Permian Resource (PR) Valuation Update - May 8

[dan_s]

PR closed today at $12.90.

I have updated my forecast model for PR's strong Q1 results and their updated guidance, including the New Mexico Bolt-on Acquisition from APA Corp. that is expected to close late in June. It will add approximately 12,000 Boepd of production (~45% oil) and over 100 high-quality development drilling locations. PR is an "Aggressive Growth" company with a strong management team.

My current valuation is $22.00 per share. My valuation is based on 4.75 X annualized operating cash flow per share. I consider that a conservative valuation multiple for a company of this size with significant Running Room in the Delaware Basin, a sub-basin of the Permian Basin which has some of the best well level economic in North America.

TipRanks: "In the last 3 months, 18 ranked analysts set 12-month price targets for PR. The average price target among the analysts is $17.56." < The only analyst that has updated his price target for Q1 results and the APA Acquisition is Gabriel Daoud from TD Cowen who reiterated a Buy rating on Permian Resources (PR), with a price target of $19.00.

PR is a bit more complex than most upstream companies, so I expect a lot more analysts to update their price targets next week.

My updated forecast/valuation model will be posted to the EPG website tomorrow morning.