Permian Resources (PR) Update - Feb 13

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Permian Resources (PR) Update - Feb 13

Post by dan_s »

I spent several hours updating my forecast/valuation model for PR today. They are going to announce Q4 2022 results and updated guidance for 2023 on February 22. If their results and guidance match my forecast model, this company is going to draw a lot of attention from the Wall Street Gang because of their large leasehold position in the core of the Delaware Basin.

Permian Resources (PR) was created by the merger of Centennial Resource Development (CDEV) & Colgate Energy Partners III that closed on 9-1-2022. The first full quarter since the merger will be Q4 2022. They have previously announced that Q4 production will be ~145,000 Boepd. My 2023 forecast is based on the assumption that production will average 157,000 Boepd, ramping up to a 2023 exit rate of more than 170,000 Boepd.

This is KEY: Most of the Wall Street Gang is very conservative in their valuations of newly formed companies like this until they get to see the first full quarter of post-acquisition results. They also will get to see the Company's 3rd party reserve report next week. That's why I am bringing it to your attention before they announce Q4 results.

PR is a pure play on the Permian Basin and most of their "running room" is in the core of the Delaware Basis (a sub-basin of the Permian Basin) which extends into SE New Mexico. Horizontal well results in Lea and Eddy counties in New Mexico have been FANTASTIC.

PR's production mix is approximately 52% crude oil, 19% high value NGLs and 29% natural gas. 75% of revenues are from the sale of liquids.

PR's realized prices in 2022 (net of differentials and cash settlements on hedges) were approximately $83/bbl for crude oil, $40/bbl for NGLs and $4.50/mcf for natural gas. My 2023 forecast is based on realized prices of $82.50/bbl of crude oil, $31.75/bbl for NGLs and $3.00/mcf for natural gas. < They have some "Good Hedges" that reduce commodity price risk in 2023.

At the time of this post, PR was trading at $10.51.

After the work I did today, my valuation increases by $1.50 to $14.00 per share.

TipRanks: "In the last 3 months, 6 ranked analysts set 12-month price targets for PR. The average price target among the analysts is $13.33. The 6 price targets range from $12.00 to $15.00."

My updated forecast model for PR will be posted to the EPG website later today.
Dan Steffens
Energy Prospectus Group
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