Permian Resources (PR) Valuation Update - May 21

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Permian Resources (PR) Valuation Update - May 21

Post by dan_s »

We will be publishing an updated profile on PR on Monday.

My valuation has increased by $0.25 to $16.50/share. It closed on May 19 at $9.61.
This is a recent addition to the Sweet 16 and it looks better each time I update my forecast model.
> Heavily weighted to oil.
> Revenues doubled in 2022 to $2.1 billion and revenues should top $2.8 billion in 2023 ($616.3 million in Q1)
> Free cash flow should exceed $600 million. Started paying dividends and funding an aggressive stock buyback.
> "Base + Variable Dividend" should be going up in 2H 2023, based on my forecast. Current annualized yield is 4%, but it will be going up with oil prices.
> Now running six operated drilling rigs with goal of completing 150 high-rate horizontal wells in the core of the Delaware Basin.
> At $70 oil price, their wells pay out in less than a year.
> 2023 production exit rate should be ~175,000 Boepd (over 70% liquids)

This one has a lot of Running Room and the Wall Street Gang is just starting to figure it out.

TipRanks: So far in May, six energy sector analysts updated their price targets to $11 to $18 (Neal Dingmann at Truist Financial). The six price targets average $14.50 per share, which is less than 4X TipRanks' operating cash flow per share forecast of $3.99 per share. A profitable upstream company with over 15 years of high-quality drilling inventory deserves a higher multiple.
Dan Steffens
Energy Prospectus Group
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