How is Permian Resources planning to pay for the $817.5 million acquisition?

The company intends to fund the cash consideration with cash on hand, part of the net proceeds from the $750.0 million senior notes offering, and part of the net proceeds from the public offering of Class A Common Stock. The acquisition is not contingent on either offering.

What assets is Permian Resources acquiring?

The assets include about 29,500 net acres, 9,900 net royalty acres, and expected net production of 15,000 Boe per day for the three months ending December 31, 2024. Most of the acreage is in Reeves County, Texas (27,500 net acres), with 2,000 net acres in Eddy County, New Mexico. The filing notes the assets are largely offset to the company's existing Reeves County position.

What is happening with the existing 7.75% Senior Notes due 2026?

The subsidiary Permian Resources Operating, LLC commenced a cash tender offer for any and all of the $300.0 million outstanding notes. The offer is conditioned on completion of the notes offering and expires at 5:00 p.m. New York City time on August 2, 2024, unless extended. Any notes not tendered are expected to be redeemed on or about February 15, 2025 at 100% of principal plus accrued interest.

What is the company's liquidity position as of June 30, 2024?

The company had about $47.8 million of cash and cash equivalents and about $375.0 million of borrowings under its five-year secured revolving credit facility. It had $2.1 billion of borrowing capacity under that facility, net of $5.6 million in outstanding letters of credit.

PR 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed July 29, 2024. Cited figures are marked; the original filing is the authoritative source.

Permian Resources Corporation (NYSE: PR) disclosed in this 8-K, filed July 29, 2024, a set of linked transactions tied to an acquisition from affiliates of Occidental Petroleum Corporation.

On July 27, 2024, its subsidiary Permian Resources Operating, LLC agreed to buy oil and gas properties for $817.5 million^a in cash, subject to customary post-closing adjustments. The package includes approximately 29,500 net acres, 9,900 net royalty acres, and expected net production of 15,000 Boe per day for the three months ending December 31, 2024, mostly in locations offset to the company's existing Reeves County, Texas position (27,500 net acres), plus 2,000 net acres in Eddy County, New Mexico. The acquisition is expected to close in the third quarter of 2024, with an effective date of July 1, 2024.

To help fund the purchase, the company launched a $750.0 million^b private placement of senior unsecured notes due 2033, an underwritten public offering of 26,500,000 shares of Class A Common Stock, and a cash tender offer for its $300.0 million of 7.75% Senior Notes due 2026. Any 2026 notes not tendered are expected to be redeemed around February 15, 2025 at 100% of principal. The tender offer is conditioned on completion of the notes offering, and the notes offering is not conditioned on the tender offer.

The company said the acquisition financing is expected to be leverage neutral and that it expects year-end 2024 pro forma net debt-to-EBITDAX of about 1x. Preliminary second-quarter 2024 estimates were also furnished, though results were not finalized and have not been audited or reviewed. The company estimates crude oil production of 152.1 to 153.6 thousand barrels per day, cash capital expenditures of $511 million to $522 million^c, and total controllable cash costs of $7.41 to $7.49 per Boe.

As of June 30, 2024, cash and equivalents were approximately $47.8 million^d and borrowings under the secured revolving credit facility were approximately $375.0 million, with $2.1 billion of borrowing capacity net of $5.6 million in letters of credit. Detailed second-quarter results are scheduled for release on August 6, 2024.

02—Key points

Key Highlights

Acquisition: Agreed on July 27, 2024 to buy oil and gas assets from Occidental affiliates for $817.5 million in cash, subject to post-closing adjustments; closing expected in Q3 2024.
Asset scope: About 29,500 net acres and 9,900 net royalty acres, with expected net production of 15,000 Boe per day for Q4 2024, mainly offset to the existing Reeves County, Texas position.
Financing: Planned $750.0 million senior unsecured notes due 2033 in a 144A/Regulation S private placement, plus an underwritten offering of 26,500,000 Class A shares.
Debt refinancing: Cash tender offer for any and all $300.0 million 7.75% Senior Notes due 2026, with remaining notes expected to be redeemed around February 15, 2025 at 100% of principal.
Preliminary Q2 2024 estimates: Crude oil production of 152.1 to 153.6 thousand barrels per day, cash capex of $511 million to $522 million, and controllable cash costs of $7.41 to $7.49 per Boe; results remain unaudited and subject to change.
Liquidity: As of June 30, 2024, cash of about $47.8 million, $375.0 million drawn on the secured revolver, and $2.1 billion of net available borrowing capacity.
Leverage target: Management expects the acquisition financing to be leverage neutral and year-end 2024 pro forma net debt-to-EBITDAX of about 1x.

03—Questions

Frequently Asked Questions

How is Permian Resources planning to pay for the $817.5 million acquisition?
The company intends to fund the cash consideration with cash on hand, part of the net proceeds from the $750.0 million senior notes offering, and part of the net proceeds from the public offering of Class A Common Stock. The acquisition is not contingent on either offering.
What assets is Permian Resources acquiring?
The assets include about 29,500 net acres, 9,900 net royalty acres, and expected net production of 15,000 Boe per day for the three months ending December 31, 2024. Most of the acreage is in Reeves County, Texas (27,500 net acres), with 2,000 net acres in Eddy County, New Mexico. The filing notes the assets are largely offset to the company's existing Reeves County position.
What is happening with the existing 7.75% Senior Notes due 2026?
The subsidiary Permian Resources Operating, LLC commenced a cash tender offer for any and all of the $300.0 million outstanding notes. The offer is conditioned on completion of the notes offering and expires at 5:00 p.m. New York City time on August 2, 2024, unless extended. Any notes not tendered are expected to be redeemed on or about February 15, 2025 at 100% of principal plus accrued interest.
How did the company perform in the second quarter of 2024?
The company furnished preliminary estimates for the quarter ended June 30, 2024, but has not finalized results and the estimates have not been audited or reviewed. It estimates crude oil production of 152.1 to 153.6 thousand barrels per day, cash capex of $511 million to $522 million, and controllable cash costs of $7.41 to $7.49 per Boe. Detailed results are scheduled for release on August 6, 2024.
What is the company's liquidity position as of June 30, 2024?
The company had about $47.8 million of cash and cash equivalents and about $375.0 million of borrowings under its five-year secured revolving credit facility. It had $2.1 billion of borrowing capacity under that facility, net of $5.6 million in outstanding letters of credit.

04—Continue

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