Permian Resources (PR) Q4 Results - Feb 27
Posted: Tue Feb 27, 2024 6:53 pm
I will be updating my forecast/valuation models for DVN, OVV, PR and CIVI tomorrow morning. This is the point in each quarter where information is coming out of a fire hose. I'll do my best to keep up.
Fourth Quarter 2023 Financial and Operational Highlights
Closed $4.5 billion Earthstone acquisition on November 1, enhancing Permian Resources’ position as the second largest Permian pure-play E&P with a >$15 billion enterprise value
Earthstone synergy capture ahead of schedule
Continued strong well performance combined with closing of the Earthstone acquisition drove crude oil and total average production to 137 MBbls/d and 285 MBoe/d < Beat my Q4 forecast of 125,500 bopd and 267,033 Boepd.
Decreased controllable cash costs by 8% quarter-over-quarter to $7.33 per Boe, driven primarily by lower LOE and continued focus on cost control
Announced accrued capital expenditures of $423 million and cash capital expenditures of $458 million
Reported net cash provided by operating activities of $846 million and adjusted free cash flow of $332 million (cash capital expenditures), or $0.47 per adjusted basic share < Compares to my Adjusted operating cash flow forecast of $711.9 million.
Delivered total return of capital of $183 million, or $0.24 per share:
Quarterly base dividend of $0.05 per share
Variable dividend of $0.10 per share
Repurchased 5.0 million shares for $67 million at an average weighted price of $13.32 per share
Since November 1, added ~14,000 net acres and ~5,300 net royalty acres located in the core of the Delaware Basin
Full Year 2023 Financial and Operational Highlights
Met or outperformed all of PR standalone’s guidance, significantly exceeding production targets while remaining within original budget on capex and controllable cash costs
Generated peer-leading total production growth per debt-adjusted share of ~35%
Delivered ~$324 million, or $0.47 per share, in dividends to shareholders < Once things settle down post-merger, I do expect PR to increase their dividends and stock repurchases.
Repurchased 10.0 million shares for ~$125 million at an average weighted price of $12.46 per share
Replaced >100% of PR standalone’s developed locations in 2023 through successful portfolio optimization transactions, effectively increasing inventory life < This is very good news.
2024 Financial and Operating Plan
Announced highly capital efficient operating plan underpinned by consistent well performance, lower well costs and continued cost discipline
Crude oil and total average production guidance of 145 to 150 MBbls/d and 300 to 325 MBoe/d
Total cash capital expenditure budget of $1.9 to $2.1 billion
Total controllable cash costs of $7.40 to $8.60 per Boe
Increasing quarterly base dividend by 20% to $0.06 per share, as previously announced
Management Commentary
"In our first full year, Permian Resources had an outstanding 2023, accomplishing all our goals laid out last February. On a standalone basis, the Company delivered oil production at the high-end of our 2023 guidance range, while staying within our capex budget," said Will Hickey, Co-CEO of Permian Resources. "During the fourth quarter, Permian Resources reported another strong quarter of production outperformance and operational improvements in the midst of closing the Earthstone acquisition. The combined team is exceeding expectations associated with the Earthstone integration and is on-track to reach key operational synergy run rates well ahead of the originally scheduled targets."
"We are excited to announce our 2024 operational and financial plan, which combines consistent year-over-year well productivity with lower costs and other optimized key inputs to deliver even better capital efficiency than we realized in 2023," said James Walter, Co-CEO of Permian Resources. "Most importantly, our 2024 plan allows us to maximize shareholder value by delivering industry leading per share annual growth across production, cash flow and free cash flow."
---------------------------------------
MY TAKE: With detailed guidance for 2024, PR deserves a higher valuation multiple because it checks all the boxes: Strong Balance Sheet, double-digit annual production growth, lots of high-quality "Running Room", over $1.2 billion of free cash flow in 2024, pays a dividend and funding stock buybacks. My valuation will be over $22 per share. I will update this one first on Wednesday morning. PR is one of my Tip Picks for 2024.
Fourth Quarter 2023 Financial and Operational Highlights
Closed $4.5 billion Earthstone acquisition on November 1, enhancing Permian Resources’ position as the second largest Permian pure-play E&P with a >$15 billion enterprise value
Earthstone synergy capture ahead of schedule
Continued strong well performance combined with closing of the Earthstone acquisition drove crude oil and total average production to 137 MBbls/d and 285 MBoe/d < Beat my Q4 forecast of 125,500 bopd and 267,033 Boepd.
Decreased controllable cash costs by 8% quarter-over-quarter to $7.33 per Boe, driven primarily by lower LOE and continued focus on cost control
Announced accrued capital expenditures of $423 million and cash capital expenditures of $458 million
Reported net cash provided by operating activities of $846 million and adjusted free cash flow of $332 million (cash capital expenditures), or $0.47 per adjusted basic share < Compares to my Adjusted operating cash flow forecast of $711.9 million.
Delivered total return of capital of $183 million, or $0.24 per share:
Quarterly base dividend of $0.05 per share
Variable dividend of $0.10 per share
Repurchased 5.0 million shares for $67 million at an average weighted price of $13.32 per share
Since November 1, added ~14,000 net acres and ~5,300 net royalty acres located in the core of the Delaware Basin
Full Year 2023 Financial and Operational Highlights
Met or outperformed all of PR standalone’s guidance, significantly exceeding production targets while remaining within original budget on capex and controllable cash costs
Generated peer-leading total production growth per debt-adjusted share of ~35%
Delivered ~$324 million, or $0.47 per share, in dividends to shareholders < Once things settle down post-merger, I do expect PR to increase their dividends and stock repurchases.
Repurchased 10.0 million shares for ~$125 million at an average weighted price of $12.46 per share
Replaced >100% of PR standalone’s developed locations in 2023 through successful portfolio optimization transactions, effectively increasing inventory life < This is very good news.
2024 Financial and Operating Plan
Announced highly capital efficient operating plan underpinned by consistent well performance, lower well costs and continued cost discipline
Crude oil and total average production guidance of 145 to 150 MBbls/d and 300 to 325 MBoe/d
Total cash capital expenditure budget of $1.9 to $2.1 billion
Total controllable cash costs of $7.40 to $8.60 per Boe
Increasing quarterly base dividend by 20% to $0.06 per share, as previously announced
Management Commentary
"In our first full year, Permian Resources had an outstanding 2023, accomplishing all our goals laid out last February. On a standalone basis, the Company delivered oil production at the high-end of our 2023 guidance range, while staying within our capex budget," said Will Hickey, Co-CEO of Permian Resources. "During the fourth quarter, Permian Resources reported another strong quarter of production outperformance and operational improvements in the midst of closing the Earthstone acquisition. The combined team is exceeding expectations associated with the Earthstone integration and is on-track to reach key operational synergy run rates well ahead of the originally scheduled targets."
"We are excited to announce our 2024 operational and financial plan, which combines consistent year-over-year well productivity with lower costs and other optimized key inputs to deliver even better capital efficiency than we realized in 2023," said James Walter, Co-CEO of Permian Resources. "Most importantly, our 2024 plan allows us to maximize shareholder value by delivering industry leading per share annual growth across production, cash flow and free cash flow."
---------------------------------------
MY TAKE: With detailed guidance for 2024, PR deserves a higher valuation multiple because it checks all the boxes: Strong Balance Sheet, double-digit annual production growth, lots of high-quality "Running Room", over $1.2 billion of free cash flow in 2024, pays a dividend and funding stock buybacks. My valuation will be over $22 per share. I will update this one first on Wednesday morning. PR is one of my Tip Picks for 2024.