Permian Resources Corporation Q2 FY2025 earnings call

• Operations team delivered 11th consecutive quarter of solid execution in Q2, including fastest well drilled, most drilled feet per day, and lowest completion cost per foot in company history.
• Raised full year production guidance while lowering CapEx guidance. In April, repurchased $43 million of shares at an average price of $10.52 per share. In May, signed approximately $600 million Apache acquisition.
• Q2 production exceeded expectations, driven by strong well performance. Marketing team built out midstream marketing team in Midland, entered multiple new transportation and marketing agreements to optimize pricing, resulting in a $50 million uplift to 2026 free cash flow versus 2024.
• Received first investment-grade rating from Fitch, view One Big Beautiful Bill Act as a strong step towards unlocking U.S. shale potential, expecting current cash taxes to be less than $5 million in 2025 and less than $50 million cumulatively in 2026 and 2027.

Production exceeded expectations in Q2 with oil production of 176.5 barrels of oil per day, including approximately 900 barrels of oil per day from the Apache acquisition. Total production for the quarter was 385,000 barrels of oil equivalent per day. Adjusted operating cash flow was $817 million and adjusted free cash flow was $312 million with $505 million of cash CapEx. Revenue contribution details weren't explicitly broken down by product segment in terms of percentage, but the focus was on overall production and financial results from operations.

• Raised full year 2025 production guidance by 3% while lowering the capital budget by 2%.
• Expect current cash taxes to be less than $5 million in 2025 and less than $50 million cumulatively in 2026 and 2027.
• The revised plan reflects the impact of the recent Apache acquisition and the One Big Beautiful Bill Act, with adjustments to production and capital expenditure based on these factors.

• Commodity price volatility which could affect actual results.
• Macro economic uncertainties that may impact business operations and financial performance.
• Tariffs on steel and other input costs which may have a modest impact.
• Risks associated with integrating the Apache acquisition, including challenges in optimizing operations and acreage position.

Q: Thoughts on hedging go-forward basis?

A: No change to overall hedge strategy, roughly 30%, 20%, 10% hedged 1, 2, 3 years out. Flexible, will hedge more if prices higher, less if attractive prices available.

Q: Impact of free cash flow guidance beyond 2026 on marketing agreements?

A: Existing contracts expected to have greater benefit than outlined in 2026, with continued optimization expected.

Q: Opportunities in Delaware acquisition integration?

A: Quick wins on production with shared personnel, potential wins on water disposal and land side, with ongoing land trades to core up areas.

Q: What's needed to drill top decile wells and how far average is from high watermarks?

A: Need no unplanned trips, near 0 NPT, and rotating most of the time. Best wells are outliers, average is closer to 10.5-11%, with potential long-term goal to improve average.

Q: Color on chemical and power optimization projects for low LOE?

A: Micro grids (behind the meter power) have been successful, reducing power costs 30% on two projects, with more opportunities in areas with high well concentration.

Q: Caution around macro and focus on costs?

A: Forecast for near term is flattish to low single-digit growth, remaining laser-focused on reducing costs due to uncertainty in supply and demand.

Q: Impact of federal lands commingling on Permian Resources?

A: Allows building central tank batteries in New Mexico like in Texas, saving capital and reducing footprint.

Q: Balance sheet cash and ground game cadence?

A: Right number for cash on balance sheet is $500 million to $1 billion. Ground game is lumpy, with recent acquisition opening new fairways, expecting more ground gain in the back half.