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Permian Resources Announces First Quarter 2023 Results

Business Wire - Mon May 8, 2023

Permian Resources Corporation (“Permian Resources” or the “Company”) (NYSE: PR) today announced its first quarter 2023 financial and operational results.

First Quarter Financial and Operational Highlights

  • Delivered total production of 153.8 MBoe/d, ahead of guidance, and oil production of 78.3 MBbls/d, in-line with guidance
  • Announced total accrued capital expenditures of $360 million and total cash capital expenditures of $315 million
  • Reported net cash provided by operating activities of $438 million and adjusted free cash flow1 of $101 million (accrued capital expenditures) or $146 million (cash capital expenditures)
  • Delivered total return of capital of $85 million through the base and variable dividends and stock repurchases:
    • Announced quarterly base dividend of $0.05 per share
    • Initiated inaugural variable dividend of $0.05 per share
    • Repurchased $29.4 million of Class C Common Stock
  • Closed the previously announced bolt-on acquisition in Lea County and midstream infrastructure divestiture in Reeves County

Management Commentary

“Permian Resources delivered another strong operational quarter as we remain focused on executing on our 2023 plan, with quarterly production and costs in-line with or ahead of expectations,” said Will Hickey, Co-CEO of Permian Resources. “We continue to build upon our operational track record and are committed to driving strong well results, improving operational efficiencies and maintaining capital discipline.”

“In the inaugural quarter of our variable return program, we are pleased to be able to return $85 million to shareholders through the base dividend, variable dividend and share buybacks,” said James Walter, Co-CEO of the Company. “Going forward, we will continue to leverage our high-quality assets, efficient operations and strong financial position to provide a unique and attractive value proposition to investors.”

Operational and Financial Results

Permian Resources met or exceeded its first quarter production targets while continuing to drive cost efficiency improvements and remains on track to achieve its full year production and capital expenditure guidance. During the quarter, average daily crude oil production was 78,332 barrels of oil per day (“Bbls/d”), and first quarter total production averaged 153,822 barrels of oil equivalent per day (“Boe/d”).

First quarter average realized prices were $74.38 per barrel of oil, $1.81 per Mcf of natural gas and $27.12 per barrel of natural gas liquids (“NGLs”), excluding the effects of hedges and GP&T expenses. Oil (98% of NYMEX oil) and NGL (36% of NYMEX oil) realizations were in-line with Company expectations. Realized natural gas prices were lower than expected, which was primarily driven by regional pricing dynamics that the Company believes to be non-recurring in nature. Permian Resources expects continued weakness for Waha natural gas prices during parts of the year and has reduced its exposure through the use of Waha basis hedges, in addition to pricing a portion of its residue natural gas at Houston Ship Channel.

First quarter total controllable cash costs (LOE, cash G&A and GP&T) were $7.86 per Boe, which were in-line with expectations. The Company anticipates total controllable cash costs on a per unit basis to decline during the year as total production is expected to grow. Total accrued capital expenditures were $360 million during the first quarter, and total cash capital expenditures realized for the quarter were $315 million. The difference between accrued and cash capital expenditures during the quarter was driven by normal course changes in working capital, and the Company expects accrued and cash capital expenditures to be approximately equivalent over time.

For the quarter, Permian Resources generated net cash provided by operating activities of $438 million and adjusted free cash flow1 of $101 million, utilizing accrued capital expenditures, or $146 million, utilizing cash capital expenditures. The Company also reported net income attributable to Class A Common Stock during the first quarter of $102 million, or $0.35 per basic share. First quarter adjusted net income1 was $192 million or $0.34 per adjusted basic share.

Since its last update on February 22, 2023, the Company has added incremental oil hedges for the second half of 2023 and full year 2024 and 2025. For the second half of 2023, the Company entered into 3,000 Bbls/d of incremental oil swaps at a weighted average fixed price of $77.32 per barrel. As a result, Permian Resources now has approximately 30% of its expected crude oil production hedged for the remainder of 2023 (using the mid-point of guidance) at a weighted average floor price of $82.48 per Bbl. For the full year 2024, Permian Resources has 17,000 Bbls/d of oil hedged at a weighted average fixed price of $75.48 per Bbl. The Company has 5,000 Bbls/d of oil hedged in 2025 at a weighted average fixed price of $68.00 per Bbl.

In addition to the hedge positions discussed above, the Company has certain other natural gas hedges, crude oil and natural gas basis swaps and crude oil roll differential swaps in place. (For a summary table of Permian Resources’ derivative contracts as of April 30, 2023, please see the Appendix to this press release.)

Permian Resources continues to maintain a strong financial position and low leverage profile. In April, the Company’s bank group reaffirmed the borrowing base under its revolving credit facility at $2.5 billion and maintained its level of elected commitments at $1.5 billion. At March 31, 2023, the Company had $26 million in cash on hand and $285 million in borrowings outstanding under the facility. Total liquidity was approximately $1.2 billion, including letters of credit. Net debt-to-LQA EBITDAX1 at March 31, 2023 was approximately 1.0x, and the Company has no debt maturities until 2026.

Shareholder Returns

Permian Resources announced today that its Board of Directors (the “Board”) declared a quarterly base cash dividend of $0.05 per share of Class A common stock, or $0.20 per share on an annualized basis. Additionally, based upon first quarter financial results, the Board has declared a quarterly variable cash dividend of $0.05 per share of Class A common stock. Combined, the base and variable dividends represent a total of $0.10 per share. The base and variable dividends are payable on May 24, 2023 to shareholders of record as of May 16, 2023.

Permian Resources returned additional capital to shareholders in the first quarter by repurchasing 2.75 million shares of Class C Common Stock for $29.4 million during a secondary offering from selling shareholders.

Portfolio Optimization Review

During the first quarter, Permian Resources closed a series of portfolio management transactions, which consisted of a bolt-on acquisition, a sizable acreage swap and a divestiture of a portion of its water infrastructure, in addition to properties added through its ongoing grassroots acquisition program.

Permian Resources closed the previously announced transaction to acquire 4,000 net leasehold acres, 3,300 net royalty acres and associated production, located predominantly in Lea County, New Mexico for a purchase price of $98 million, before post-closing adjustments. The acquired operated position consists of largely undeveloped acreage and is contiguous to one of the Company’s existing core blocks in Lea County.

Also during the quarter, the Company executed an acreage trade that further bolstered its position in Eddy County, New Mexico. Permian Resources traded into approximately 3,400 net acres, consisting of seven newly created, operated drilling spacing units (DSUs) adjacent to its current position and increased working interest in existing acreage on the Company’s near-term drilling schedule. As part of the transaction, the Company traded out of approximately 3,200 net acres of lower working interest acreage, which was not on its near-term drill schedule and had no material production.

“We are excited to trade into high quality inventory in one of our core operating areas, which has demonstrated highly productive results. Importantly, we expect to begin drilling activity on approximately half of the inbound acreage over the next twelve months, making this type of transaction highly accretive to shareholders,” said James Walter, Co-CEO. “We believe active portfolio management is a key competency for Permian Resources and will continue to drive value for our shareholders.”

Finally, as previously announced, the Company divested a portion of its saltwater disposal wells and associated produced water infrastructure in Reeves County, Texas for total cash consideration of $125 million received at closing, with $60 million of such consideration subject to future performance obligations by the Company.

Quarterly Report on Form 10-Q

Permian Resources’ financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which is expected to be filed with the Securities and Exchange Commission ("SEC") on May 9, 2023.

Conference Call and Webcast

Permian Resources will host an investor conference call on Tuesday, May 9, 2023 at 9:00 a.m. Central (10:00 a.m. Eastern) to discuss first quarter operating and financial results. Interested parties may join the webcast by visiting Permian Resources’ website at www.permianres.com and clicking on the webcast link or by dialing (888) 396-8049 (Conference ID: 92425142) at least 15 minutes prior to the start of the call. A replay of the call will be available on the Company’s website or by phone at (877) 674-7070 (Access Code: 425142) for a 14-day period following the call.

About Permian Resources

Headquartered in Midland, Texas, Permian Resources is an independent oil and natural gas company focused on the responsible acquisition, optimization and development of high-return oil and natural gas properties. The Company’s assets and operations are located in the core of the Delaware Basin. For more information, please visit www.permianres.com.

Cautionary Note Regarding Forward-Looking Statements

The information in this press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this press release, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this press release, the words “could,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “goal,” “plan,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

Forward-looking statements may include statements about:

  • volatility of oil, natural gas and NGL prices or a prolonged period of low oil, natural gas or NGL prices and the effects of actions by, or disputes among or between, members of the Organization of Petroleum Exporting Countries (“OPEC”), such as Saudi Arabia, and other oil and natural gas producing countries, such as Russia, with respect to production levels or other matters related to the price of oil;
  • the effects of excess supply of oil and natural gas resulting from reduced demand caused by the COVID-19 pandemic and the actions taken in response by certain oil and natural gas producing countries;
  • political and economic conditions in or affecting other producing regions or countries, including the Middle East, Russia, Eastern Europe, Africa and South America;
  • our ability to realize the anticipated benefits and synergies from the recently-closed merger and effectively integrate the assets of Centennial and Colgate;
  • our business strategy and future drilling plans;
  • our reserves and our ability to replace the reserves we produce through drilling and property acquisitions;
  • our drilling prospects, inventories, projects and programs;
  • our financial strategy, return of capital program, liquidity and capital required for our development program;
  • our realized oil, natural gas and NGL prices;
  • the timing and amount of our future production of oil, natural gas and NGLs;
  • our ability to identify, complete and effectively integrate acquisitions of properties or businesses;
  • our hedging strategy and results;
  • our competition and government regulations;
  • our ability to obtain permits and governmental approvals;
  • our pending legal or environmental matters;
  • the marketing and transportation of our oil, natural gas and NGLs;
  • our leasehold or business acquisitions;
  • costs of developing or operating our properties;
  • our anticipated rate of return;
  • general economic conditions;
  • weather conditions in the areas where we operate;
  • credit markets;
  • uncertainty regarding our future operating results;
  • our plans, objectives, expectations and intentions contained in this press release that are not historical; and
  • the other factors described in our most recent Annual Report on Form 10-K, and any updates to those factors set forth in our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, risks relating to the merger, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating oil and gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures and the other risks described in our filings with the SEC.

Reserve engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any oil and gas reserve estimate 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. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered.

Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release 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.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release.

1) Adjusted Net Income, Adjusted Free Cash Flow and Net Debt-to-LQA EBITDAX are non-GAAP financial measures. See “Non-GAAP Financial Measures” included within the Appendix of this press release for related disclosures and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Permian Resources Corporation

Operating Highlights

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

Net revenues (in thousands):

 

 

 

Oil sales

$

524,386

 

 

$

262,767

 

Natural gas sales(1)

 

32,122

 

 

 

39,018

 

NGL sales(2)

 

59,760

 

 

 

45,492

 

Oil and gas sales

$

616,268

 

 

$

347,277

 

 

 

 

 

Average sales prices:

 

 

 

Oil (per Bbl)

$

74.38

 

 

$

89.17

 

Effect of derivative settlements on average price (per Bbl)

 

3.65

 

 

 

(12.82

)

Oil including the effects of hedging (per Bbl)

$

78.03

 

 

$

76.35

 

 

 

 

 

Average NYMEX price for oil (per Bbl)

$

76.13

 

 

$

94.40

 

Oil differential from NYMEX

 

(1.75

)

 

 

(5.23

)

 

 

 

 

Natural gas price excluding the effects of GP&T (per Mcf)(1)

$

1.81

 

 

$

3.93

 

 

 

 

 

Effect of derivative settlements on average price (per Mcf)

 

0.58

 

 

 

(0.51

)

Natural gas including the effects of hedging (per Mcf)

$

2.39

 

 

$

3.42

 

 

 

 

 

Average NYMEX price for natural gas (per MMBtu)

$

2.67

 

 

$

4.60

 

Natural gas differential from NYMEX

 

(0.86

)

 

 

(0.67

)

 

 

 

 

NGL price excluding the effects of GP&T (per Bbl)(2)

$

27.12

 

 

$

49.37

 

 

 

 

 

Net production:

 

 

 

Oil (MBbls)

 

7,050

 

 

 

2,947

 

Natural gas (MMcf)

 

23,974

 

 

 

9,925

 

NGL (MBbls)

 

2,798

 

 

 

921

 

Total (MBoe)(3)

 

13,844

 

 

 

5,522

 

 

 

 

 

Average daily net production:

 

 

 

Oil (Bbls/d)

 

78,332

 

 

 

32,741

 

Natural gas (Mcf/d)

 

266,374

 

 

 

110,280

 

NGL (Bbls/d)

 

31,094

 

 

 

10,238

 

Total (Boe/d)(3)

 

153,822

 

 

 

61,359

 

_______________________

(1)

Natural gas sales include a portion of gathering, processing and transportation expenses (“GP&T”), that are reflected as a reduction to natural gas sales of $11.3 million for the three months ended March 31, 2023 and none for the three months ended March 31, 2022. Natural gas average sales price excludes $0.47 per Mcf of these GP&T charges for the three months ended March 31, 2023.

(2)

NGL sales include a portion of GP&T, that are reflected as a reduction to NGL sales of $16.1 million for the three months ended March 31, 2023 and none for the three months ended March 31, 2022. NGL average sales prices excludes $5.77 per Bbl of these GP&T charges for the three months ended March 31, 2023.

(3)

Calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Boe.

Permian Resources Corporation

Operating Expenses

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

Operating costs (in thousands):

 

 

 

Lease operating expenses

$

74,532

 

 

$

28,734

 

Severance and ad valorem taxes

 

48,509

 

 

 

25,051

 

Gathering, processing and transportation expenses

 

15,482

 

 

 

21,891

 

Operating cost metrics:

 

 

 

Lease operating expenses (per Boe)

$

5.38

 

 

$

5.20

 

Severance and ad valorem taxes (% of revenue)

 

7.9

%

 

 

7.2

%

Gathering, processing and transportation expenses (per Boe)

$

1.12

 

 

$

3.96

 

Permian Resources Corporation

Consolidated Statements of Operations (unaudited)

(in thousands, except per share data)

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

Operating revenues

 

 

 

Oil and gas sales

$

616,268

 

 

$

347,277

 

Operating expenses

 

 

 

Lease operating expenses

 

74,532

 

 

 

28,734

 

Severance and ad valorem taxes

 

48,509

 

 

 

25,051

 

Gathering, processing and transportation expenses

 

15,482

 

 

 

21,891

 

Depreciation, depletion and amortization

 

188,219

 

 

 

71,009

 

General and administrative expenses

 

35,474

 

 

 

30,603

 

Merger and integration expense

 

13,299

 

 

 

 

Impairment and abandonment expense

 

245

 

 

 

2,627

 

Exploration and other expenses

 

4,374

 

 

 

2,307

 

Total operating expenses

 

380,134

 

 

 

182,222

 

Net gain (loss) on sale of long-lived assets

 

66

 

 

 

82

 

Income (loss) from operations

 

236,200

 

 

 

165,137

 

 

 

 

 

Other income (expense)

 

 

 

Interest expense

 

(36,777

)

 

 

(13,154

)

Net gain (loss) on derivative instruments

 

54,512

 

 

 

(129,523

)

Other income (expense)

 

120

 

 

 

118

 

Total other income (expense)

 

17,855

 

 

 

(142,559

)

 

 

 

 

Income (loss) before income taxes

 

254,055

 

 

 

22,578

 

Income tax (expense) benefit

 

(34,254

)

 

 

(6,776

)

Net income (loss)

 

219,801

 

 

 

15,802

 

Less: Net (income) loss attributable to noncontrolling interest

 

(117,681

)

 

 

 

Net income (loss) attributable to Class A Common Stock

$

102,120

 

 

$

15,802

 

 

 

 

 

Income (loss) per share of Class A Common Stock:

 

 

 

Basic

$

0.35

 

 

$

0.06

 

Diluted

$

0.31

 

 

$

0.05

 

 

 

 

 

Weighted average Class A Common Stock outstanding:

 

 

 

Basic

 

295,913

 

 

 

284,851

 

Diluted

 

335,848

 

 

 

319,680

 

Permian Resources Corporation

Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share amounts)

 

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

25,593

 

 

$

59,545

 

Accounts receivable, net

 

301,581

 

 

 

282,846

 

Derivative instruments

 

108,293

 

 

 

100,797

 

Prepaid and other current assets

 

8,528

 

 

 

20,602

 

Total current assets

 

443,995

 

 

 

463,790

 

Property and Equipment

 

 

 

Oil and natural gas properties, successful efforts method

 

 

 

Unproved properties

 

1,433,639

 

 

 

1,424,744

 

Proved properties

 

9,283,311

 

 

 

8,869,174

 

Accumulated depreciation, depletion and amortization

 

(2,600,676

)

 

 

(2,419,692

)

Total oil and natural gas properties, net

 

8,116,274

 

 

 

7,874,226

 

Other property and equipment, net

 

16,294

 

 

 

15,173

 

Total property and equipment, net

 

8,132,568

 

 

 

7,889,399

 

Noncurrent assets

 

 

 

Operating lease right-of-use assets

 

70,289

 

 

 

64,792

 

Other noncurrent assets

 

76,306

 

 

 

74,611

 

TOTAL ASSETS

$

8,723,158

 

 

$

8,492,592

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable and accrued expenses

$

619,828

 

 

$

562,156

 

Operating lease liabilities

 

34,959

 

 

 

29,759

 

Derivative instruments

 

344

 

 

 

1,998

 

Other current liabilities

 

26,867

 

 

 

11,656

 

Total current liabilities

 

681,998

 

 

 

605,569

 

Noncurrent liabilities

 

 

 

Long-term debt, net

 

2,042,916

 

 

 

2,140,798

 

Asset retirement obligations

 

46,613

 

 

 

40,947

 

Deferred income taxes

 

50,414

 

 

 

4,430

 

Operating lease liabilities

 

41,570

 

 

 

41,341

 

Other noncurrent liabilities

 

50,961

 

 

 

3,211

 

Total liabilities

 

2,914,472

 

 

 

2,836,296

 

Commitments and contingencies (Note 12)

 

 

 

Shareholders’ equity

 

 

 

Common stock, $0.0001 par value, 1,500,000,000 shares authorized:

 

 

 

Class A: 321,723,961 shares issued and 313,958,894 shares outstanding at March 31, 2023 and 298,640,260 shares issued and 288,532,257 shares outstanding at December 31, 2022

 

32

 

 

 

30

 

Class C: 245,644,075 shares issued and outstanding at March 31, 2023 and 269,300,000 shares issued and outstanding at December 31, 2022

 

25

 

 

 

27

 

Additional paid-in capital

 

2,891,528

 

 

 

2,698,465

 

Retained earnings (accumulated deficit)

 

323,677

 

 

 

237,226

 

Total shareholders' equity

 

3,215,262

 

 

 

2,935,748

 

Noncontrolling interest

 

2,593,424

 

 

 

2,720,548

 

Total equity

 

5,808,686

 

 

 

5,656,296

 

TOTAL LIABILITIES AND EQUITY

$

8,723,158

 

 

$

8,492,592

 

Permian Resources Corporation

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income (loss)

$

219,801

 

 

$

15,802

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amorti