Vital Energy today announced the signing of a definitive purchase and sale agreement to acquire the assets of Driftwood Energy, inclusive of all leasehold interests and hedges, in exchange for 1,578,948 shares of Vital common stock and $127.6 million of cash. The transaction is expected to close early April 2023 with an effective date of January 1, 2023, subject to customary closing conditions.

Highlights:

• Accretive to Free Cash Flow and Net Asset Value per share and leverage neutral
• Current production of ~5,400 barrels of oil equivalent ("BOE") per day (63% oil), ~50% next 12-month decline rate
• Extends Company’s oil-weighted inventory life, adding an estimated 30 gross (23 net) operated horizontal locations in the Wolfcamp B, including four gross (four net) drilled but uncompleted locations
• Approximately 16,500 gross (11,200 net) acres in Upton and Reagan counties (~91% held by production)
• Majority of acreage, production and inventory located in the prolific, contiguous Upton County leasehold (~85% of transaction value allocated to Upton County)

"This purchase strengthens Vital by expanding our footprint into Upton County, adding high-return inventory and a new development area in the Midland Basin," stated Jason Pigott, President and Chief Executive Officer. "Importantly, it is also accretive on key financial metrics, is leverage neutral and extends our proven track record of completing disciplined transactions that add value for shareholders. We plan to develop these assets over the next two to three years without increasing our current activity levels, highlighting our commitment to maintaining capital discipline and maximizing Free Cash Flow generation."

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