Permian Resources (PR) - 2022 Q1 - Quarterly Report

Part I—FINANCIAL INFORMATION Financial Statements (Unaudited) The company's unaudited statements show a net income of $15.8 million, reversing a prior-year loss Consolidated Balance Sheets Total assets grew to $3.96 billion, driven by increases in cash and accounts receivable Consolidated Balance Sheets (in thousands) | | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total current assets | $189,434 | $86,535 | | Total property and equipment, net | $3,727,063 | $3,685,820 | | TOTAL ASSETS | $3,958,532 | $3,804,594 | | Total current liabilities | $299,727 | $167,899 | | Long-term debt, net | $801,203 | $825,565 | | Total liabilities | $1,187,455 | $1,053,874 | | Total Shareholders' equity | $2,771,077 | $2,750,720 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $3,958,532 | $3,804,594 | Consolidated Statements of Operations The company achieved a net income of $15.8 million, driven by an 81% rise in oil and gas sales Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Oil and gas sales | $347,277 | $192,391 | | Total operating expenses | $182,222 | $158,403 | | Income (loss) from operations | $165,137 | $34,032 | | Net gain (loss) on derivative instruments | ($129,523) | ($51,199) | | Net income (loss) | $15,802 | ($34,645) | | Diluted income (loss) per share | $0.05 | ($0.12) | Consolidated Statements of Cash Flows Net cash from operations more than doubled to $160.1 million, funding investments and debt repayment Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $160,120 | $72,346 | | Net cash used in investing activities | ($84,088) | ($46,598) | | Net cash used in financing activities | ($34,788) | ($20,609) | | Net increase (decrease) in cash | $41,244 | $5,139 | | Cash, cash equivalents and restricted cash, end of period | $51,179 | $13,478 | Notes to Consolidated Financial Statements Notes detail a new credit facility, stock compensation, derivative losses, and revenue composition - In February 2022, the company entered into an amended and restated five-year secured credit facility, increasing elected commitments to $750 million and the borrowing base to $1.15 billion, extending maturity to February 2027[69] - Total stock-based compensation expense was $19.3 million in Q1 2022, up from $15.0 million in Q1 2021, with liability awards comprising the majority of the expense[101] - The company recognized a net loss of $129.5 million on derivative instruments in Q1 2022, compared to a $51.2 million loss in Q1 2021[127] Oil and Gas Sales Breakdown (in thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Oil sales | $262,767 | $133,726 | | Natural gas sales | $39,018 | $35,451 | | NGL sales | $45,492 | $23,214 | | Total Oil and gas sales | $347,277 | $192,391 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong Q1 results to higher commodity prices, leading to increased revenue and cash flow Results of Operations Revenues rose 81% to $347.3 million, fueled by higher commodity prices and a 13% production increase - The increase in production volumes was driven by the successful completion of 49 new wells since Q1 2021, compared to 20 wells in the prior period[181] - Interest expense decreased by $4.3 million year-over-year, primarily due to the redemption of Senior Secured Notes in April 2021 and lower borrowings on the credit facility[193] Q1 2022 vs Q1 2021 Performance Summary | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Net Revenues | $347.3M | $192.4M | 81% | | Average Daily Production (Boe/d) | 61,359 | 54,202 | 13% | | Average Realized Oil Price ($/Bbl) | $89.17 | $52.62 | 69% | | Lease Operating Expenses ($/Boe) | $5.20 | $5.30 | (2)% | | Severance & Ad Valorem Taxes | $25.1M | $12.6M | 99% | Liquidity and Capital Resources The company's liquidity improved, fully funding capital expenditures and paying down its credit facility - The company funded its Q1 2022 capital expenditures of $114.7 million entirely from cash flows from operations and expects to fund its full-year budget of $365-$425 million similarly[200] - In February 2022, the Board of Directors authorized a stock repurchase program to acquire up to $350 million of outstanding common stock through April 1, 2024[176][201] - As of March 31, 2022, the company had no borrowings outstanding under its new credit facility and $744.2 million in available borrowing capacity[208] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is commodity price volatility, managed through derivative instruments - A hypothetical 10% change in the NYMEX forward curve for crude oil as of March 31, 2022, would change the fair value of derivative positions by approximately $45 million[232] - The company's Credit Agreement is based on a SOFR spread, exposing it to interest rate risk; however, as of March 31, 2022, there were no borrowings outstanding[233][234] Derivative Fair Value Change (in thousands) | Description | Amount | | :--- | :--- | | Net fair value as of Dec 31, 2021 | $(34,910) | | Cash settlement payments, net | $42,878 | | Mark-to-market losses | $(129,523) | | Net fair value as of Mar 31, 2022 | $(121,555) | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the quarter-end - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[237] - No material changes occurred during the quarter ended March 31, 2022, that are reasonably likely to materially affect the company's internal control over financial reporting[238] Part II—OTHER INFORMATION Legal Proceedings The company faces a legal dispute with a potential loss exposure of up to $7.6 million - The company is in a legal dispute over pipeline capacity charges during Winter Storm Uri, with a potential loss exposure estimated to be between zero and $7.6 million[154] Risk Factors No material changes to risk factors were reported since the last annual filing - There have been no material changes in the company's risk factors from those described in its 2021 Annual Report[241] Exhibits This section lists all exhibits filed with the Form 10-Q, including required certifications - Exhibits filed include the Second Amended and Restated 2016 Long Term Incentive Plan and certifications from the CEO and CFO pursuant to Section 302 of the Sarbanes-Oxley Act[243]