Permian Basin (PR) Valuation Update - Jan 22

[dan_s]

This morning Permian Resources' price target was raised by $1 at Morgan Stanley to $20/share.

TipRanks: "In the last 3 months, 14 ranked analysts set 12-month price targets for PR. The average price target among the analysts is $18.86." The 14 price targets range from $14 to $23 < Neal Dingmann at Truist Financial on 1-13-2025.

I have updated my forecast/valuation model for PR and it will be posted to the EPG website later this afternoon. I have raised the oil & gas prices for 2025 to $77.50/bbl for WTI and $3.70/MMBtu for HH NGas and I have adjusted some line item expenses to agree with PR's guidance.

At the time of this post, PR was trading at $15.70 per share. My valuation increases by $0.50 to $24.50 per share.

PR is an Aggressive Growth company. I started following Centennial Resource Development, Inc. in 2018. It merged with a private company and changed its name to Permian Resources Corporation in September 2022. Since 2022 its production has grown as follows:
103.5% YOY in 2023, primarily the result of the merger of Earthstone Energy into PR that closed 11-1-2023
75.8% YOY in 2024 to an exit rate of ~360,000 Boepd in December, 2024. Production mix is approximately 47% crude oil, 28% natural gas & 25% NGLs.

Their drilling program should generate 7% to 10% production growth this year and it is a good bet that they will make more bolt-on acquisitions.

PR pays a decent dividend of $0.15/quarter (~3.8% yield), which I expect them to increase this year.

Timing is good on this one since they should report a significant increase in production from Q3 to Q4.