Energy Select Sector

Russell 2000

The Balanced Allocator

Comparable Companies - VTS

The report covers insider trading activity from January 2025 to January 2026, showing 1 purchase and 7 sales. Institutional ownership data includes filings from The Vanguard Group, BlackRock, Inc., and FR XIII PetroShale Holdings L.P. Short interest data is available for multiple settlement dates through December 2025.

CHIEF EXECUTIVE OFFICER

PRESIDENT

VP - SEC AND FINANCIAL RPRTNG

VP - CHIEF ACCOUNTING OFFICER

CHIEF FINANCIAL OFFICER

The filing amends and supplements the Schedule 13D to reflect the completion of the Arrangement Agreement with Lucero Energy Corp. on March 7, 2025, where Vitesse acquired Lucero in an all-stock transaction. The Reporting Person's beneficial ownership increased to 2,863,591 shares (7.4% of outstanding shares).

The Reporting Persons acquired 2,911,384 shares of Common Stock in connection with the Closing of the Arrangement Agreement with Lucero Energy Corp. The filing states that the Reporting Persons may engage in communications with other security holders, officers, or directors regarding the Issuer and may suggest or take a position with respect to potential changes in operations, management, or capital structure to enhance stockholder value.

Chairman and Chief Executive Officer

President

Chief Financial Officer

General Counsel and Secretary

Director

Lead Independent Director

Robert W. Gerrity

Brian J. Cree

James P. Henderson

M. Scott Regan

Daniel J. O'Leary

Linda L. Adamany

M. Bruce Chernoff

Brian P. Friedman

Cathleen M. Osborn

Gary D. Reaves

Randy I. Stein

Joseph S. Steinberg

Robert W. Gerrity's career is deeply rooted in the energy sector, with a significant entrepreneurial history marked by the founding and leadership of Gerrity Oil & Gas Corporation, which evolved through mergers into larger entities. His personal investment in Vitesse Energy's foundational acreage and ongoing participation in well development underscore a hands-on approach and commitment to the business. Recent stock transactions, including sales to cover tax obligations and a purchase reflecting continued investment, suggest a dynamic engagement with the company's equity. His long-standing industry experience and strategic direction of Vitesse Energy position him as a pivotal figure in the company's governance and operational trajectory.

Investment in non-operated working interest acreage in the Bakken

Brian J. Cree's extensive experience in the oil and gas industry, spanning over 25 years, has been instrumental in shaping Vitesse Energy's operational and financial framework. His prior roles at Gerrity Oil & Gas Corporation, including CFO, SVP of Operations, and COO, demonstrate a comprehensive understanding of the business. His close working relationship with Bob Gerrity since 1987 highlights a long-standing partnership built on shared vision and operational execution. As President of Vitesse Energy, Cree's oversight of financial, operational, and legal matters is critical to the company's sustained performance and strategic objectives.

James P. Henderson's extensive financial leadership experience, spanning over three decades in the oil and gas sector, makes him a valuable asset to Vitesse Energy. His prior roles as CFO at prominent companies like Whiting Petroleum Corporation, SRC Energy Inc., and Kodiak Oil & Gas Corporation demonstrate a proven track record in financial management, particularly through periods of significant corporate activity such as mergers and acquisitions. Henderson's stated enthusiasm for Vitesse Energy's 'durable return-of-capital vehicle' and acquisition opportunities indicates a strategic alignment with the company's business model. His appointment as CFO signifies a commitment to robust financial stewardship and continued growth.

M. Scott Regan brings a wealth of legal and executive experience in the oil and gas sector to his role as General Counsel and Secretary at Vitesse Energy. His career includes significant tenures at companies like Chord Energy Corp. and Whiting Petroleum Corp., where he held key legal leadership positions. Regan's appointment in August 2024 signifies a strategic move to bolster Vitesse Energy's corporate governance and legal compliance. With over two decades of industry-specific legal expertise, he is well-positioned to navigate the complex regulatory and transactional landscape inherent in the energy business.

Linda L. Adamany's distinguished career, highlighted by 32 years of executive experience at BP plc, including her tenure as CEO of BP Shipping, provides a strong foundation for her directorship at Vitesse Energy. Her current roles on the boards of Jefferies and Coeur Mining Inc., where she holds significant committee leadership positions such as Audit Committee Chair, demonstrate her expertise in corporate governance and financial oversight. Adamany's accounting background (CPA) and extensive public company board experience are invaluable assets for Vitesse Energy's strategic direction and risk management.

M. Bruce Chernoff's role as President of Caribou Capital Corp. since 1999, coupled with his directorships at Maxim Power Corp. and formerly Lucero Energy Corp., highlights his extensive experience in investment management and corporate governance within the energy sector. His involvement with Lucero Energy Corp. until its acquisition by Vitesse Energy in March 2025 provides direct insight into the company's recent strategic moves. Chernoff's chemical engineering background from Queen's University, combined with his investment acumen, offers a unique perspective to Vitesse Energy's board, particularly in evaluating strategic opportunities and operational efficiencies.

Brian P. Friedman's extensive background in investment banking and private equity, particularly his leadership roles at Jefferies and Jefferies Capital Partners, brings a deep understanding of capital markets and corporate finance to Vitesse Energy's board. His prior experience as an attorney at Wachtell, Lipton, Rosen & Katz further enhances his strategic perspective on corporate transactions and governance. Friedman's involvement with numerous public and private company boards demonstrates a broad range of governance expertise, making him a valuable contributor to Vitesse Energy's strategic decision-making and capital allocation.

Cathleen M. Osborn's extensive legal career, spanning nearly 30 years as a corporate attorney in the energy sector, provides Vitesse Energy with robust expertise in legal and M&A transactions. Her previous roles as General Counsel and Corporate Secretary at SRC Energy Inc., Deputy General Counsel at Whiting Petroleum Corporation, and General Counsel at Kodiak Oil & Gas Corporation demonstrate a deep understanding of the complexities within the oil and gas industry. Osborn's background as a legal professional, coupled with her J.D. from the University of Denver, equips her to provide critical counsel on governance, compliance, and strategic transactions.

Gary D. Reaves's role as Managing Partner at First Reserve, a leading global private equity firm focused on energy investments, provides Vitesse Energy with significant financial and strategic expertise. His directorships at Lucero Energy Corp. (until its merger with Vitesse) and Crestwood Equity Partners LP demonstrate a deep understanding of the midstream and upstream energy sectors. Reaves's prior experience in investment banking at UBS and financial advisory at Howard Frazier Barker Elliott, Inc., coupled with his B.B.A. from the University of Texas, equips him to contribute valuable insights into capital allocation, strategic partnerships, and value creation for Vitesse Energy.

Randy I. Stein's extensive background in accounting and auditing, honed during his 20-year tenure at PricewaterhouseCoopers LLP, combined with his significant experience on public company boards, including multiple Audit Committee Chair roles, makes him a key governance figure at Vitesse Energy. His designation as an audit committee financial expert and his current role chairing Vitesse's Audit Committee underscore his deep expertise in financial oversight and energy sector governance. Stein's prior directorships at Denbury Resources Inc., HighPoint Resources Corporation, and Westport Resources Inc. provide him with direct experience in the upstream energy sector, enabling him to offer valuable strategic guidance.

Joseph S. Steinberg's extensive tenure as Chairman of Jefferies since 2013, and as a director since 1978, provides Vitesse Energy with unparalleled experience in financial services and corporate governance. His oversight of Jefferies' investments in various companies, including HomeFed Corporation, HRG Group, and Spectrum Brands Holdings, Inc., demonstrates a broad understanding of diverse corporate structures and strategic oversight. Steinberg's MBA from Harvard Business School and his deep involvement in financial markets position him as a critical advisor on capital allocation, strategic direction, and long-term value creation for Vitesse Energy.

Pioneer is a large independent oil and gas exploration and production company focused on the Permian Basin in West Texas. It operates a large-scale, low-cost asset base with a focus on maximizing free cash flow and shareholder returns.

Exploration, development, and production of oil, natural gas, and NGLs, primarily in the Permian Basin.

Permian Resources is an independent oil and natural gas company focused on the responsible acquisition, optimization, and development of high-return crude oil and associated liquids-rich natural gas reserves in the Permian Basin.

Exploration, development, and production of oil, natural gas, and NGLs in the Permian Basin.

Devon Energy is a leading independent oil and natural gas exploration and production company with a diversified asset portfolio across major U.S. basins. The company focuses on delivering competitive shareholder returns through capital-efficient operations.

Exploration, development, and production of oil, natural gas, and NGLs in U.S. basins, aggregated into one reporting segment due to similar nature of operations.

APA is an independent oil and natural gas company with a diversified asset portfolio, including conventional and unconventional, onshore and offshore assets. Operations are primarily focused in the Permian Basin, with international assets in Egypt, the UK, and Suriname.

Exploration, development, and production of oil, natural gas, and NGLs in the U.S., Egypt, the North Sea, and Suriname.

Principal facilities include non-operated oil and natural gas properties primarily in the Williston Basin of North Dakota and Montana, and non-operated properties in the Central Rockies (Denver-Julesburg Basin and Powder River Basin). The company's principal executive offices are leased at 5619 DTC Parkway, Suite 700, Greenwood Village, CO 80111.

Vitesse Energy's management team is led by experienced industry veterans with a deep understanding of the cyclical E&P sector. However, their recent capital allocation decisions have been pro-cyclical and value-destructive, evidenced by negative incremental ROIC (-18.7%), a 44% increase in Net Debt, and a complete cessation of share buybacks despite favorable valuations. While the board is well-structured with industry experts and the incentive plan includes some cycle-aware metrics, the lack of explicit through-cycle return targets and the massive SBC dilution (Offset Ratio 318.5x) indicate a misalignment with long-term per-share value creation. The team's experience is a strength, but their execution in the current cycle has been weak, prioritizing empire-building (CapEx and acquisitions) over shareholder returns.

The company's operations are subject to extensive federal, state, and local environmental regulations, including those governing GHG emissions. The company notes that the EPA finalized rules establishing more stringent methane and volatile organic compound emissions performance standards for oil and gas facilities, and the Inflation Reduction Act (IRA) imposed a first-ever federal fee on waste methane emissions. The company also discusses risks associated with the National Environmental Policy Act (NEPA) and potential regulatory changes related to induced seismicity from produced water disposal wells. The company states that substantial limitations on GHG emissions could adversely affect demand for the oil and gas produced from its properties.

As of December 31, 2024, the company had 33 full-time employees.

The company's product is oil and natural gas. The 10-K does not contain a specific narrative summary on product safety, quality management, responsible marketing, or data privacy disclosures beyond general business operations.

The company states it focuses on supporting the communities in which it lives and works. The 10-K does not contain a specific narrative summary on responsible sourcing, audits, or detailed community engagement programs.

This narrative is built upon a deteriorating financial backdrop where TTM Gross Margin has compressed to 67.9%, Free Cash Flow per share has declined 39% to $0.43, and Net Debt has increased 42% to $114M, despite a modest 3.5% revenue increase in FY 2024.

Management's strategy, per the 10-K and transcripts, is to allocate capital to the highest rate of return projects, comparing acquisitions, AFE investments, and buybacks. The P14 Innovation Dossier confirms CapEx is primarily for capacity expansion and acquisition activity. Transcripts reveal the CapEx strategy has evolved from a maintenance-level budget ($40M-$50M annually) to a growth-oriented one, with FY 2025 guidance raised to $110M-$125M to fund 3- and 4-mile lateral development and the integration of Lucero assets.

The 10-K states that the company reviews properties for impairment but did not record any impairment expense in FY 2022, 2023, or 2024. The auditor did not identify asset impairment as a Critical Audit Matter (CAM). The Material Events Appendix shows no impairments. The asset base is primarily comprised of non-operated oil and gas properties in the Williston Basin and Central Rockies.

Management's narrative is focused on high-return acquisitions and development. The P14 Innovation Dossier states CapEx is for 'capacity expansion' and 'growth through value-enhancing acquisitions'. Transcripts highlight the Lucero acquisition as immediately accretive and the focus on extended laterals for better economics.

Price / Tangible Book Value

EV / Normalized EBITDA

EV / EBITDA

Robert W. Gerrity (via Gerrity Family Trust)

M. Bruce Chernoff (via Hawthorne Energy Ltd.)

Mike Morella

Michael Sabol

Vitesse Energy, Inc. is an independent energy company focused on owning interests, predominantly as a non-operator, in oil and natural gas wells. The company primarily engages in the acquisition, development, and production of non-operated oil and natural gas properties in the United States, specifically in the Williston Basin of North Dakota and Montana, and the Central Rockies (including the Denver-Julesburg Basin and Powder River Basin). The company was incorporated in Delaware in August 2022 and completed its spin-off from Jefferies Financial Group Inc. on January 13, 2023.

Held WACC (10.0%) and Terminal Multiple (5.0x EV/EBITDA) constant. Solved for the required Year 5 Operating Margin to justify the current Enterprise Value of $854.4M.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - VTS

The oil and gas industry is currently in a Peak cycle phase, characterized by high cash generation but surging capital expenditures that signal future supply pressure. While global energy demand remains robust, with the IEA forecasting 4% growth in electricity demand for 2025, Bakken production is expected to remain stable at 1.18 million barrels per day. Vitesse is outperforming on volume growth due to acquisitions, but its margins of 9.7% lag the peer median of 23.4%, indicating it is not yet capturing the full benefits of the current pricing environment.

Vitesse is highly relevant now because it is trading near 52-week lows with an RSI of 29.1, even as it integrates a transformative acquisition and realizes a significant cash settlement. The disconnect between operational progress and share price performance has reached an extreme.

Full Integration and Optimization of Lucero Assets
Successful integration is expected to drive G&A synergies and production growth. Management has already noted better-than-expected synergies and the successful completion of operated DUCs under budget.

Realization of Legal Settlement and Gas-in-Kind Revenue
The 24 million legal settlement and new gas gathering agreements are expected to improve margins by 2.5-3.0 million per half-year.

Commodity Price Volatility
A sustained decline in oil prices below 55-60 per barrel would impair the value of proved reserves and threaten the company's ability to fund its dividend and CapEx program from operating cash flow.

Continued Per-Share Dilution
Management's reliance on equity issuance to fund growth (as seen in the Lucero deal) could continue to erode per-share value even if absolute production and EBITDA grow.

Vitesse Energy, Inc.'s core asset base consists primarily of non-operated working interests and royalty interests in oil and natural gas properties, predominantly located in the Williston Basin (North Dakota and Montana), with additional interests in the Central Rockies (Colorado and Wyoming). The company's asset base expanded significantly with the acquisition of Lucero Energy Corp in Q4 2024, which introduced an operated platform. As of December 31, 2024, the company owned a working interest in 6,071 gross (168.2 net) productive wells and royalty interests in an additional 1,180 productive wells. Following the Lucero acquisition, 1.9 net operated DUCs (drilled but uncompleted wells) were successfully completed by Q3 2025, adding to the productive well count. The development pipeline as of September 30, 2025, included 5.6 net wells actively drilling/completing and 15.2 net wells permitted for future development. For this valuation, the current asset base includes approximately 170.1 net productive wells (168.2 net as of 2024-12-31 plus 1.9 net DUCs completed from Lucero acquisition by Q3 2025) and 5.6 net wells currently drilling/completing, totaling 175.7 net well equivalents, representing the tangible infrastructure for oil and gas extraction. [cite: 1.1, 7.1, 11, 15, P7_0_VTS_Transcript_Analysis_Universal]

Permian Basin asset sale by Endeavor Energy Resources to Diamondback Energy, valued at approximately $26 billion for 220,000 net acres and 340,000 boe/d of production. This implies a value per flowing barrel of around $76,470, which can be extrapolated to a per-well equivalent based on average production per well.

Chesapeake Energy's acquisition of Southwestern Energy for $7.4 billion, creating a natural gas giant. While primarily gas, it indicates significant M&A activity and valuation multiples in the broader E&P sector.

APA Corporation's acquisition of Callon Petroleum for $4.5 billion, including debt, for assets primarily in the Permian and Eagle Ford basins. This transaction implies a value for proved reserves and production, which can be used to derive a per-well or per-flowing-barrel metric.

Cash & Equivalents

Accounts Receivable

Vitesse Energy, Inc. reported a zero balance for inventory on its consolidated balance sheet as of December 31, 2024. [cite: 1.5 VTS - Balance Sheet - 2024-12-31.json] This indicates that the company does not hold any material physical inventory that would be subject to a liquidation valuation. Consequently, the inventory nature, liquidation channel, turnover assessment, and all scenario-based orderly liquidation values and recovery rates are $0. This reflects a business model where produced oil and gas are likely sold immediately or held as reserves rather than as traditional inventory.

Inventory

Other Current Assets

**Primary Transaction Comps:**
- Devon Energy acquired Grayson Mill Energy's Williston Basin assets for $5 billion, including 307,000 net acres and 100 Mboe/d of production. The deal encompassed 500 undrilled gross locations and 300 refrac candidates. ($13.70 - $17.12/Boe (estimated based on 8-10 year reserve life for 100 Mboe/d production))
- Chord Energy acquired Enerplus for $3.8 billion, consolidating a significant portion of the Bakken. Enerplus contributed approximately 100 Mboe/d of production. ($10.41 - $13.01/Boe (estimated based on 8-10 year reserve life for 100 Mboe/d production))

**Replacement/Scrap Data:**
Bakken breakeven costs were reported around $58 per barrel in mid-2025, representing a 4% increase from the prior year due to rising drilling, equipment, labor, and logistics expenses. Some operators indicated needing $60-$70 per barrel for minimal profitability. These figures provide a contextual floor for the cost of bringing new production online but are not direct market comparables for existing proved reserves.

Vitesse Energy, Inc. holds a diversified portfolio of oil and natural gas properties, primarily consisting of non-operated working interests and royalty interests in the core of the Bakken Field in North Dakota and Montana, with additional non-operated interests in Colorado and Wyoming. The company's asset base has expanded significantly with the late 2024 acquisition of Lucero assets, which introduced an operated component to its strategy. As of December 31, 2024, the company reported 6,071 gross (168.2 net) productive wells and 1,180 additional royalty interest wells, alongside 248 gross (9.7 net) wells under drilling/completion and 362 gross (8.0 net) permitted wells. The total estimated net proved reserves as of December 31, 2024, are approximately 40.5 MMBoe. [cite: 1.1 VTS Company Profile.json, P7_0_VTS_Transcript_Analysis_Universal, 7.1]

Net PP&E

Other Non-Current

Accounts Payable

Tax Liabilities

Other Current Liabilities

Non-Current Debt

Other Non-Current Liabilities

Vitesse Energy reported Q2 2025 results including $24M legal settlement and maintained dividend.

Vitesse Energy reported Q1 2025 results, closed Lucero Energy acquisition, and revised 2025 guidance downward.

Market/Sector Move -6.45%

Vitesse Energy announced Q1 2024 results, raised dividend to $0.525/share, and increased 2024 guidance.

Vitesse Energy announced full-year 2023 results and declared $0.50 quarterly dividend.

Vitesse Energy Announces Several Impactful Acquisitions, Revised 2023 Guidance And Preliminary 2024 Outlook, And Additional Hedging

Vitesse Energy announced full year 2022 financial results and declared its initial quarterly cash dividend of $0.50 per share.

Jefferies Financial Group completed the spin-off of Vitesse Energy, making it an independent publicly traded company.

Jefferies Completes Spin-Off Of Vitesse

Vitesse Energy represents a deep-value asset play where the market is currently fixated on short-term per-share dilution and commodity volatility, ignoring a massive tangible asset floor. While management has historically struggled with value-destructive reinvestment, the current 65% discount to Net Liquidation Value provides a significant margin of safety for patient investors seeking to capture the intrinsic value of a high-quality Bakken asset portfolio.

Executive Summary

The primary value driver is the significant gap between the current share price and the company's Net Liquidation Value of 55.83 per share. This value will be unlocked as the company integrates the Lucero acquisition, which increased production by 35% to a guided range of 17,000-18,000 Boe/day. Downside is protected by a conservative balance sheet with Net Debt/EBITDA of only 0.65x and a proved reserve base valued at over 800 million on a pro forma basis.<ul><li>Driver: Deep Discount to Net Asset Value</li><li>Catalyst: Integration of Lucero Energy and Cash Flow Normalization</li><li>Protection: Proved Reserve Value and Low Leverage</li></ul>Our variant perception is that the market is obsessing over short-term rate volatility and per-share dilution, missing the massive discount to Net Asset Value (NAV). We view this not as a simple earnings growth story, but as a capital return story where the liquidation value of the oil and gas properties provides a hard floor significantly above the current share price of 19.29. While the market focuses on the 7.0% annual share count increase, it ignores the 35% production step-change and the 24 million legal settlement that significantly bolsters the company's liquidity and margin profile.This is an investment in a durable, cash-flowing asset portfolio, where the primary bet is on the stability of those cash flows and a potential re-rating to a more appropriate yield-based valuation as the market recognizes the underlying asset coverage.

Core Investment Rationale

Vitesse Energy operates as an independent energy company primarily focused on the acquisition and development of non-operated working interests in the Williston Basin. The company generates revenue through the sale of oil and natural gas, with TTM revenue reaching 271.3 million. Its strategy centers on a non-operated model, partnering with over 30 different operators to mitigate single-well performance risk. This capital-intensive model is reflected in its balance sheet, where Net PP&E of 867.6 million constitutes over 90% of total assets. Management employs a proprietary data-driven approach, utilizing the Luminis database to evaluate thousands of wells and identify high-return drilling opportunities, specifically targeting extended 3- and 4-mile laterals to improve capital efficiency.The company's core assets are concentrated in the Bakken and Three Forks formations of North Dakota and Montana. As of December 31, 2024, Vitesse held 40.3 MMBoe of proved reserves with a PV-10 value of 587 million. Following the Lucero acquisition in March 2025, the pro forma PV-10 value increased to over 800 million. These assets are predominantly non-operated, though the Lucero deal added an operated platform with high working interests of 75-80% on specific properties, a significant shift from the legacy portfolio average of 3%. The physical asset base is supported by a development pipeline of 20.8 net wells as of September 30, 2025.Vitesse operates in a rational oligopoly within the U.S. onshore E&P sector. It competes for acreage and acquisitions against mid-cap peers such as Permian Resources, which has an enterprise value of 15.25 billion, and Granite Ridge Resources, a closer peer with an enterprise value of 911.6 million. While Vitesse is a smaller player, its non-operated model allows it to participate in high-quality projects led by major operators like Chord Energy and Continental Resources. The industry is currently characterized by high capital discipline, with peers focusing on free cash flow generation rather than aggressive volume growth.The most critical historical event for Vitesse was its spin-off from Jefferies Financial Group on January 13, 2023, which established it as an independent publicly traded entity. Since the spin-off, the company has aggressively expanded its asset base, culminating in the transformative acquisition of Lucero Energy Corp in March 2025. This stock-for-stock transaction provided Vitesse with an operated platform and a net cash infusion of approximately 50 million. However, this growth has come at a cost; the company has issued significant equity, leading to a 29.8% increase in share count over the last two years. This dilution, combined with a capital expenditure program that generated a negative Incremental ROIC of -18.7%, has left per-share book value stagnant at approximately 16.63, creating the current valuation disconnect.

Business & Situation

<ul><li>Bull Case: Vitesse offers a premier 11.4% dividend yield supported by a conservative 0.65x Net Debt/EBITDA ratio. The stock trades at a massive 65% discount to its Net Liquidation Value of 55.83, and the recent Lucero acquisition provides a 35% production step-change that is not yet fully reflected in the share price.</li><li>Bear Case: The company is a value destroyer on a per-share basis, with a 7.0% annual share count CAGR and a negative -18.7% Incremental ROIC. The high dividend yield is a trap, as it is partially funded by debt and equity issuance rather than sustainable free cash flow, and the company remains highly sensitive to commodity price fluctuations.</li></ul>The consensus view is that Vitesse is a leveraged yield vehicle with poor capital discipline. Investors are wary of the continuous share dilution used to fund acquisitions and a dividend that often exceeds free cash flow. This skepticism is reflected in the high short interest of 17.0% of the float and the fact that the stock has delivered -33.64% alpha versus the market over the past year.Furthermore, the market is concerned that the company's non-operated model leaves it with limited control over its own depletion rate and capital efficiency, making it a passive bet on the decisions of third-party operators.The oil and gas industry is currently in a Peak cycle phase, characterized by high cash generation but surging capital expenditures that signal future supply pressure. While global energy demand remains robust, with the IEA forecasting 4% growth in electricity demand for 2025, Bakken production is expected to remain stable at 1.18 million barrels per day. Vitesse is outperforming on volume growth due to acquisitions, but its margins of 9.7% lag the peer median of 23.4%, indicating it is not yet capturing the full benefits of the current pricing environment.Our differentiated view is that the market is mispricing the quality and stability of the asset's cash flows due to an overblown concern regarding per-share dilution. While the share count has grown, the underlying asset base has grown faster, with proved reserves increasing to 40.3 MMBoe. The 24 million legal settlement in Q2 2025 and the move to taking gas in-kind are expected to improve margins by 2.5-3.0 million per half-year, a structural improvement the market has yet to value. We believe the 11.4% yield is sustainable in a 65-70 oil environment because lower prices naturally lead to lower CapEx, protecting the payout.The debate between asset value and dilution is currently being won by the bears, but the sheer magnitude of the discount to Net Liquidation Value creates an asymmetric risk/reward profile. At 19.29, the stock is priced for a permanent impairment of the asset base that is not supported by the 0.65x leverage or the PV-10 reserve values. We conclude that the asset floor will eventually force a re-rating as the Lucero integration proves accretive to free cash flow per share.Our analytical edge is a more detailed understanding of the Net Liquidation Value and the specific impact of the Lucero integration, which gives us higher confidence in the long-term stability and predictability of its cash flows than the market's current focus on short-term operational volatility would suggest.

Core Thesis

CEO Robert W. Gerrity has an exceptional track record, having founded Gerrity Oil & Gas and orchestrated the merger that created Patina Oil & Gas, which was sold to Noble Energy for 3.4 billion in 2005. This history demonstrates a proven ability to build and exit successful energy companies.Capital allocation skill is mixed; while Gerrity has a history of successful exits, current per-share metrics are weak. The company has paid 191.4 million in dividends over 3.8 years but has also increased debt by 33 million and issued significant equity. Buyback activity is negligible at only 248,000, despite a 60 million authorization.Management maintains a candid tone in transcripts, openly discussing the need to revise guidance due to commodity volatility. However, the frequent revisions (e.g., lowering 2025 CapEx guidance in Q1 and raising it in Q3) suggest a reactive rather than predictive management style.<ul><li>Board Independence: 66.67% (6 of 9 directors)</li><li>Chairman/CEO Roles: Combined</li><li>Chairman Tenure: 3 Years</li><li>Insider Ownership: 18.15%</li><li>Shareholder Rights: Declassified Board, Proxy Access (3% for 3 years)</li></ul>The leadership assessment is net neutral. While the CEO's historical track record is exceptional, the current strategy of prioritizing dividends over per-share value creation is a concern. Governance is strong with a 66.7% independent board and a Lead Independent Director, but the lack of significant insider buying at current depressed prices (only 10,000 shares by the CEO) limits our conviction in management's alignment with minority shareholders.

Leadership & Governance

The valuation floor is anchored to the Low Case NLV of 0.00. This represents the most conservative estimate of the asset base in a distressed, low-commodity-price environment where PP&E values are severely impaired and inventory is non-existent.The base case assumes 5% revenue growth in Year 1 and a stabilized operating margin of 9.5%. It reflects a rational industry environment where the Lucero integration proceeds as planned, but per-share gains are limited by continued moderate dilution and cost inflation in lease operating expenses.The bull case assumes 8% revenue growth and margin expansion to 12% as the company sources chunkier, high-return acquisitions and extended laterals drive significant cost savings. The P19 Bull Value of 8.08 represents the blue-sky potential for the DCF component, though the weighted fair value is much higher due to asset value.The bear case floor is anchored to the Net Liquidation Value (NLV) from the Liquidation Value Analysis Appendix. In a distressed scenario where commodity prices fall below 55 per barrel, the company would likely trade toward its tangible asset value. While the Low Case NLV is 0.00, the Base Case NLV of 55.83 suggests that even in a significant downturn, the underlying proved reserves hold substantial value that exceeds the current market price.

Valuation Context

<ul><li>Full Integration and Optimization of Lucero Assets
Successful integration is expected to drive G&A synergies and production growth. Management has already noted better-than-expected synergies and the successful completion of operated DUCs under budget.</li><li>Realization of Legal Settlement and Gas-in-Kind Revenue
The 24 million legal settlement and new gas gathering agreements are expected to improve margins by 2.5-3.0 million per half-year.</li></ul>Vitesse is highly relevant now because it is trading near 52-week lows with an RSI of 29.1, even as it integrates a transformative acquisition and realizes a significant cash settlement. The disconnect between operational progress and share price performance has reached an extreme.

Catalyst Path & Context

<ul><li>Commodity Price Volatility
A sustained decline in oil prices below 55-60 per barrel would impair the value of proved reserves and threaten the company's ability to fund its dividend and CapEx program from operating cash flow. Realized oil prices decreased 5% in 2024, and the company's breakeven costs are estimated at 60-70 per barrel in the Bakken.</li><li>Continued Per-Share Dilution
Management's reliance on equity issuance to fund growth (as seen in the Lucero deal) could continue to erode per-share value even if absolute production and EBITDA grow. Share count has grown at a 7.0% CAGR over the last two years, leaving per-share book value stagnant.</li></ul>

Primary Risks

<ul><li>Entry Target: Entry target set to current market price to capture immediate upside on a high-conviction thesis.</li><li>Stop Loss: Set the stop-loss at a price (11.64) that implies a Price-to-Tangible-Book multiple of 0.7x. A break below this level suggests a permanent impairment of the asset base rather than a temporary market mispricing.</li><li>Position Size: Base conviction is Medium due to the company's narrow moat and mixed capital allocation track record. While the Asset-Based Operator archetype allows for a Full position, we have constrained the size to Half to reflect the structural risks of per-share dilution and commodity sensitivity.</li><li>Time Horizon: A 2-3 year horizon is required to allow for the full integration of the Lucero assets and for the market to normalize its valuation of the company's cash flows and asset base.</li></ul><ul><li>Lease Operating Expense (LOE) per Boe trends post-Lucero integration</li><li>Quarterly per-share dilution and utilization of the share buyback authorization</li><li>Realized commodity price differentials versus WTI benchmarks</li></ul>The thesis killer is a permanent, negative change to the value of the core assets, such as an irreversible regulatory ban on hydraulic fracturing in the Williston Basin or a structural collapse in oil prices below 40 per barrel.

Actionable Parameters & Monitoring

Vitesse Energy is a high-conviction asset play trading at a profound discount to its net realizable value. While the market is currently focused on the company's dilutive growth strategy, the 55.83 Net Liquidation Value provides a massive margin of safety and a clear path to significant capital appreciation. We recommend a Buy with a valuation target of 32.74, representing 69.7% upside from current levels.

Final Conclusion

Driver

Integration of Lucero Energy and Cash Flow Normalization

Catalyst

Protection

Vitesse offers a premier 11.4% dividend yield supported by a conservative 0.65x Net Debt/EBITDA ratio. The stock trades at a massive 65% discount to its Net Liquidation Value of 55.83, and the recent Lucero acquisition provides a 35% production step-change that is not yet fully reflected in the share price.

Bull Case

The company is a value destroyer on a per-share basis, with a 7.0% annual share count CAGR and a negative -18.7% Incremental ROIC. The high dividend yield is a trap, as it is partially funded by debt and equity issuance rather than sustainable free cash flow, and the company remains highly sensitive to commodity price fluctuations.

Bear Case

Vitesse Energy represents a deep-value asset play where the market is currently fixated on short-term per-share dilution and commodity volatility, ignoring a massive tangible asset floor. While management has historically struggled with value-destructive reinvestment, the current 65% discount to Net Liquidation Value provides a significant margin of safety for patient investors seeking to capture the intrinsic value of a high-quality Bakken asset portfolio.

The strategy has evolved from a non-operated, dividend-focused model reliant on opportunistic acquisitions to a fully operated, growth-oriented strategy centered on extended lateral development and disciplined M&A. The company shifted from a 'dividend-first' narrative with a flexible, maintenance-level CapEx budget to a 'growth-and-dividend' model, significantly increasing CapEx guidance to fund operated inventory and larger-scale development.

Method	Implied Value	Weight	Weighted Value
DCF	$4.83	15%	$0.72
Comps	$11.71	35%	$4.10
NLV	$55.83	50%	$27.92
Total Weighted			$32.74

VTS

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