Permian Resources (PR) Update - Sept 20

[dan_s]

PR is not selling ("dumping") any stock. In fact, they may be buying 2,200,000 shares of the stock that NGP is selling.

MIDLAND, Texas, September 20, 2023--(BUSINESS WIRE)--Permian Resources Corporation ("Permian Resources" or the "Company") (NYSE: PR) today announced the pricing of an underwritten public offering of an aggregate 21,450,000 shares of its Class A Common Stock, par value $0.0001 per share ("Class A common stock"), at a price to the public of $13.05 per share, by certain affiliates of NGP Energy Capital Management, L.L.C. (the "Selling Stockholders"). Permian Resources will not sell any shares of Class A common stock in the offering and will not receive any proceeds therefrom. The Selling Stockholders also granted the underwriters a 30-day option to purchase up to an additional aggregate 3,217,500 shares of Class A common stock at the public offering price, less the underwriting discounts and commissions.

Concurrently with the closing of the offering, the Company (PR) has agreed to purchase (the "Concurrent OpCo Unit Purchase") from the Selling Stockholders an aggregate 2,200,000 common units representing limited liability company interests ("OpCo Units") in Permian Resources Operating, LLC, a Delaware limited liability company and a subsidiary of Permian Resources ("OpCo"), at a price per OpCo Unit equal to the price per share at which the underwriters purchase shares of Class A common stock in the offering and to cancel a corresponding number of shares of the Company’s Class C Common Stock, par value $0.0001 per share, held by the Selling Stockholders. The offering of Class A common stock is not conditioned upon the completion of the Concurrent OpCo Unit Purchase, but the Concurrent OpCo Unit Purchase is conditioned upon the completion of the offering.

[Fraser921]

I posted the same exact message

[Cliff_N]

Thanks Dan, apparently this has had no effect on the stock price of PR or ESTE. The two pieces of information posted by PR were a bit confusing.

[dan_s]

Fraser: You posted that PR was dumping stock. The opposite is happening.

The merger of ESTE into PR is an all stock deal. They don't need a lot of cash, so no need to issue more shares. In fact, both companies are now generating a lot of free cash flow. Quite a bit of that free cash flow will be buying back shares.

Take some time to study the proforma Net Income & Cash Flow Forecast model that I posted to the EPG website on 8/25. I have followed both companies for several years, so I have a high level of confidence in my model. If WTI stays over $90/bbl, "New PR" should generate over $4 Billion of operating cash flow in 2024 and I expect even an aggressive drilling program to cost under $2.5 Billion. This company should be a Cash Flow Machine next year.

The real upside for PR is that size matters in this business and PR will have over 300,000 Boepd of production when the merger closes. Large-caps get rated by the Wall Street Gang using higher multiples. PR will be close to FANG in size. FANG trades today of 5X operating CFPS, while PR trades at 3.8X.

[Fraser921]

Perhaps,I could have been more clear as it confused you.

I don't want to belabor the point, but what I meant to get across was PR shares are being dumped too like Baytex. Long time holders want out. People must of been wondering why Baytex fell hard. I found out the reason and posted it.

I'm not saying that's good or bad. if someone is selling 21.45 m shares at 13.05 = 280 m. What do you call that a minor sale? A puke, a disgorgement, a minor trimming, I call it a dump. My header said PR shares are being dumped. I did not mean to imply that PR was doing the dumping. The narrative clearly said who was doing the dumping

Private owners that get stock want to monetize their holdings. They have been holding a long time. Can't say I blame them.

I'm happy to say I "dumped" my VTLE shares and plowed the proceeds in names I like better Surge for one, a little ROK, small cap Canadians like Baytex, InPlay, HMENF, oily names without crap hedges and or management that wants to entrench themselves building kingdoms

[dan_s]

"Dumping" implies that NGP is selling the shares at a loss. "Harvesting a Big Gain" might be a better choice of words.

Venture Capital firms are always going to take gains at some point. NGP has a lot of other companies that need funding.

Baytex has pulled back a bit after a nice run.

[Fraser921]

Ok point well taken but I don't know their cost basis.

In my mind any sale is a dump

Interestingly, the high in PR was 14.49 last week. The seller got 13.05 which was a 10 % haircut. Like it or not when profits are harvested the common falls to the harvested price. The low today was 13.17

[dan_s]

Here is why these types of sales happen. Just my Wild Ass Guess (WAG)

A mutual fund company like Fidelity of T Rowe Price decides they want to add PR to one or more of their many growth + income funds.

They know if they go into the open market and start buying large blocks of stock it will run up the share price and when they stop buying the shares in the open market the share price will fall back down. Or NGP wants to sell a large block of shares, so they contact companies like Fidelity or T Rowe Price asking if they are interested.

Regardless, for every large block sale like this there is a Buyer willing to buy that much stock without going into the open market.

The smart move for the Buyer is to close the big block sale as a private transaction and then go into the open market and start buying more PR to drive up the share price.

My point is that we don't know why NGP is selling or why there is a Big Buyer willing to buy millions of shares. Obviously, someone buying this much PR believes it is going up.