Permian Resources Corporation this week announced its fourth quarter and full year 2023 financial and operational results and 2024 operational plans.

Permian Resources’ full year and fourth quarter 2023 information discussed within this release includes results from Earthstone Energy, for the months of November and December, unless otherwise specified.

Fourth Quarter 2023 Financial and Operational Highlights

• Closed $4.5 billion Earthstone acquisition on November 1, enhancing Permian Resources’ position as the second largest Permian pure-play E&P with a >$15 billion enterprise value
• Earthstone synergy capture ahead of schedule
• Continued strong well performance combined with closing of the Earthstone acquisition drove crude oil and total average production to 137 MBbls/d and 285 MBoe/d
• Decreased controllable cash costs by 8% quarter-over-quarter to $7.33 per Boe, driven primarily by lower LOE and continued focus on cost control
• Announced accrued capital expenditures of $423 million and cash capital expenditures of $458 million
• Reported net cash provided by operating activities of $846 million and adjusted free cash flow of $332 million (cash capital expenditures), or $0.47 per adjusted basic share
• Delivered total return of capital of $183 million, or $0.24 per share:
• Quarterly base dividend of $0.05 per share
• Variable dividend of $0.10 per share
• Repurchased 5.0 million shares for $67 million at an average weighted price of $13.32 per share
• Since November 1, added ~14,000 net acres and ~5,300 net royalty acres located in the core of the Delaware Basin

Full Year 2023 Financial and Operational Highlights

• Met or outperformed all of PR standalone’s guidance, significantly exceeding production targets while remaining within original budget on capex and controllable cash costs
• Generated peer-leading total production growth per debt-adjusted share of ~35%
• Delivered ~$324 million, or $0.47 per share, in dividends to shareholders
• Repurchased 10.0 million shares for ~$125 million at an average weighted price of $12.46 per share
• Replaced >100% of PR standalone’s developed locations in 2023 through successful portfolio optimization transactions, effectively increasing inventory life 

2024 Financial and Operating Plan

• Announced highly capital efficient operating plan underpinned by consistent well performance, lower well costs and continued cost discipline
• Crude oil and total average production guidance of 145 to 150 MBbls/d and 300 to 325 MBoe/d
• Total cash capital expenditure budget of $1.9 to $2.1 billion
• Total controllable cash costs of $7.40 to $8.60 per Boe
• Increasing quarterly base dividend by 20% to $0.06 per share, as previously announced

“In our first full year, Permian Resources had an outstanding 2023, accomplishing all our goals laid out last February. On a standalone basis, the Company delivered oil production at the high-end of our 2023 guidance range, while staying within our capex budget,” said Will Hickey, Co-CEO of Permian Resources. “During the fourth quarter, Permian Resources reported another strong quarter of production outperformance and operational improvements in the midst of closing the Earthstone acquisition. The combined team is exceeding expectations associated with the Earthstone integration and is on-track to reach key operational synergy run rates well ahead of the originally scheduled targets.”

“We are excited to announce our 2024 operational and financial plan, which combines consistent year-over-year well productivity with lower costs and other optimized key inputs to deliver even better capital efficiency than we realized in 2023,” said James Walter, Co-CEO of Permian Resources. “Most importantly, our 2024 plan allows us to maximize shareholder value by delivering industry leading per share annual growth across production, cash flow and free cash flow.”

“Consistent with our game plan, we continue to return 50% of our quarterly free cash flow after the base dividend to shareholders through dividends and share repurchases,” said James Walter, Co-CEO. “During 2023, Permian Resources delivered approximately $324 million, or $0.47 per share, in dividends to shareholders. Additionally, we repurchased 10.0 million shares for approximately $125 million during the year at an average weighted price of $12.46 per share, driving incremental value for our shareholders.”

Financial and Operational Results

Permian Resources continued the efficient development of its core Delaware Basin acreage position in the fourth quarter, delivering robust well results while successfully integrating the Earthstone acquisition. During the quarter, average daily crude oil production was 136,590 barrels of oil per day (“Bbls/d”), a 52% increase compared to the prior quarter. Fourth quarter total production averaged 285,161 barrels of oil equivalent per day (“Boe/d”).

“In addition to the contribution from incoming Earthstone production, our strong fourth quarter production results were driven by better than expected well performance and minimal production downtime despite winter weather,” said Will Hickey, Co-CEO. “For the full year 2023, our operations team delivered consistent well productivity year-over-year, demonstrating the quality of our high-return, long-dated inventory.”

In the fourth quarter, the Company continued to realize drilling and completions efficiencies while incorporating legacy Earthstone rigs and fleets into its program. Total cash and accrued capital expenditures (“capex”) for the fourth quarter were $458 million and $423 million, respectively.

Realized prices for the fourth quarter were $76.61 per barrel of oil, $1.50 per Mcf of natural gas and $21.57 per barrel of natural gas liquids (“NGLs”), excluding the effects of hedges and GP&T costs.

The Company demonstrated strong cost control in the fourth quarter, with total controllable cash costs (LOE, GP&T and cash G&A) decreasing 8% quarter-over-quarter to $7.33 per Boe. Fourth quarter LOE was $4.97 per Boe, GP&T was $1.19 per Boe and cash G&A was $1.17 per Boe, representing 8%, 9% and 2% decreases compared to the prior quarter, respectively.

For the fourth quarter, Permian Resources generated net cash provided by operating activities of $846 million and adjusted free cash flow1 of $332 million (or $367 million, utilizing accrued capex), or $0.47 per adjusted basic share.

Permian Resources continues to maintain a strong financial position and low leverage profile upon closing the Earthstone acquisition. At December 31, 2023, the Company had $73 million in cash on hand and no amounts drawn under its revolving credit facility. Net debt-to-LQA EBITDAX1 at December 31, 2023 was approximately 1x.

Earthstone Integration Update

On November 1, 2023, Permian Resources closed the $4.5 billion Earthstone acquisition that was announced on August 21, 2023. The acquisition enhances Permian Resources’ position as a leading Delaware Basin independent and creates value for the combined shareholder base through significant accretion to all relevant metrics and accelerated return of capital.

Integration of Earthstone has been underway since closing, and both integration and synergy capture are ahead of schedule. Operationally, Permian Resources’ team has been making extensive progress in the field, achieving a 50% reduction in downtime on legacy Earthstone’s Midland Basin asset since close. Permian Resources was able to improve drilling and completion efficiencies during the fourth quarter by approximately 35% and 20%, respectively, compared to legacy Earthstone’s first half 2023 results. As a result of higher efficiencies and the benefits of increased scale, Permian Resources has already achieved a 12% reduction in drilling and completions (“D&C”) as compared to Earthstone’s historical well costs. Additionally, G&A synergies are on-track, with key contributors from both companies fully integrated into the organization. Permian Resources remains confident in its ability to deliver the originally announced $175 million in annual synergies and is now expecting to realize announced synergies ahead of schedule.

2024 Operational Plans and Targets

With a focus on capital returns, Permian Resources’ 2024 operational budget delivers a highly capital efficient plan that maximizes free cash flow and value for its investors. Assuming planned activity levels and current commodity prices, the Company expects its full year oil and total production to average approximately 145 to 150 MBbls/d and 300 to 325 MBoe/d, respectively. During 2024, Permian Resources expects its well productivity to remain strong year-over-year as a result of its deep inventory of primary Delaware Basin zones and methodical development philosophy.

The estimated fiscal year 2024 cash capex budget is approximately $1.9 billion to $2.1 billion, with approximately 75% allocated to drilling and completions with the remaining 25% allocated to facilities, infrastructure, capital workover and non-operated capex. Permian Resources expects to turn-in-line (“TIL”) approximately 250 gross wells, with an average working interest of approximately 75% and 8/8ths net revenue interest of approximately 79%. The Company also expects its average completed lateral length during 2024 to be approximately 9,300 feet. Importantly, the Company’s capital budget is underpinned by an approximately 10% reduction in D&C costs per foot expected when compared to 2023.

Given the recent Earthstone acquisition, the Company expects an increasing portion of its capital budget to be allocated to high returning inventory in New Mexico. During 2024, Permian Resources anticipates that approximately 70% of its operating activity will be directed towards the Northern Delaware Basin and approximately 25% towards the Southern Delaware Basin, with the remaining portion to be allocated to its Midland Basin position.

Through its continued focus on being a low-cost leader, Permian Resources anticipates total controllable cash costs of approximately $7.40 to $8.60 per Boe, consisting of $5.50 to $6.00 per Boe for LOE, $1.00 to $1.50 per Boe for GP&T and $0.90 to $1.10 per Boe for cash G&A. Notably, the mid-point represents an 11% reduction in total controllable cash costs compared to Permian Resources and Earthstone’s combined third quarter 2023 costs, demonstrating the Company’s ability to execute on its synergy targets.

Year-End 2023 Proved Reserves

Permian Resources reported year-end 2023 total proved reserves of 925 MMBoe compared to 582 MMBoe at prior year-end. Proved developed reserves were 704 MMBoe (76% of total proved reserves) at December 31, 2023. Proved and proved developed reserves growth per share increased 15% and 49%, respectively, at year-end 2023 compared to the previous year-end.

KeyFacts Energy: Permian Resources United States country profile