Vitesse Energy Inc

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The information in this Annual Report on Form 10-K contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “confident” and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future earnings, cash flow, results of operations, uses of cash, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Vitesse, and other statements that are not historical facts. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks, and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated, or budgeted. Such assumptions, risks, uncertainties and other factors include, but are not limited to, the following:

■the timing and extent of changes in oil and natural gas prices;

■our ability to successfully implement our business plan;

■the pace of our operators’ drilling and completion activity on our properties, including in connection with refrac programs and extended length three-mile lateral wells;

■our operators’ ability to complete projects on time and on budget;

■uncertainties about estimates of reserves, identification of drilling locations and the ability to add reserves in the future;

■our ability to complete acquisitions;

■actions taken by third-party operators, processors, transporters and gatherers;

■natural disasters, adverse weather conditions, pandemic, war (such as the recent conflict in the Middle East and the ongoing military conflict in Ukraine), financial or political instability, casualty losses and other matters beyond our control;

■changes in general economic conditions, including central bank policy actions, bank failures and associated liquidity risks;

■our ability to achieve the benefits that we expect to achieve as an independent publicly traded company;

■the qualification of the Distribution and certain related transactions as tax-free under the Code;

■inflation;

■infrastructure constraints and related factors affecting our properties;

■competitive conditions in our industry;

■the effects of existing and future laws and governmental regulations;

■the availability and price of oil and natural gas to the consumer compared to the price of alternative and competing fuels;

■operating hazards and other risks incidental to gathering, storing and transporting oil and natural gas;

■restrictions in our Revolving Credit Facility;

■interest rates;

■the effects of ongoing or future litigation;

■cyber-related risks;

■changes in insurance markets impacting costs and the level and types of coverage available;

■financial, regulatory, and political risks associated with societal responses to climate change;

■extreme weather events and fluctuating regional and global weather conditions or patterns;

■energy efficiency and technology trends;

■changes in the availability and cost of capital;

■large customer defaults;

■labor relations; and

■changes in tax status.

The above list of factors is not exhaustive. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see the discussion under the section Part I, Item 1A. Risk Factors.

Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimates depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered.

Any forward-looking statements, express or implied, included in this Annual Report on Form 10-K are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Any forward-looking statement that we make in this Annual Report on Form 10-K speaks only as of the date on which it was made. Except as otherwise required by applicable law, we expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

GLOSSARY

In this Annual Report on Form 10-K, unless the context otherwise requires:

■“3B Energy” refers to 3B Energy, LLC, the holder of a minority of the equity interests in Vitesse Energy prior to the Pre-Spin-Off Transactions and an entity owned by Bob Gerrity, our Chief Executive Officer and Chairman of our Board, and Brian Cree, our President;

■“Amended and Restated Bylaws” refers to the bylaws of Vitesse effective as of January 13, 2023;

■“Amended and Restated Certificate of Incorporation” refers to the certificate of incorporation of Vitesse effective as of January 12, 2023;

■“Basin” refers to a large natural depression on the earth’s surface in which sediments generally brought by water accumulate;

■the “Board” refers to our board of directors;

■“Bbl” refers to one stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to oil, condensate or NGLs;

■"BLM" refers to the Bureau of Land Management;

■“Boe” refers to barrels of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil;

■“Boe/d” refers to one Boe per day;

■“Btu” refers to a British thermal unit, which is the quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit;

■“CAA” refers to the Clean Air Act;

■“Cawley” refers to Cawley, Gillespie & Associates, Inc.;

■“CEQ” refers to the Council on Environmental Quality, a division of the Executive Office of the President;

■“CERCLA” refers to the Comprehensive Environmental, Response, Compensation, and Liability Act;

■“CFTC” refers to the Commodities Futures Trading Commission;

■“Code” refers to the United States Internal Revenue Code of 1986, as amended;

■“completion” refers to the process of preparing an oil and natural gas wellbore for production through the installation of permanent production equipment, as well as perforation and fracture stimulation to optimize production of oil, natural gas and/or NGLs;

■“condensate” refers to a mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature;

■the "Corps" refers to the United States Army Corps of Engineers;

■“CWA” refers to the Federal Water Pollution Control Act of 1972;

■“DGCL” refers to the General Corporation Law of the State of Delaware;

■“differential” refers to an adjustment to the price of oil or natural gas from an established index price to reflect differences in the quality and/or location of oil or natural gas;

■the “Distribution” refers to the transaction on January 13, 2023 in which Jefferies distributed to its shareholders outstanding shares of our common stock held by Jefferies;

■the “Dodd-Frank Act” refers to the Dodd-Frank Wall Street Reform and Consumer Protection Act;

■the “DOI” refers to the Department of the Interior;

■“dry hole” refers to a well found to be incapable of producing oil and natural gas in sufficient quantities to justify completion;

■the “EPA” refers to the Environmental Protection Agency;

■the “ESA” refers to the Endangered Species Act;

■“ESG” refers to environmental, social and governance;

■“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

■“FDIC” refers to Federal Deposit Insurance Corporation

■“FERC” refers to the Federal Energy Regulatory Commission;

■“FTC” refers to the Federal Trade Commission;

■“GAAP” refers to accounting principles generally accepted in the United States;

■“Gerrity Bakken” refers to Gerrity Bakken, LLC, the holder of a minority of the equity interests in Vitesse Oil and an entity owned by Bob Gerrity, our Chief Executive Officer and a member of our Board;

■“GHGs” refer to greenhouse gases;

■“gross acres” refers to the total acres in which a working interest is owned;

■“gross wells” refers to the total wells in which a working interest is owned;

■“IPOs” refer to initial public offerings;

■the “IRA” refers to the Inflation Reduction Act of 2022;

■“IRS” refers to the Internal Revenue Service;

■“Jefferies” or “JFG” refers to Jefferies Financial Group Inc. and its consolidated subsidiaries other than, for all periods following the Spin-Off, Vitesse, unless the context requires otherwise;

■“Jefferies Capital Partners” refers to Jefferies Capital Partners V L.P. and Jefferies SBI USA Fund L.P., collectively, the holders of a majority of the equity interests in Vitesse Oil and entities in which Jefferies holds an indirect limited partner interest;

■“MBbls” refers to one thousand barrels of oil or NGLs;

■“MBoe” refers to one thousand barrels of oil equivalent;

■“Mcf” refers to one thousand cubic feet of natural gas;

■"MIUs” refers to management incentive units;

■“MMBoe” refers to one million barrels of oil equivalent;

■“MMBtu” refers to one million British thermal units;

■“MMcf” refers to one million cubic feet of natural gas;

■“net acres” refers to the sum of the fractional working interests owned in gross acres (e.g., a 10% working interest in a lease covering 1,280 gross acres is equivalent to 128 net acres);

■“net wells” refers to wells that are deemed to exist when the sum of fractional ownership working interests in gross wells equals one;

■"NAAQS" refers to National Ambient Air Quality Standards;

■“NEPA” refers to the National Environmental Policy Act;

■“NGLs” refer to natural gas liquids;

■“NSPS” refers to New Source Performance Standards;

■“NYMEX” refers to the New York Mercantile Exchange;

■“NYSE” refers to the New York Stock Exchange;

■“OPEC” refers to the Organization of Petroleum Exporting Countries;

■“OPA” refers to the Oil Pollution Act of 1990;

■“OTC” refers to the over-the-counter market;

■“PDP” or “proved developed producing” refers to proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods;

■“PDNP” or “proved developed non-producing” refers to proved reserves that are developed behind pipe and are expected to be recovered from zones in existing wells that will require additional completion work or future recompletion prior to the start of production;

■“PHMSA” refers to the Pipeline and Hazardous Materials Safety Administration;

■“possible reserves” refers to the additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than probable reserves;

■“Pre-Spin-Off Transactions” refers to the series of transactions, including Vitesse’s acquisitions of Vitesse Energy and Vitesse Oil, consummated immediately prior to the Distribution;

■"Predecessor Company Agreement” means the Limited Liability Company Agreement of the Predecessor, dated as of July 1, 2018, as amended;

■“Prior Revolving Credit Facility” refers to Vitesse Energy’s Amended and Restated Credit Agreement, dated as of April 29, 2022, as amended from time to time, among Vitesse Energy, as borrower, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto;

■“probable reserves” refers to the additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered;

■“productive well” refers to a well that is found to be capable of producing oil and natural gas in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes;

■“proved developed reserves” refers to proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of new equipment or operating methods is relatively minor compared to the cost of a new well;

■“proved reserves” refers to the quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible, from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations, prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time;

■“PUD” or “proved undeveloped” refers to proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for development. Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years from the date that such undrilled location was initially classified as proved undeveloped unless specific circumstances justify a longer time. Under no circumstances shall estimates of proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty:

■“RCRA” refers the Federal Resource Conservation and Recovery Act;

■“reserves” refers to estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project;

■“Revolving Credit Facility” refers to Vitesse’s Second Amended and Restated Credit Agreement, as amended from time to time, among Vitesse, as borrower, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto, dated as of January 13, 2023;

■“RSU” refers to Restricted Stock Units under the LTIP:

■“SDWA” refers to the Safe Drinking Water Act;

■“SEC” refers to the Securities and Exchange Commission;

■“Securities Act” refers to Securities Act of 1933, as amended;

■“SOFR” refers to the Secured Overnight Financing Rate;

■the “Spin-Off” refers to our separation on January 13, 2023 from Jefferies and the creation of an independent, publicly traded company, Vitesse, through (1) the Pre-Spin-Off Transactions and (2) the Distribution;

■“Standardized Measure” refers to discounted future net cash flows estimated by applying year-end SEC prices (based on the 12-month unweighted arithmetic average of the first-day-of-the-month oil and natural gas prices for such year-end period) to the estimated future production of year-end proved reserves. Future cash flows are reduced by estimated future production and development costs, including asset retirement obligations, based on year-end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash flows over our tax basis in the oil and natural gas properties. Future net cash flows after income taxes are discounted using a 10% annual discount rate;

■“Stock Repurchase Program” refers to the stock repurchase program approved by the Board in February 2023 authorizing the repurchase of up to $60 million of the Company’s common stock;

■"SVB” refers to Silicon Valley Bank;

■“Tax Matters Agreement” refers to the tax matters agreement entered into between Jefferies and the Company on January 13, 2023;

■“Treasury Regulations” refers to final, temporary, and (to the extent they can be relied upon) proposed regulations promulgated under the Code, as amended from time to time (including corresponding provisions and succeeding provisions);

■“Two-stream basis” refers to the reporting of production or reserve volumes of oil and wet natural gas, where the NGLs have not been removed from the natural gas stream, and the economic value of the NGLs is included in the wellhead natural gas price;

■“Vitesse,” “we,” “our,” “us” and the “Company” (1) when used in regard to events prior to the Spin-Off, refer to Vitesse Energy and do not give effect to the consummation of the Pre-Spin-Off Transactions, and (2) when used in regard to events subsequent to the Spin-Off or future tense, refer to Vitesse Energy, Inc. and its consolidated subsidiaries and give effect to the consummation of the Pre-Spin-Off Transactions, in each case unless the context requires otherwise;

■“Vitesse Energy” and the “Predecessor” refer to Vitesse Energy, LLC and its consolidated subsidiaries;

■“Vitesse Energy Finance” refers to Vitesse Energy Finance LLC, the holder of a majority of the equity interests in Vitesse Energy prior to the Pre-Spin-Off Transactions and an indirect wholly owned subsidiary of Jefferies;

■“Vitesse Energy MIUs” refers to management incentive units with respect to Vitesse Energy;

■“Vitesse Oil” refers to Vitesse Oil, LLC;

■“Vitesse Oil Revolving Credit Facility” refers to Vitesse Oil’s Credit Agreement, dated as of July 23, 2015, as amended from time to time, among Vitesse Oil, as borrower, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto;

■“VOCs” refers to volatile organic compounds;

■“WOTUS” refers to the waters of the United States; and

■“WTI” refers to West Texas Intermediate.

PRESENTATION OF FINANCIAL AND OPERATING DATA

Unless otherwise indicated, the financial, reserve and operational information presented for periods prior to the January 13, 2023 Spin-Off in this Annual Report on Form 10-K is that of our Predecessor, Vitesse Energy. Also, unless otherwise indicated all references to wells, working interest, royalty interest, or acreage are based on the published information available as of the date indicated, which may not be current.

INDUSTRY AND MARKET DATA

This Annual Report on Form 10-K includes information concerning our industry and the markets in which we operate that is based on information from public filings, internal company sources, various third-party sources and management estimates. Management’s estimates regarding Vitesse’s position, share and industry size are derived from publicly available information and our internal research, and are based on assumptions we made upon reviewing such data and our knowledge of such industry and markets, which we believe to be reasonable. While we are not aware of any misstatements regarding any industry data presented in this Annual Report on Form 10-K and believe such data to be accurate, we have not independently verified any data obtained from third-party sources and cannot assure you of the accuracy or completeness of such data. Such data involve uncertainties and are subject to change based on various factors, including those discussed in “Part I, Item 1A, Risk Factors.”