PR - Earnings call 3 2022 | Permian Resources Corporation

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Operator

Good morning, and welcome to Permian Resources Conference Call to discuss its third quarter 2022 earnings. [Operator Instructions] Today's call is being recorded. A replay of the call will be accessible until November 16, 2022 by dialing (877) 344-7529 and entering the replay access code 5341497 or by visiting the company's website at www.permianres.com. At this time, I will turn the call over to Hays Mabry, Permian Resources Senior Director of Investor Relations, for some opening remarks. Please go ahead, sir.

Hays Mabry

you. Thank and quarter for earnings Vishnavi, the us you third company's call. thank you, joining all on Thank

On the Chief well results call Yesterday, with Walter, the Matt our earnings today for our as November are Will Executive Garrison, third a company. George operational Hickey X, Officers; release, we results Glyphis, Form Operating reporting as our Chief Financial filed and Chief Officer; Officer. and X-K James earnings quarter

reference our also call. during an will presentation that We today's to website posted we earnings

quarterly You www.permianres.com. I our can discussed Securities our that and plans. on statements these this are the earnings filings presentation factors actual which in results beyond of our website morning. risks of ended News and this homepage the the September affect forward-looking Exchange find the forward-looking and to involve and many or was with for risks Events Commission, would that during on risk of XX, are under section filed Many SEC control our more note in with and sections comments our Form at uncertainties statements XX-Q report the the call the could like the quarter detail that in are including

non-GAAP our based and measures believe results periods future to they're performance, may that we or materially. We across on and help comparisons with developments expectations Although financial expressed not the refer are also actual assumptions, facilitate reasonable guarantees of peers. may differ

on With Hickey, the I found corresponding our presentation, call in Co-CEO. the which both any or we For Will reconciliation our that, to measure GAAP earnings non-GAAP measure website. be can turn a available nearest will over use, release to are

William Hickey

quarterly as morning, to our Resources. earnings Thank you, and welcome Hays. call Good Permian first

couldn't one the Both outsized of the excited it's employee extremely highlighted process I the And we working have any been post investors. continue I more if Centennial. for of for talent our People and prior industry, bases teams between We are proud of from foundation merger returns efforts. thing highest-caliber and employees' closing, employees appreciative legacy closed to equals and and be of that and having hard the integration create the Colgate of are in recently companies. me, will there's which the one believe to has our both have the quality firmly business.

a QX, with rigs no producing strong During during the in cost field merger. corporate completed operated the results fleets a all On in respectively. and through third of which working very well quarter, drilling pro environment, XX majority basis, forma while executed of our team difficult XX X a integration the well frac the control and X operating demonstrating we wells, while and issues, spud

an as addition team our done a quarter-over-quarter. field to driving results saw across and Texas, has In job both the in production reduction we in Mexico solid New well excellent downtime surface-related

result, and X. to a remain quarter synergies on achieve a 'XX track provide to we quick on fourth on As like also full merger update Slide year targets. I'd our XXXX

cycle times shared D&C well and design and been side, best to reduce On the practices costs. implementing we've changes

department flat closing. our cementing incorporated drilling Our optimized off-line has times, and reduced [indiscernible] since

Third XX the days, Second in During X-mile well Bone a Spring successes X we where well in a drilled and days and we our X Parkway quarter, asset, had X-mile Sand Spring standout respectively. Bone Sand

of the we over cycle results, to expect further in times next additional are these While fantastic hopes XX months. reducing pull levers early time

acreage, time our initiatives used Additionally, completions only our but which savings. legacy and LOE provides the sustainability advances we not for Colgate during also on water recently both recycled own first CapEx

operations. water recycled possible our we whenever forward, Going use plan to in

team would on to has remind date, only at annual million synergy our together $XX out see our track you from to I target X combined months laid the since progress closing. can been we announcement. As remain everyone for achieve that

continue company over As show I'm get and really that begin this what better do to we'll the can to next a confident new result, several quarters.

we on earnings of topic I'd it touch quite field season. development become topical as on this to like the certainly full Before quickly financial hit results,

For Colgate asset the have larger past efficiently to codevelopment both and several multi-well Centennial develop years, been targeting projects our scale bases.

any technical the strong believe simultaneously codeveloped, of the sure degradation. each profitability teams Our that assets future be of to make we optimizing work we while maximizing to by zones pad our need development are minimizing well developing

of company change the Importantly, won't how how develops development change either field assets does from the Resources going not forward. represent Permian assets developed full and idea has previously a their

to and have fortunate Delaware in X major the are of high-quality feet intervals we as previous many confident feel between over very of XXXX efficiency compared any proven anticipate Thus, changes located rock to significant to zones. over the years. our plan frac We in we capital be Basin overpressured or development and barriers X,XXX philosophy with don't where our

over like call George quarter that, financials. the to third I'd with review turn And to to

George Glyphis

Thank you, Will.

a X, for August, for result both and Centennial and legacy month of the of September. merger As closing September July quarterly months company include combined results on of stand-alone companies X the for the results

clean Given for and this quarters dynamic, meaningful, are comparisons the prior the Permian fourth to will first quarter quarter be not Resources.

Slide barrels which average for XX,XXX X barrels XX,XXX approximately oil third financial I'll briefly can totaled day, results, equivalent the the reference per production net review of day. was quarter presentation. production Net said, that on per With you quarterly and

quarter Page XX million largely for adjusted G&A, capital the can reference $XXX Cash this morning, came EBITDAX or million. on of as reported QX, per of $XXX free $X.XX anticipated. million and total approximately of $XX.X was you expenditures During million, incurred generated adjusted as filed the XX-Q Cost flow BOE. company in $XXX cash of the approximately

the specific touch cash expect continue term. I'd few barrel G&A a both also like in clarifications. We per to near that and will to on merger-related decline GP&T

million the occur expenses X next to merger the were that represent during we of of costs estimate of the to quarters and we severance taper QX, merger primarily QX. during and $XX balance incur. incurred in $X will First, that approximately were expenses, will date which the XX% are realized the We which over expenses, total approximately addition had over costs, million time. integration-related related to The will that

Turning corporate QX outlook our to beyond. for and

our September execution year As result as are field, that fourth in the full we mentioned, confident a targets team's of early XXXX and closed. we Will in merger provided the in when the quarter

In we and industry important. summarized capital X balance maturity cyclical low profile liquidity is a On ours, our and maintaining critically like position. a Slides sheet strong and profile X, leverage structure,

million on the had company's at of borrowings billion revolving XX. million XX, borrowing a we $XX and facility. facility billion provided The cash liquidity September billion credit of September and As approximately approximately $XXX of governed $X.X $X base by on is hand of $X.X

We facility expect utilizing revolving flow cash free several credit repay the borrowings, over the to quarters. next

less we Total EBITDAX that and to was net debt billion debt $X.X net Xx. estimate approximately LQA than was

Finally, be over we have paid record November announced quarterly With first of on on our dividend to shareholders to November share, turn XX base XX. of which James. are pleased to that, will the call will $X.XX per I

James Walter

gas marketing head get of very has our item is peers, expect markets out XXXX. Thanks, we to regional topical and gas tight basin natural George. quarter One the takeaway. most takeaway of and as this into been Like that we other

assurance primary for our midstream This a better a significant allows large ensure managing natural of midstream Houston by gas year. Across next you our division million weaknesses and to potential our our to exposure at commodities, the ahead As commodity WAHA goal of see maximize as can residue both us been we've flow amount Channel is our on At prices, our at contract regard. XXXX. in hubs, pricing proactively many portion we takeaway of recently incremental of progress to flow pricing. prices over with end entered real cash of in basin. rather Slide XX, to as one to out are residue announce this regional make markets gas sell that We at hydrocarbons free continue current and excited providers that in $XX can we than realize Ship a increase and to contract into division revised contract we we result expect of netbacks

In Coast we of hedges. our addition through the further to use pricing, to mitigated WAHA advantageous Gulf basis exposure

of place MMBtu weighted basis minus For in of have a $X.XX. full average XX,XXX swaps price WAHA year XXXX, we at gas for

result, by Houston protected only will X/X production XXXX, exposed gas our remainder hedges. in and Channel the estimate be a natural pricing being of with Ship basis we to As WAHA pricing,

Overall, find enhance ways we to assurance believe look our flow pricing periods time. existing pricing next midstream forward to we year. agreements provide further weakness and for advantaged continuing to potential of over And during

where probably we you head like we momentum As are business have next year. into today the tell, excited as significant feel can about we and stands

environment. price flow and to positioned any well returns are commodity nearly generate to We shareholders deliver free cash in significant robust

to Turning Slide X.

competitive highlighted, after paying large-cap growing dividend peers sustainably this is quarterly our The further time a than committed this dividend XXX. view share over We annualized dividend are dividend milestone for S&P business months strategy. the execute yield closing $X.XX As the represents the returns. combined base base first less shareholder and as George which key look forward first our our paying as to an with long-term and to we reiterating base we merger, X.X%, per X of commitment to our

described base cash in previously In deducting we an to flow dividend. return variable but will free additional a announced return XX% summary, the the of the dividend, investors further achieved. detail variable the we then XX% after with buybacks on the will in end addition program X, whereby flow This minimum our free at true completed a generated the is cash program, during base of payout quarter, quarter Slide quarter, to and we any of evaluate ensure during up dividend variable remaining each is

that a After we XX% shareholder flexibility we of returns provided payout decided as right company felt ratio and of between strategic careful for balance a the ultimately our deliberation, size. it

outsized a thoughtful history excess can this investors be capital successful and pride allocators ourselves we creation. cash will assured of rest we on Our and equity strong of value allocation flow, that free

significant business, and aligned As management the value. of shareholders focused creating highly long-term is team on our laser with owners

that true summary, and company's qualities on larger underpinned is high-quality independents. to robust its institutional represents balance the quickly life shareholder by E&P mid-cap inventory a to I'd sheet. long-dated relevant investors that scale compete return as program and with base, wrap like asset Permian unique the to has asset be up to we XX. Resources a The Slide fortress opportunity the both investment In believe

attributes, will are in these to creation cycles. value operator Thank has drive it Resources turn back today, the now Permian shareholders and commodity across and our today's we outsized for listening confident market we the Q&A. all for characteristics to sell for Given that you

Operator

[Operator Instructions]

Parham question from first Zach Our with comes JPMorgan.

Zachary Parham

a Bone a spud-to-TD and Springs in remarks, you X prepared as County. your the and quarter first talk the XX to Can give company. the drivers your you more Third on wells days prior merger? efficiency on the some of little combined days fast gains? Colgate And mentioned maybe was how in those in of us the the release Eddy Congrats Second, in about bit In color drilling times area

William Hickey

kind of the it Yes, that, days kind days of wells each call Colgate so sure, to those say quite XX the Bone quarter. Third Zach. Second XX average XX to the going slower say in to of bit than Kind This Will. best respectively, or the a are closer improvement. in X of to for the zone, is and X Spring, so be I'd I'd standout X were of

changes further with with day times. drilling And cementing changes the of that note the still integrating, could changes slew of don't we parameters, and kind that require come that make with of long changes that that. lead kind There's that are equipment, a changes require surface X, off-line of more on like are I'd BHA, things of kind these kind changes

we they're I'd So team as doing getting say they're look and started. what really just the at already,

Zachary Parham

realizations have strip. the you Got that I on specifically? impact one contract? of know more the James, price give you marketing do gas mentioned maybe the natural just cost contract will the a any you little it. how you current signed? on the flow at cash What's in But color on $XX And Could And side. duration contract color free then uplift the million us or

James Walter

Yes.

I So -- $X the and think through XXXX. contract, revision that next pertains entered between I our contract going year that to And think kind that kind to of yes, by that increase $X.XX. that of gas high level, for we it's realizations goes super

of basis of where kind kind uplift next year, given today. meaningful the So stands

Operator

Neal from comes Our next question Truist. Dingmann with

Neal Dingmann

is planned arrive My that first on at question 'XX estimate. your to activity

OFS would of ]. be consider in further already you're mostly next see most X how efficiencies X Will, nature? think that on about that I wondering, showing versus all for continued you so, And I'm just right the just could incremental you [ XX, specifically, for would And potential wondering for seen obviously XX you you've comment if developmental potential do activity year inflation? there, I'm

William Hickey

'XX Yes. have I developmental, that of activity, mean, I'd XXX% that. plan, in meaning it's say the areas we kind if already

We just plan the and packages areas we're and feel kind of back confident are get. the that to really, very results we'll confident in drilling in we coming the

kind course -- over way kind I kind we've of to year the we'll drop what of the running further rigs we're X think base the case start efficiencies, mean, As to far to as is the means year. that be put X from I it the expecting of the of for down

X gain year, of the And hit to need well at And X close, the we'll sense. we what just of continue kind I'd from counts just say I've matter we'll very the order see post makes them, It's if half seen of at in when kind efficiencies. are in them. to of that rigs back a months that the we'll confident to see

Neal Dingmann

if that's if you of have all guess return sales, Xx. to had would an would capital Or payout buybacks and then allocation, you shares of And maybe you you paying specifically just opportunity of or wondering with to XX%-plus or equity to buybacks that second, a XX% to it if leverage that No, my I private, consider And just you part for that around and of top on the did owner James period? variable the your hear. you revolver those potentially participate of some George, the consider buy you I'm opportunity meant would back other still top consider that? particular for keeping a using this shareholder on maybe in if any potential out repurchase still great

James Walter

Neal. question, great No, Yes.

to your is a question the again that way program. with and And to part share participating buyback absolutely. we use a of be think answer sell-down first I'd the alongside say the plan I time said sponsor is we've think I great buyback. opportunistic to

But at we've I'd on to time XX%. buybacks and any -- returns XX%, think are aggressive incremental I say an the we've in think market at the But exit, with role sponsors are say that been to with constraints going as other case, dependent that regards of as to key. I'd buyback, of of view I messaged we what playing really conditions which pretty think excited an and think it of of is and to are we opportunities like. that the we real the thoughtful say and be as that expect that orderly incremental, kind we clear beyond us have really, it's a ordinary base view to into and would the view market opportunities look as that share kind on kind go don't least do I I'd part there say date, course if beyond get a I any I'd would there. kind

Operator

Leo question from Mariani next MKM today for Partners. Our with comes

Leo Mariani

quickly to up follow on deal. gas Wanted the

couple for looking a more Just of here. details

increase XXXX? in does well if begin potentially realization X, with And of So that GP&T Wanted then in kind your XXXX? that come $X.XX on additionally, there's would corresponding of there benefit that you roughly like spoke year. some $X see price fourth along gas the Is uplift to to about next January here? as expense any quarter

William Hickey

Yes.

pricing we the you'll revision ago. effective contract it, at level, works the pay kind year, extra, if get the to then wellhead, WAHA is we But at deduct X so And revenue. kind an way between of that the additional November kind see that $X -- and $X.XX to that so off gas the X hub, gas this call So of $X.XX, super became to so is high the fees of sell -- of no, of fuel days Houston.

that $X.XX uplift. answer So of that's of $X.XX, kind to how you Does that? that get

Leo Mariani

I a the into more wanted Yes. buyback sure. Helpful little And bit here. guess for dive to just

the we get down something way next do our we first might fourth in quarters year. the that's think to as couple quarters? year? quarter next work quarter as you wanted into kind the could a knocking of is guys really possible Just really sense Or something if it's see focus in of of kick this that over that next on next quickly as And midyear couple more revolver of kind and

William Hickey

Yes. in I mean think today. the I is buyback authorization place

think absent that sell be of to this I probably I see is the But there think I a think think to elsewhere. I participating using to could free cash us flow incremental down, kind quarter of opportunity, focused sooner were degree on on looking end I the that that. sponsor

Leo Mariani

inflationary Okay, that's the But I that you've just side working talk the side, obviously, seeing synergies then Are are anything you seeing you rising on of just about of the on. what starting op there What see just you in on the costs? down? settle you helpful. you you're are some oilfield? kind -- And in of things got can kind field? out to still know seeing Are

William Hickey

tight these about and mean the on just that up efforts. like the the kind rigs lion's of this via our year, point. And likely our become contracts, things we year, this at I where there's item as kind fortunate -- that recycling we feels of over sand, stands that share more to then line gotten. look this and today more the of our us steel through kind in were And single at kind then much feels AFE, given water now kind significant is casing to of highest point like probably half of come it of of has behind market how than the a casing see at lapped we of has and inflation how course upside it project or next that lot like lock down

So CapEx we we from today. of good about kind feel given perspective, outlook what know of 'XX our kind a

Operator

The next Stifel. question comes from with John Annis

John Annis

the Congrats dividend. on initiating

my to you experiencing and some expectations. capital of have first maintain at are you capital above the guide efficiency? to initiatives For inflationary time question, hold levers pressures you other CapEx that a peers speak reiterated when your to your Could you enabled self-help guidance have

James Walter

market I a lot is guidance Yes. early No, of that looks a I where out today. think part the kind this of that like big we September in think market put a is

I a then I'll just of a hit little side. Will and let think the from timing bit a difference perspective, So there there's to operational

William Hickey

mean, side, operational I on some Yes. put aggressive say and the I'd synergy targets worked out we kind really hard. have we -- of been there

coming we and you closing, think we really And make pull to place exactly to months of a we If were fruition levers knew get with going from plan about plan very to the what is together in teams and into September on had announcement quickly. put that X. closing sure

From it think best kind it best Centennial everything to quickly. we out achieve we've what post close, Colgate did, that And the seeing of we best gives targets able feels and world, months put I going kind confidence did, the really we're seen of be of are like what of we're that X the there. both to getting the us of

John Annis

follow-up, then That makes it. to Got my Slide sense. for X. And turning

flow? range, free are within your $X.X excess billion leverage about thinking shareholder forecasting free your target the cash And you of in use with the $XXX how flow returns, million slated long-term in XXXX. cash for You're of

James Walter

looks for anything value evaluating with year, kind then into this as flexibility think And revolver. doing returns, the the other going what strategic kind say next we're from there. the our there's drives comparing the get in shareholder borrowings also obviously, the to this think the that and say And perspective, could repay we're shareholders. of cost equity quarter further way further we probably first do we be value on opportunity along to we what that kind be So into thing That's the could from acquisitions, we creation But like. our we'll of that And things et continuing a I'd I'd lot really outstanding with capital opportunity month. of always use that of that. cetera. And set I most of opportunities,

John Annis

Got Great update. it.

Operator

& Tudor, comes The Oliver Huang with question next Holt Pickering, Co. from

Hsu-Lei Huang

solid Congrats quarter. a on

behind about issues mitigate off, fronts all of First of both that of on it. bit you able to ask, seen things the just hoping into some risk. on to kind might to Was labor supply peers run speak some more that your this you all or wanted and chain be scenes doing we've a kind talk certain are

William Hickey

you Sure, to -- remarkable it's shout out an put opportunity I Oliver. companies it merger that were X the and to me team really this beat side. mean, glad get gives these miss of of think to truly question, they get able on I'm I asked really give really that is operations together a -- and a not our this completed, kind

for out were think that X one I fleets the that of of the it's We activity the X at deal. pre ran of with companies QX this kind incremental thing -- there picked predecessor we pointing up. kind worth frac and not was majority no running was kind merger, this the rigs of

to contracted needed, needed, kind plan So we cetera, put fortunate they water kind the of companies they et had we that place, in place. the the had needed, hit the out both casing volumes they sand were of in

to just their see benefits they of testament really being procured that So And to a the and best there needed in now ducks merger and a merger. across of everything to practice Centennial Colgate business. you're incorporate the kind starting really had of were a row we the had it's both pre that can execute lot

going what company that's great see for quarter think this to execution is. kind the continue another like I'd on is that of do we just makes us, forward. and the ground blocking hopefully, it you'll And and the So this tackling to

Hsu-Lei Huang

large highly from allow still progression could just kind Awesome. and undeveloped talk about perspective, level Colgate from of portion virgin the is a even And forward, of pad sizing question, for just should lateral fairway second all lengths and this? a the an moving considering current acreage operational the for a you of and X,XXX-foot

William Hickey

[ ] perspective, Yes. X,XXX, No, great at of Basin that, say it, a length lateral the right Delaware that's length optimal call lateral feel length I'd like from a kind question. XX,XXX-foot lateral is level. we

the [ sprinkled drilling X,XXX we're a in few there. X-mile mix with the that's think, ] a X,XXX of about length, a of the laterals mile-and-a-halfs target 'XX where So optimal course to we'll kind over that in towards Basin heavily of Delaware of And trying weighted is probably X,XXX to we lateral X-mile be, lateral.

And combined then pad from a we pad size as kind that optimally of business, the the to our perspective, needed we're of very this have fortunate assets. with flexibility scale sizes and that size scale develop to

some think it's it pads. quite what other of of a range of areas X, are separation is kind where sizes. barriers X thousands sizes, such, kind in X, smaller are feet in call away well of the targeting of good pad very well fortunate develop 'XX we benches pad that we're I see we're from that There and them with frac between. packages have vertical as can And you'll

have the XX then 'XX have of of or other And are case, pad plenty And pads in program to large-scale develop that kind most in the areas we of the feel that pads there's to plenty a need in where we asset. more. efficiently

size that the right execute pad got we've we from the financial good, different have a mix think to we're of it's both really go-forward kind pad that on are looking for the done the So kind feel not that sizes and of what flexibility backward assets. targeting I but we

Operator

Geoff [Operator Daniel Partners. Instructions] Jay question The from Energy next comes with

Geoff Jay

you in over. I quick going the I what's got your you a had Delaware? about terms look in scale question sort what's where are just you say couple the I know But potential of over of next you've your feel And road lot of of guess, thinking deal. to -- you current a of And grace are kind about years? how if map the sort forward consolidation your post

James Walter

Yes, Geoff, good question.

capital we asset today, feel to really kind of of think business return have that kind the good we scale. quality, I about

of think cap rerate the the there's where how I size got So regards not part could be one large independents. track see cap really I'd forward the in with value balance independents. immediate anything. correlation, And don't pretty I'd the term, that to of do can the kind and market. we there to equity do really accretive and shareholder I of don't the But really and any business today open definitely, independents. if say mean, incredible But with but the some quality ways feel M&A do have have constantly do And is an a today, sheet say drive larger strong believe We've we are quality. We've asset larger to direct that larger return pressure that make path we a got incredible business got ultimately, to a if think cap of we we accretive we have to scale, creation. got evaluating trade. we I the and deals the that. I'd today, We've were we'd between anything value of the better a creation, businesses capital of that say of scale record with business we've

really like think the we'd really open do we us no them. business I But to make is anything. business from to We So if better, have be that pressure opportunities to we today. had

Geoff Jay

answered. questions of That's the been Excellent. -- have rest my

Operator

further would no any this question-and-answer the to closing conference see Walter remarks. like turn we the concludes As questions, to back for over James session. I

James Walter

Permian the are creation. out you and in here Thank quarter investor first really everything first long-term in track full for call. with building participated doing value our as to again, look everyone investors We're when to Resources. forward be Permian everyone excited official We which in, in outsized of Resources operating time. about listening who record we your look and to everyone, Thank to Permian February forward a will the we tuning back relationships you announce results, QX

Operator

The for you conference has now concluded. Thank presentation. attending today's

You now disconnect. may all

Permian Resources (PR) 9 Nov 222022 Q3 Earnings call transcript