Permian Resources Corporation (“Permian Resources” or the
“Company”) (NYSE: PR) today announced its fourth quarter and full
year 2023 financial and operational results and 2024 operational
plans.
Permian Resources’ full year and fourth quarter 2023 information
discussed within this release includes results from Earthstone
Energy, Inc. (“Earthstone”) for the months of November and
December, unless otherwise specified.
Fourth Quarter 2023 Financial and Operational
Highlights
- Closed $4.5 billion Earthstone acquisition on November 1,
enhancing Permian Resources’ position as the second largest Permian
pure-play E&P with a >$15 billion enterprise value
- Earthstone synergy capture ahead of schedule
- Continued strong well performance combined with closing of the
Earthstone acquisition drove crude oil and total average production
to 137 MBbls/d and 285 MBoe/d
- Decreased controllable cash costs by 8% quarter-over-quarter to
$7.33 per Boe, driven primarily by lower LOE and continued focus on
cost control
- Announced accrued capital expenditures of $423 million and cash
capital expenditures of $458 million
- Reported net cash provided by operating activities of $846
million and adjusted free cash flow of $332 million (cash capital
expenditures), or $0.47 per adjusted basic share
- Delivered total return of capital of $183 million, or $0.24 per
share:
- Quarterly base dividend of $0.05 per share
- Variable dividend of $0.10 per share
- Repurchased 5.0 million shares for $67 million at an average
weighted price of $13.32 per share
- Since November 1, added ~14,000 net acres and ~5,300 net
royalty acres located in the core of the Delaware Basin
Full Year 2023 Financial and Operational Highlights
- Met or outperformed all of PR standalone’s guidance,
significantly exceeding production targets while remaining within
original budget on capex and controllable cash costs
- Generated peer-leading total production growth per
debt-adjusted share of ~35%
- Delivered ~$324 million, or $0.47 per share, in dividends to
shareholders
- Repurchased 10.0 million shares for ~$125 million at an average
weighted price of $12.46 per share
- Replaced >100% of PR standalone’s developed locations in
2023 through successful portfolio optimization transactions,
effectively increasing inventory life
2024 Financial and Operating Plan
- Announced highly capital efficient operating plan underpinned
by consistent well performance, lower well costs and continued cost
discipline
- Crude oil and total average production guidance of 145 to 150
MBbls/d and 300 to 325 MBoe/d
- Total cash capital expenditure budget of $1.9 to $2.1
billion
- Total controllable cash costs of $7.40 to $8.60 per Boe
- Increasing quarterly base dividend by 20% to $0.06 per share,
as previously announced
Management Commentary
“In our first full year, Permian Resources had an outstanding
2023, accomplishing all our goals laid out last February. On a
standalone basis, the Company delivered oil production at the
high-end of our 2023 guidance range, while staying within our capex
budget,” said Will Hickey, Co-CEO of Permian Resources. “During the
fourth quarter, Permian Resources reported another strong quarter
of production outperformance and operational improvements in the
midst of closing the Earthstone acquisition. The combined team is
exceeding expectations associated with the Earthstone integration
and is on-track to reach key operational synergy run rates well
ahead of the originally scheduled targets.”
“We are excited to announce our 2024 operational and financial
plan, which combines consistent year-over-year well productivity
with lower costs and other optimized key inputs to deliver even
better capital efficiency than we realized in 2023,” said James
Walter, Co-CEO of Permian Resources. “Most importantly, our 2024
plan allows us to maximize shareholder value by delivering industry
leading per share annual growth across production, cash flow and
free cash flow.”
Financial and Operational Results
Permian Resources continued the efficient development of its
core Delaware Basin acreage position in the fourth quarter,
delivering robust well results while successfully integrating the
Earthstone acquisition. During the quarter, average daily crude oil
production was 136,590 barrels of oil per day (“Bbls/d”), a 52%
increase compared to the prior quarter. Fourth quarter total
production averaged 285,161 barrels of oil equivalent per day
(“Boe/d”).
“In addition to the contribution from incoming Earthstone
production, our strong fourth quarter production results were
driven by better than expected well performance and minimal
production downtime despite winter weather,” said Will Hickey,
Co-CEO. “For the full year 2023, our operations team delivered
consistent well productivity year-over-year, demonstrating the
quality of our high-return, long-dated inventory.”
In the fourth quarter, the Company continued to realize drilling
and completions efficiencies while incorporating legacy Earthstone
rigs and fleets into its program. Total cash and accrued capital
expenditures (“capex”) for the fourth quarter were $458 million and
$423 million, respectively.
Realized prices for the fourth quarter were $76.61 per barrel of
oil, $1.50 per Mcf of natural gas and $21.57 per barrel of natural
gas liquids (“NGLs”), excluding the effects of hedges and GP&T
costs.
The Company demonstrated strong cost control in the fourth
quarter, with total controllable cash costs (LOE, GP&T and cash
G&A) decreasing 8% quarter-over-quarter to $7.33 per Boe.
Fourth quarter LOE was $4.97 per Boe, GP&T was $1.19 per Boe
and cash G&A was $1.17 per Boe, representing 8%, 9% and 2%
decreases compared to the prior quarter, respectively.
For the fourth quarter, Permian Resources generated net cash
provided by operating activities of $846 million and adjusted free
cash flow1 of $332 million (or $367 million, utilizing accrued
capex), or $0.47 per adjusted basic share.
Permian Resources continues to maintain a strong financial
position and low leverage profile upon closing the Earthstone
acquisition. At December 31, 2023, the Company had $73 million in
cash on hand and no amounts drawn under its revolving credit
facility. Net debt-to-LQA EBITDAX1 at December 31, 2023 was
approximately 1x.
Earthstone Integration Update
On November 1, 2023, Permian Resources closed the $4.5 billion
Earthstone acquisition that was announced on August 21, 2023. The
acquisition enhances Permian Resources’ position as a leading
Delaware Basin independent and creates value for the combined
shareholder base through significant accretion to all relevant
metrics and accelerated return of capital.
Integration of Earthstone has been underway since closing, and
both integration and synergy capture are ahead of schedule.
Operationally, Permian Resources’ team has been making extensive
progress in the field, achieving a 50% reduction in downtime on
legacy Earthstone’s Midland Basin asset since close. Permian
Resources was able to improve drilling and completion efficiencies
during the fourth quarter by approximately 35% and 20%,
respectively, compared to legacy Earthstone’s first half 2023
results. As a result of higher efficiencies and the benefits of
increased scale, Permian Resources has already achieved a 12%
reduction in drilling and completions (“D&C”) as compared to
Earthstone’s historical well costs. Additionally, G&A synergies
are on-track, with key contributors from both companies fully
integrated into the organization. Permian Resources remains
confident in its ability to deliver the originally announced $175
million in annual synergies and is now expecting to realize
announced synergies ahead of schedule.
2024 Operational Plans and Targets
With a focus on capital returns, Permian Resources’ 2024
operational budget delivers a highly capital efficient plan that
maximizes free cash flow and value for its investors. Assuming
planned activity levels and current commodity prices, the Company
expects its full year oil and total production to average
approximately 145 to 150 MBbls/d and 300 to 325 MBoe/d,
respectively. During 2024, Permian Resources expects its well
productivity to remain strong year-over-year as a result of its
deep inventory of primary Delaware Basin zones and methodical
development philosophy.
The estimated fiscal year 2024 cash capex budget is
approximately $1.9 billion to $2.1 billion, with approximately 75%
allocated to drilling and completions with the remaining 25%
allocated to facilities, infrastructure, capital workover and
non-operated capex. Permian Resources expects to turn-in-line
(“TIL”) approximately 250 gross wells, with an average working
interest of approximately 75% and 8/8ths net revenue interest of
approximately 79%. The Company also expects its average completed
lateral length during 2024 to be approximately 9,300 feet.
Importantly, the Company’s capital budget is underpinned by an
approximately 10% reduction in D&C costs per foot expected when
compared to 2023.
Given the recent Earthstone acquisition, the Company expects an
increasing portion of its capital budget to be allocated to high
returning inventory in New Mexico. During 2024, Permian Resources
anticipates that approximately 70% of its operating activity will
be directed towards the Northern Delaware Basin and approximately
25% towards the Southern Delaware Basin, with the remaining portion
to be allocated to its Midland Basin position.
Through its continued focus on being a low-cost leader, Permian
Resources anticipates total controllable cash costs of
approximately $7.40 to $8.60 per Boe, consisting of $5.50 to $6.00
per Boe for LOE, $1.00 to $1.50 per Boe for GP&T and $0.90 to
$1.10 per Boe for cash G&A. Notably, the mid-point represents
an 11% reduction in total controllable cash costs compared to
Permian Resources and Earthstone’s combined third quarter 2023
costs, demonstrating the Company’s ability to execute on its
synergy targets.
(For a detailed table summarizing Permian Resources’ 2024
operational and financial guidance, please see the Appendix of this
press release.)
Shareholder Returns
Permian Resources announced today that its Board of Directors
(the “Board”) declared a quarterly base cash dividend of $0.05 per
share of Class A common stock, or $0.20 per share on an annualized
basis. Additionally, based upon fourth quarter financial results,
the Board has declared a quarterly variable cash dividend of $0.10
per share of Class A common stock. Combined, the base and variable
dividends represent a total cash return of $0.15 per share. The
base and variable dividends are payable on March 21, 2024 to
shareholders of record as of March 13, 2024. Permian Resources
returned additional capital to shareholders in the fourth quarter
by repurchasing 5.0 million shares of common stock for $67.0
million at an average weighted price of $13.32 per share.
The Company’s fourth quarter total return of capital, inclusive
of the base dividend, variable dividend and share repurchases, was
$0.24 per share, a 41% increase from the prior quarter.
“Consistent with our game plan, we continue to return 50% of our
quarterly free cash flow after the base dividend to shareholders
through dividends and share repurchases,” said James Walter,
Co-CEO. “During 2023, Permian Resources delivered approximately
$324 million, or $0.47 per share, in dividends to shareholders.
Additionally, we repurchased 10.0 million shares for approximately
$125 million during the year at an average weighted price of $12.46
per share, driving incremental value for our shareholders.”
Year-End 2023 Proved Reserves
Permian Resources reported year-end 2023 total proved reserves
of 925 MMBoe compared to 582 MMBoe at prior year-end. Proved
developed reserves were 704 MMBoe (76% of total proved reserves) at
December 31, 2023. Proved and proved developed reserves growth per
share2 increased 15% and 49%, respectively, at year-end 2023
compared to the previous year-end.
Netherland Sewell & Associates, Inc., an independent reserve
engineering firm, prepared Permian Resources’ year-end reserves
estimates for the year ended December 31, 2023. (For additional
information relating to our reserves, please see the Appendix of
this press release.)
Annual Report on Form 10-K
Permian Resources’ financial statements and related footnotes
will be available in its Annual Report on Form 10-K for the year
ended December 31, 2023, which is expected to be filed with the
Securities and Exchange Commission (“SEC”) on February 29,
2024.
Conference Call and Webcast
Permian Resources will host an investor conference call on
Wednesday, February 28, 2024 at 8:00 a.m. Central (9:00 a.m.
Eastern) to discuss fourth quarter and full year 2023 operating and
financial results. Interested parties may join the call by visiting
Permian Resources’ website at www.permianres.com and clicking on
the webcast link or by dialing (888) 259-6580 (Conference ID:
41855841) at least 15 minutes prior to the start of the call. A
replay of the call will be available on the Company’s website or by
phone at (877) 674-7070 (Passcode: 855841) for a 14-day period
following the call.
About Permian Resources
Headquartered in Midland, Texas, Permian Resources is an
independent oil and natural gas company focused on the responsible
acquisition, optimization and development of high-return oil and
natural gas properties. The Company’s assets and operations are
concentrated in the core of the Delaware Basin, making it the
second largest Permian Basin pure-play E&P. For more
information, please visit www.permianres.com.
Cautionary Note Regarding Forward-Looking Statements
The information in this press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical fact included in this press release, regarding our
strategy, future operations, financial position, estimated revenues
and losses, projected costs, prospects, plans and objectives of
management are forward-looking statements. When used in this press
release, the words “could,” “may,” “believe,” “anticipate,”
“intend,” “estimate,” “expect,” “project,” “goal,” “plan,” “target”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These forward-looking statements are based
on management’s current expectations and assumptions about future
events and are based on currently available information as to the
outcome and timing of future events.
Forward-looking statements may include statements about:
- volatility of oil, natural gas and NGL prices or a prolonged
period of low oil, natural gas or NGL prices and the effects of
actions by, or disputes among or between, members of the
Organization of Petroleum Exporting Countries (“OPEC”), such as
Saudi Arabia, and other oil and natural gas producing countries,
such as Russia, with respect to production levels or other matters
related to the price of oil;
- political and economic conditions in or affecting other
producing regions or countries, including the Middle East, Russia,
Eastern Europe, Africa and South America;
- our business strategy and future drilling plans;
- our reserves and our ability to replace the reserves we produce
through drilling and property acquisitions;
- our ability to realize the anticipated benefits and synergies
from the Earthstone merger and effectively integrate Earthstone’s
assets;
- our drilling prospects, inventories, projects and
programs;
- our financial strategy, return of capital program, liquidity
and capital required for our development program;
- our realized oil, natural gas and NGL prices;
- the timing and amount of our future production of oil, natural
gas and NGLs;
- our ability to identify, complete and effectively integrate
acquisitions of properties or businesses;
- our hedging strategy and results;
- our competition and government regulations;
- our ability to obtain permits and governmental approvals;
- our pending legal or environmental matters;
- the marketing and transportation of our oil, natural gas and
NGLs;
- our leasehold or business acquisitions;
- costs of developing or operating our properties;
- our anticipated rate of return;
- general economic conditions;
- weather conditions in the areas where we operate;
- credit markets;
- our ability to make dividends, distributions and share
repurchases;
- uncertainty regarding our future operating results;
- our plans, objectives, expectations and intentions contained in
this press release that are not historical; and
- the other factors described in our most recent Annual Report on
Form 10-K, and any updates to those factors set forth in our
subsequent Quarterly Reports on Form 10-Q or Current Reports on
Form 8-K.
We caution you that these forward-looking statements are subject
to all of the risks and uncertainties, most of which are difficult
to predict and many of which are beyond our control, incident to
the development, production, gathering and sale of oil and natural
gas. These risks include, but are not limited to, commodity price
volatility, inflation, lack of availability of drilling and
production equipment and services, risks relating to the Earthstone
merger, environmental risks, drilling and other operating risks,
regulatory changes, the uncertainty inherent in estimating reserves
and in projecting future rates of production, cash flow and access
to capital, the timing of development expenditures and the other
risks described in our filings with the SEC.
Reserve engineering is a process of estimating underground
accumulations of oil and natural gas that cannot be measured in an
exact way. The accuracy of any oil and gas reserve estimate depends
on the quality of available data, the interpretation of such data,
and price and cost assumptions made by reserve engineers. In
addition, the results of drilling, testing and production
activities may justify revisions of estimates that were made
previously. If significant, such revisions would change the
schedule of any further production and development drilling.
Accordingly, reserve estimates may differ significantly from the
quantities of oil and natural gas that are ultimately
recovered.
Should one or more of the risks or uncertainties described in
this press release occur, or should underlying assumptions prove
incorrect, our actual results and plans could differ materially
from those expressed in any forward-looking statements. All
forward-looking statements, expressed or implied, included in this
press release are expressly qualified in their entirety by this
cautionary statement. This cautionary statement should also be
considered in connection with any subsequent written or oral
forward-looking statements that we or persons acting on our behalf
may issue.
Except as otherwise required by applicable law, we disclaim any
duty to update any forward-looking statements, all of which are
expressly qualified by the statements in this section, to reflect
events or circumstances after the date of this press release.
1) Adjusted Net Income, Adjusted Free Cash Flow, Adjusted Free
Cash Flow per Adjusted Basic Share and Net Debt-to-LQA EBITDAX are
non-GAAP financial measures. See “Non-GAAP Financial Measures”
included within the Appendix of this press release for related
disclosures and reconciliations to the most directly comparable
financial measures calculated and presented in accordance with
GAAP.
2) Reserves per share calculated utilizing Basic shares
outstanding of Class A Common Stock and Class C Common Stock at
period year-end.
Details of our 2024 operational and
financial guidance are presented below:
2024 FY Guidance
Net average daily production
(Boe/d)
300,000
—
325,000
Net average daily oil production
(Bbls/d)
145,000
—
150,000
Production costs
Lease operating expenses ($/Boe)
$5.50
—
$6.00
Gathering, processing and transportation
expenses ($/Boe)
$1.00
—
$1.50
Cash general and administrative
($/Boe)(1)
$0.90
—
$1.10
Severance and ad valorem taxes (% of
revenue)
6.5%
—
8.5%
Total cash capital expenditure program
($MM)
$1,900
—
$2,100
Operated drilling program
TILs (gross)
~250
Average working interest
~75%
Average lateral length (feet)
~9,300
(1)
Excludes stock-based
compensation.
Permian Resources Corporation
Operating Highlights
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net revenues (in thousands):
Oil sales
$
962,720
$
612,490
$
2,696,777
$
1,622,035
Natural gas sales(1)
47,954
76,454
142,077
276,957
NGL sales(2)
112,012
72,612
282,039
232,273
Oil and gas sales
$
1,122,686
$
761,556
$
3,120,893
$
2,131,265
Average sales prices:
Oil (per Bbl)
$
76.61
$
81.81
$
75.84
$
88.95
Effect of derivative settlements on
average price (per Bbl)
0.53
2.41
1.81
(4.85
)
Oil including the effects of hedging (per
Bbl)
$
77.14
$
84.22
$
77.65
$
84.10
Average NYMEX WTI price for oil (per
Bbl)
$
78.32
$
82.64
$
77.62
$
94.24
Oil differential from NYMEX
(1.71
)
(0.84
)
(1.78
)
(5.29
)
Natural gas price excluding the effects of
GP&T (per Mcf)(1)
$
1.50
$
3.64
$
1.60
$
4.86
Effect of derivative settlements on
average price (per Mcf)
0.09
0.43
0.29
(0.53
)
Natural gas including the effects of
hedging (per Mcf)
$
1.59
$
4.07
$
1.89
$
4.33
Average NYMEX Henry Hub price for natural
gas (per MMBtu)
$
2.74
$
5.55
$
2.53
$
6.38
Natural gas differential from NYMEX
(1.24
)
(1.91
)
(0.93
)
(1.52
)
NGL price excluding the effects of
GP&T (per Bbl)(2)
$
21.57
$
28.03
$
22.83
$
35.97
Net production:
Oil (MBbls)
12,566
7,487
35,560
18,235
Natural gas (MMcf)
44,048
24,610
119,182
59,692
NGL (MBbls)
6,328
2,966
15,569
6,750
Total (MBoe)(3)
26,234
14,556
70,992
34,934
Average daily net production:
Oil (Bbls/d)
136,590
81,378
97,424
49,958
Natural gas (Mcf/d)
478,781
267,503
326,525
163,539
NGL (Bbls/d)
68,774
32,246
42,654
18,494
Total (Boe/d)(3)
285,161
158,208
194,499
95,708
____________________________________
(1)
Natural gas sales for the three months and
year ended December 31, 2023 include $18.2 million and $48.9
million, respectively, of gathering, processing and transportation
costs (“GP&T”) that are reflected as a reduction to natural gas
sales and $13.1 million for the three months and year ended
December 31, 2022. Natural gas average sales price, however,
excludes $0.41 per Mcf of such GP&T charges for the three
months and year ended December 31, 2023 and $0.53 and $0.22 per Mcf
for the three months and year ended December 31, 2022.
(2)
NGL sales for the three months and year
ended December 31, 2023 include $24.4 million and $73.3 million,
respectively of GP&T that are reflected as a reduction to NGL
sales and $10.6 million for the three months and year ended
December 31, 2022. NGL average sales price, however, excludes $3.87
and $4.71 per Bbl of such GP&T charges for the three months and
year ended December 31, 2023 and $3.56 and $1.56 per Bbl for the
three months and year ended December 31, 2022.
(3)
Calculated by converting natural gas to
oil equivalent barrels at a ratio of six Mcf of natural gas to one
Boe.
Permian Resources Corporation
Operating Expenses
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Operating costs (in thousands):
Lease operating expenses
$
130,439
$
73,289
$
373,772
$
171,867
Severance and ad valorem taxes
84,384
54,233
240,762
155,724
Gathering, processing, and transportation
expense
31,316
20,246
89,282
97,915
Operating cost metrics:
Lease operating expenses (per Boe)
$
4.97
$
5.04
$
5.26
$
4.92
Severance and ad valorem taxes (% of
revenue)
7.5
%
7.1
%
7.7
%
7.3
%
Gathering, processing, and transportation
expense (per Boe)
1.19
1.39
1.26
2.80
Permian Resources Corporation
Consolidated Statements of Operations (in thousands, except per
share data)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Operating revenues
Oil and gas sales
$
1,122,686
$
761,556
$
3,120,893
$
2,131,265
Operating expenses
Lease operating expenses
130,439
73,289
373,772
171,867
Severance and ad valorem taxes
84,384
54,233
240,762
155,724
Gathering, processing and transportation
expenses
31,316
20,246
89,282
97,915
Depreciation, depletion and
amortization
367,427
182,052
1,007,576
444,678
General and administrative expenses
39,126
75,617
161,855
159,554
Merger and integration expense
97,260
12,469
125,331
77,424
Impairment and abandonment expense
5,947
244
6,681
3,875
Exploration and other expenses
4,669
4,765
19,337
11,378
Total operating expenses
760,568
422,915
2,024,596
1,122,415
Net gain (loss) on sale of long-lived
assets
82
13
211
(1,314
)
Income from operations
362,200
338,654
1,096,508
1,007,536
Other income (expense)
Interest expense
(63,024
)
(39,358
)
(177,209
)
(95,645
)
Net gain (loss) on derivative
instruments
190,684
(60,019
)
114,016
(42,368
)
Other income (expense)
1,648
291
2,333
609
Total other income (expense)
129,308
(99,086
)
(60,860
)
(137,404
)
Income before income taxes
491,508
239,568
1,035,648
870,132
Income tax expense
(78,889
)
(40,860
)
(155,945
)
(120,292
)
Net income
412,619
198,708
879,703
749,840
Less: Net income attributable to
noncontrolling interest
(157,265
)
(115,658
)
(403,397
)
(234,803
)
Net income attributable to Class A Common
Stock
$
255,354
$
83,050
$
476,306
$
515,037
Income per share of Class A Common
Stock:
Basic
$
0.56
$
0.29
$
1.36
$
1.80
Diluted
$
0.51
$
0.26
$
1.24
$
1.61
Weighted average Class A Common Stock
outstanding:
Basic
459,593
288,512
349,213
286,160
Diluted
500,919
329,454
389,096
322,816
Permian Resources Corporation
Consolidated Balance Sheets (in thousands, except share and per
share amounts)
December 31, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
73,290
$
59,545
Accounts receivable, net
481,060
282,846
Derivative instruments
70,591
100,797
Prepaid and other current assets
25,451
20,602
Total current assets
650,392
463,790
Property and equipment
Oil and natural gas properties, successful
efforts method
Unproved properties
2,401,317
1,424,744
Proved properties
15,036,687
8,869,174
Accumulated depreciation, depletion and
amortization
(3,401,895
)
(2,419,692
)
Total oil and natural gas properties,
net
14,036,109
7,874,226
Other property and equipment, net
43,647
15,173
Total property and equipment, net
14,079,756
7,889,399
Noncurrent assets
Operating lease right-of-use assets
59,359
64,792
Other noncurrent assets
176,071
74,611
TOTAL ASSETS
$
14,965,578
$
8,492,592
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses
$
1,167,525
$
562,156
Operating lease liabilities
33,006
29,759
Other current liabilities
41,022
13,654
Total current liabilities
1,241,553
605,569
Noncurrent liabilities
Long-term debt, net
3,848,781
2,140,798
Asset retirement obligations
121,417
40,947
Deferred income taxes
422,627
4,430
Operating lease liabilities
28,302
41,341
Other noncurrent liabilities
73,150
3,211
Total liabilities
5,735,830
2,836,296
Shareholders’ equity
Common stock, $0.0001 par value,
1,500,000,000 shares authorized:
Class A: 544,610,984 shares issued and
540,789,758 shares outstanding at December 31, 2023 and 298,640,260
shares issued and 288,532,257 shares outstanding at December 31,
2022
54
30
Class C: 230,962,833 shares issued and
outstanding at December 31, 2023 and 269,300,000 shares issued and
outstanding at December 31, 2022
23
27
Additional paid-in capital
5,766,881
2,698,465
Retained earnings (accumulated
deficit)
569,139
237,226
Total shareholders’ equity
6,336,097
2,935,748
Noncontrolling interest
2,893,651
2,720,548
Total equity
9,229,748
5,656,296
TOTAL LIABILITIES AND EQUITY
$
14,965,578
$
8,492,592
Permian Resources Corporation
Consolidated Statements of Cash Flows (in thousands)
Year Ended December
31,
2023
2022
Cash flows from operating
activities:
Net income
$
879,703
$
749,840
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
1,007,576
444,678
Stock-based compensation expense - equity
awards
78,418
116,480
Stock-based compensation expense -
liability awards
—
(24,174
)
Impairment and abandonment expense
6,681
3,875
Deferred tax expense (benefit)
152,383
119,679
Net (gain) loss on sale of long-lived
assets
(211
)
1,314
Non-cash portion of derivative (gain)
loss
(14,606
)
(77,737
)
Amortization of debt issuance costs, debt
discount and debt premium
11,326
15,362
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable
36,336
(66,824
)
(Increase) decrease in prepaid and other
assets
(27,267
)
(1,751
)
Increase (decrease) in accounts payable
and other liabilities
83,160
90,929
Net cash provided by operating
activities
2,213,499
1,371,671
Cash flows from investing
activities:
Acquisition of oil and natural gas
properties, net
(234,288
)
(8,858
)
Drilling and development capital
expenditures
(1,524,899
)
(771,577
)
Cash (paid) received for businesses
acquired in mergers, net of cash received
39,832
(496,671
)
Purchases of other property and
equipment
(34,483
)
(3,563
)
Contingent considerations received related
to divestiture
60,000
—
Proceeds from sales of oil and natural gas
properties
115,459
75,620
Net cash used in investing activities
(1,578,379
)
(1,205,049
)
Cash flows from financing
activities:
Proceeds from borrowings under revolving
credit facility
1,950,000
1,115,000
Repayment of borrowings under revolving
credit facility
(2,335,000
)
(755,000
)
Repayment of credit facility acquired in
mergers
(830,000
)
(400,000
)
Proceeds from issuance of senior notes
997,500
—
Debt issuance costs
(15,169
)
(19,833
)
Proceeds from exercise of stock
options
534
109
Share repurchases
(162,420
)
(19,010
)
Dividends paid
(141,947
)
(14,426
)
Distributions paid to noncontrolling
interest owners
(94,686
)
(13,465
)
Net cash (used in) provided by financing
activities
(631,188
)
(106,625
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
3,932
59,997
Cash, cash equivalents and restricted
cash, beginning of period
69,932
9,935
Cash, cash equivalents and restricted
cash, end of period
$
73,864
$
69,932
Reconciliation of cash, cash equivalents
and restricted cash presented on the consolidated statements of
cash flows for the periods presented:
Year Ended December
31,
2023
2022
Cash and cash equivalents
$
73,290
$
59,545
Restricted cash
$
574
$
10,387
Total cash, cash equivalents and
restricted cash
$
73,864
$
69,932
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in
accordance with U.S. generally accepted accounting principles
(“GAAP”), our earnings release contains non-GAAP financial measures
as described below.
Adjusted EBITDAX
Adjusted EBITDAX is a supplemental non-GAAP financial measure
that is used by management and external users of our consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies. We define Adjusted EBITDAX as net income
attributable to Class A Common Stock before net income attributable
to noncontrolling interest, interest expense, income taxes,
depreciation, depletion and amortization, impairment and
abandonment expense, non-cash gains or losses on derivatives,
stock-based compensation (not cash-settled), exploration and other
expenses, merger and integration expense, gain/loss from the sale
of long-lived assets and non-recurring items. Adjusted EBITDAX is
not a measure of net income as determined by GAAP.
Our management believes Adjusted EBITDAX is useful as it allows
them to more effectively evaluate our operating performance and
compare the results of our operations from period to period and
against our peers, without regard to our financing methods or
capital structure. We exclude the items listed above from net
income in arriving at Adjusted EBITDAX because these amounts can
vary substantially from company to company within our industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. Adjusted EBITDAX should not be considered as an
alternative to, or more meaningful than, net income as determined
in accordance with GAAP or as an indicator of our operating
performance or liquidity. Certain items excluded from Adjusted
EBITDAX are significant components in understanding and assessing a
company’s financial performance, such as a company’s cost of
capital and tax structure, as well as the historic costs of
depreciable assets, none of which are components of Adjusted
EBITDAX. Our presentation of Adjusted EBITDAX should not be
construed as an inference that our results will be unaffected by
unusual or nonrecurring items. Our computations of Adjusted EBITDAX
may not be comparable to other similarly titled measures of other
companies.
The following table presents a reconciliation of Adjusted
EBITDAX to net income, which is the most directly comparable
financial measure calculated and presented in accordance with
GAAP:
Three Months Ended
(in thousands)
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Adjusted EBITDAX reconciliation to net
income:
Net income attributable to Class A Common
Stock
$
255,354
$
45,433
$
73,399
$
102,120
$
83,050
Net income attributable to noncontrolling
interest
157,265
52,896
75,555
117,681
115,658
Interest expense
63,024
40,582
36,826
36,777
39,358
Income tax expense
78,889
16,254
26,548
34,254
40,860
Depreciation, depletion and
amortization
367,427
236,204
215,726
188,219
182,052
Impairment and abandonment expense
5,947
245
244
245
244
Non-cash derivative (gain) loss
(180,179
)
161,672
18,678
(14,777
)
88,635
Stock-based compensation expense(1)
8,495
15,633
35,042
16,707
54,342
Exploration and other expenses
4,669
5,031
5,263
4,374
4,765
Merger and integration expense
97,260
10,422
4,350
13,299
12,469
(Gain) loss on sale of long-lived
assets
(82
)
(63
)
—
(66
)
(13
)
Adjusted EBITDAX
$
858,069
$
584,309
$
491,631
$
498,833
$
621,420
(1)
Includes stock-based compensation expense
for equity awards related to general and administrative employees
only. Stock-based compensation amounts for geographical and
geophysical personnel are included within the Exploration and other
expenses line item.
Net Debt-to-LQA EBITDAX
Net debt-to-LQA EBITDAX is a non-GAAP financial measure. We
define net debt as long-term debt, net, plus unamortized debt
discount and debt issuance costs on our senior notes minus cash and
cash equivalents.
We define net debt-to-LQA EBITDAX as net debt (defined above)
divided by Adjusted EBITDAX (defined and reconciled in the section
above) for the three months ended December 31, 2023, on an
annualized basis. We refer to this metric to show trends that
investors may find useful in understanding our ability to service
our debt. This metric is widely used by professional research
analysts, including credit analysts, in the valuation and
comparison of companies in the oil and gas exploration and
production industry. The following table presents a reconciliation
of net debt to long-term debt, net and the calculation of net
debt-to-LQA EBITDAX for the period presented:
(in thousands)
December 31, 2023
Long-term debt, net
3,848,781
Unamortized debt discount, debt issuance
costs and debt premium on senior notes
17,018
Long-term debt
3,865,799
Less: cash and cash equivalents
(73,290
)
Net debt (Non-GAAP)
3,792,509
LQA EBITDAX(1)
3,432,276
Net debt-to-LQA EBITDAX
1.1
____________________________________
(1)
Represents adjusted EBITDAX (defined and
reconciled in the section above) for the three months ended
December 31, 2023, on an annualized basis.
Adjusted Shares
Adjusted basic and diluted weighted average shares outstanding
(“Adjusted Basic and Diluted Shares”) are non-GAAP financial
measures defined as basic and diluted weighted average shares
outstanding adjusted to reflect the weighted average shares of our
Class C Common Stock outstanding during the period.
Our Adjusted Basic and Diluted Shares provide a comparable per
share measurement when presenting results such as adjusted free
cash flow and adjusted net income that include the interests of
both net income attributable to Class A Common Stock and the net
income attributable to our noncontrolling interest. Adjusted Basic
and Diluted Shares are used in calculating several metrics that we
use as supplemental financial measurements in the evaluation of our
business.
The following table presents a reconciliation of Adjusted Basic
and Diluted Shares to basic and diluted weighted average shares
outstanding, which are the most directly comparable financial
measure calculated and presented in accordance with GAAP:
Three Months Ended December
31,
(in thousands)
2023
2022
Basic weighted average shares of Class A
Common Stock outstanding
459,593
288,512
Weighted average shares of Class C Common
Stock
244,039
269,300
Adjusted basic weighted average shares
outstanding
703,632
557,812
Basic weighted average shares of Class A
Common Stock outstanding
459,593
288,512
Add: Dilutive effects of Convertible
Senior Notes
28,090
27,074
Add: Dilutive effects of equity awards and
ESPP shares
13,236
13,868
Diluted weighted average shares of Class A Common Stock outstanding
500,919
329,454
Weighted average shares of Class C Common
Stock
244,039
269,300
Adjusted diluted weighted average
shares outstanding
744,958
598,754
Free Cash Flow and Adjusted Free Cash Flow
Free cash flow and adjusted free cash flow are supplemental
non-GAAP financial measures that are used by management and
external users of our consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies. We
define free cash flow as net cash provided by operating activities
before changes in working capital, less incurred capital
expenditures and adjusted free cash flow as free cash flow before
non-recurring merger and integration expense.
Our management believes free cash flow and adjusted free cash
flow are useful indicators of the Company’s ability to internally
fund its exploration and development activities and to service or
incur additional debt, without regard to the timing of settlement
of either operating assets and liabilities or accounts payable
related to capital expenditures. The Company believes that these
measures, as so adjusted, present meaningful indicators of the
Company’s actual sources and uses of capital associated with its
operations conducted during the applicable period. Our computations
of free cash flow and adjusted free cash flow may not be comparable
to other similarly titled measures of other companies. Free cash
flow and adjusted free cash flow should not be considered as
alternatives to, or more meaningful than, net cash provided by
operating activities as determined in accordance with GAAP or as
indicators of our operating performance or liquidity.
Free cash flow and adjusted free cash flow are not financial
measures that are determined in accordance with GAAP. Accordingly,
the following table presents a reconciliation of free cash flow and
adjusted free cash flow to net cash provided by operating
activities, which is the most directly comparable financial measure
calculated and presented in accordance with GAAP:
Accrued Capital
Expenditures(1)
Cash Capital
Expenditures(2)
Three Months Ended December
31,
Three Months Ended December
31,
(in thousands, except per share
data)
2023
2022
2023
2022
Net cash provided by operating
activities
$
845,994
$
528,295
$
845,994
$
528,295
Changes in working capital:
Accounts receivable
(94,123
)
60,071
(94,123
)
60,071
Prepaid and other assets
(543
)
1,713
(543
)
1,713
Accounts payable and other liabilities
(58,365
)
(21,290
)
(58,365
)
(21,290
)
Operating cash flow before working capital
changes
692,963
568,789
692,963
568,789
Less: total capital expenditures
incurred/paid
(422,917
)
(325,200
)
(458,206
)
(373,685
)
Free cash flow
270,046
243,589
234,757
195,104
Merger and integration expense
97,260
12,469
97,260
12,469
Adjusted free cash flow
$
367,306
$
256,058
$
332,017
$
207,573
Adjusted basic weighted average shares
outstanding
703,632
557,812
703,632
557,812
Adjusted free cash flow per adjusted basic
share
$
0.52
$
0.46
$
0.47
$
0.37
____________________________________
(1)
Utilizes activity-based capital
expenditures incurred during the period.
(2)
Utilizes cash capital expenditures paid
during the period.
Adjusted Net Income
Adjusted net income is not a financial measure that is
determined in accordance with GAAP. Accordingly, the following
table presents a reconciliation of adjusted net income to net
income, which is the most directly comparable financial measure
calculated and presented in accordance with GAAP:
Three Months Ended December
31,
(in thousands, except per share
data)
2023
2022
Net income attributable to Class A Common
Stock
$
255,354
$
83,050
Net income attributable to noncontrolling
interest
157,265
115,658
Non-cash derivative (gain) loss
(180,179
)
88,635
Merger and integration expense
97,260
12,469
Impairment and abandonment expense
5,947
244
(Gain) loss on sale of long-lived
assets
(82
)
(13
)
Adjusted net income excluding above
items
335,565
300,043
Income tax (expense) benefit attributable
to the above items(1)
(18,047
)
(48,823
)
Adjusted Net Income
$
317,518
$
251,220
Adjusted basic weighted average shares
outstanding (Non-GAAP)(2)
703,632
557,812
Adjusted net income per adjusted basic
share
$
0.45
$
0.45
____________________________________
(1)
Income tax (expense) benefit for
adjustments made to adjusted net income is calculated using PR's
federal and state-apportioned statutory tax rate of 22.5%.
(2)
Adjusted basic weighted average shares
outstanding is a Non-GAAP measure that has been computed and
reconciled to the nearest GAAP metric in the preceding table
above.
The following table summarizes the approximate volumes and
average contract prices of the hedge contracts the Company had in
place as of December 31, 2023 and additional contracts entered into
through February 23, 2024:
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Crude
Price
($/Bbl)(1)
Crude oil swaps
January 2024 - March 2024
2,919,100
32,078
$77.10
April 2024 - June 2024
2,975,500
32,698
76.24
July 2024 - September 2024
2,990,000
32,500
75.40
October 2024 - December 2024
2,990,000
32,500
74.61
January 2025 - March 2025
1,575,000
17,500
73.33
April 2025 - June 2025
1,592,500
17,500
72.27
July 2025 - September 2025
1,610,000
17,500
71.25
October 2025 - December 2025
1,610,000
17,500
70.34
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Collar
Price Ranges
($/Bbl)(2)
Crude oil collars
January 2024 - March 2024
182,000
2,000
$60.00
-
$76.01
April 2024 - June 2024
182,000
2,000
60.00
-
76.01
July 2024 - September 2024
184,000
2,000
60.00
-
76.01
October 2024 - December 2024
184,000
2,000
60.00
-
76.01
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd.
Avg. Put
Price
($/Bbl)(3)
Deferred
Premium
($/Bbl)(3)
Deferred premium puts
January 2024 - March 2024
227,500
2,500
65.00
4.96
April 2024 - June 2024
227,500
2,500
65.00
4.96
July 2024 - September 2024
230,000
2,500
65.00
4.96
October 2024 - December 2024
230,000
2,500
65.00
4.96
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg.
Differential
($/Bbl)(4)
Crude oil basis differential swaps
January 2024 - March 2024
3,148,600
34,600
$0.94
April 2024 - June 2024
3,385,018
37,198
0.95
July 2024 - September 2024
3,404,000
37,000
0.95
October 2024 - December 2024
3,404,000
37,000
0.95
January 2025 - March 2025
1,575,000
17,500
1.09
April 2025 - June 2025
1,592,500
17,500
1.09
July 2025 - September 2025
1,610,000
17,500
1.09
October 2025 - December 2025
1,610,000
17,500
1.09
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg.
Differential
($/Bbl)(5)
Crude oil roll differential swaps
January 2024 - March 2024
3,148,600
34,600
$0.45
April 2024 - June 2024
3,385,018
37,198
0.45
July 2024 - September 2024
3,404,000
37,000
0.45
October 2024 - December 2024
3,404,000
37,000
0.45
January 2025 - March 2025
1,575,000
17,500
0.37
April 2025 - June 2025
1,592,500
17,500
0.37
July 2025 - September 2025
1,610,000
17,500
0.37
October 2025 - December 2025
1,610,000
17,500
0.37
____________________________________
(1)
These crude oil swap transactions are
settled based on the NYMEX WTI index price on each trading day
within the specified monthly settlement period versus the
contractual swap price for the volumes stipulated.
(2)
These crude oil collars are settled based
on the NYMEX WTI index price on each trading day within the
specified monthly settlement period versus the contractual floor
and ceiling prices for the volumes stipulated.
(3)
These crude oil deferred premium puts are
settled based on the NYMEX WTI index price on each trading day
within the specified monthly settlement period versus the
contractual put prices for the volumes stipulated.
(4)
These crude oil basis swap transactions
are settled based on the difference between the arithmetic average
of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices, during each
applicable monthly settlement period.
(5)
These crude oil roll swap transactions are
settled based on the difference between the arithmetic average of
NYMEX WTI calendar month prices and the physical crude oil delivery
month price.
Period
Volume
(MMBtu)
Volume
(MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)(1)
Natural gas swaps
January 2024 - March 2024
4,104,919
45,109
$3.77
April 2024 - June 2024
5,906,321
64,905
3.29
July 2024 - September 2024
5,949,388
64,667
3.43
October 2024 - December 2024
5,933,899
64,499
3.86
January 2025 - March 2025
3,600,000
40,000
4.32
April 2025 - June 2025
3,640,000
40,000
3.65
July 2025 - September 2025
3,680,000
40,000
3.83
October 2025 - December 2025
3,680,000
40,000
4.20
Period
Volume
(MMBtu)
Volume
(MMBtu/d)
Wtd. Avg.
Differential
($/MMBtu)(2)
Natural gas basis differential swaps
January 2024 - March 2024
12,740,000
140,000
$(0.90)
April 2024 - June 2024
10,920,000
120,000
(0.99)
July 2024 - September 2024
11,040,000
120,000
(0.99)
October 2024 - December 2024
11,040,000
120,000
(0.98)
January 2025 - March 2025
3,600,000
40,000
(0.74)
April 2025 - June 2025
3,640,000
40,000
(0.74)
July 2025 - September 2025
3,680,000
40,000
(0.74)
October 2025 - December 2025
3,680,000
40,000
(0.74)
Period
Volume
(MMBtu)
Volume
(MMBtu/d)
Wtd. Avg.
Differential
($/MMBtu)(3)
Natural gas basis differential swaps
January 2024 - March 2024
3,640,000
40,000
$0.00
Period
Volume
(MMBtu)
Volume
(MMBtu/d)
Wtd. Avg. Collar
Price Ranges
($/MMBtu)(4)
Natural gas collars
January 2024 - March 2024
6,815,081
74,891
$2.93
-
$6.81
April 2024 - June 2024
5,013,679
55,095
2.68
-
5.04
July 2024 - September 2024
5,090,612
55,333
2.68
-
5.06
October 2024 - December 2024
5,106,101
55,501
2.75
-
5.29
____________________________________
(1)
These natural gas swap contracts are
settled based on the NYMEX Henry Hub price on each trading day
within the specified monthly settlement period versus the
contractual swap price for the volumes stipulated.
(2)
These natural gas basis swap contracts are
settled based on the difference between the Inside FERC’s West
Texas WAHA price and the NYMEX price of natural gas during each
applicable monthly settlement period.
(3)
These natural gas basis swap contracts are
settled based on the difference between the Houston Ship Channel
(“HSC”) price and the NYMEX price of natural gas during each
applicable monthly settlement period.
(4)
These natural gas collars are settled
based on the NYMEX Henry Hub price on each trading day within the
specified monthly settlement period versus the contractual floor
and ceiling prices for the volumes stipulated.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227219426/en/
Hays Mabry – Sr. Director, Investor Relations Mae Herrington –
Engineering Advisor, Investor Relations (832) 240-3265
ir@permianres.com
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