Permian Resources Announces Second Quarter 2023 Results
Second Quarter Financial and Operational Highlights
-
Increased both crude oil and total average production by
8% quarter-over-quarter to 84.4 MBbls/d and 165.9 MBoe/d, respectively -
Announced cash capital expenditures of
$371 million $386 million -
Reported net cash provided by operating activities of
$448 million $80 million -
Continued to realize significant operational efficiency gains, driving meaningful improvements in drilling and completion cycle times
-
Increased average completed and drilled feet per day by
31% and13% , respectively, compared to third quarter 2022
-
Increased average completed and drilled feet per day by
-
Delivered total return of capital of
$57 million $0.10 -
Quarterly base dividend of
$0.05 -
Variable dividend of
$0.05
-
Quarterly base dividend of
Management Commentary
“Permian Resources had a strong operational and financial quarter, driven by robust well results across both
“We are proud to continue building upon our track record of operational execution and returning capital to shareholders. For the second quarter, we delivered
Operational and Financial Results
Permian Resources continued the efficient development of its core
Second quarter average realized prices were
Second quarter total controllable cash costs (LOE, GP&T and cash G&A) were
Second quarter total cash and accrued capital expenditures (“capex”) were
Since closing the merger in September of 2022, Permian Resources has continued to capture significant synergies, driven by higher operational efficiencies and lower costs. Through completion design modifications and quality control initiatives, the Company’s average completed feet and pump hours per day for the quarter increased by
“These operational efficiencies have resulted in a meaningful improvement to our cycle times,” said Will Hickey, Co-CEO. “As a result, we recently reduced our operated rig program to six compared to seven during the first half of the year, while maintaining our fourth quarter crude oil production growth target of approximately
For the second quarter, Permian Resources generated net cash provided by operating activities of
Permian Resources continues to maintain a strong financial position and low leverage profile. At June 30, 2023, the Company had
Shareholder Returns
Permian Resources announced today that its Board of Directors (the “Board”) declared a quarterly base cash dividend of
“Consistent with our game plan, we continue to return
Leadership Change
Permian Resources announced today that Matt Garrison will be departing his role as Chief Operating Officer for personal reasons, effective September 1, 2023. At that time, Mr. Garrison’s direct operational reports will report to Will Hickey, Co-CEO. Permian Resources believes this structure will streamline the Company’s reporting process and provide for direct communication from individual operational departments to the Co-CEOs.
“On behalf of the Board and the entire organization, I want to thank Matt for his leadership and dedication,” said Will Hickey, Co-CEO. “Matt’s contribution was fundamental to the successful integration between Colgate and Centennial. We will miss working with him and wish him the best in the future.”
“The past seven years at Permian Resources and its predecessor company have been incredibly rewarding. I am proud of the accomplishments of the entire Permian Resources team and grateful for the relationships built over that time. I wish Permian Resources continued success going forward,” said Matt Garrison.
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 June 30, 2023, which is expected to be filed with the Securities and Exchange Commission (“SEC”) on August 3, 2023.
Conference Call and Webcast
Permian Resources will host an investor conference call on Thursday, August 3, 2023 at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss second 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) 886-7786 (Conference ID: 63908236) 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: 908236) for a 14-day period following the call.
About Permian Resources
Headquartered in
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 asRussia , 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 andSouth America ; - the effects of excess supply of oil and natural gas resulting from reduced demand caused by the COVID-19 pandemic and the actions taken in response by certain oil and natural gas producing countries;
- our ability to realize the anticipated benefits and synergies from the recently-closed merger and effectively integrate the assets of Centennial and Colgate;
- 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, 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;
- 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 of the company with Colgate Energy Partners III, LLC (the “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.
2) Peer group includes Callon Petroleum, Earthstone Energy, Magnolia Oil & Gas, Matador Resources, PDC Energy and SM Energy. Please see the Company’s Earnings Presentation for more details.
Permian Resources Corporation |
|||||||||||||||
Operating Highlights |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net revenues (in thousands): |
|
|
|
|
|
|
|
||||||||
Oil sales |
$ |
549,226 |
|
|
$ |
349,591 |
|
|
$ |
1,073,612 |
|
|
$ |
612,358 |
|
Natural gas sales(1) |
|
23,647 |
|
|
|
68,030 |
|
|
|
55,769 |
|
|
|
107,048 |
|
NGL sales(2) |
|
50,525 |
|
|
|
55,033 |
|
|
|
110,285 |
|
|
|
100,525 |
|
Oil and gas sales |
$ |
623,398 |
|
|
$ |
472,654 |
|
|
$ |
1,239,666 |
|
|
$ |
819,931 |
|
|
|
|
|
|
|
|
|
||||||||
Average sales prices: |
|
|
|
|
|
|
|
||||||||
Oil (per Bbl) |
$ |
71.52 |
|
|
$ |
104.69 |
|
|
$ |
72.89 |
|
|
$ |
97.42 |
|
Effect of derivative settlements on average price (per Bbl) |
|
3.42 |
|
|
|
(16.97 |
) |
|
|
3.53 |
|
|
|
(15.03 |
) |
Oil including the effects of hedging (per Bbl) |
$ |
74.94 |
|
|
$ |
87.72 |
|
|
$ |
76.42 |
|
|
$ |
82.39 |
|
|
|
|
|
|
|
|
|
||||||||
Average NYMEX WTI price for oil (per Bbl) |
$ |
73.78 |
|
|
$ |
108.34 |
|
|
$ |
74.95 |
|
|
$ |
101.37 |
|
Oil differential from NYMEX |
|
(2.26 |
) |
|
|
(3.65 |
) |
|
|
(2.06 |
) |
|
|
(3.95 |
) |
|
|
|
|
|
|
|
|
||||||||
Natural gas price excluding the effects of GP&T (per Mcf)(1) |
$ |
1.24 |
|
|
$ |
6.22 |
|
|
$ |
1.52 |
|
|
$ |
5.13 |
|
Effect of derivative settlements on average price (per Mcf) |
|
0.52 |
|
|
|
(1.55 |
) |
|
|
0.55 |
|
|
|
(1.06 |
) |
Natural gas including the effects of hedging (per Mcf) |
$ |
1.76 |
|
|
$ |
4.67 |
|
|
$ |
2.07 |
|
|
$ |
4.07 |
|
|
|
|
|
|
|
|
|
||||||||
Average NYMEX Henry Hub price for natural gas (per MMBtu) |
$ |
2.12 |
|
|
$ |
7.39 |
|
|
$ |
2.39 |
|
|
$ |
6.00 |
|
Natural gas differential from NYMEX |
|
(0.88 |
) |
|
|
(1.17 |
) |
|
|
(0.87 |
) |
|
|
(0.87 |
) |
|
|
|
|
|
|
|
|
||||||||
NGL price excluding the effects of GP&T (per Bbl)(2) |
$ |
20.73 |
|
|
$ |
44.77 |
|
|
$ |
23.69 |
|
|
$ |
46.74 |
|
|
|
|
|
|
|
|
|
||||||||
Net production: |
|
|
|
|
|
|
|
||||||||
Oil (MBbls) |
|
7,680 |
|
|
|
3,339 |
|
|
|
14,730 |
|
|
|
6,286 |
|
Natural gas (MMcf) |
|
25,092 |
|
|
|
10,941 |
|
|
|
49,066 |
|
|
|
20,866 |
|
NGL (MBbls) |
|
3,231 |
|
|
|
1,230 |
|
|
|
6,029 |
|
|
|
2,151 |
|
Total (MBoe)(3) |
|
15,093 |
|
|
|
6,392 |
|
|
|
28,937 |
|
|
|
11,914 |
|
|
|
|
|
|
|
|
|
||||||||
Average daily net production: |
|
|
|
|
|
|
|
||||||||
Oil (Bbls/d) |
|
84,393 |
|
|
|
36,696 |
|
|
|
81,379 |
|
|
|
34,729 |
|
Natural gas (Mcf/d) |
|
275,734 |
|
|
|
120,225 |
|
|
|
271,080 |
|
|
|
115,280 |
|
NGL (Bbls/d) |
|
35,502 |
|
|
|
13,507 |
|
|
|
33,310 |
|
|
|
11,881 |
|
Total (Boe/d)(3) |
|
165,850 |
|
|
|
70,240 |
|
|
|
159,869 |
|
|
|
65,824 |
|
| ____________________ | |
(1) |
Natural gas sales for the three and six months ended June 30, 2023 include |
(2) |
NGL sales for the three and six months ended June 30, 2023 include |
(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 June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating costs (in thousands): |
|
|
|
|
|
|
|
||||||||
Lease operating expenses |
$ |
82,991 |
|
|
$ |
28,900 |
|
|
$ |
157,523 |
|
|
$ |
57,634 |
|
Severance and ad valorem taxes |
|
48,927 |
|
|
|
34,695 |
|
|
|
97,436 |
|
|
|
59,746 |
|
Gathering, processing and transportation expenses |
|
21,753 |
|
|
|
25,756 |
|
|
|
37,235 |
|
|
|
47,647 |
|
Operating cost metrics: |
|
|
|
|
|
|
|
||||||||
Lease operating expenses (per Boe) |
$ |
5.50 |
|
|
$ |
4.52 |
|
|
$ |
5.44 |
|
|
$ |
4.84 |
|
Severance and ad valorem taxes (% of revenue) |
|
7.8 |
% |
|
|
7.3 |
% |
|
|
7.9 |
% |
|
|
7.3 |
% |
Gathering, processing and transportation expenses (per Boe) |
$ |
1.44 |
|
|
$ |
4.03 |
|
|
$ |
1.29 |
|
|
$ |
4.00 |
|
Permian Resources Corporation |
|||||||||||||||
Consolidated Statements of Operations (unaudited) |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating revenues |
|
|
|
|
|
|
|
||||||||
Oil and gas sales |
$ |
623,398 |
|
|
$ |
472,654 |
|
|
$ |
1,239,666 |
|
|
$ |
819,931 |
|
Operating expenses |
|
|
|
|
|
|
|
||||||||
Lease operating expenses |
|
82,991 |
|
|
|
28,900 |
|
|
|
157,523 |
|
|
|
57,634 |
|
Severance and ad valorem taxes |
|
48,927 |
|
|
|
34,695 |
|
|
|
97,436 |
|
|
|
59,746 |
|
Gathering, processing and transportation expenses |
|
21,753 |
|
|
|
25,756 |
|
|
|
37,235 |
|
|
|
47,647 |
|
Depreciation, depletion and amortization |
|
215,726 |
|
|
|
82,117 |
|
|
|
403,945 |
|
|
|
153,126 |
|
General and administrative expenses |
|
52,736 |
|
|
|
9,947 |
|
|
|
88,210 |
|
|
|
40,550 |
|
Merger and integration expense |
|
4,350 |
|
|
|
5,685 |
|
|
|
17,649 |
|
|
|
5,685 |
|
Impairment and abandonment expense |
|
244 |
|
|
|
506 |
|
|
|
489 |
|
|
|
3,133 |
|
Exploration and other expenses |
|
5,263 |
|
|
|
1,954 |
|
|
|
9,637 |
|
|
|
4,261 |
|
Total operating expenses |
|
431,990 |
|
|
|
189,560 |
|
|
|
812,124 |
|
|
|
371,782 |
|
Net gain (loss) on sale of long-lived assets |
|
— |
|
|
|
(1,406 |
) |
|
|
66 |
|
|
|
(1,324 |
) |
Income (loss) from operations |
|
191,408 |
|
|
|
281,688 |
|
|
|
427,608 |
|
|
|
446,825 |
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
(36,826 |
) |
|
|
(14,326 |
) |
|
|
(73,603 |
) |
|
|
(27,480 |
) |
Net gain (loss) on derivative instruments |
|
20,601 |
|
|
|
(34,134 |
) |
|
|
75,113 |
|
|
|
(163,657 |
) |
Other income (expense) |
|
319 |
|
|
|
85 |
|
|
|
439 |
|
|
|
203 |
|
Total other income (expense) |
|
(15,906 |
) |
|
|
(48,375 |
) |
|
|
1,949 |
|
|
|
(190,934 |
) |
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes |
|
175,502 |
|
|
|
233,313 |
|
|
|
429,557 |
|
|
|
255,891 |
|
Income tax (expense) benefit |
|
(26,548 |
) |
|
|
(41,487 |
) |
|
|
(60,802 |
) |
|
|
(48,263 |
) |
Net income (loss) |
|
148,954 |
|
|
|
191,826 |
|
|
|
368,755 |
|
|
|
207,628 |
|
Less: Net (income) loss attributable to noncontrolling interest |
|
(75,555 |
) |
|
|
— |
|
|
|
(193,236 |
) |
|
|
— |
|
Net income (loss) attributable to Class A Common Stock |
$ |
73,399 |
|
|
$ |
191,826 |
|
|
|
175,519 |
|
|
$ |
207,628 |
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) per share of Class A Common Stock: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
0.23 |
|
|
$ |
0.67 |
|
|
$ |
0.57 |
|
|
$ |
0.73 |
|
Diluted |
$ |
0.21 |
|
|
$ |
0.60 |
|
|
$ |
0.52 |
|
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average Class A Common Stock outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
315,168 |
|
|
|
284,992 |
|
|
|
305,593 |
|
|
|
284,922 |
|
Diluted |
|
351,915 |
|
|
|
320,104 |
|
|
|
343,935 |
|
|
|
319,893 |
|
Permian Resources Corporation |
|||||||
Consolidated Balance Sheets (unaudited) |
|||||||
(in thousands, except share and per share amounts) |
|||||||
|
June 30, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
18,280 |
|
|
$ |
59,545 |
|
Accounts receivable, net |
|
309,624 |
|
|
|
282,846 |
|
Derivative instruments |
|
87,737 |
|
|
|
100,797 |
|
Prepaid and other current assets |
|
10,396 |
|
|
|
20,602 |
|
Total current assets |
|
426,037 |
|
|
|
463,790 |
|
Property and Equipment |
|
|
|
||||
Oil and natural gas properties, successful efforts method |
|
|
|
||||
Unproved properties |
|
1,415,969 |
|
|
|
1,424,744 |
|
Proved properties |
|
9,691,058 |
|
|
|
8,869,174 |
|
Accumulated depreciation, depletion and amortization |
|
(2,811,580 |
) |
|
|
(2,419,692 |
) |
Total oil and natural gas properties, net |
|
8,295,447 |
|
|
|
7,874,226 |
|
Other property and equipment, net |
|
38,731 |
|
|
|
15,173 |
|
Total property and equipment, net |
|
8,334,178 |
|
|
|
7,889,399 |
|
Noncurrent assets |
|
|
|
||||
Operating lease right-of-use assets |
|
62,049 |
|
|
|
64,792 |
|
Other noncurrent assets |
|
104,061 |
|
|
|
74,611 |
|
TOTAL ASSETS |
$ |
8,926,325 |
|
|
$ |
8,492,592 |
|
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable and accrued expenses |
$ |
661,748 |
|
|
$ |
562,156 |
|
Operating lease liabilities |
|
36,160 |
|
|
|
29,759 |
|
Derivative instruments |
|
354 |
|
|
|
1,998 |
|
Other current liabilities |
|
24,462 |
|
|
|
11,656 |
|
Total current liabilities |
|
722,724 |
|
|
|
605,569 |
|
Noncurrent liabilities |
|
|
|
||||
Long-term debt, net |
|
2,060,070 |
|
|
|
2,140,798 |
|
Asset retirement obligations |
|
44,546 |
|
|
|
40,947 |
|
Deferred income taxes |
|
78,685 |
|
|
|
4,430 |
|
Operating lease liabilities |
|
27,894 |
|
|
|
41,341 |
|
Other noncurrent liabilities |
|
66,396 |
|
|
|
3,211 |
|
Total liabilities |
|
3,000,315 |
|
|
|
2,836,296 |
|
Commitments and contingencies (Note 12) |
|
|
|
||||
Shareholders’ equity |
|
|
|
||||
Common stock, |
|
|
|
||||
Class A: 325,446,375 shares issued and 319,646,487 shares outstanding at June 30, 2023 and 298,640,260 shares issued and 288,532,257 shares outstanding at December 31, 2022 |
|
33 |
|
|
|
30 |
|
Class C: 244,632,559 shares issued and outstanding at June 30, 2023 and 269,300,000 shares issued and outstanding at December 31, 2022 |
|
24 |
|
|
|
27 |
|
Additional paid-in capital |
|
2,944,785 |
|
|
|
2,698,465 |
|
Retained earnings (accumulated deficit) |
|
363,881 |
|
|
|
237,226 |
|
Total shareholders' equity |
|
3,308,723 |
|
|
|
2,935,748 |
|
Noncontrolling interest |
|
2,617,287 |
|
|
|
2,720,548 |
|
Total equity |
|
5,926,010 |
|
|
|
5,656,296 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
8,926,325 |
|
|
$ |
8,492,592 |
|
Permian Resources Corporation |
|||||||
Consolidated Statements of Cash Flows (unaudited) |
|||||||
(in thousands) |
|||||||
|
Six Months Ended June 30, |
||||||
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net income (loss) |
$ |
368,755 |
|
|
$ |
207,628 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
||||
Depreciation, depletion and amortization |
|
403,945 |
|
|
|
153,126 |
|
Stock-based compensation expense - equity awards |
|
53,565 |
|
|
|
12,202 |
|
Stock-based compensation expense - liability awards |
|
— |
|
|
|
5,127 |
|
Impairment and abandonment expense |
|
489 |
|
|
|
3,133 |
|
Deferred tax expense (benefit) |
|
57,199 |
|
|
|
47,663 |
|
Net (gain) loss on sale of long-lived assets |
|
(66 |
) |
|
|
1,324 |
|
Non-cash portion of derivative (gain) loss |
|
3,901 |
|
|
|
47,131 |
|
Amortization of debt issuance costs and debt discount |
|
6,278 |
|
|
|
4,226 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
(Increase) decrease in accounts receivable |
|
(11,888 |
) |
|
|
(62,751 |
) |
(Increase) decrease in prepaid and other assets |
|
(3,969 |
) |
|
|
(6,201 |
) |
Increase (decrease) in accounts payable and other liabilities |
|
8,495 |
|
|
|
42,491 |
|
Net cash provided by operating activities |
|
886,704 |
|
|
|
455,099 |
|
Cash flows from investing activities: |
|
|
|
||||
Acquisition of oil and natural gas properties, net |
|
(107,766 |
) |
|
|
(2,592 |
) |
Drilling and development capital expenditures |
|
(686,556 |
) |
|
|
(224,011 |
) |
Purchases of other property and equipment |
|
(29,050 |
) |
|
|
(2,863 |
) |
Contingent considerations received related to divestiture |
|
60,000 |
|
|
|
— |
|
Proceeds from sales of oil and natural gas properties |
|
63,986 |
|
|
|
863 |
|
Net cash used in investing activities |
|
(699,386 |
) |
|
|
(228,603 |
) |
Cash flows from financing activities: |
|
|
|
||||
Proceeds from borrowings under revolving credit facility |
|
630,000 |
|
|
|
170,000 |
|
Repayment of borrowings under revolving credit facility |
|
(715,000 |
) |
|
|
(195,000 |
) |
Debt issuance costs |
|
(603 |
) |
|
|
(8,533 |
) |
Proceeds from exercise of stock options |
|
230 |
|
|
|
8 |
|
Share repurchase |
|
(29,418 |
) |
|
|
— |
|
Dividends paid |
|
(47,619 |
) |
|
|
— |
|
Distributions paid to noncontrolling interest owners |
|
(37,883 |
) |
|
|
— |
|
Class A Common Stock repurchased from employees for taxes due upon share vestings |
|
(38,108 |
) |
|
|
(1,259 |
) |
Net cash provided by (used in) financing activities |
|
(238,401 |
) |
|
|
(34,784 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
(51,083 |
) |
|
|
191,712 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
69,932 |
|
|
|
9,935 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
18,849 |
|
|
$ |
201,647 |
|
Reconciliation of cash, cash equivalents and restricted cash presented on the Consolidated Statements of Cash Flows for the periods presented:
|
Six Months Ended June 30, |
||||
|
2023 |
|
2022 |
||
Cash and cash equivalents |
$ |
18,280 |
|
$ |
201,092 |
Restricted cash |
|
569 |
|
|
555 |
Total cash, cash equivalents and restricted cash |
$ |
18,849 |
|
$ |
201,647 |
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance with
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) |
6/30/2023 |
|
3/31/2023 |
|
12/31/2022 |
|
9/30/2022 |
|
6/30/2022 |
|||||||||
Adjusted EBITDAX reconciliation to net income: |
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) attributable to Class A Common Stock |
$ |
73,399 |
|
$ |
102,120 |
|
|
$ |
83,050 |
|
|
$ |
224,359 |
|
|
$ |
191,826 |
|
Net income (loss) attributable to noncontrolling interest |
|
75,555 |
|
|
117,681 |
|
|
|
115,658 |
|
|
|
119,145 |
|
|
|
— |
|
Interest expense |
|
36,826 |
|
|
36,777 |
|
|
|
39,358 |
|
|
|
28,807 |
|
|
|
14,326 |
|
Income tax expense |
|
26,548 |
|
|
34,254 |
|
|
|
40,860 |
|
|
|
31,169 |
|
|
|
41,487 |
|
Depreciation, depletion and amortization |
|
215,726 |
|
|
188,219 |
|
|
|
182,052 |
|
|
|
109,500 |
|
|
|
82,117 |
|
Impairment and abandonment expense |
|
244 |
|
|
245 |
|
|
|
244 |
|
|
|
498 |
|
|
|
506 |
|
Non-cash derivative (gain) loss |
|
18,678 |
|
|
(14,777 |
) |
|
|
88,635 |
|
|
|
(213,503 |
) |
|
|
(39,514 |
) |
Stock-based compensation expense(1) |
|
35,042 |
|
|
16,707 |
|
|
|
54,342 |
|
|
|
18,896 |
|
|
|
(2,487 |
) |
Exploration and other expenses |
|
5,263 |
|
|
4,374 |
|
|
|
4,765 |
|
|
|
2,352 |
|
|
|
1,954 |
|
Merger and integration expense |
|
4,350 |
|
|
13,299 |
|
|
|
12,469 |
|
|
|
59,270 |
|
|
|
5,685 |
|
(Gain) loss on sale of long-lived assets |
|
— |
|
|
(66 |
) |
|
|
(13 |
) |
|
|
3 |
|
|
|
1,406 |
|
Adjusted EBITDAX |
$ |
491,631 |
|
$ |
498,833 |
|
|
$ |
621,420 |
|
|
$ |
380,496 |
|
|
$ |
297,306 |
|
| ____________________ | |
(1) |
Includes stock-based compensation for equity awards and also for cash-based liability awards that have not yet been settled in cash, both of which relate 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 June 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) |
June 30, 2023 |
|
Long-term debt, net |
2,060,070 |
|
Unamortized debt discount and debt issuance costs on senior notes |
55,729 |
|
Long-term debt |
2,115,799 |
|
Less: cash and cash equivalents |
(18,280 |
) |
Net debt (Non-GAAP) |
2,097,519 |
|
LQA EBITDAX(1) |
1,966,524 |
|
Net debt-to-LQA EBITDAX |
1.1 |
|
(1) Represents adjusted EBITDAX (defined and reconciled in the section above) for the three months ended June 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 June 30, |
||
(in thousands) |
2023 |
|
2022 |
Basic weighted average shares of Class A Common Stock outstanding |
315,168 |
|
284,992 |
Weighted average shares of Class C Common Stock |
245,586 |
|
— |
Adjusted basic weighted average shares outstanding |
560,754 |
|
284,992 |
|
|
|
|
Basic weighted average shares of Class A Common Stock outstanding |
315,168 |
|
284,992 |
Add: Dilutive effects of Convertible Senior Notes |
27,605 |
|
27,074 |
Add: Dilutive effects of equity awards and ESPP shares |
9,142 |
|
8,038 |
Diluted weighted average shares of Class A Common Stock outstanding |
351,915 |
|
320,104 |
Weighted average shares of Class C Common Stock |
245,586 |
|
— |
Adjusted diluted weighted average shares outstanding |
597,501 |
|
320,104 |
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 June 30, |
|
Three Months Ended June 30, |
||||||||||||
(in thousands, except per share data) |
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net cash provided by operating activities |
$ |
448,491 |
|
|
$ |
294,979 |
|
|
$ |
448,491 |
|
|
$ |
294,979 |
|
Changes in working capital: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
|
10,385 |
|
|
|
8,927 |
|
|
|
10,385 |
|
|
|
8,927 |
|
Prepaid and other assets |
|
2,953 |
|
|
|
5,786 |
|
|
|
2,953 |
|
|
|
5,786 |
|
Accounts payable and other liabilities |
|
(15,306 |
) |
|
|
(31,666 |
) |
|
|
(15,306 |
) |
|
|
(31,666 |
) |
Operating cash flow before working capital changes |
|
446,523 |
|
|
|
278,026 |
|
|
|
446,523 |
|
|
|
278,026 |
|
Less: total capital expenditures incurred/paid |
|
(385,700 |
) |
|
|
(140,600 |
) |
|
|
(371,271 |
) |
|
|
(142,855 |
) |
Free cash flow |
|
60,823 |
|
|
|
137,426 |
|
|
|
75,252 |
|
|
|
135,171 |
|
Merger and integration expense |
|
4,350 |
|
|
|
5,685 |
|
|
|
4,350 |
|
|
|
5,685 |
|
Adjusted free cash flow |
$ |
65,173 |
|
|
$ |
143,111 |
|
|
$ |
79,602 |
|
|
$ |
140,856 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted basic weighted average shares outstanding |
|
560,754 |
|
|
|
284,992 |
|
|
|
560,754 |
|
|
|
284,992 |
|
Adjusted free cash flow per adjusted basic share |
$ |
0.12 |
|
|
$ |
0.50 |
|
|
$ |
0.14 |
|
|
$ |
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 June 30, |
||||||
(in thousands, except per share data) |
2023 |
|
2022 |
||||
Net income (loss) attributable to Class A Common Stock |
$ |
73,399 |
|
|
$ |
191,826 |
|
Net income (loss) attributable to noncontrolling interest |
|
75,555 |
|
|
|
— |
|
Non-cash derivative (gain) loss |
|
18,678 |
|
|
|
(39,514 |
) |
Merger and integration expense |
|
4,350 |
|
|
|
5,685 |
|
Impairment and abandonment expense |
|
244 |
|
|
|
506 |
|
(Gain) loss on sale of long-lived assets |
|
— |
|
|
|
1,406 |
|
Adjusted net income excluding above items |
|
172,226 |
|
|
|
159,909 |
|
Income tax (expense) benefit attributable to the above items(1) |
|
(22,236 |
) |
|
|
7,181 |
|
Adjusted Net Income |
$ |
149,990 |
|
|
$ |
167,090 |
|
|
|
|
|
||||
Adjusted basic weighted average shares outstanding (Non-GAAP)(2) |
|
560,754 |
|
|
|
284,992 |
|
Adjusted net income per adjusted basic share |
$ |
0.27 |
|
|
$ |
0.59 |
|
| ____________________ | |
(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 |
(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 July 31, 2023. There were no additional contracts entered into through the date of this filing:
|
Period |
|
Volume
|
|
Volume
|
|
Wtd. Avg. Crude Price
|
Crude oil swaps |
July 2023 - September 2023 |
|
1,748,000 |
|
19,000 |
|
|
|
October 2023 - December 2023 |
|
1,748,000 |
|
19,000 |
|
82.93 |
|
January 2024 - March 2024 |
|
1,547,000 |
|
17,000 |
|
77.14 |
|
April 2024 - June 2024 |
|
1,547,000 |
|
17,000 |
|
75.99 |
|
July 2024 - September 2024 |
|
1,564,000 |
|
17,000 |
|
74.89 |
|
October 2024 - December 2024 |
|
1,564,000 |
|
17,000 |
|
73.94 |
|
January 2025 - March 2025 |
|
450,000 |
|
5,000 |
|
69.56 |
|
April 2025 - June 2025 |
|
455,000 |
|
5,000 |
|
68.49 |
|
July 2025 - September 2025 |
|
460,000 |
|
5,000 |
|
67.46 |
|
October 2025 - December 2025 |
|
460,000 |
|
5,000 |
|
66.54 |
|
Period |
|
Volume
|
|
Volume
|
|
Wtd. Avg. Collar Price
|
Crude oil collars |
July 2023 - September 2023 |
|
644,000 |
|
7,000 |
|
|
|
October 2023 - December 2023 |
|
644,000 |
|
7,000 |
|
76.43 - 92.70 |
|
Period |
|
Volume
|
|
Volume
|
|
Wtd. Avg. Differential
|
Crude oil basis differential swaps |
July 2023 - September 2023 |
|
1,025,000 |
|
11,141 |
|
|
|
October 2023 - December 2023 |
|
1,025,002 |
|
11,141 |
|
0.63 |
|
January 2024 - March 2024 |
|
1,092,000 |
|
12,000 |
|
0.66 |
|
April 2024 - June 2024 |
|
1,092,000 |
|
12,000 |
|
0.66 |
|
July 2024 - September 2024 |
|
1,104,000 |
|
12,000 |
|
0.66 |
|
October 2024 - December 2024 |
|
1,104,000 |
|
12,000 |
|
0.66 |
|
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
|
|
Volume
|
|
Wtd. Avg. Differential
|
Crude oil roll differential swaps |
July 2023 - September 2023 |
|
1,656,000 |
|
18,000 |
|
|
|
October 2023 - December 2023 |
|
1,656,000 |
|
18,000 |
|
1.16 |
|
January 2024 - March 2024 |
|
1,092,000 |
|
12,000 |
|
0.68 |
|
April 2024 - June 2024 |
|
1,092,000 |
|
12,000 |
|
0.67 |
|
July 2024 - September 2024 |
|
1,104,000 |
|
12,000 |
|
0.66 |
|
October 2024 - December 2024 |
|
1,104,000 |
|
12,000 |
|
0.66 |
|
January 2025 - March 2025 |
|
180,000 |
|
2,000 |
|
0.37 |
|
April 2025 - June 2025 |
|
182,000 |
|
2,000 |
|
0.37 |
|
July 2025 - September 2025 |
|
184,000 |
|
2,000 |
|
0.37 |
|
October 2025 - December 2025 |
|
184,000 |
|
2,000 |
|
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 basis swap transactions are settled based on the difference between the arithmetic average of ARGUS |
(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
|
|
Volume
|
|
Wtd. Avg. Gas Price
|
Natural gas swaps |
July 2023 - September 2023 |
|
1,486,925 |
|
16,162 |
|
|
|
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 |
|
446,321 |
|
4,905 |
|
3.93 |
|
July 2024 - September 2024 |
|
429,388 |
|
4,667 |
|
4.01 |
|
October 2024 - December 2024 |
|
413,899 |
|
4,499 |
|
4.32 |
|
Period |
|
Volume
|
|
Volume
|
|
Wtd. Avg. Differential
|
Natural gas basis differential swaps |
July 2023 - September 2023 |
|
6,210,000 |
|
67,500 |
|
|
|
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
|
|
Volume
|
|
Wtd. Avg. Differential
|
Natural gas basis differential swaps |
July 2023 - September 2023 |
|
1,840,000 |
|
20,000 |
|
|
|
October 2023 - December 2023 |
|
1,840,000 |
|
20,000 |
|
(0.30) |
|
January 2024 - March 2024 |
|
3,640,000 |
|
40,000 |
|
0.00 |
|
Period |
|
Volume
|
|
Volume
|
|
Wtd. Avg. Collar Price
|
Natural gas collars |
July 2023 - September 2023 |
|
6,563,075 |
|
71,338 |
|
|
|
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/20230802340529/en/
Hays Mabry
Sr. Director, Investor Relations
(832) 240-3265
ir@permianres.com
Source: Permian Resources Corporation
