Permian Resources Announces Fourth Quarter 2022 Results and Provides Improved 2023 Guidance

Permian Resources Corporation (“Permian Resources” or the “Company”) (NYSE: PR) today announced its fourth quarter and full year 2022 financial and operational results and 2023 operational plans.

Recent Financial and Operational Highlights

• Delivered fourth quarter oil production of 81.4 MBbls/d, exceeding the mid-point of prior outlook by 9%
• Reported net cash provided by operating activities of $528 million and adjusted free cash flow¹ of $256 million
• Executed a series of portfolio optimization transactions, adding high-return inventory and generating ~$100 million of net cash proceeds
• Enhanced capital efficiency driven by strong well performance and cost control
• Delivered controllable cash costs of $7.89 per Boe
• Announced quarterly base dividend of $0.05 per share

2023 Financial and Operational Plan

• Increased 2023 oil and total production guidance by 4% and 3%, respectively, compared to previous outlook
  • Continue to target oil production growth of ~10% in the fourth quarter 2023 compared to the prior year period, despite exceeding fourth quarter 2022 production outlook
• Currently operating seven rigs, with plans to reduce to six rigs during second quarter 2023 as a result of operational synergies
• Reduced controllable cash costs by ~5% to $7.60 per Boe compared to previous outlook
• Announced 2023 total capital budget of $1.25 to $1.45 billion
  • Increase to prior outlook driven primarily by higher working interest (85% from 80% previously) and longer lateral lengths (9,300’ from 9,000’ previously)
• Variable return to be initiated based upon first quarter 2023 results

Management Commentary

“Permian Resources’ outstanding fourth quarter results reflect a continuation of our strong operational track record,” said Will Hickey, Co-CEO of Permian Resources. “In our first full quarter post-merger, our team delivered strong financial and operational results driven by well outperformance and continued cost discipline.”

“Our team has worked diligently to build an optimized 2023 plan that maximizes capital efficiency and leads to higher oil production and lower cash costs, accomplishing our ultimate goal of driving more free cash flow and higher returns for our investors,” said James Walter, Co-CEO of the Company. “We believe Permian Resources represents a unique value proposition for investors, with the benefits of scaled operations in the Delaware Basin combined with a nimble and creative approach to value creation, as exemplified by our recent portfolio optimization efforts.”

Financial Results

For the quarter, Permian Resources generated net cash provided by operating activities of $528 million and adjusted free cash flow of $256 million. The Company also reported net income attributable to Class A Common Stock during the fourth quarter of $83 million, or $0.26 per diluted share.

Average daily crude oil production for the fourth quarter was 81,378 barrels of oil per day (“Bbls/d”), and total production during the quarter averaged 158,208 barrels of oil equivalent per day (“Boe/d”).

Permian Resources maintains a strong financial position and low leverage profile. At December 31, 2022, the Company had approximately $60 million in cash on hand and $385 million of borrowings outstanding under its revolving credit facility. Net debt-to-LQA EBITDAX¹ at December 31, 2022 was approximately 0.9x, and the Company has no debt maturities until 2026.

Operational Results

Permian Resources continues to optimize its Delaware Basin acreage position through large-scale, co-development well packages. The Company significantly exceeded its fourth quarter production targets, while maintaining cost discipline. Permian Resources’ robust production results during the quarter were primarily attributable to better than expected well performance, in addition to higher production runtime and reduced cycle times. Total capital expenditures incurred for the quarter were $325 million.

2023 Operational Plans and Targets

Based on recent operational results, Permian Resources increased its 2023 oil production target by 4% to approximately 85 MBbls/d and raised its total production target by 3% to approximately 162 MBoe/d, based on the mid-point of guidance. Permian Resources also lowered its full year 2023 guidance range for controllable cash costs (LOE, Cash G&A and GP&T) on a per unit basis by approximately 5%, compared to its preliminary full year outlook.

The estimated fiscal year 2023 total capital budget is approximately $1.25 billion to $1.45 billion. Permian Resources expects to turn-in-line (“TIL”) approximately 150 gross wells, with an average working interest of approximately 85% and 8/8ths net revenue interest of approximately 78%. This represents an increase from its previously expected full year working interest of 80%. The Company also expects its average completed lateral length during 2023 to increase to approximately 9,300 feet, compared to 9,000 feet previously.

Due to recent efficiency gains, Permian Resources expects to further reduce its operated rig program from seven currently to six during the second quarter. Assuming planned activity levels, the Company is maintaining crude oil production growth of approximately 10% in the fourth quarter 2023 compared to the fourth quarter 2022.

“Through the implementation of combined best practices, our operations team has accelerated the realization of higher operational efficiencies and reduced cycle times,” said Will Hickey, Co-CEO. “This will allow us to reduce our operated rig count sooner than anticipated, while drilling and completing the same amount of wells for the full year.”

(For a detailed table summarizing Permian Resources’ 2023 operational and financial guidance, please see the Appendix of this press release.)

Shareholder Returns

Permian Resources announced today that its Board of Directors declared a quarterly cash dividend of $0.05 per share of Class A common stock, or $0.20 per share on an annualized basis. The dividend is payable on March 15, 2023 to shareholders of record as of March 7, 2023. The Company’s base dividend represents an annualized yield of 2.1%, as of February 21, 2023.

Beginning in the first quarter of 2023, Permian Resources expects to initiate its variable return of capital program, which is structured to distribute at least 50% of free cash flow after the base dividend through a variable dividend, share repurchases or a combination of both. The Company’s inaugural variable dividend will be paid during the second quarter of 2023.

Year-End 2022 Proved Reserves

Permian Resources reported year-end 2022 total proved reserves of 582 MMBoe compared to 305 MMBoe at prior year-end. At year-end 2022, proved reserves consisted of 49% oil, 30% natural gas and 21% natural gas liquids. Proved developed reserves were 341 MMBoe (59% of total proved reserves) at December 31, 2022. Permian Resources had a standardized measure of discounted future net cash flows of $9.4 billion at December 31, 2022. The pre-tax present value at 10% (“Pre-tax PV 10%”, a non-GAAP financial measure reconciled within the Appendix) of Permian Resources’ total proved reserves was $11.7 billion at year-end.

Netherland Sewell & Associates, Inc., an independent reserve engineering firm, prepared Permian Resources’ year-end reserves estimates for the year ended December 31, 2022. (For additional information relating to our reserves, please see the Appendix of this press release.)

Annual Report on Form 10-K

Permian Resources’ financial statements and related footnotes will be available in its Annual Report on Form 10-K for the year ended December 31, 2022, which is expected to be filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023.

Conference Call and Webcast

Permian Resources will host an investor conference call on Thursday, February 23, 2023 at 8:00 a.m. Central (9:00 a.m. Eastern) to discuss fourth quarter and full year 2022 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) 886-7786 (Conference ID: 74862610) 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: 862610) 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 located in the core of the Delaware Basin. 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, 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;
• the effects of excess supply of oil and natural gas resulting from the reduced demand caused by the Coronavirus Disease 2019 pandemic and the actions by certain oil and natural gas producing countries;
• 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;
• 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 ability to realize the anticipated benefits and synergies from the Merger and effectively integrate the assets of CRP and Colgate;
• 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;
• 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 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 merger, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating oil and gas 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 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.

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:

Net Debt-to-LQA EBITDAX

Net debt-to-LQA EBITDAX is a non-GAAP financial measure. We define net debt as long-term debt, net, plus unamortized debt discount and debt issuance costs on our senior notes minus cash and cash equivalents.

We define net debt-to-LQA EBITDAX as net debt (defined above) divided by Adjusted EBITDAX (defined and reconciled in the section above) for the three months ended December 31, 2022, 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:

Free Cash Flow and Adjusted Free Cash Flow

Free cash flow and adjusted free cash flow are supplemental non-GAAP financial measures that are used by management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. We define free cash flow as net cash provided by operating activities before changes in working capital, less incurred capital expenditures and adjusted free cash flow as free cash flow before non-recurring merger and integration expense.

Our management believes free cash flow and adjusted free cash flow are useful indicators of the Company’s ability to internally fund its exploration and development activities and to service or incur additional debt, without regard to the timing of settlement of either operating assets and liabilities or accounts payable related to capital expenditures. The Company believes that these measures, as so adjusted, present meaningful indicators of the Company’s actual sources and uses of capital associated with its operations conducted during the applicable period. Our computations of free cash flow and adjusted free cash flow may not be comparable to other similarly titled measures of other companies. Free cash flow and adjusted free cash flow should not be considered as alternatives to, or more meaningful than, net cash provided by operating activities as determined in accordance with GAAP or as indicators of our operating performance or liquidity.

Free cash flow and adjusted free cash flow are not financial measures that are determined in accordance with GAAP. Accordingly, the following table presents a reconciliation of free cash flow and adjusted free cash flow to net cash provided by operating activities, which is the most directly comparable financial measure calculated and presented in accordance with GAAP:

The following table summarizes the approximate volumes and average contract prices of the hedge contracts the Company had in place as of December 31, 2022 and additional contracts entered into through February 17, 2023:

The following table summarizes estimated proved reserves, pre-tax PV 10%, and standardized measure of discounted future cash flows for the periods indicated:

View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005896/en/