Vitesse (VTS) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition adds operated Bakken assets with 6,400 BOE/d production, enhancing operational flexibility and control over capital spending.

• Aligns with strategy to deliver shareholder value through increased dividends and capital returns, and is immediately accretive to earnings, cash flow, and net asset value.

• Increases insider ownership to about 30% and public float by 14%, improving shareholder alignment and trading liquidity.

• Lucero shareholders gain immediate value and future upside through ownership in a larger, stronger company.

• Combined company will have increased scale in the Bakken, with lower production declines and high operating netbacks.

Financial terms and conditions

• All-stock transaction values Lucero at $222 million; Lucero shareholders receive 0.01239 Vitesse shares per Lucero share, totaling about 8.2 million new shares.

• Pro forma equity ownership: approximately 80% Vitesse, 20% Lucero.

• Lucero brings a net cash position of $56 million and no outstanding borrowings as of September 30, 2024; some cash will reduce Vitesse's borrowings.

• Public float expected to increase by 14%, enhancing trading volume and investor access.

• $222 million equity value includes Lucero's net cash.

Synergies and expected cost savings

• Targeting approximately $3 million in annual general and administrative synergies.

• Transaction expected to immediately improve earnings, cash flow, and net asset value.

• Reduces Net Debt to Adjusted EBITDA ratio to approximately 0.3x post-closing, strengthening the balance sheet.

• Additional liquidity supports future acquisitions and dividend sustainability.

• Hedging oil production through 2026 to protect deal economics.