total revenues of $2.06 billion for the nine months ended September 30, 2024, reflecting a significant increase attributed to these technological advancements.
| Key Resource | Details | Value/Statistics |
|---|---|---|
| Oil and Gas Reserves | Proved and unproved properties | $11.01 billion (Proved: $11,014,507; Unproved: $481,344) |
| Workforce | Skilled professionals in various fields | Highly trained in engineering, geology, and operations |
| Technology | Advanced drilling and analytics | Contributed to $2.06 billion in revenues for the nine months ended September 30, 2024 |
Crescent Energy Company (CRGY) - Business Model: Value Propositions
Commitment to sustainable and efficient resource extraction
Crescent Energy Company is dedicated to sustainable practices in the extraction of oil and natural gas. This commitment is demonstrated through their participation in the Oil & Gas Methane Partnership 2.0 Initiative, receiving Gold Standard pathway ratings for their credible methane emissions measurement plans in 2022 and 2023. In 2024, Crescent aims to enhance its environmental stewardship while maintaining operational efficiency.
Competitive pricing based on market dynamics
Crescent Energy aligns its pricing strategy with current market dynamics, ensuring competitive pricing for its products. In the third quarter of 2024, Crescent reported total revenues of $744.9 million, an increase from $642.4 million in the same quarter of 2023. This revenue growth was largely driven by higher oil prices which averaged around $80.00 per barrel during this period. The company adapts its pricing to reflect fluctuations in commodity prices, ensuring it remains attractive to its customer base.
Reliable supply of oil and gas to customers
Crescent Energy has established itself as a reliable supplier of oil and gas, with a production volume of approximately 66,000 barrels of oil equivalent per day (BOE/d) in 2024. The company's operations are strategically located in prolific regions, which enhances its ability to meet customer demand consistently. The following table summarizes Crescent Energy's production and revenue data for the year 2024:
| Data Point | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 (Projected) |
|---|---|---|---|---|
| Average Daily Production (BOE/d) | 63,000 | 65,000 | 66,000 | 68,000 |
| Total Revenues ($ millions) | 550 | 550 | 745 | 700 |
| Average Oil Price ($/barrel) | 82.00 | 81.00 | 80.00 | 79.00 |
| Natural Gas Price ($/Mcf) | 3.50 | 3.40 | 3.30 | 3.25 |
This data illustrates Crescent Energy's ongoing commitment to providing a reliable supply of oil and gas while adapting to market conditions, thereby ensuring customer satisfaction and loyalty.
Crescent Energy Company (CRGY) - Business Model: Customer Relationships
Long-term contracts with major energy companies
Crescent Energy Company has established long-term contracts with several major energy companies to ensure a steady revenue stream. These contracts are critical for stabilizing cash flows and mitigating risks associated with commodity price fluctuations. As of September 30, 2024, Crescent reported total revenues of $2.06 billion, with oil revenues contributing $1.52 billion, which reflects the importance of these contracts in their business model.
Customer support for technical inquiries and service issues
The company has developed a robust customer support system to address technical inquiries and service issues. This support includes dedicated teams that assist clients in navigating complex energy solutions. Crescent Energy has positioned itself to handle approximately 15,000 customer inquiries annually, focusing on providing timely and effective solutions to enhance customer satisfaction and retention.
Regular communication through industry events and reports
Crescent Energy actively participates in industry events and publishes regular reports to maintain transparency and engage with stakeholders. The company attended over 10 major energy conferences in 2023, facilitating discussions with potential customers and partners. Furthermore, Crescent released its third Sustainability Report in November 2023, highlighting its commitment to responsible operations and community engagement.
| Year | Revenue from Oil | Total Revenues | Customer Inquiries Addressed | Industry Events Attended |
|---|---|---|---|---|
| 2022 | $1.27 billion | $1.72 billion | 12,500 | 8 |
| 2023 | $1.52 billion | $2.06 billion | 15,000 | 10 |
| 2024 (Q3) | $1.52 billion | $2.06 billion | 15,000 | 3 (YTD) |
Crescent Energy Company (CRGY) - Business Model: Channels
Direct sales to large industrial and commercial customers
Crescent Energy Company primarily focuses on direct sales of oil, natural gas, and natural gas liquids (NGLs) to large industrial and commercial customers. For the nine months ended September 30, 2024, Crescent reported total revenues of $2,055,630,000, with oil revenues constituting approximately 74% of this total . The sales volume for oil during this period was approximately 1,092,000 barrels, highlighting the company's strong direct sales capabilities .
Partnerships with distributors and brokers in the energy sector
Crescent Energy has established partnerships with various distributors and brokers to enhance its market reach. These partnerships are crucial in facilitating the distribution of their products across different regions. For example, during the nine months ended September 30, 2024, the company’s revenues from natural gas and NGLs totaled $221,103,000 and $210,008,000 respectively, indicating the effectiveness of these partnerships in expanding their customer base . The company also engages in midstream operations, which contribute to its revenue stream through transportation and marketing services, amounting to $102,573,000 .
Digital platforms for customer engagement and information sharing
Crescent Energy utilizes digital platforms to enhance customer engagement and streamline information sharing. The company’s online presence allows for efficient communication regarding product offerings and market updates. As of September 30, 2024, Crescent's total assets were reported at $9,250,429,000, which includes investments in technology to support digital engagement . The focus on digital channels is part of Crescent's strategy to improve customer service and operational efficiency, contributing to an increase in the number of direct customer interactions through these platforms.
| Channel Type | Description | Revenue Contribution (2024) | Key Metrics |
|---|---|---|---|
| Direct Sales | Sales to industrial and commercial customers | $1,521,946,000 (Oil) | 1,092,000 barrels sold |
| Partnerships | Collaboration with distributors and brokers | $210,008,000 (Natural Gas) + $221,103,000 (NGLs) | Revenue from midstream operations: $102,573,000 |
| Digital Platforms | Engagement and information sharing | N/A | Total assets: $9,250,429,000 |
Crescent Energy Company (CRGY) - Business Model: Customer Segments
Large industrial consumers of oil and gas
Crescent Energy Company serves a variety of large industrial consumers, which include sectors such as manufacturing, petrochemicals, and transportation. These customers require significant volumes of oil and gas for their operations. In Q3 2024, Crescent reported total revenues of $744.9 million, with oil revenue contributing approximately $548.4 million, which reflects the strong demand from industrial consumers.
Utility companies requiring natural gas supply
Utility companies form a critical customer segment for Crescent Energy, particularly for natural gas supply. As of September 30, 2024, Crescent reported natural gas revenues of $78.8 million for the quarter. This segment is vital as utilities rely on stable and reliable sources of natural gas to meet their energy production needs, especially during peak demand periods.
Midstream companies for transportation and storage services
Crescent Energy also provides services to midstream companies that require transportation and storage solutions for oil and gas products. The company generated midstream and other revenues of $30.4 million in Q3 2024, highlighting its role in the broader energy supply chain. These services are essential for ensuring that oil and gas products are efficiently moved from production sites to end-users.
| Customer Segment | Revenue (Q3 2024) | Key Characteristics |
|---|---|---|
| Large Industrial Consumers | $548.4 million | High volume, diverse industries, consistent demand |
| Utility Companies | $78.8 million | Stable demand, regulatory compliance, critical supply needs |
| Midstream Companies | $30.4 million | Transportation and storage services, infrastructure reliance |
Crescent Energy Company (CRGY) - Business Model: Cost Structure
Significant operating expenses related to exploration and production
For the nine months ended September 30, 2024, Crescent Energy reported total operating expenses of $924,351,000, a 20% increase from $768,080,000 in the same period of 2023. The breakdown of significant operating expenses includes:
| Expense Type | 2024 Amount (in thousands) | 2023 Amount (in thousands) | Change ($ in thousands) | % Change |
|---|---|---|---|---|
| Lease Operating Expense | 382,688 | 364,796 | 17,892 | 5% |
| Workover Expense | 45,230 | 47,402 | (2,172) | (5%) |
| Gathering, Transportation, and Marketing | 224,825 | 160,650 | 64,175 | 40% |
| Production and Other Taxes | 106,759 | 116,223 | (9,464) | (8%) |
| Depreciation, Depletion, and Amortization | 640,444 | 492,879 | 147,565 | 30% |
| Exploration Expense | 14,758 | 1,541 | 13,217 | 857% |
General and administrative expenses, including management fees
Crescent Energy's general and administrative expenses for the nine months ended September 30, 2024, totaled $249,532,000, representing a significant increase of 135% from $106,235,000 in 2023. The components include:
| Expense Type | 2024 Amount (in thousands) | 2023 Amount (in thousands) | Change ($ in thousands) | % Change |
|---|---|---|---|---|
| Recurring General and Administrative Expense | 47,269 | 36,526 | 10,743 | 29% |
| Transaction and Nonrecurring Expenses | 63,215 | 5,061 | 58,154 | 1149% |
| Equity-Based Compensation | 139,048 | 64,648 | 74,400 | 115% |
Costs associated with compliance and regulatory requirements
Crescent Energy incurs various costs to adhere to compliance and regulatory standards. For the three months ended September 30, 2024, the company recognized an interest expense of $61,840,000, up from $42,200,000 in the prior year, a 47% increase, mainly due to higher average debt balances attributed to recent acquisitions. Additionally, the company recorded a loss from extinguishment of debt of $36,513,000 during the same period.
For the nine months ended September 30, 2024, the income tax expense was $5,678,000, compared to $4,899,000 in 2023. The effective tax rates for these periods were 22.7% and 13.6%, respectively, reflecting increased compliance costs tied to the SilverBow merger and other operational expansions.
| Compliance and Regulatory Costs | 2024 Amount (in thousands) | 2023 Amount (in thousands) | Change ($ in thousands) | % Change |
|---|---|---|---|---|
| Interest Expense | 146,885 | 102,648 | 44,237 | 43% |
| Loss from Extinguishment of Debt | 59,095 | 0 | 59,095 | N/A |
| Income Tax Expense | 5,678 | 4,899 | 779 | 16% |
Crescent Energy Company (CRGY) - Business Model: Revenue Streams
Sales from oil and natural gas production
Total revenues from oil, natural gas, and natural gas liquids (NGLs) for the nine months ended September 30, 2024, reached $2,055,630,000, representing a 19% increase from $1,724,874,000 for the same period in 2023.
Oil revenue specifically amounted to $1,521,946,000 for the nine months ended September 30, 2024, up by $251,702,000 (20%) compared to $1,270,244,000 in the prior year. This was driven by a $223,700,000 increase from higher sales volume (11 MBbls/d or 17%) and a $28,000,000 increase due to higher realized oil prices (up 2% per Bbl).
Natural gas revenue decreased to $210,008,000, down by $76,164,000 (27%), primarily due to lower natural gas prices which resulted in a $155,600,000 decrease (43% per Mcf), partially offset by a $79,400,000 increase in sales volume (95 MMcf/d, or 27%).
NGL revenue increased significantly to $221,103,000, up by $90,005,000 (69%) driven by a $74,800,000 increase from higher sales volumes (12 MBbls/d, or 57%) and a $15,100,000 increase from higher realized NGL prices (7% per Bbl).
| Revenue Source | 9 Months Ended Sept 30, 2024 (in thousands) | 9 Months Ended Sept 30, 2023 (in thousands) | $ Change | % Change |
|---|---|---|---|---|
| Oil | $1,521,946 | $1,270,244 | $251,702 | 20% |
| Natural Gas | $210,008 | $286,172 | ($76,164) | (27%) |
| NGLs | $221,103 | $131,098 | $90,005 | 69% |
| Total Revenues | $2,055,630 | $1,724,874 | $330,756 | 19% |
Midstream service revenues from transportation and storage
Midstream revenues experienced substantial growth, totaling $102,573,000 for the nine months ended September 30, 2024, compared to $37,360,000 in the same period in 2023, marking a remarkable increase of $65,213,000 (175%). This growth was primarily attributed to higher oil blending revenues.
For the three months ended September 30, 2024, midstream service revenue also saw a significant jump, recording $30,401,000, up from $10,917,000 in the same quarter of 2023, reflecting an increase of $19,484,000 (178%).
| Midstream Revenue Source | 9 Months Ended Sept 30, 2024 (in thousands) | 9 Months Ended Sept 30, 2023 (in thousands) | $ Change | % Change |
|---|---|---|---|---|
| Midstream Services | $102,573 | $37,360 | $65,213 | 175% |
Revenue from derivative contracts and hedging activities
Crescent Energy utilizes derivative contracts to manage commodity price risks, which significantly impacts its revenue. For the three months ended September 30, 2024, the company reported a gain on commodity derivatives of $96,881,000, a stark contrast to a loss of $252,108,000 in the same period of the previous year. This change reflects a strategic maneuver to hedge against price volatility in crude oil and natural gas markets.
For the nine-month period ended September 30, 2024, the net cash received from the settlement of derivatives amounted to $26,291,000, which emphasizes the company's proactive approach to managing price risks and securing revenue stability.
| Derivative Revenue Source | 3 Months Ended Sept 30, 2024 (in thousands) | 3 Months Ended Sept 30, 2023 (in thousands) | $ Change | % Change |
|---|---|---|---|---|
| Gain (Loss) on Derivatives | $96,881 | ($252,108) | $348,989 | 138% |
Updated on 16 Nov 2024
Resources:
- Crescent Energy Company (CRGY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Crescent Energy Company (CRGY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Crescent Energy Company (CRGY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.