Permian Resources Corporation reported its best quarter to date for Q1 2024, with significant production growth and operational efficiencies following the integration of Earthstone.
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Permian Resources Well Drilled Since 2023
The company achieved an 11% increase in average daily crude oil production to 151,794 barrels and a total average production of 319,514 barrels of oil equivalent per day. Financially, Permian Resources generated $648 million in net cash from operating activities and $324 million in adjusted free cash flow. They successfully increased their annual synergy target by $50 million to $225 million due to the Earthstone integration and executed about $270 million in bolt-on acquisitions, adding 11,200 net acres in the Delaware Basin. Permian Resources raised its full-year production guidance by 2% and announced shareholder returns including a base dividend of $0.06 per share and a variable dividend of $0.14 per share.
Drilling & Completions
The announcement details several key points regarding operational efficiencies achieved by Permian Resources, particularly following the integration of Earthstone assets:
- Acceleration of Synergies: Permian Resources has successfully accelerated the integration of Earthstone, leading to increased synergy targets. Originally set at $175 million annually, the synergy target has now been increased by $50 million to $225 million. This indicates a significant improvement in operational efficiencies.
- Drilling and Completion Efficiencies: The company has enhanced drilling and completion (D&C) efficiencies across its operations. They’ve stopped utilizing Earthstone drilling rigs and completion crews, fully integrating these assets from a D&C perspective. This has contributed to faster and more cost-effective drilling operations.
- Reduction in Spud-to-Rig Release Days: There has been an 18% reduction in the average number of days from spud to rig release on legacy Earthstone wells, indicating improved operational speed and efficiency.
- Decrease in Completion Days: The average completion days per well on legacy Earthstone acreage have been cut by 50% compared to Earthstone’s performance in the first half of 2023. This reduction showcases significant operational improvements and faster cycle times.
- Cost Savings and Margins: Permian Resources has achieved cost savings and enhanced margins, realizing approximately $1 per barrel of oil equivalent (Boe) in lease operating expense (LOE) and margin synergies. This was achieved through optimizations in workovers, compressors, and midstream services.
These points underline Permian Resources’ focus on improving operational efficiencies to drive production growth and financial performance, further emphasizing their capability to manage assets effectively and optimize production processes.
Acquisitions
operational and financial strategy, as outlined in their first quarter 2024 report. Here are the key points about their acquisitions:
- Bolt-On Acquisitions: Permian Resources executed approximately $270 million of additional bolt-on acquisitions in their core operating areas during the first quarter. These acquisitions are aimed at strengthening their strategic position and enhancing their drilling inventory.
- Acreage Added: Through these acquisitions, the company added approximately 11,200 net acres and about 110 drilling locations in the Delaware Basin. This increases their capacity for production and development in this key operational area.
- Strategic Impact: The properties acquired are in close proximity to Permian Resources’ highly capital-efficient Parkway asset. This strategic positioning allows for immediate competition for capital within the company’s portfolio, emphasizing the high-quality nature of the acquired assets.
- Operational Integration and Development Plans: The company plans to begin development on the newly acquired acreage later in the year, suggesting that these acquisitions are not only strategic in terms of location but also slated for rapid development and integration into their existing operations.
- Financial and Production Outlook: The acquisitions are expected to contribute approximately 3,500 Boe/d (~45% oil) of total production during the second half of 2024. This anticipated increase in production underscores the strategic importance of these acquisitions in supporting the company’s growth targets.
Overall, these acquisitions reflect Permian Resources Corporation’s proactive approach to expanding its operational footprint and enhancing its asset base, which is integral to sustaining growth and improving operational efficiency in the competitive energy market.
Permian & Delaware Basin
The information about Permian Resources Corporation’s activities in the Delaware Basin underlines its importance as a strategic operational area for the company. Here’s what the announcement reveals about their presence and actions in the Delaware Basin:
- Significant Acreage Acquisition: Permian Resources has been active in expanding its footprint in the Delaware Basin, with recent acquisitions amounting to about $270 million, adding approximately 11,200 net acres. This expansion is centered around enhancing their leasehold in a region known for its high-return assets.
- Operational Excellence and Efficiency: The Delaware Basin has been a focal point for achieving operational efficiencies, particularly following the integration of Earthstone assets. This integration has allowed Permian Resources to capture significant synergies, increasing their annual synergy target by $50 million to $225 million.
- High-Quality Inventory: The properties acquired in the Delaware Basin consist of high-quality inventory which includes two-mile locations with high net revenue interests (NRIs). These properties are positioned adjacent to Permian Resources’ capital-efficient Parkway asset, underscoring the strategic nature of these acquisitions.
- Increased Production and Upgraded Guidance: The successful operational strategies in the Delaware Basin have contributed to the company increasing its overall production guidance. The basin continues to be a key driver of production growth and operational success for Permian Resources.
- Future Development Plans: The company has indicated that it plans to initiate development on the newly acquired acreage in the Delaware Basin later in the year. This development is expected to be highly accretive and competitive for capital allocation, further solidifying the Delaware Basin’s role as a critical component of Permian Resources’ growth strategy.
Overall, the Delaware Basin remains a central element of Permian Resources’ operational and strategic planning, reflecting its significant potential and the company’s commitment to maximizing its assets in this prolific region.
Budget
Permian Resources Corporation provided detailed information on its budgeting for the 2024 fiscal year. Here are the main points regarding their budget:
- Cash Capital Expenditures: The company announced cash capital expenditures of $520 million for the first quarter. For the full year of 2024, they anticipate total cash capital expenditures to range between $1,900 million and $2,100 million.
- Operational Budget Allocation: The increased budget for cash capital expenditures supports their operational strategy, which includes managing costs while maximizing production efficiency. The expenditures cover drilling and development activities, especially focusing on the Delaware Basin where they have recently increased their acreage.
- Investment in Acquisitions: Alongside operational expenditures, Permian Resources executed approximately $270 million of additional bolt-on acquisitions in their core operating areas during the first quarter. This investment is aimed at enhancing their strategic position and drilling inventory in the Delaware Basin.
- Financing the Budget: The budgeting details also include financial strategies such as maintaining a low leverage profile, increasing their revolving credit facility to $2.5 billion for additional liquidity, and managing a net debt-to-LQA EBITDAX ratio at approximately 1x, which supports their financial health and operational flexibility.
- Impact of Acquisitions on Budget: The acquisitions are expected to require about $50 million of additional capital expenditures for wells to be spud on the newly acquired acreage in the second half of the year, which is not included in the revised standalone guidance.
This comprehensive approach to budgeting reflects Permian Resources’ focus on growth through strategic investments and operational efficiency, ensuring that they remain financially robust while expanding their production capabilities.
Production
Permian Resources Corporation reported significant details about its production for the first quarter of 2024, showing notable growth and operational success. Here are the key points about their production:
- Production Levels: During the first quarter, Permian Resources achieved a total average production of 319,514 barrels of oil equivalent per day (Boe/d), with crude oil making up 151,794 barrels per day (Bbls/d). This represents an 11% increase in crude oil production compared to the previous quarter.
- Increased Production Guidance: Based on the strong performance in the first quarter, Permian Resources has increased the mid-point of their full-year oil and total production guidance by 2%. They now expect to produce between 148,000 to 152,000 Bbls/d of oil and 310,000 to 330,000 Boe/d total.
- Operational Efficiencies: The increased production has been supported by improved operational efficiencies, particularly from the accelerated integration of Earthstone assets. These efficiencies include better than expected well performance and strong production runtimes.
- Impact of Acquisitions: The recent bolt-on acquisitions in the Delaware Basin are also expected to contribute to production growth. These acquisitions have added around 11,200 net acres and are anticipated to provide additional production of approximately 3,500 Boe/d (~45% oil) during the second half of 2024.
- Financial Impact on Production: The increased production and operational efficiencies have had a positive impact on financial metrics, allowing the company to generate robust cash flows from operations and free cash flow, further supporting their growth and operational strategy.
Overall, Permian Resources’ production results and forecasts reflect a strong and growing operational capability, supported by strategic acquisitions and efficiencies in the Delaware Basin. These efforts are aligned with their goals to enhance shareholder value through increased production and financial strength.
Conclution
The first quarter of 2024 has been highly successful for Permian Resources Corporation, marked by significant operational and financial achievements. Here’s a concise conclusion based on the detailed report:
- Strong Production and Operational Performance: Permian Resources has demonstrated exceptional production growth, particularly in the Delaware Basin, driven by operational efficiencies and the successful integration of Earthstone assets. This has led to an 11% increase in crude oil production compared to the previous quarter, with total production reaching 319,514 barrels of oil equivalent per day.
- Financial Robustness: The company reported robust financial results, including $648 million in net cash provided by operating activities and $324 million in adjusted free cash flow. These strong financial metrics are a result of higher production levels and effective cost management.
- Strategic Acquisitions and Expanded Footprint: Permian Resources has aggressively expanded its acreage in the Delaware Basin through strategic acquisitions totaling approximately $270 million, enhancing its drilling inventory and operational scope. These acquisitions are expected to be immediately accretive to the company’s financial and operational performance.
- Increased Guidance and Positive Outlook: Encouraged by the quarter’s performance, Permian Resources has increased its production guidance for 2024, reflecting confidence in sustained operational efficiency and growth potential. The company’s strategic initiatives and operational advancements suggest a positive outlook for the remainder of the year.
- Shareholder Value Enhancement: The company continues to focus on enhancing shareholder value through increased dividends and share repurchases, demonstrating its commitment to returning capital to its shareholders.
Overall, Permian Resources Corporation is positioned for continued growth and success in 2024, leveraging its operational strengths and strategic initiatives to enhance shareholder value and maintain its competitive edge in the industry.
