Permian Resources (PR) Valuation Update - May 10
Posted: Wed May 10, 2023 10:31 am
I have updated my forecast/valuation model for PR. It will be posted to the EPG website later today.
PR was trading at $9.56 at the time this was posted.
My valuation increases by $0.75 to $16.25/share.
Three energy sector analysts submitted updated price targets to TipRanks late yesterday:
> Gabriele Sorbara at Siebert Williams Shank & Co rates PR a BUY with a price target of $17.00
> Mark Lear at Piper Sandler rates PR a BUY with a price target of $16.00
> Gabriel Daoud TD Cowen rates PR a BUY with a price target of $15.00
PR's first quarter production (153,822 Boepd) was a bit lower than my forecast, but the Company confirmed their full-year production guidance mid-point of 161,500 Boepd. I do expect their production growth to accelerate in 2H 2023, thanks in part to the strategic leasehold trade they announced yesterday. Keep in mind that winter weather does have an impact on oil & gas production in West Texas.
They are also buying back stock faster than I expected, which could generate better per share results this year and in 2024 than my model.
PR is on-track to generate ~$2 billion of operating cash flow this year and over $500 million of free cash flow.
PR is a recent addition to the Sweet 16. It was created by the merger of Colgate Energy Partners III (a private company) into Centennial Resources Development (CDEV) that closed 9-1-2022. It has a very strong balance sheet and a lot of high-quality "running room" in the Delaware Basin. Each quarter of strong results will increase the confidence that I have in my forecast model.
I highly recommend that each of you take the time to review the new slide deck that was posted to https://permianres.com/investor-relations/news-events/ yesterday. This is a mid-cap that has a lot of upside for us.
PR was trading at $9.56 at the time this was posted.
My valuation increases by $0.75 to $16.25/share.
Three energy sector analysts submitted updated price targets to TipRanks late yesterday:
> Gabriele Sorbara at Siebert Williams Shank & Co rates PR a BUY with a price target of $17.00
> Mark Lear at Piper Sandler rates PR a BUY with a price target of $16.00
> Gabriel Daoud TD Cowen rates PR a BUY with a price target of $15.00
PR's first quarter production (153,822 Boepd) was a bit lower than my forecast, but the Company confirmed their full-year production guidance mid-point of 161,500 Boepd. I do expect their production growth to accelerate in 2H 2023, thanks in part to the strategic leasehold trade they announced yesterday. Keep in mind that winter weather does have an impact on oil & gas production in West Texas.
They are also buying back stock faster than I expected, which could generate better per share results this year and in 2024 than my model.
PR is on-track to generate ~$2 billion of operating cash flow this year and over $500 million of free cash flow.
PR is a recent addition to the Sweet 16. It was created by the merger of Colgate Energy Partners III (a private company) into Centennial Resources Development (CDEV) that closed 9-1-2022. It has a very strong balance sheet and a lot of high-quality "running room" in the Delaware Basin. Each quarter of strong results will increase the confidence that I have in my forecast model.
I highly recommend that each of you take the time to review the new slide deck that was posted to https://permianres.com/investor-relations/news-events/ yesterday. This is a mid-cap that has a lot of upside for us.