Permian Resources Corporation — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This filing reports annual results, not standalone fourth-quarter results. The September 1, 2022 Colgate merger materially changed the company’s scale; 2022 results include Colgate only from the merger closing, so year-over-year comparisons are not like-for-like.
Business context and financial performance
Permian Resources is an independent oil and gas producer focused on the Delaware Basin in West Texas and New Mexico. At year-end it reported approximately 176,380 net leasehold acres, 96% operated, and 582.1 million Boe of proved reserves.
| Metric | 2022 | 2021 |
|---|---|---|
| Oil and gas sales | $2.131 billion | $1.030 billion |
| Net income | $749.8 million | $138.2 million |
| Net income attributable to Class A common stock | $515.0 million | $138.2 million |
| Basic / diluted EPS | $1.80 / $1.61 | $0.49 / $0.46 |
| Cash from operating activities | $1.372 billion | $525.6 million |
| Drilling and development cash expenditures | $771.6 million | $319.6 million |
| Long-term debt, net, at year-end | $2.141 billion | $825.6 million |
Revenue rose 107%, reflecting higher realized oil and gas prices and increased production, including acquired Colgate volumes. Total net production increased 57% to 95,708 Boe/d. Realized prices before hedge settlements were $88.95/Bbl for oil, $4.64/Mcf for gas and $34.41/Bbl for NGLs. Operating expenses included $77.4 million of merger and integration costs and $159.6 million of G&A, including a $46.5 million stock-award acceleration charge tied to the merger. Interest expense was $95.6 million; derivative instruments produced a $42.4 million net loss.
Year-end cash and cash equivalents were $59.5 million. The company reported $385 million drawn and approximately $1.1 billion of available borrowing capacity under its revolving credit facility, net of letters of credit. The facility’s borrowing base was $2.5 billion, elected commitments were $1.5 billion, and maturity was February 2027. Reported total current assets were $463.8 million versus current liabilities of $605.6 million.
Material changes and unusual items
- The Colgate merger closed September 1, 2022. Consideration included $525 million cash, 269.3 million Class C shares and an equal number of OpCo units; former Colgate owners held approximately 48% of OpCo at year-end. The company assumed Colgate notes, including $300 million due 2026 and $700 million due 2029.
- Year-end proved reserves increased to 582.1 MMBoe from 305.2 MMBoe, primarily due to 272.9 MMBoe of acquired reserves and 95.3 MMBoe of extensions and discoveries. Revisions reduced reserves by 50.0 MMBoe, including reclassifications or removals of development locations after combining drilling plans.
- The 2022 standardized measure of discounted future net cash flows was $9.426 billion; supplemental pre-tax PV-10 was $11.715 billion. These reserve measures are not estimates of market value.
- No shares were repurchased under the enlarged $500 million authorization during 2022. The company paid a $0.05-per-share Class A dividend and matching OpCo distribution in November.
- In September 2022, the company agreed with the EPA to a $610,000 penalty and corrective actions concerning alleged air-emissions violations.
Outlook, risks and contingencies
Management expected 2023 drilling, completion and facilities capital expenditures of $1.1–$1.2 billion and planned to fund the budget from operating cash flow, based on anticipated production, commodity prices and hedges. The company operated seven rigs at the start of 2023. It planned a base dividend plus a variable-return framework targeting at least 50% of free cash flow after the base dividend, through variable dividends, repurchases or both; management planned to begin the variable program in the second quarter of 2023, subject to board discretion and other constraints.
- Commodity-price volatility, inflation and service-cost increases, production execution, reserve-estimation uncertainty, and dependence on the Delaware Basin are significant risks. A 10% change in oil or gas prices used in reserve estimates would change pre-tax PV-10 by about $1.7 billion, according to the filing.
- Third-party transportation and processing access, water supply and disposal, induced seismicity, regulation and potential climate-related requirements could constrain or increase the cost of operations. Major purchasers BP, Shell and Enterprise accounted for 34%, 21% and 18% of 2022 net revenue, respectively.
- Debt covenants restrict certain activities; the company reported compliance at year-end. A borrowing-base reduction could require repayment. The $170 million convertible notes could be converted during first-quarter 2023 under conditions met at year-end, potentially affecting dilution or cash needs.
- A dispute with a transportation provider related to Winter Storm Uri had a reasonably possible loss range of zero to $7.6 million; the filing stated no amount within that range was a better estimate.
- Minimum purchase obligations totaled $48.7 million at year-end, in addition to lease, debt and interest commitments. Oil delivery commitments include 29,000 Bbl/d through May 2025 subject to ship-or-pay penalties if deliveries fall short.
- Management and the auditor reported effective internal controls, but the assessment excluded Colgate’s controls, representing approximately 50% of consolidated assets and 26% of 2022 revenue. Integration of those controls remained in progress.
Important facts for investors to verify
- Separate the pre- and post-merger contribution when assessing growth; the filing does not provide standalone fourth-quarter results in the supplied text.
- Compare the 2023 capital budget and variable-return plan with subsequent company updates and actual operating cash flow.
- Review debt maturities, borrowing-base redeterminations, covenant headroom and the convertible-note conversion outcome.
- Assess reserve revisions, PUD development timing and sensitivity to prices, costs and the combined drilling plan.
- Track resolution of the Winter Storm Uri dispute, delivery commitments, environmental corrective actions and Colgate control integration.