Permian Resources (PR)2024-11-07 20:48Financial Data and Key Metrics Changes - In Q3 2024, the company reported oil production of 161,000 barrels per day and total production of 347,000 barrels of oil equivalent per day, exceeding expectations [7] - Adjusted operating cash flow reached $823 million, with adjusted free cash flow of $303 million [8] - The company raised its full year oil guidance by 11,000 barrels per day, marking a 7% increase from the original guidance [24] Business Line Data and Key Metrics Changes - The company achieved a Q3 lease operating expense (LOE) of $5.43 per BOE, cash G&A of $0.95 per BOE, and GP&T of $1.57 per BOE, indicating strong cost management [8] - The company set a record of 13 days from spud to rig release, demonstrating improved operational efficiency [12] Market Data and Key Metrics Changes - The company is one of the largest natural gas producers in the Permian Basin, producing approximately 600 million cubic feet per day of residue gas, with potential upside if natural gas prices improve [14] - The company increased the amount of natural gas sold at the Gulf Coast by almost 50%, achieving better pricing compared to historical sales at Waha [16] Company Strategy and Development Direction - The company focuses on the Delaware Basin, aiming to maintain a single basin strategy to drive operational efficiencies and shareholder value [10][11] - The company updated its return of capital policy, increasing the base dividend by 150% to $0.60 per share annually, with a current yield over 4% [19][20] - The management emphasizes a strategy of bolt-on acquisitions rather than transformative M&A, focusing on deals that enhance the base business [49][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational plans for 2025, indicating a continued focus on New Mexico for capital spending [29] - The company is optimistic about the potential for natural gas demand growth due to expected changes in power consumption [33] - Management noted that they do not foresee significant regulatory changes in New Mexico that would impact operations [48] Other Important Information - The company has maintained a strong balance sheet with leverage around one times and increased liquidity to nearly $2.8 billion [22] - The company is over 25% hedged heading into Q4 at $74, providing downside protection [22] Q&A Session Summary Question: Future operational plans for 2025 - Management indicated that the capital spend will primarily focus on New Mexico, with some activity in Texas, and they are ahead on permitting [29][30] Question: Plans for surface acres and gas pricing - Management discussed potential options for maximizing value from surface acres and the goal of moving more gas volumes to favorable downstream markets [31][34] Question: 2025 guidance and production outlook - Management stated it is too early to provide firm numbers for 2025 but indicated a growth target of 0-10% based on prior year's average [36][38] Question: Infrastructure spending trends - Management confirmed that infrastructure spending is expected to be down year over year, primarily due to reduced acquisition-related expenditures [53] Question: Natural gas pricing and M&A focus - Management emphasized a focus on bolt-on M&A opportunities that enhance the base business rather than transformative deals [49][51] Question: Water recycling goals - Management expressed a goal to increase recycled water usage to two-thirds or three-fourths over the next couple of years [44][45] Question: Service cost trends and deflation - Management noted some progress in reducing costs for materials but indicated that service company pricing remains sticky [62] Question: Activity expectations for Q4 - Management expects a slight decrease in CapEx for Q4 compared to Q3, primarily due to well mix [68]