Permian Resources (PR) Q2 Results - Aug 4

[dan_s]

PR is an Aggressive Growth company in our Sweet 16. They increased production by 56.6% YOY in 2022 and they are on-track for over 75% YOY production growth this year. If oil prices going up, the aggressive growth companies like ESTE, MTDR and PR will draw a lot of attention because their year-end reserve reports will show how under-valued they are. Based on my forecast, they will be able to increase dividend quite a bit in 2024.

Second Quarter Financial and Operational Highlights

Increased both crude oil and total average production by 8% quarter-over-quarter to 84.4 MBbls/d and 165.9 MBoe/d, respectively < Beat my Q2 production forecast of 161,900 Boepd with 84,100 BOPD.

Announced cash capital expenditures of $371 million and accrued capital expenditures of $386 million

Reported net cash provided by operating activities of $448 million and adjusted free cash flow of $80 million (cash capital expenditures)

Continued to realize significant operational efficiency gains, driving meaningful improvements in drilling and completion cycle times

Increased average completed and drilled feet per day by 31% and 13%, respectively, compared to third quarter 2022

Delivered total return of capital of $57 million, or $0.10 per share:

Quarterly base dividend of $0.05 per share

Variable dividend of $0.05 per share

Management Commentary

"Permian Resources had a strong operational and financial quarter, driven by robust well results across both Texas and New Mexico. Over halfway through the year, our asset base is performing as expected, with year-to-date well productivity in-line with last year’s," said Will Hickey, Co-CEO of Permian Resources. "Additionally, we recently reduced our operated rig count from seven to six rigs due to continued efficiency gains and remain on pace to achieve our full-year and fourth quarter production targets, highlighting the strength of our operations."

"We are proud to continue building upon our track record of operational execution and returning capital to shareholders. For the second quarter, we delivered $57 million to shareholders through the base and variable dividends," said James Walter, Co-CEO of the Company. "Given our expected production growth profile and reduced capital spending for the remainder of the year, we expect to generate significantly more free cash flow during the third and fourth quarters, assuming current strip pricing."

[dan_s]

I have updated my forecast/valuation model for PR. My valuation stays at $16.50, but this one definitely has a lot of upside potential.

TipRanks: "In the last 3 months, 10 ranked analysts set 12-month price targets for PR. The average price target among the analysts is $14.20. Only two of the analysts covering PR have updated their price targets to $15 and $16 since the Company announced Q2 results."

PR closed at $12.01 on Friday. It is a pure play on the Permian Basin and the Company has a lot of running room in the Delaware Basin, which has more oil prone zones than the Midland Basin.

If you are not familiar with the Permian Basin, just Google it and study the map. The Delaware Basin and the Midland Basin are sub-basins of the Permian, which is one of the largest oil producing regions in the world, over 19 million acres. "God's Gift to Texas".

[dan_s]

Permian Resources Corporation (PR, $11.59, Buy) - Out
in Midland Just Executing - Permian Resources continues to
report some of the most stable operational results not only
in the Delaware Basin but throughout the Lower 48, which is
comforting during a period when well productivity and capital
efficiency remains under a microscope. Though not appropriately
appreciated, the company also has some of the best vendor and
land owner relationships, which we experienced firsthand. We
continue to forecast stable operational and financial results with
PR able to mitigate any potential private equity common stock
sale. We reiterate our $16 price target. - Neal Dingmann, Truist Financial