01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Permian Resources Corporation is an independent oil and natural gas company focused on the acquisition, optimization and development of high-return crude oil and liquids-rich natural gas reserves, concentrated in the Permian Basin of West Texas and New Mexico.
The year 2023 was transformed by the Earthstone Merger, completed November 1, 2023, which added approximately 223,000 net leasehold acres and issued 161.2 million Class A and 49.5 million Class C shares. Year-end proved reserves rose to 925,098 MBoe from 582,146 MBoe in 2022, with 402.7 MMBoe added through purchases of reserves in place, and total oil and gas sales reached $3.12 billiona versus $2.13 billion in 2022. Profitability and cash generation improved despite lower realized prices.
Net income attributable to Class A Common Stock was $476.3 millionb, down from $515.0 million in 2022, while net cash provided by operating activities rose to $2.21 billion from $1.37 billion. Average realized oil price fell to $75.84 per Bbl from $88.95, and natural gas to $1.60 per Mcf from $4.86, but production volumes nearly doubled, with average daily net production of 194,499 Boe/d. Depreciation, depletion and amortization rose to $1.01 billion, and merger and integration expense was $125.3 million.
Leverage increased materially. Long-term debt, net was $3.85 billionc at year end, versus $2.14 billion a year earlier, and the Credit Agreement had no borrowings outstanding with $2.0 billion of available borrowing capacity.
The company expects 2024 total drilling, completion and facilities cash capital expenditures of $1.9 billion to $2.1 billiond, to be funded from operating cash flow. Shareholder returns include a base quarterly dividend of $0.05 per share, variable dividends totaling $0.17 per share for 2023, and a $500 million repurchase program running through December 31, 2024.
02—Key points
Key Highlights
- Earthstone Merger completed November 1, 2023, adding approximately 223,000 net leasehold acres and increasing aggregate production to approximately 300,000 Boe per day, with merger consideration of $2.9 billion.
- Total proved reserves reached 925,098 MBoe at December 31, 2023, up from 582,146 MBoe a year earlier; proved developed reserves were 76% of the total.
- Oil and gas sales were $3.12 billion for 2023, up 46% from $2.13 billion in 2022, driven by a 103% increase in net production to 70,992 MBoe.
- Net income attributable to Class A Common Stock was $476.3 million, compared with $515.0 million in 2022; diluted EPS was $1.24 versus $1.61.
- Net cash provided by operating activities was $2.21 billion, up from $1.37 billion, while drilling and development capital expenditures were $1.52 billion.
- Long-term debt, net increased to $3.85 billion, including $1.0 billion of 7.00% Senior Notes due 2032 issued in 2023, and the revolving credit facility had $2.0 billion of available capacity with no borrowings outstanding.
- Realized oil price fell to $75.84 per Bbl from $88.95 and natural gas to $1.60 per Mcf from $4.86, while the company expects 2024 capital expenditures of $1.9 billion to $2.1 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $3.12B$2.13B | +46.4% |
| Operating Expenses | $2.02B$1.12B | +80.4% |
| Operating Income | $1.10B$1.01B | +8.8% |
| Interest Expense | $177.21M$95.64M | +85.3% |
| Net Income | $880K$515.04M | −99.8% |
| EPS (Basic) | $1.36$1.80 | −24.4% |
| EPS (Diluted) | $1.24$1.61 | −23.0% |
| Shares Outstanding (Basic) | 349.21M286.16M | +22.0% |
| Shares Outstanding (Diluted) | 389.10M322.82M | +20.5% |
05—Questions
Frequently Asked Questions
How did the Earthstone Merger change Permian Resources' scale?
The Earthstone Merger, completed November 1, 2023, added approximately 223,000 net leasehold acres in the Permian Basin and increased aggregate production to approximately 300,000 Boe per day. The company issued 161.2 million Class A and 49.5 million Class C shares, and assumed $1.05 billion of Earthstone senior notes and $830 million of credit facility borrowings. Operating results from Earthstone are included only from November 1, 2023.
What drove the increase in revenue despite lower commodity prices?
Oil and gas sales rose 46% to $3.12 billion, primarily because net production increased 103% to 70,992 MBoe. Oil production rose 95%, while the average oil price excluding hedges fell 15% to $75.84 per Bbl and the natural gas price fell 67% to $1.60 per Mcf. Oil sales were $2.70 billion of the total.
How is the company's debt position and liquidity?
Long-term debt, net was $3.85 billion at December 31, 2023, up from $2.14 billion. The Credit Agreement had a borrowing base of $4.0 billion, elected commitments of $2.0 billion, no outstanding borrowings, and $2.0 billion of available capacity net of $5.7 million of letters of credit. The company reported compliance with its financial covenants as of year end.
How does the company return capital to shareholders?
The company pays a base quarterly dividend of $0.05 per share of Class A Common Stock and a matching distribution per Common Unit, plus variable dividends. During 2023 it declared variable dividends totaling $0.17 per share, and cash dividends and distributions to common unitholders totaled $236.0 million. Its $500 million stock repurchase program runs through December 31, 2024, and during 2023 it repurchased shares for $162.4 million in total. On February 27, 2024, the board declared a $0.05 base dividend and a $0.10 variable dividend per share.
What are the main risks highlighted in the filing?
The filing emphasizes commodity price volatility, with a sustained low-price environment potentially causing impairments and reduced capital spending. It also highlights concentration in the Permian Basin, dependence on a small number of significant purchasers, reliance on third-party transportation, and leverage that requires debt service. Other risks include reserve estimate uncertainty, with 24% of proved reserves classified as proved undeveloped, and integration risk from the Earthstone Merger.
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