Form S-1 Crescent Energy Co


Development program and investment budget

Our development program is designed to prioritize the generation of attractive risk-adjusted returns and significant free cash flow and is inherently flexible, with the flexibility to modify our investment program as necessary to react to the current market. On a pro forma basis for transactions, our capital expenditures, excluding acquisitions, incurred during the year ended December 31, 2021 totaled approximately $231.6 million. For the year ending December 31, 2022, including nine months of contribution from the Uinta acquisition, we expect to commit approximately $600-700 million, excluding acquisitions.

After accounting for the Uinta acquisition, our planned capital program for 2022, which totals between $600 and $700 million, is allocated approximately 95% to D&C drilling and completions (80 to 85% to our assets operated mainly in the Eagle Ford and Uinta basins and 10-15% to non-operated activity) and about 5% to other capital expenditures. Due to the flexible nature of our capital program and the fact that our square footage is 96% owned by production, including the acquisition of Uinta, we may elect to defer some or all of these expenditures planned capital expenditures based on various factors, including, but not limited to, the success of our drilling activities, prevailing and expected prices for oil, gas and NGLs, and the resulting economics of the well , availability of necessary equipment, infrastructure and capital, receipt and timing of required permits and regulatory approvals, seasonal conditions, drilling and acquisition costs and level of involvement of others interest holders.

Our relationship with the KKR group

On December 7, 2021, in connection with the closing of the Merger Transactions, we entered into the management agreement (the “Management Agreement”), dated December 7, 2021, by and between the Company and KKR Energy Assets Manager LLC, a Delaware limited liability company (the “Manager”), which engages the Manager to provide certain management and investment advisory services to us and our affiliates. Our management team provides services to us pursuant to the Management Agreement.

The Manager is an indirect subsidiary of KKR & Co. Inc. (together with its subsidiaries, the “KKR Group”). The KKR Group is a leading global investment firm providing alternative asset management as well as capital markets and insurance solutions.

Pursuant to the Management Agreement, the Manager has agreed to provide us with management services, including senior members of our executive and corporate management teams, and other forms of assistance, including strategic planning, risk management, identification and selection of potential acquisitions, identification and analysis of ESG issues and providing any other assistance we may need. Additionally, entities affiliated with the KKR Group invested in Crescent’s predecessor, helped found the strategy we have employed since 2011, and continue to hold a significant investment in our company.

Through our integration with the global KKR Group platform, we believe we benefit from: the power of the “KKR” brand; KKR Global Macro and Asset Allocation, which helps assess the impact of macroeconomic factors on potential investments and helps identify market opportunities; KKR Capital Markets, which helps optimize the capital structure of investments and underwrites and arranges debt, equity and other forms of financing for KKR’s portfolio companies and independent clients; KKR Public Affairs, which together with the KKR Global Institute provides insight into public policy, government and regulatory affairs, including experience working with key stakeholders, such as labor unions, industry and trade associations and non-governmental organizations, and ESG issues and opportunities; and KKR Capstone, which creates value by assisting with due diligence and identifying and delivering sustainable operational performance improvements across KKR Group portfolio companies.

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