Permian Resources Corporation (“Permian Resources” or the
“Company”) (NYSE: PR) today announced its third quarter 2023
financial and operational results.
Recent 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
- Delivered strong well results, which drove crude oil and total
average production higher by 6% and 4%, respectively,
quarter-over-quarter to 89.8 MBbls/d and 172.0 MBoe/d (~52%
oil)
- Continued to realize significant operational efficiency gains,
resulting in meaningful improvements to drilling and completion
cycle times
- Increased average drilled and completed feet per day by 14% and
4%, respectively, compared to second quarter 2023
- Efficiencies resulted in higher operational activity for the
third quarter
- Announced accrued capital expenditures of $367 million and cash
capital expenditures of $380 million
- Reported net cash provided by operating activities of $481
million and adjusted free cash flow1 of $165 million (cash capital
expenditures)
- Delivered total return of capital of $96 million, or $0.17 per
share:
- Quarterly base dividend of $0.05 per share
- Variable dividend of $0.07 per share
- Share repurchases of 2.2 million shares for $27.9 million
- Added ~740 net acres in the Delaware Basin through ~20
grassroots transactions during the quarter, demonstrating continued
ground game success
- Published inaugural Corporate Sustainability Report,
highlighting Permian Resources’ commitment to environmental
stewardship, social responsibility and corporate governance
Management Commentary
“Permian Resources delivered an outstanding operational and
financial quarter, with the combination of strong well performance,
decreases in controllable cash costs and continued
quarter-over-quarter improvements in our drilling and completions
efficiencies driving significantly higher free cash flow per
share,” said Will Hickey, Co-CEO of Permian Resources. “In
addition, we are extremely excited to have closed the Earthstone
transaction earlier this month, and our teams have hit the ground
running on integration efforts, keeping us on-track to achieve
meaningful synergies through leveraging our deep Delaware Basin
experience.”
“This quarter’s strong results and increased free cash flow have
allowed us to return approximately $0.17 per share, or
approximately $100 million, of capital to shareholders between the
base dividend, variable dividend and share buybacks,” said James
Walter, Co-CEO of the Company. “One of the key drivers of the
recently closed Earthstone acquisition was its meaningful accretion
to free cash flow per share, and we are excited to return
additional capital to shareholders under our existing return of
capital framework as we integrate and develop these high-return
assets in the core of the Delaware Basin.”
Operational and Financial Results
Permian Resources continued the efficient development of its
core Delaware Basin acreage position in the third quarter,
delivering strong well results and driving meaningful operational
efficiencies. During the quarter, average daily crude oil
production was 89,824 barrels of oil per day (“Bbls/d”), a 6%
increase compared to the prior quarter. Third quarter total
production increased 4% quarter-over-quarter and averaged 171,966
barrels of oil equivalent per day (“Boe/d”). “Our robust production
results during the quarter were primarily attributable to better
than expected well performance, in addition to higher production
runtime and increased activity due to reduced cycle times,” said
Will Hickey, Co-CEO.
The Company also delivered outstanding results from both its
drilling and completions operations, carrying forward its
operational momentum from the prior quarter. Permian Resources
continued to drive operational improvements in the third quarter,
with drilled and completed feet per day increasing by 14% and 4%,
respectively, quarter-over-quarter. During the quarter, the
drilling team’s continued refinement and distribution of best
practices across the field contributed to a reduction in drilling
durations compared to the prior quarter. Furthermore, the
completion team’s focus on efficiency drivers and enhancement of
completion design resulted in a significant increase in runtime,
averaging over 19 pumping hours per day during the quarter.
“Ultimately, higher efficiencies and shorter cycle times are key
contributors to the Company’s goal of decreasing well costs per
lateral foot. As the Delaware Basin’s lowest-cost operator, we will
continue to prioritize and execute upon these initiatives in the
field,” said James Walter, Co-CEO.
Total cash and accrued capital expenditures (“capex”) for the
third quarter were $380 million and $367 million, respectively, and
included a modest shift of fourth quarter planned capex into the
third quarter due to efficiency-driven activity acceleration. “As a
result of our team’s continued momentum realizing operational
efficiencies, we completed a higher number of wells than expected
during the third quarter, positioning us for a strong fourth
quarter to close the year,” said Will Hickey, Co-CEO.
Third quarter average realized prices were higher than the
previous quarter, due in part to improved commodity prices.
Realized prices for the third quarter were $79.92 per barrel of
oil, $1.93 per Mcf of natural gas and $23.67 per barrel of natural
gas liquids (“NGLs”), excluding the effects of hedges and GP&T
costs, which represent 12%, 56% and 14% increases compared to the
previous quarter, respectively.
Third quarter total controllable cash costs (LOE, GP&T and
cash G&A) were $7.92 per Boe, a 2% decrease compared to the
prior quarter. Third quarter LOE was $5.42 per Boe, GP&T was
$1.31 per Boe and cash G&A was $1.19 per Boe.
For the third quarter, Permian Resources generated net cash
provided by operating activities of $481 million and adjusted free
cash flow1 of $165 million (or $178 million, utilizing accrued
capex). The Company also reported net income attributable to Class
A Common Stock during the third quarter of $45 million, or $0.14
per basic share. Third quarter adjusted net income1 was $220
million or $0.39 per adjusted basic share.
In addition, on September 12, 2023, the Company closed an
offering of $500 million in aggregate principal amount of 7.0%
senior notes due 2032 that were issued at par. The net proceeds
from this offering were used to repay indebtedness, which included
amounts outstanding under Permian Resources’ credit facility in
addition to credit facility borrowings assumed in connection with
the closing of the Earthstone acquisition. Following the bond
offering, Permian Resources has approximately $1.5 billion of
liquidity as of November 1, 2023 with aggregate lender commitments
under the credit facility increasing from $1.5 to $2.0 billion at
the close of the Earthstone transaction.
At September 30, 2023, the Company had $212 million in cash on
hand. Net debt-to-LQA EBITDAX1 at September 30, 2023 was
approximately 0.9x, and the Company has no maturities of long-term
debt until 2026. Additionally, the acquisition of Earthstone
materially enhances Permian Resources’ credit profile and decreases
its overall cost of capital, as larger scale and higher production
levels accelerate its path to investment grade.
Earthstone Integration Update
On November 1, 2023, Permian Resources announced the closing of
the $4.5 billion Earthstone transaction that was announced on
August 21, 2023. The acquisition enhances Permian Resources’
position as a leading Delaware Basin independent with over 400,000
Permian net acres and approximately 300 MBoe/d of total production
on a pro forma basis. The Company plans to utilize its extensive
Delaware Basin expertise and incremental scale to drive value for
the combined shareholder base through synergies, accelerated return
of capital and significant accretion to all relevant metrics.
Integration of Earthstone’s assets and teams is underway, and
Permian Resources remains on-track to deliver a minimum of $175
million in annual operational, G&A and financial synergies.
Permian Resources has a proven integration track record and plans
to implement the Company’s peer-leading efficiency practices and
cost structure across the Earthstone platform to drive lower well
costs, operating costs and cycle times.
“The Earthstone transaction increases the overall quality of our
business, enhancing our core Delaware assets, increasing our
potential for organic growth, leveraging our efficient operations
and strengthening our solid financial position,” said James Walter,
Co-CEO. “We look forward to executing another successful
integration and synergy capture in the coming months.”
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 third quarter financial results,
the Board has declared a quarterly variable cash dividend of $0.07
per share of Class A common stock. Combined, the base and variable
dividends represent a total cash return of $0.12 per share. The
base and variable dividends are payable on November 28, 2023 to
shareholders of record as of November 20, 2023.
Permian Resources returned additional capital to shareholders in
the third quarter by repurchasing 2.2 million shares of Class C
Common Stock for $27.9 million during a secondary offering from
selling shareholders.
Environmental, Social and Governance
Permian Resources is committed to developing and producing its
oil and natural gas assets in a responsible way that creates
long-term value for stakeholders. The Company recently published
its inaugural Corporate Sustainability Report as a combined
company. This report describes Permian Resources’ ESG programs,
initiatives and performance to its stakeholders in a transparent
and measurable way. For more information on the report, please
visit www.permianres.com/sustainability.
Quarterly Report on Form 10-Q
Permian Resources’ financial statements and related footnotes
will be available in its Quarterly Report on Form 10-Q for the
quarter ended September 30, 2023, which is expected to be filed
with the Securities and Exchange Commission (“SEC”) on November 8,
2023.
Conference Call and Webcast
Permian Resources will host an investor conference call on
Wednesday, November 8, 2023 at 9:00 a.m. Central (10:00 a.m.
Eastern) to discuss third quarter operating and financial results.
Interested parties may join the webcast by visiting Permian
Resources’ website at www.permianres.com and clicking on the
webcast link or by dialing (888) 259-6580 (Conference ID: 67608519)
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 (Access Code: 608519) 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 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.
Permian Resources
Corporation
Operating Highlights
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net revenues (in thousands):
Oil sales
$
660,445
$
397,187
$
1,734,057
$
1,009,545
Natural gas sales(1)
38,354
93,455
94,123
200,503
NGL sales(2)
59,742
59,136
170,027
159,661
Oil and gas sales
$
758,541
$
549,778
$
1,998,207
$
1,369,709
Average sales prices:
Oil (per Bbl)
$
79.92
$
89.02
$
75.42
$
93.93
Effect of derivative settlements on
average price (per Bbl)
0.69
(2.71
)
2.51
(9.91
)
Oil including the effects of hedging (per
Bbl)
$
80.61
$
86.31
$
77.93
$
84.02
Average NYMEX WTI price for oil (per
Bbl)
$
82.26
$
91.56
$
77.39
$
98.10
Oil differential from NYMEX
(2.34
)
(2.54
)
(1.97
)
(4.17
)
Natural gas price excluding the effects of
GP&T (per Mcf)(1)
$
1.93
$
6.57
$
1.66
$
5.72
Effect of derivative settlements on
average price (per Mcf)
0.16
(1.41
)
0.41
(1.20
)
Natural gas including the effects of
hedging (per Mcf)
$
2.09
$
5.16
$
2.07
$
4.52
Average NYMEX Henry Hub price for natural
gas (per MMBtu)
$
2.58
$
7.96
$
2.46
$
6.65
Natural gas differential from NYMEX
(0.65
)
(1.39
)
(0.80
)
(0.93
)
NGL price excluding the effects of
GP&T (per Bbl)(2)
$
23.67
$
36.21
$
23.69
$
42.20
Net production:
Oil (MBbls)
8,264
4,462
22,994
10,748
Natural gas (MMcf)
26,068
14,216
75,134
35,082
NGL (MBbls)
3,212
1,633
9,241
3,784
Total (MBoe)(3)
15,821
8,464
44,758
20,378
Average daily net production:
Oil (Bbls/d)
89,824
48,499
84,225
39,369
Natural gas (Mcf/d)
283,351
154,520
275,215
128,504
NGL (Bbls/d)
34,917
17,751
33,852
13,859
Total (Boe/d)(3)
171,966
92,003
163,946
74,646
_________________________
(1)
Natural gas sales for the three and nine
months ended September 30, 2023 include $12.0 million and $30.7
million, respectively, of gathering, processing and transportation
costs (“GP&T”) that are reflected as a reduction to natural gas
sales and zero for the three and nine months ended September 30,
2022. Natural gas average sales prices, however, exclude $0.46 and
$0.41 per Mcf of such GP&T charges for the three and nine
months ended September 30, 2023 respectively.
(2)
NGL sales for the three and nine months
ended September 30, 2023 include $16.3 million and $48.9 million,
respectively, of GP&T that are reflected as a reduction to NGL
sales and zero for the three and nine months ended September 30,
2022. NGL average sales prices, however, exclude $5.07 and $5.29
per Bbl of such GP&T charges for the three and nine months
ended September 30, 2023 respectively.
(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 September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating costs (in thousands):
Lease operating expenses
$
85,810
$
40,944
$
243,333
$
98,578
Severance and ad valorem taxes
58,942
41,745
156,378
101,491
Gathering, processing and transportation
expenses
20,731
30,022
57,966
77,669
Operating cost metrics:
Lease operating expenses (per Boe)
$
5.42
$
4.84
$
5.44
$
4.84
Severance and ad valorem taxes (% of
revenue)
7.8
%
7.6
%
7.8
%
7.4
%
Gathering, processing and transportation
expenses (per Boe)
$
1.31
$
3.55
$
1.30
$
3.81
Permian Resources
Corporation
Consolidated Statements of
Operations (unaudited)
(in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating revenues
Oil and gas sales
$
758,541
$
549,778
$
1,998,207
$
1,369,709
Operating expenses
Lease operating expenses
85,810
40,944
243,333
98,578
Severance and ad valorem taxes
58,942
41,745
156,378
101,491
Gathering, processing and transportation
expenses
20,731
30,022
57,966
77,669
Depreciation, depletion and
amortization
236,204
109,500
640,149
262,626
General and administrative expenses
34,519
43,387
122,729
83,937
Merger and integration expense
10,422
59,270
28,071
64,955
Impairment and abandonment expense
245
498
734
3,631
Exploration and other expenses
5,031
2,352
14,668
6,613
Total operating expenses
451,904
327,718
1,264,028
699,500
Net gain (loss) on sale of long-lived
assets
63
(3
)
129
(1,327
)
Income (loss) from operations
306,700
222,057
734,308
668,882
Other income (expense)
Interest expense
(40,582
)
(28,807
)
(114,185
)
(56,287
)
Net gain (loss) on derivative
instruments
(151,781
)
181,308
(76,668
)
17,651
Other income (expense)
246
115
685
318
Total other income (expense)
(192,117
)
152,616
(190,168
)
(38,318
)
Income (loss) before income taxes
114,583
374,673
544,140
630,564
Income tax (expense) benefit
(16,254
)
(31,169
)
(77,056
)
(79,432
)
Net income (loss)
98,329
343,504
467,084
551,132
Less: Net (income) loss attributable to
noncontrolling interest
(52,896
)
(119,145
)
(246,132
)
(119,145
)
Net income (loss) attributable to Class A
Common Stock
$
45,433
$
224,359
220,952
$
431,987
Income (loss) per share of Class A Common
Stock:
Basic
$
0.14
$
0.78
$
0.71
$
1.51
Diluted
$
0.13
$
0.70
$
0.64
$
1.36
Weighted average Class A Common Stock
outstanding:
Basic
324,650
286,245
312,015
285,368
Diluted
366,174
321,986
351,417
320,595
Permian Resources
Corporation
Consolidated Balance Sheets
(unaudited)
(in thousands, except share
and per share amounts)
September 30, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
211,703
$
59,545
Accounts receivable, net
339,495
282,846
Derivative instruments
2,662
100,797
Prepaid and other current assets
11,330
20,602
Total current assets
565,190
463,790
Property and Equipment
Oil and natural gas properties, successful
efforts method
Unproved properties
1,373,138
1,424,744
Proved properties
10,112,084
8,869,174
Accumulated depreciation, depletion and
amortization
(3,037,676
)
(2,419,692
)
Total oil and natural gas properties,
net
8,447,546
7,874,226
Other property and equipment, net
39,271
15,173
Total property and equipment, net
8,486,817
7,889,399
Noncurrent assets
Operating lease right-of-use assets
58,446
64,792
Other noncurrent assets
99,345
74,611
TOTAL ASSETS
$
9,209,798
$
8,492,592
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses
$
665,359
$
562,156
Operating lease liabilities
34,266
29,759
Derivative instruments
35,748
1,998
Other current liabilities
24,638
11,656
Total current liabilities
760,011
605,569
Noncurrent liabilities
Long-term debt, net
2,254,178
2,140,798
Asset retirement obligations
44,393
40,947
Deferred income taxes
83,416
4,430
Operating lease liabilities
26,156
41,341
Other noncurrent liabilities
74,708
3,211
Total liabilities
3,242,862
2,836,296
Commitments and contingencies (Note
12)
Shareholders’ equity
Common stock, $0.0001 par value,
1,500,000,000 shares authorized:
Class A: 354,470,922 shares issued and
350,725,718 shares outstanding at September 30, 2023 and
298,640,260 shares issued and 288,532,257 shares outstanding at
December 31, 2022
35
30
Class C: 215,223,134 shares issued and
outstanding at September 30, 2023 and 269,300,000 shares issued and
outstanding at December 31, 2022
22
27
Additional paid-in capital
3,278,846
2,698,465
Retained earnings (accumulated
deficit)
375,933
237,226
Total shareholders' equity
3,654,836
2,935,748
Noncontrolling interest
2,312,100
2,720,548
Total equity
5,966,936
5,656,296
TOTAL LIABILITIES AND EQUITY
$
9,209,798
$
8,492,592
Permian Resources
Corporation
Consolidated Statements of
Cash Flows (unaudited)
(in thousands)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net income (loss)
$
467,084
$
551,132
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and
amortization
640,149
262,626
Stock-based compensation expense - equity
awards
69,585
60,971
Stock-based compensation expense -
liability awards
—
(24,174
)
Impairment and abandonment expense
734
3,631
Deferred tax expense (benefit)
73,453
78,832
Net (gain) loss on sale of long-lived
assets
(129
)
1,327
Non-cash portion of derivative (gain)
loss
165,573
(166,372
)
Amortization of debt issuance costs and
debt discount
11,858
12,555
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable
(57,787
)
(6,753
)
(Increase) decrease in prepaid and other
assets
(27,810
)
(38
)
Increase (decrease) in accounts payable
and other liabilities
24,795
69,639
Net cash provided by operating
activities
1,367,505
843,376
Cash flows from investing
activities:
Acquisition of oil and natural gas
properties, net
(116,869
)
(4,866
)
Drilling and development capital
expenditures
(1,066,693
)
(397,892
)
Cash paid for business acquired in the
Colgate Merger, net of cash acquired
—
(496,671
)
Purchases of other property and
equipment
(30,828
)
(3,199
)
Contingent considerations received related
to divestiture
60,000
—
Proceeds from sales of oil and natural gas
properties
59,203
6,190
Net cash used in investing activities
(1,095,187
)
(896,438
)
Cash flows from financing
activities:
Proceeds from borrowings under revolving
credit facility
1,050,000
970,000
Repayment of borrowings under revolving
credit facility
(1,435,000
)
(445,000
)
Repayment of credit facility acquired in
the Colgate Merger
—
(400,000
)
Proceeds from the issuance of 2032 Senior
Notes
500,000
—
Debt issuance costs
(6,950
)
(19,611
)
Proceeds from exercise of stock
options
514
46
Share repurchases
(95,448
)
(16,241
)
Dividends paid
(80,793
)
—
Dividend distributions paid to
noncontrolling interest owners
(62,296
)
—
Net cash provided by (used in) financing
activities
(129,973
)
89,194
Net increase (decrease) in cash, cash
equivalents and restricted cash
142,345
36,132
Cash, cash equivalents and restricted
cash, beginning of period
69,932
9,935
Cash, cash equivalents and restricted
cash, end of period
$
212,277
$
46,067
Reconciliation of cash, cash equivalents and restricted cash
presented on the Consolidated Statements of Cash Flows for the
periods presented:
Nine Months Ended September
30,
2023
2022
Cash and cash equivalents
$
211,703
$
45,514
Restricted cash
574
553
Total cash, cash equivalents and
restricted cash
$
212,277
$
46,067
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/loss
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)
9/30/2023
6/30/2023
3/31/2023
12/31/2022
9/30/2022
Adjusted EBITDAX reconciliation to net
income:
Net income (loss) attributable to Class A
Common Stock
$
45,433
$
73,399
$
102,120
$
83,050
$
224,359
Net income (loss) attributable to
noncontrolling interest
52,896
75,555
117,681
115,658
119,145
Interest expense
40,582
36,826
36,777
39,358
28,807
Income tax expense
16,254
26,548
34,254
40,860
31,169
Depreciation, depletion and
amortization
236,204
215,726
188,219
182,052
109,500
Impairment and abandonment expense
245
244
245
244
498
Non-cash derivative (gain) loss
161,672
18,678
(14,777
)
88,635
(213,503
)
Stock-based compensation expense(1)
15,633
35,042
16,707
54,342
18,896
Exploration and other expenses
5,031
5,263
4,374
4,765
2,352
Merger and integration expense
10,422
4,350
13,299
12,469
59,270
(Gain) loss on sale of long-lived
assets
(63
)
—
(66
)
(13
)
3
Adjusted EBITDAX
$
584,309
$
491,631
$
498,833
$
621,420
$
380,496
_________________________
(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 September 30, 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)
September 30, 2023
Long-term debt, net
2,254,178
Unamortized debt discount and debt
issuance costs on senior notes
61,621
Long-term debt
2,315,799
Less: cash and cash equivalents
(211,703
)
Net debt (Non-GAAP)
2,104,096
LQA EBITDAX(1)
2,337,236
Net debt-to-LQA EBITDAX
0.9
(1) Represents adjusted EBITDAX (defined
and reconciled in the section above) for the three months ended
September 30, 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 September
30,
(in thousands)
2023
2022
Basic weighted average shares of Class A
Common Stock outstanding
324,650
286,245
Weighted average shares of Class C Common
Stock
241,340
87,815
Adjusted basic weighted average shares
outstanding
565,990
374,060
Basic weighted average shares of Class A
Common Stock outstanding
324,650
286,245
Add: Dilutive effects of Convertible
Senior Notes
27,829
27,074
Add: Dilutive effects of equity awards and
ESPP shares
13,695
8,667
Diluted weighted average shares of Class A
Common Stock outstanding
366,174
321,986
Weighted average shares of Class C Common
Stock
241,340
87,815
Adjusted diluted weighted average
shares outstanding
607,514
409,801
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 capital expenditures
incurred/paid 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 future exploration and development activities, to service
its existing level of indebtedness or incur additional debt,
without regard to the timing of settlement of either operating
assets and liabilities or its merger and integration costs and
after funding its capital expenditures incurred or paid for the
period. 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
Expenditure(1)
Cash Capital
Expenditure(2)
Three Months Ended September
30,
Three Months Ended September
30,
(in thousands, except per share
data)
2023
2022
2023
2022
Net cash provided by operating
activities
$
480,801
$
388,277
$
480,801
$
388,277
Changes in working capital:
Accounts receivable
45,899
(55,998
)
45,899
(55,998
)
Prepaid and other assets
23,841
(6,163
)
23,841
(6,163
)
Accounts payable and other liabilities
(16,300
)
(27,148
)
(16,300
)
(27,148
)
Operating cash flow before working capital
changes
534,241
298,968
534,241
298,968
Less: total capital expenditures
incurred/paid
(366,800
)
(198,900
)
(380,137
)
(173,881
)
Free cash flow
167,441
100,068
154,104
125,087
Merger and integration expense
10,422
59,270
10,422
59,270
Adjusted free cash flow
$
177,863
$
159,338
$
164,526
$
184,357
Adjusted basic weighted average shares
outstanding
565,990
374,060
565,990
374,060
Adjusted free cash flow per adjusted basic
share
$
0.31
$
0.43
$
0.29
$
0.49
_________________________
(1) Utilizes activity-based capital
expenditures incurred during the period.
(2) Utilizes cash capital expenditure
payments during the period.
Adjusted Net Income
Adjusted net income 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 net income as net income
attributable to Class A Common Stock plus net income/loss
attributable to noncontrolling interest adjusted for non-cash gains
or losses on derivatives, merger and integration expense,
impairment and abandonment expense, gain/loss from the sale of
long-lived assets and the related income tax adjustments for these
items. Adjusted net income is not a measure of net income as
determined by GAAP.
Our management believes adjusted net income 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 by excluding certain non-cash items that can vary
significantly. Adjusted net income 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. Our presentation of adjusted net income
should not be construed as an inference that our results will be
unaffected by unusual or nonrecurring items. Our computations of
adjusted net income may not be comparable to other similarly titled
measures of other companies.
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 September
30,
(in thousands, except per share
data)
2023
2022
Net income (loss) attributable to Class A
Common Stock
$
45,433
$
224,359
Net income (loss) attributable to
noncontrolling interest
52,896
119,145
Non-cash derivative (gain) loss
161,672
(213,503
)
Merger and integration expense
10,422
59,270
Impairment and abandonment expense
245
498
(Gain) loss on sale of long-lived
assets
(63
)
3
Adjusted net income excluding above
items
270,605
189,772
Income tax (expense) benefit attributable
to the above items(1)
(50,664
)
7,782
Adjusted Net Income
$
219,941
$
197,554
Adjusted basic weighted average shares
outstanding (Non-GAAP)(2)
565,990
374,060
Adjusted net income per adjusted basic
share
$
0.39
$
0.53
________________________
(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 October 31, 2023. There were no additional contracts
entered into through the date of this filing:
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Crude Price
($/Bbl)(1)
Crude oil swaps
October 2023 - December 2023
1,748,000
19,000
$82.93
January 2024 - March 2024
1,820,000
20,000
77.54
April 2024 - June 2024
1,820,000
20,000
76.34
July 2024 - September 2024
1,840,000
20,000
75.19
October 2024 - December 2024
1,840,000
20,000
74.19
January 2025 - March 2025
990,000
11,000
73.51
April 2025 - June 2025
1,001,000
11,000
72.27
July 2025 - September 2025
1,012,000
11,000
71.09
October 2025 - December 2025
1,012,000
11,000
70.03
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Collar Price Ranges
($/Bbl)(2)
Crude oil collars
October 2023 - December 2023
644,000
7,000
$76.43 - 92.70
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Differential
($/Bbl)(3)
Crude oil basis differential swaps
October 2023 - December 2023
1,025,002
11,141
$0.63
January 2024 - March 2024
1,820,000
20,000
0.86
April 2024 - June 2024
1,820,000
20,000
0.86
July 2024 - September 2024
1,840,000
20,000
0.86
October 2024 - December 2024
1,840,000
20,000
0.86
January 2025 - March 2025
450,000
5,000
0.95
April 2025 - June 2025
455,000
5,000
0.95
July 2025 - September 2025
460,000
5,000
0.95
October 2025 - December 2025
460,000
5,000
0.95
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Differential
($/Bbl)(4)
Crude oil roll differential swaps
October 2023 - December 2023
1,656,000
18,000
$1.16
January 2024 - March 2024
1,820,000
20,000
0.58
April 2024 - June 2024
1,820,000
20,000
0.58
July 2024 - September 2024
1,840,000
20,000
0.57
October 2024 - December 2024
1,840,000
20,000
0.57
January 2025 - March 2025
450,000
5,000
0.35
April 2025 - June 2025
455,000
5,000
0.35
July 2025 - September 2025
460,000
5,000
0.35
October 2025 - December 2025
460,000
5,000
0.35
________________________
(1)
These crude oil swap transactions are
settled based on the NYMEX WTI index price on each trading day
within the specified monthly settlement period versus the
contractual swap price for the volumes stipulated.
(2)
These crude oil collars are settled based
on the NYMEX WTI index price on each trading day within the
specified monthly settlement period versus the contractual floor
and ceiling prices for the volumes stipulated.
(3)
These crude oil basis swap transactions
are settled based on the difference between the arithmetic average
of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices during each
applicable monthly settlement period.
(4)
These crude oil roll swap transactions are
settled based on the difference between the arithmetic average of
NYMEX WTI calendar month prices and the physical crude oil delivery
month price.
Period
Volume (MMBtu)
Volume (MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)(1)
Natural gas swaps
October 2023 - December 2023
1,413,628
15,366
$4.90
January 2024 - March 2024
4,104,919
45,109
3.77
April 2024 - June 2024
5,906,321
64,905
3.29
July 2024 - September 2024
5,949,388
64,667
3.43
October 2024 - December 2024
5,933,899
64,499
3.86
January 2025 - March 2025
3,600,000
40,000
4.32
April 2025 - June 2025
3,640,000
40,000
3.65
July 2025 - September 2025
3,680,000
40,000
3.83
October 2025 - December 2025
3,680,000
40,000
4.20
Period
Volume (MMBtu)
Volume (MMBtu/d)
Wtd. Avg. Differential
($/MMBtu)(2)
Natural gas basis differential swaps
October 2023 - December 2023
6,210,000
67,500
$(1.30)
January 2024 - March 2024
3,640,000
40,000
(0.52)
April 2024 - June 2024
1,820,000
20,000
(0.67)
July 2024 - September 2024
1,840,000
20,000
(0.66)
October 2024 - December 2024
1,840,000
20,000
(0.64)
Period
Volume (MMBtu)
Volume (MMBtu/d)
Wtd. Avg. Differential
($/MMBtu)(3)
Natural gas basis differential swaps
October 2023 - December 2023
1,840,000
20,000
$(0.30)
January 2024 - March 2024
3,640,000
40,000
0.00
Period
Volume (MMBtu)
Volume (MMBtu/d)
Wtd. Avg. Collar Price
Ranges ($/MMBtu)(4)
Natural gas collars
October 2023 - December 2023
6,636,372
72,134
$3.66 - $8.22
January 2024 - March 2024
3,175,081
34,891
3.36 - 9.44
April 2024 - June 2024
1,373,679
15,095
3.00 - 6.45
July 2024 - September 2024
1,410,612
15,333
3.00 - 6.52
October 2024 - December 2024
1,426,101
15,501
3.25 - 7.30
_________________________
(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/20231107696922/en/
Hays Mabry – Sr. Director, Investor Relations Mae Herrington –
Engineering Advisor, Investor Relations (832) 240-3265
ir@permianres.com
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