Permian Resources Corporation (“Permian Resources” or the
“Company”) (NYSE: PR) today announced its first quarter 2024
financial and operational results and revised 2024 guidance.
Recent Financial and Operational Highlights
- Delivered Permian Resources’ best quarter to-date:
- Production outperformance due to accelerated Earthstone
efficiencies and continued strong well results
- Robust free cash flow driven by operational execution and
realization of cost synergies
- Earthstone integration completed ahead of schedule
- Earthstone annual synergy target increased by $50 million to
$225 million
- Executed ~$270 million of additional bolt-on acquisitions in
core operating areas
- Reported crude oil and total average production of 151.8
MBbls/d and 319.5 MBoe/d (~48% oil) during the quarter
- Announced cash capital expenditures of $520 million, net cash
provided by operating activities of $648 million and adjusted free
cash flow1 of $324 million ($0.42 per adjusted basic share)
- Reported total return of capital of $185 million, or $0.24 per
share, implying a total annualized return yield of ~5.7%2:
- Quarterly base dividend of $0.06 per share
- Variable dividend of $0.14 per share
- Repurchased 2.0 million shares for $31 million
- Added ~11,200 net acres and ~110 locations in the Delaware
Basin through recent transactions
- Increased mid-point of full year oil and total production
guidance by 2% to 150 MBbls/d and 320 MBoe/d
Management Commentary
“In our first full quarter post closing Earthstone, Permian
Resources delivered strong operational and financial results,
building upon our operational momentum from last year,” said Will
Hickey, Co-CEO of Permian Resources. “Outstanding well results and
higher operational efficiencies across both legacy Permian
Resources and Earthstone assets drove robust production during the
quarter. This outperformance provided us with the confidence to
increase standalone production guidance and represents a solid
start to the year.”
“This quarter’s strong results allowed us to generate $324
million of adjusted free cash flow, or $0.42 per share,” said James
Walter, Co-CEO of Permian Resources. “Additionally, we continue to
enhance our position through strategic leasehold and bolt-on
acquisitions, adding high-quality inventory directly offset our
most capital efficient asset that immediately competes for capital.
We believe Permian Resources’ leading cost structure, basin
knowledge and balance sheet strength will continue to drive
attractive opportunities to grow our already deep inventory
position in an accretive manner.”
Operational and Financial Results
Permian Resources continued the efficient development of its
core Delaware Basin acreage position in the first quarter,
delivering excellent well results while successfully integrating
the Earthstone acquisition. During the quarter, average daily crude
oil production was 151,794 barrels of oil per day (“Bbls/d”), an
11% increase compared to the prior quarter. First quarter total
production averaged 319,514 barrels of oil equivalent per day
(“Boe/d”). “Our strong first quarter production results were
primarily driven by better than expected well performance, strong
production runtimes and acceleration from continued operational
efficiencies,” said Will Hickey, Co-CEO.
The Company was able to accelerate activity due to strong
drilling and completion (“D&C”) synergy capture, driving
increased D&C efficiencies program-wide. As of May 1, the
Company is no longer utilizing any Earthstone drilling rigs or
completion crews, and the Earthstone assets are fully integrated
from a D&C perspective. Total cash capital expenditures
(“capex”) for the first quarter was $520 million.
Realized prices for the quarter were $76.13 per barrel of oil,
$1.24 per Mcf of natural gas and $26.47 per barrel of natural gas
liquids (“NGLs”), excluding the effects of hedges and GP&T
costs. First quarter total controllable cash costs (LOE, GP&T
and cash G&A) were $8.11 per Boe. LOE was $5.80 per Boe,
GP&T was $1.34 per Boe and Cash G&A was $0.97 per Boe.
For the first quarter, Permian Resources generated net cash
provided by operating activities of $648 million, adjusted
operating cash flow1 of $844 million ($1.09 per adjusted basic
share) and adjusted free cash flow1 of $324 million ($0.42 per
adjusted basic share).
Permian Resources continues to maintain a strong financial
position and low leverage profile. At March 31, 2024, the Company
had $13 million in cash on hand and $60 million drawn under its
revolving credit facility. Net debt-to-LQA EBITDAX1 at March 31,
2024 was approximately 1x. Permian Resources recently completed its
spring borrowing base redetermination process, whereby elected
commitments increased to $2.5 billion from $2.0 billion, providing
an additional $500 million of liquidity. The borrowing base remains
unchanged at $4.0 billion. Also subsequent to quarter-end, the
Company redeemed the $356 million aggregate principal amount of
6.875% Senior Notes due 2027.
Earthstone Integration Update
The integration of Earthstone is complete, and synergy capture
is meaningfully ahead of schedule. Overall, the Company’s success
in both the acceleration and magnitude of synergies captured
to-date has resulted in an increase of $50 million to the
previously stated annual synergy target of $175 million, bringing
the updated synergy target to $225 million per year.
As a result of the successful integration and synergy
realization, during the quarter the Company reduced average
spud-to-rig release days by 18% per well and average completion
days by 50% per well on legacy Earthstone acreage compared to
Earthstone’s results from the first half of 2023. Additionally,
Permian Resources has improved legacy Earthstone runtimes,
benefiting overall production volumes, and realized approximately
$1 per Boe of LOE and margin synergies through workover, compressor
and midstream optimization initiatives.
“We are pleased to have achieved our original synergy target
ahead of schedule and excited to increase our annual target to $225
million,” said James Walter, Co-CEO. “I’m incredibly proud of both
legacy companies’ employees for ensuring such a smooth integration.
Their hard work and dedication were key to such an efficient
synergy capture.”
Recent Acquisitions
Permian Resources continues to strengthen its acreage position
in the core of the Delaware Basin, announcing two bolt-on
acquisitions and additional properties acquired through its ongoing
grassroots program.
The Company recently executed two separate bolt-on transactions
located in Eddy County, New Mexico from undisclosed third-parties.
The acquired properties consist of predominantly undeveloped
acreage offset Permian Resources’ highly capital efficient Parkway
asset. Inventory on the acquired acreage comprises two-mile
locations with high NRIs which immediately compete for capital. The
Company closed upon the first transaction during the first quarter,
and the second transaction is currently pending with closing
expected to occur late in the second quarter.
“The acquired acreage is analogous to our high-quality Parkway
position. This area represents one of the highest returning assets
within our portfolio, with returns driven by reduced D&C costs
and strong oil cuts. We are excited to begin development on the
acquired acreage later this year,” said Will Hickey, Co-CEO.
Additionally, Permian Resources continues to be highly
successful executing upon its ground game, consisting of smaller
grassroots acquisitions and leasehold transactions. During the
first quarter of 2024, the Company completed approximately 150
grassroots leasing and working interest acquisitions. The majority
of these acquisitions are slated for near-term development, making
them highly accretive.
Combined, the Company added approximately 11,200 net leasehold
acres and 4,500 net royalty acres for total consideration of
approximately $270 million, reflecting an acquisition value of
approximately $9,500 per net leasehold acre and approximately
$5,000 per net royalty acre after adjusting for production value.
Permian Resources has identified approximately 110 gross operated
locations on the acquired properties. In total, these acquisitions
contributed less than 100 Boe/d of total production in the first
quarter.
(The transactions referenced in this press release are additive
to the Company’s Portfolio Optimization Transactions which were
announced on January 30, 2024. For maps and further details
summarizing Permian Resources’ recent transactions, please see the
presentation materials on its website under the Investor Relations
tab.)
2024 Operational Plan and Target Update
Based on recent operational results, Permian Resources increased
its 2024 standalone oil and total production targets by
approximately 2% to 148-152 MBbls/d and 310-330 MBoe/d,
respectively, based on the mid-point of guidance. There are no
other changes to the Company’s standalone guidance ranges.
The recent acquisitions noted above are expected to add
approximately 3,500 Boe/d (~45% oil) of total production during the
second half of 2024. The Company expects approximately $50 million
of incremental capital expenditures associated with wells spud on
the newly acquired acreage during the second half of 2024. Notably,
the potential impact of the recently announced acquisitions is not
included in the revised standalone guidance.
(For a detailed table summarizing Permian Resources’ revised
2024 standalone 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 $0.06 per
share of Class A common stock, or $0.24 per share on an annualized
basis. This represents a 20% increase in the Company’s base cash
dividend compared to the prior quarter. Additionally, based upon
first quarter financial results, the Board has declared a quarterly
variable cash dividend of $0.14 per share of Class A common stock.
Combined, the base and variable dividends represent a total cash
return of $0.20 per share. The base and variable dividends are
payable on May 29, 2024 to shareholders of record as of May 21,
2024. Permian Resources returned additional capital to shareholders
in the first quarter by repurchasing 2.0 million shares of common
stock for $31 million. The Company’s first quarter total return of
capital, inclusive of the base dividend, variable dividend and
share repurchases, was $0.24 per share.
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 March 31, 2024, which is expected to be filed with
the Securities and Exchange Commission (“SEC”) on May 8, 2024.
Conference Call and Webcast
Permian Resources will host an investor conference call on
Wednesday, May 8, 2024 at 9:00 a.m. Central (10:00 a.m. Eastern) to
discuss first quarter 2024 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 (800) 225-9448 (Conference ID: PRCQ124) 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 (800) 938-2488
(Passcode: 24995) 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, natural gas and NGLs;
- political and economic conditions and events 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 drilling prospects, inventories, projects and
programs;
- our financial strategy, return of capital program, leverage,
liquidity and capital required for our development program;
- 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, assets or businesses;
- our ability to realize the anticipated benefits and synergies
from the Earthstone merger and effectively integrate the assets
acquired in such transaction;
- our hedging strategy and results;
- our competition;
- our ability to obtain permits and governmental approvals;
- our compliance with government regulations, including those
related to climate change as well as environmental, health and
safety regulations and liabilities thereunder;
- our pending legal matters;
- the marketing and transportation of our oil, natural gas and
NGLs;
- our leasehold or business acquisitions;
- cost 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 exploration for and development, production, gathering and sale
of oil, natural gas and NGLs. Factors which could cause our actual
results to differ materially from the results contemplated by
forward-looking statements include, but are not limited to,
commodity price volatility (including regional basis
differentials), uncertainty inherent in estimating oil, natural gas
and NGL reserves and in projecting future rates of production,
geographic concentration of our operations, lack of availability of
drilling and production equipment and services, lack of
transportation and storage capacity as a result of oversupply,
government regulations or other factors, risks relating to the
Earthstone Merger, competition in the oil and natural gas industry
for assets, materials, qualified personnel and capital, drilling
and other operating risks, environmental and climate related risks,
regulatory changes, restrictions on the use of water, availability
to cash flow and access to capital, inflation, changes in our
credit ratings or adverse changes in interest rates, changes in the
financial strength of counterparties to our credit agreement and
hedging contracts, the timing of development expenditures,
political and economic conditions and events in foreign oil and
natural gas producing countries, changes in local, regional,
national, and international economic conditions, security threats
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 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 any 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 Operating Cash Flow, 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.
2) Based on closing share price as of May 3, 2024.
Details of our revised 2024 operational and financial guidance
are presented below:
2024 FY Guidance
(Updated)
Net average daily production
(Boe/d)
310,000
—
330,000
Net average daily oil production
(Bbls/d)
148,000
—
152,000
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 March
31,
2024
2023
Net revenues (in thousands):
Oil sales
$
1,051,642
$
524,386
Natural gas sales(1)
38,767
32,122
NGL sales(2)
152,590
59,760
Oil and gas sales
$
1,242,999
$
616,268
Average sales prices:
Oil (per Bbl)
$
76.13
$
74.38
Effect of derivative settlements on
average price (per Bbl)
(0.12
)
3.65
Oil including the effects of hedging (per
Bbl)
$
76.01
$
78.03
Average NYMEX WTI price for oil (per
Bbl)
$
76.96
$
76.13
Oil differential from NYMEX
(0.83
)
(1.75
)
Natural gas price excluding the effects of
GP&T (per Mcf)(1)
$
1.24
$
1.81
Effect of derivative settlements on
average price (per Mcf)
0.17
0.58
Natural gas including the effects of
hedging (per Mcf)
$
1.41
$
2.39
Average NYMEX Henry Hub price for natural
gas (per MMBtu)
$
2.41
$
2.67
Natural gas differential from NYMEX
(1.17
)
(0.86
)
NGL price excluding the effects of
GP&T (per Bbl)(2)
$
26.47
$
27.12
Net production:
Oil (MBbls)
13,813
7,050
Natural gas (MMcf)
51,802
23,974
NGL (MBbls)
6,629
2,798
Total (MBoe)(3)
29,076
13,844
Average daily net production:
Oil (Bbls/d)
151,794
78,332
Natural gas (Mcf/d)
569,249
266,374
NGL (Bbls/d)
72,846
31,094
Total (Boe/d)(3)
319,514
153,822
_______________________________________
(1)
Natural gas sales for the three months
ended March 31, 2024 include $25.3 million of gathering, processing
and transportation costs (“GP&T”) that are reflected as a
reduction to natural gas sales and $11.3 million for the three
months ended March 31, 2023. Natural gas average sales prices,
however, exclude $0.49 per Mcf of such GP&T charges for the
three months ended March 31, 2024 and $0.47 per Mcf for the three
months ended March 31, 2023.
(2)
NGL sales for the three months ended March
31, 2024 include $22.9 million of GP&T that are reflected as a
reduction to NGL sales and $16.1 million for the three months ended
March 31, 2023. NGL average sales prices, however, exclude $3.45
per Bbl of such GP&T charges for the three months ended March
31, 2024 and $5.77 per Bbl for the three months ended March 31,
2023.
(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 March
31,
2024
2023
Operating costs (in thousands):
Lease operating expenses
$
168,671
$
74,532
Severance and ad valorem taxes
96,166
48,509
Gathering, processing and transportation
expenses
39,055
15,482
Operating cost metrics:
Lease operating expenses (per Boe)
$
5.80
$
5.38
Severance and ad valorem taxes (% of
revenue)
7.7
%
7.9
%
Gathering, processing and transportation
expenses (per Boe)
$
1.34
$
1.12
Permian Resources Corporation
Consolidated Statements of Operations (unaudited) (in thousands,
except per share data)
Three Months Ended March
31,
2024
2023
Operating revenues
Oil and gas sales
$
1,242,999
$
616,268
Operating expenses
Lease operating expenses
168,671
74,532
Severance and ad valorem taxes
96,166
48,509
Gathering, processing and transportation
expenses
39,055
15,482
Depreciation, depletion and
amortization
410,179
188,219
General and administrative expenses
37,373
35,474
Merger and integration expense
11,123
13,299
Impairment and abandonment expense
20
245
Exploration and other expenses
11,488
4,374
Total operating expenses
774,075
380,134
Net gain (loss) on sale of long-lived
assets
112
66
Income from operations
469,036
236,200
Other income (expense)
Interest expense
(72,587
)
(36,777
)
Net gain (loss) on derivative
instruments
(121,129
)
54,512
Other income (expense)
3,232
120
Total other income (expense)
(190,484
)
17,855
Income before income taxes
278,552
254,055
Income tax expense
(48,957
)
(34,254
)
Net income
229,595
219,801
Less: Net income attributable to
noncontrolling interest
(83,020
)
(117,681
)
Net income attributable to Class A Common
Stock
$
146,575
$
102,120
Income per share of Class A Common
Stock:
Basic
$
0.27
$
0.35
Diluted
$
0.25
$
0.31
Weighted average Class A Common Stock
outstanding:
Basic
552,472
295,913
Diluted
595,352
335,848
Permian Resources Corporation
Consolidated Balance Sheets (unaudited) (in thousands, except share
and per share amounts)
March 31, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
$
12,692
$
73,290
Accounts receivable, net
557,243
481,060
Derivative instruments
5,000
70,591
Prepaid and other current assets
32,442
25,451
Total current assets
607,377
650,392
Property and Equipment
Oil and natural gas properties, successful
efforts method
Unproved properties
2,476,541
2,401,317
Proved properties
15,492,619
15,036,687
Accumulated depreciation, depletion and
amortization
(3,808,590
)
(3,401,895
)
Total oil and natural gas properties,
net
14,160,570
14,036,109
Other property and equipment, net
45,007
43,647
Total property and equipment, net
14,205,577
14,079,756
Noncurrent assets
Operating lease right-of-use assets
123,147
59,359
Other noncurrent assets
145,208
176,071
TOTAL ASSETS
$
15,081,309
$
14,965,578
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses
$
977,114
$
1,167,525
Operating lease liabilities
53,172
33,006
Derivative instruments
33,687
2,725
Other current liabilities
48,059
38,297
Total current liabilities
1,112,032
1,241,553
Noncurrent liabilities
Long-term debt, net
3,909,418
3,848,781
Asset retirement obligations
128,160
121,417
Deferred income taxes
441,839
422,627
Operating lease liabilities
71,898
28,302
Other noncurrent liabilities
69,766
73,150
Total liabilities
5,733,113
5,735,830
Commitments and contingencies (Note
12)
Shareholders’ equity
Common stock, $0.0001 par value,
1,500,000,000 shares authorized:
Class A: 587,622,487 shares issued and
582,262,542 shares outstanding at March 31, 2024 and 544,610,984
shares issued and 540,789,758 shares outstanding at December 31,
2023
59
54
Class C: 187,607,059 shares issued and
outstanding at March 31, 2024 and 230,962,833 shares issued and
outstanding at December 31, 2023
19
23
Additional paid-in capital
6,331,073
5,766,881
Retained earnings (accumulated
deficit)
626,930
569,139
Total shareholders' equity
6,958,081
6,336,097
Noncontrolling interest
2,390,115
2,893,651
Total equity
9,348,196
9,229,748
TOTAL LIABILITIES AND EQUITY
$
15,081,309
$
14,965,578
Permian Resources Corporation
Consolidated Statements of Cash Flows (unaudited) (in
thousands)
Three Months Ended March
31,
2024
2023
Cash flows from operating
activities:
Net income
$
229,595
$
219,801
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and
amortization
410,179
188,219
Stock-based compensation expense
9,631
17,871
Impairment and abandonment expense
20
245
Deferred tax expense
46,979
33,454
Net (gain) loss on sale of long-lived
assets
(112
)
(66
)
Non-cash portion of derivative (gain)
loss
128,474
(14,777
)
Amortization of debt issuance costs,
discount and premium
1,531
2,796
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable
(85,138
)
(1,503
)
(Increase) decrease in prepaid and other
assets
5,350
(1,016
)
Increase (decrease) in accounts payable
and other liabilities
(98,911
)
(6,811
)
Net cash provided by operating
activities
647,598
438,213
Cash flows from investing
activities:
Acquisition of oil and natural gas
properties, net
(97,019
)
(100,755
)
Drilling and development capital
expenditures
(519,623
)
(315,285
)
Purchases of other property and
equipment
(2,772
)
(1,204
)
Contingent considerations received related
to divestiture
—
60,000
Proceeds from sales of oil and natural gas
properties
66
65,116
Net cash used in investing activities
(619,348
)
(292,128
)
Cash flows from financing
activities:
Proceeds from borrowings under revolving
credit facility
220,000
160,000
Repayment of borrowings under revolving
credit facility
(160,000
)
(260,000
)
Debt issuance costs
(1,880
)
—
Proceeds from exercise of stock
options
58
231
Share repurchases
(31,492
)
(61,578
)
Dividends paid
(87,194
)
(15,192
)
Distributions paid to noncontrolling
interest owners
(28,327
)
(13,324
)
Net cash provided by (used in) financing
activities
(88,835
)
(189,863
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(60,585
)
(43,778
)
Cash, cash equivalents and restricted
cash, beginning of period
73,864
69,932
Cash, cash equivalents and restricted
cash, end of period
$
13,279
$
26,154
Reconciliation of cash, cash equivalents and restricted cash
presented on the Consolidated Statements of Cash Flows for the
periods presented:
Three Months Ended March
31,
2024
2023
Cash and cash equivalents
$
12,692
$
25,593
Restricted cash
587
561
Total cash, cash equivalents and
restricted cash
$
13,279
$
26,154
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 other 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)
3/31/2024
12/31/2023
9/30/2023
6/30/2023
3/31/2023
Adjusted EBITDAX reconciliation to net
income:
Net income attributable to Class A Common
Stock
$
146,575
$
255,354
$
45,433
$
73,399
$
102,120
Net income attributable to noncontrolling
interest
83,020
157,265
52,896
75,555
117,681
Interest expense
72,587
63,024
40,582
36,826
36,777
Income tax expense
48,957
78,889
16,254
26,548
34,254
Depreciation, depletion and
amortization
410,179
367,427
236,204
215,726
188,219
Impairment and abandonment expense
20
5,947
245
244
245
Non-cash derivative (gain) loss
128,474
(180,179
)
161,672
18,678
(14,777
)
Stock-based compensation expense(1)
9,094
8,495
15,633
35,042
16,707
Exploration and other expenses
11,488
4,669
5,031
5,263
4,374
Merger and integration expense
11,123
97,260
10,422
4,350
13,299
(Gain) loss on sale of long-lived
assets
(112
)
(82
)
(63
)
—
(66
)
Adjusted EBITDAX
$
921,405
$
858,069
$
584,309
$
491,631
$
498,833
_______________________________________
(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, premium 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 March 31, 2024, 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)
March 31, 2024
Long-term debt, net
3,909,418
Unamortized debt discount, premium and
issuance costs on senior notes
16,381
Long-term debt
3,925,799
Less: cash and cash equivalents
(12,692
)
Net debt (Non-GAAP)
3,913,107
LQA EBITDAX(1)
3,685,620
Net debt-to-LQA EBITDAX
1
_______________________________________
(1)
Represents adjusted EBITDAX (defined and
reconciled in the section above) for the three months ended March
31, 2024, 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 March
31,
(in thousands)
2024
2023
Basic weighted average shares of Class A
Common Stock outstanding
552,472
295,913
Weighted average shares of Class C Common
Stock
218,811
263,369
Adjusted basic weighted average shares
outstanding
771,283
559,282
Basic weighted average shares of Class A
Common Stock outstanding
552,472
295,913
Add: Dilutive effects of Convertible
Senior Notes
28,355
27,314
Add: Dilutive effects of equity awards
14,525
12,621
Diluted weighted average shares of Class A
Common Stock outstanding
595,352
335,848
Weighted average shares of Class C Common
Stock
218,811
263,369
Adjusted diluted weighted average
shares outstanding
814,163
599,217
Adjusted Operating Cash Flow and Adjusted Free Cash
Flow
Adjusted operating cash flow and adjusted free cash flow are
supplemental non-GAAP financial measures used by management and
external users of our consolidated financial statements, such as
industry analysts, investors, lenders and rating agencies. We
define adjusted operating cash flow as net cash provided by
operating activities adjusted to remove changes in working capital,
merger and integration and other non-recurring charges, and
estimated tax distributions to our non-controlling interest owners.
Adjusted operating cash flows is reduced by total cash capital
expenditures to arrive at adjusted free cash flows.
Our management believes adjusted operating 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, its merger and integration
and other non-recurring costs or estimated tax distributions to
noncontrolling interest owners after funding its capital
expenditures 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 computation
of adjusted operating cash flow and adjusted free cash flow may not
be comparable to other similarly titled measures of other
companies. Adjusted operating 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.
Adjusted operating 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
adjusted operating 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:
Three Months Ended March
31,
(in thousands, except per share
data)
2024
2023
Net cash provided by operating
activities
$
647,598
$
438,213
Changes in working capital:
Accounts receivable
85,138
1,503
Prepaid and other assets
(5,350
)
1,016
Accounts payable and other liabilities
98,911
6,811
Merger and integration expense &
other
17,612
13,299
Estimated tax distribution to
noncontrolling interest owners(1)
(335
)
—
Adjusted operating cash flow
843,574
460,842
Less: total cash capital expenditures
(519,623
)
(315,285
)
Adjusted free cash flow
$
323,951
$
145,557
Adjusted basic weighted average shares
outstanding
771,283
559,282
Adjusted operating cash flow per adjusted
basic share
$
1.09
$
0.82
Adjusted free cash flow per adjusted basic
share
$
0.42
$
0.26
_______________________________________
(1)
Reflects estimated future distributions to
noncontrolling interest owners based upon current federal and state
income tax expense recognized during the period and expected to be
paid by the partnership. Such estimates are based upon the
noncontrolling interest ownership percentage as of three months
ended March 31, 2024.
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 attributable
to noncontrolling interest adjusted for non-cash gains or losses on
derivatives, merger and integration expense, other nonrecurring
charges, 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 March
31,
(in thousands, except per share
data)
2024
2023
Net income attributable to Class A Common
Stock
$
146,575
$
102,120
Net income attributable to noncontrolling
interest
83,020
117,681
Non-cash derivative (gain) loss
128,474
(14,777
)
Merger and integration expense &
other
17,612
13,299
Impairment and abandonment expense
20
245
(Gain) loss on sale of long-lived
assets
(112
)
(66
)
Adjusted net income excluding above
items
375,589
218,502
Income tax expense attributable to the
above items(1)
(51,528
)
(26,186
)
Adjusted Net Income
$
324,061
$
192,316
Adjusted basic weighted average shares
outstanding (Non-GAAP)(2)
771,283
559,282
Adjusted net income per adjusted basic
share
$
0.42
$
0.34
_______________________________________
(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 April 30, 2024. 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
April 2024 - June 2024
3,612,500
39,698
$77.27
July 2024 - September 2024
3,634,000
39,500
76.08
October 2024 - December 2024
3,634,000
39,500
74.94
January 2025 - March 2025
2,250,000
25,000
74.30
April 2025 - June 2025
2,275,000
25,000
73.05
July 2025 - September 2025
2,300,000
25,000
71.88
October 2025 - December 2025
2,300,000
25,000
70.88
January 2026 - March 2026
405,000
4,500
71.74
April 2026 - June 2026
409,500
4,500
70.75
July 2026 - September 2026
414,000
4,500
69.80
October 2026 - December 2026
414,000
4,500
69.00
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg. Collar
Price Ranges
($/Bbl)(2)
Crude oil collars
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
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
April 2024 - June 2024
3,841,018
42,209
$0.97
July 2024 - September 2024
4,048,000
44,000
0.98
October 2024 - December 2024
4,048,000
44,000
0.98
January 2025 - March 2025
2,250,000
25,000
1.10
April 2025 - June 2025
2,275,000
25,000
1.10
July 2025 - September 2025
2,300,000
25,000
1.10
October 2025 - December 2025
2,300,000
25,000
1.10
January 2026 - March 2026
405,000
4,500
1.12
April 2026 - June 2026
409,500
4,500
1.12
July 2026 - September 2026
414,000
4,500
1.12
October 2026 - December 2026
414,000
4,500
1.12
Period
Volume (Bbls)
Volume (Bbls/d)
Wtd. Avg.
Differential
($/Bbl)(5)
Crude oil roll differential swaps
April 2024 - June 2024
3,842,018
42,220
$0.51
July 2024 - September 2024
4,048,000
44,000
0.53
October 2024 - December 2024
4,048,000
44,000
0.53
January 2025 - March 2025
2,250,000
25,000
0.43
April 2025 - June 2025
2,275,000
25,000
0.43
July 2025 - September 2025
2,300,000
25,000
0.43
October 2025 - December 2025
2,300,000
25,000
0.43
January 2026 - March 2026
405,000
4,500
0.37
April 2026 - June 2026
409,500
4,500
0.37
July 2026 - September 2026
414,000
4,500
0.37
October 2026 - December 2026
414,000
4,500
0.37
_______________________________________
(1)
These crude oil swap transactions are
settled based on the NYMEX WTI index price on each trading day
within the specified monthly settlement period versus the
contractual swap price for the volumes stipulated.
(2)
These crude oil collars are settled based
on the NYMEX WTI index price on each trading day within the
specified monthly settlement period versus the contractual floor
and ceiling prices for the volumes stipulated.
(3)
These crude oil deferred premium puts are
settled based on the NYMEX WTI index price on each trading day
within the specified monthly settlement period versus the
contractual put prices for the volumes stipulated.
(4)
These crude oil basis swap transactions
are settled based on the difference between the arithmetic average
of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices, during each
applicable monthly settlement period.
(5)
These crude oil roll swap transactions are
settled based on the difference between the arithmetic average of
NYMEX WTI calendar month prices and the physical crude oil delivery
month price.
Period
Volume (MMBtu)
Volume (MMBtu/d)
Wtd. Avg. Gas Price
($/MMBtu)(1)
Natural gas swaps
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
April 2024 - June 2024
10,920,000
120,000
$(0.99)
July 2024 - September 2024
11,040,000
120,000
(0.99)
October 2024 - December 2024
11,040,000
120,000
(0.98)
January 2025 - March 2025
3,600,000
40,000
(0.74)
April 2025 - June 2025
3,640,000
40,000
(0.74)
July 2025 - September 2025
3,680,000
40,000
(0.74)
October 2025 - December 2025
3,680,000
40,000
(0.74)
Period
Volume (MMBtu)
Volume (MMBtu/d)
Wtd. Avg. Collar
Price Ranges
($/MMBtu)(3)
Natural gas collars
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 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/20240507843399/en/
Hays Mabry – Vice President, Investor Relations Mae Herrington –
Engineering Advisor, Investor Relations (832) 240-3265
ir@permianres.com
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