Permian Resources Corp

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes. The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, future market prices for oil, natural gas and NGLs, future production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, inflation, regulatory changes, and other uncertainties, as well as those factors discussed in “Cautionary Statement Concerning Forward-Looking Statements” and under the heading “Item 1A. Risk Factors” in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”); all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may or may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes. The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, future market prices for oil, NGLs and natural gas, future production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, inflation, regulatory changes, and other uncertainties, as well as those factors discussed in “Cautionary Statement Concerning Forward-Looking Statements” and under the heading “Item 1A. Risk Factors” in this Quarterly Report and the 2024 Annual Report; all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may or may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Previous wording

Our revenue, profitability and ability to return cash to stockholders can depend substantially on factors beyond our control, such as economic, political and regulatory developments. Prices for crude oil, natural gas and NGLs have experienced significant fluctuations in recent years and may continue to fluctuate widely in the future.

Current wording

Our revenue, profitability and ability to return cash to stockholders can depend substantially on factors beyond our control, such as economic, political and regulatory developments. Prices for crude oil, NGLs and natural gas have experienced significant fluctuations in recent years and may continue to fluctuate widely in the future.

Previous wording

The oil and natural gas industry is cyclical, and it is likely that commodity prices, as well as commodity price differentials, will continue to be volatile due to fluctuations in global supply and demand, inventory levels, geopolitical events, federal and state government regulations, weather conditions, the global transition to alternative energy sources, supply chain constraints and other factors. The following table highlights the quarterly average price trends for NYMEX WTI spot prices for crude oil and NYMEX Henry Hub index price for natural gas since the first quarter of 2023:

Current wording

The oil and natural gas industry is cyclical, and it is likely that commodity prices, as well as commodity price differentials, will continue to be volatile due to fluctuations in global supply and demand, inventory levels, geopolitical events, federal and state government regulations, including the OBBBA, weather conditions, growth in alternative energy sources, supply chain constraints and other factors. The following table highlights the quarterly average price trends for NYMEX WTI spot prices for crude oil and NYMEX Henry Hub index price for natural gas since the first quarter of 2023:

Previous wording

Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, costs of oilfield goods and services generally also increase; however, during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. In addition, the U.S. saw higher levels of inflation during 2024 and the beginning of 2025, which is expected to remain heightened throughout 2025 due to concerns over global trade wars and changes in tariff policies. Inflationary pressures such as these may also result in increases to the costs of our oilfield goods, services and personnel, which can in turn cause our capital expenditures and operating costs to rise.

Current wording

Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, costs of oilfield goods and services generally also increase; however, during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. In addition, the U.S. saw higher levels of inflation during 2024 and through the first half of 2025, which is expected to remain heightened throughout 2025 due to concerns over international conflicts, tariffs and trade policies. Inflationary pressures such as these may also result in increases to the costs of our oilfield goods, services and personnel, which can in turn cause our capital expenditures and operating costs to rise.

Previous wording

During the three months ended March 31, 2025, we declared and paid quarterly base dividends totaling $0.15 per share of Class A Common Stock and distributions totaling $0.15 per share of Class C Common Stock (each of which has an underlying common unit of OpCo (“Common Units”)). The cash dividends and distributions paid to common unitholders totaled $121.0 million for the three months ended March 31, 2025.

Current wording

During the six months ended June 30, 2025, we declared and paid quarterly base dividends totaling $0.30 per share of Class A Common Stock and distributions totaling $0.30 per share of Class C Common Stock (each of which has an underlying common unit of OpCo (“Common Units”)). The cash dividends and distributions paid to common unitholders totaled $241.6 million for the six months ended June 30, 2025.

Previous wording

Oil, Natural Gas and NGL Sales Revenues. Total net revenues for the three months ended March 31, 2025 were $133.5 million (or 11%) higher than total net revenues for the three months ended March 31, 2024. Revenues are a function of oil, natural gas and NGL volumes sold and average commodity prices realized.

Current wording

Oil and Gas Sales. Total net revenues for the three months ended June 30, 2025 were $48.5 million (or 4%) lower than total net revenues for the three months ended June 30, 2024. Revenues are primarily a function of oil, NGL and natural gas volumes sold and average commodity prices realized.

Previous wording

Lease Operating Expenses. Lease operating expenses (“LOE”) for the three months ended March 31, 2025 increased $11.0 million compared to the three months ended March 31, 2024 and was the direct result of our higher well count between periods primarily due to additional wells placed on production or acquired since March 31, 2024.

Current wording

Lease Operating Expenses. Lease operating expenses (“LOE”) for the three months ended June 30, 2025 increased $28.3 million compared to the three months ended June 30, 2024 and was the direct result of our higher well count between periods primarily due to additional wells placed on production or acquired since June 30, 2024. LOE per Boe for the second quarter of 2025 was $5.36, which represents a slight increase of 3% from the second quarter of 2024.

Previous wording

Gathering, Processing and Transportation Expenses. Gathering, processing and transportation costs (“GP&T”) for the three months ended March 31, 2025 increased $7.6 million as compared to the three months ended March 31, 2024. This increase in expense was mainly attributable to higher natural gas and NGL volumes sold between periods, which in turn resulted in a higher amount of plant processing fees and gathering costs being incurred.

Current wording

Gathering, Processing and Transportation Expenses. Gathering, processing and transportation costs (“GP&T”) for the three months ended June 30, 2025 increased $12.0 million as compared to the three months ended June 30, 2024. This increase in expense was mainly attributable to higher NGL and natural gas volumes sold between periods, which in turn resulted in a higher amount of plant processing fees and gathering costs being incurred. GP&T on a per Boe basis increased from $1.42 for the three months ended June 30, 2024 to $1.59 for the three months ended June 30, 2025. This increase was mainly related to higher GP&T rates based on the location of new wells placed on production since the second quarter of 2024.

Previous wording

For the three months ended March 31, 2025, DD&A expense amounted to $474.2 million, an increase of $64.0 million over the same 2024 period. The primary factor contributing to higher DD&A expense in 2025 was the increase in our overall production volumes between periods, which increased DD&A expense by $63.7 million, while our slightly higher DD&A rate of $14.12 per BOE increased DD&A expense by $0.3 million between periods.

Current wording

For the three months ended June 30, 2025, DD&A expense amounted to $506.4 million, an increase of $80.0 million over the same 2024 period. The primary factor contributing to higher DD&A expense in 2025 was the increase in our overall production volumes between periods, which increased DD&A expense by $58.4 million, while our slightly higher DD&A rate of $14.45 per Boe increased DD&A expense by $21.6 million between periods.

Previous wording

DD&A per BOE was $14.12 for the first quarter of 2025 as compared to $14.11 for the same period in 2024. Our DD&A rate can fluctuate as a result of finding and development costs incurred, acquisitions, impairments, as well as changes in proved developed and proved undeveloped reserves.

Current wording

DD&A per Boe was $14.45 for the second quarter of 2025 as compared to $13.83 for the same period in 2024, a 4% increase between periods. Our DD&A rate can fluctuate as a result of finding and development costs incurred, acquisitions, and impairments, as well as changes in proved developed and proved undeveloped reserves.

Previous wording

Interest expense increased $7.1 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily due to (i) $15.6 million in interest incurred on our senior notes due 2033 that were issued in July 2024; and (ii) $5.8 million in additional interest expense related to the loss on extinguishment related to the partial redemption of our 2031 Senior Notes in January 2025. These increases were partially offset by the redemptions of our 6.875% senior notes due 2027 in April 2024 and 7.75% senior notes due 2026 in August 2024, as well as the partial redemption of our 2031 Senior Notes in January 2025 resulting in a total of $15.2 million less interest expense incurred between periods.

Current wording

Interest expense decreased $2.7 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 primarily due to (i) $13.9 million less interest incurred related to senior notes that have been fully or partially redeemed or repurchased, inclusive of the loss on extinguishment of debt associated with their redemptions; and (ii) $5.1 million less interest expense incurred on our credit facility due to lower weighted average borrowings outstanding during the 2025 period. These decreases were partially offset by $15.6 million in interest incurred on our senior notes due 2033 that were issued in July 2024.

Previous wording

Our provisions for income taxes for the three months ended March 31, 2025 and 2024 differs from the amounts that would be provided by applying the U.S. federal statutory rate of 21% to pre-tax book income primarily due to (i) the portion of pre-tax net income that is attributable to our non-controlling interest and which is therefore not taxable to the Company; (ii) other permanent differences; and (iii) state income taxes.

Current wording

Our provisions for income taxes for the three months ended June 30, 2025 and 2024 differ from the amounts that would be provided by applying the U.S. federal statutory rate of 21% to pre-tax book income primarily due to (i) the portion of pre-tax net income that is attributable to our non-controlling interest and which is therefore not taxable to the Company; (ii) other permanent differences; and (iii) state income taxes.

Previous wording

For the three months ended March 31, 2025, we generated pre-tax net income of $490.9 million and recorded income tax expense of $100.3 million. During the three months ended March 31, 2024, we generated pre-tax net income of $278.6 million and recorded income tax expense of $49.0 million. The primary factor decreasing our income tax expense below the U.S. statutory rate for both periods was the portion of pre-tax income that was attributable to our non-controlling interest partners and not taxable to the Company.

Current wording

For the three months ended June 30, 2025, we generated pre-tax net income of $307.5 million and recorded income tax expense of $62.5 million. During the three months ended June 30, 2024, we generated pre-tax net income of $391.2 million and recorded income tax expense of $82.3 million. The primary factor decreasing our income tax expense below the U.S. statutory rate for both periods was the portion of pre-tax income that was attributable to our non-controlling interest partners and not taxable to the Company.

Previous wording

Net production volumes for oil, natural gas and NGLs increased 14%, 17% and 17%, respectively, between periods. The increase in oil production resulted from additional production added from additional wells placed online or acquired since the first quarter of 2024. These oil volume increases were partially offset by normal production declines across our existing wells. Natural gas and NGLs are produced concurrently with our crude oil volumes, which typically result in a high correlation between fluctuations in oil quantities sold and natural gas and NGL quantities sold driving the respective 17% increases in gas and NGL volumes between periods.

Current wording

Net production volumes for oil, NGLs and natural gas increased 15%, 16%, and 13%, respectively, between periods. The increase in oil production resulted from additional production added from wells placed online or acquired since the second quarter of 2024. These oil volume increases were partially offset by normal production declines across our existing wells. NGLs and natural gas are produced concurrently with our crude oil volumes, which typically result in a high correlation between fluctuations in oil quantities sold and NGL and natural gas quantities sold driving the respective 16% and 13% increases in NGL and gas volumes between periods.

Previous wording

Total net revenues increases were also driven by higher average realized sales prices of natural gas and NGLs, which increased 80% and 4%, respectively, in the first quarter of 2025 compared to the same 2024 period. The 80% increase in the average realized natural gas price was mainly the result of significantly higher local and national average index gas prices between periods. The 4% increase in the average realized NGL prices between periods was primarily attributable to improved differentials between periods based on the mix and prices of NGL components produced between periods.

Current wording

Total net revenues increases were also driven by higher average realized sales prices of natural gas, which increased 513% in the first half of 2025 compared to the same 2024 period. This increase was the result of significantly higher local and national average index gas prices between periods.

Previous wording

These increases were partially offset by a decrease in the average realized sales price for oil which decreased 7% in the first quarter of 2025 compared to the same 2024 period. The 7% decrease in the average realized oil price was mainly the result of lower NYMEX crude prices due to economic and political concerns during the 2025 period as discussed under the “Market Conditions” section above.

Current wording

These increases were partially offset by decreases in the average realized sales prices for oil and NGLs, which decreased 15% and 4%, respectively, in the first half of 2025 compared to the same 2024 period. The 15% decrease in the average realized oil price was mainly the result of lower NYMEX crude prices between periods. The 4% decrease in the average realized NGL price between periods was primarily attributable to lower Mont Belvieu spot prices for plant products for first half of 2025 compared to the same 2024 period.

Previous wording

Severance and Ad Valorem Taxes. Severance and ad valorem taxes for the three months ended March 31, 2025 increased $11.8 million compared to the three months ended March 31, 2024. Severance taxes are based on the market value of our oil and gas production at the wellhead, while ad valorem taxes are generally based on the assessed taxable value of proved developed oil and gas properties and vary across the different counties in which we operate. Severance taxes for the first quarter of 2025 increased $12.0 million compared to the same 2024 period primarily due to higher total operating revenues between periods. As a percentage of revenues, our severance and ad valorem taxes were consistent between periods at 7.8% and 7.7% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Severance and Ad Valorem Taxes. Severance and ad valorem taxes for the six months ended June 30, 2025 increased $13.7 million compared to the six months ended June 30, 2024. Severance taxes are based on the market value of our production at the wellhead, while ad valorem taxes are generally based on the assessed taxable value of our proved developed oil and gas properties and vary across the different counties in which we operate. Severance taxes for the first half of 2025 increased $13.7 million compared to the same 2024 period primarily due to (i) higher NGL and natural gas revenues between periods; and (ii) less tax credits received on wells designated “high cost gas” by the state of Texas. As a result, our severance and ad valorem taxes as a percentage of revenues also increased between periods from 7.6% for the six months ended June 30, 2024 to 7.9% for the six months ended June 30, 2025.

Previous wording

G&A expenses for the three months ended March 31, 2025 were $43.1 million compared to $37.4 million for the three months ended March 31, 2024. Higher G&A in the first quarter of 2025 was the result of an increase of $7.1 million in stock-based compensation between periods primarily related to (i) additional grants of performance stock units (“PSUs”) and restricted stock since the first quarter of 2024; and (ii) the modification of the Co-CEO’s PSUs that resulted in accelerated expense period over period. This increase was partially offset by a $1.4 million decrease in cash G&A between periods.

Current wording

G&A expenses for the six months ended June 30, 2025 were $92.9 million compared to $86.1 million for the six months ended June 30, 2024. Higher G&A for the first six months of 2025 was the result of a $3.9 million increase in total stock-based compensation and $2.9 million increase in cash G&A between periods. The $3.9 million increase in stock-based compensation was primarily related to (i) additional grants of performance stock units (“PSUs”) and restricted stock since the second quarter of 2024; and (ii) the modification of the Co-CEO’s PSUs that resulted in more accelerated expense period over period. This was partially offset by less expense associated with accelerated vestings of equity awards that occurred during the first half of 2024 that did not reoccur during the same 2025 period. The $2.9 million increase in cash G&A between periods was primarily related to higher consulting and professional services as well as higher employee expenses related to our overall corporate growth.

Previous wording

Cash G&A on a per Boe basis decreased 18% between periods from $0.97 per Boe during the three months ended March 31, 2024 to $0.80 per Boe during the three months ended March 31, 2025 as a result of improved operational execution and realization of cost synergies following various transactions.

Current wording

While cash G&A increased between periods, on a per Boe basis our cash G&A rate decreased 8% from $0.91 per Boe during the six months ended June 30, 2024 to $0.84 per Boe during the six months ended of 2025 as a result of improved operational execution and realization of cost synergies following various transactions.

Previous wording

We continually evaluate our capital needs and compare them to our capital resources. During the three months ended March 31, 2025 our total development capital expenditures were $500.7 million. We expect our total drilling, completion and facilities capital expenditures for 2025 to be between $1.9 billion to $2.0 billion. We funded our capital expenditures for the three months ended March 31, 2025 entirely from cash flows from operations, and we expect to fund the remainder of our 2025 capital expenditures budget entirely from cash flows from operations given our anticipated level of oil and gas production, current commodity prices and our commodity hedge positions in place.

Current wording

We continually evaluate our capital needs and compare them to our capital resources. During the six months ended June 30, 2025 our total development capital expenditures were $1.0 billion. We expect our total drilling, completion and facilities capital expenditures for 2025 to be between $1.92 billion to $2.02 billion. We funded our capital expenditures for the six months ended June 30, 2025 entirely from cash flows from operations, and we expect to fund the remainder of our 2025 capital expenditures budget entirely from cash flows from operations given our anticipated level of oil and gas production, current commodity prices and our commodity hedge positions in place.

Previous wording

We plan to return capital to shareholders primarily through our base dividend, in addition to opportunistic share repurchases. During the three months ended March 31, 2025, we declared and paid a quarterly base dividend of $0.15 per share of Class A Common Stock and a distribution of $0.15 per share of Class C Common Stock (each of which has an underlying Common Unit of OpCo). The cash dividends and distributions paid to common unitholders totaled $121.0 million for the three months ended March 31, 2025.

Current wording

We plan to return capital to shareholders primarily through our base dividend, in addition to opportunistic share repurchases. During the six months ended June 30, 2025, we declared and paid quarterly base dividends totaling $0.30 per share of Class A Common Stock and distributions totaling $0.30 per share of Class C Common Stock (each of which has an underlying Common Unit of OpCo). The cash dividends and distributions paid to common unitholders totaled $241.6 million for the six months ended June 30, 2025. Additionally, we repurchased 4.1 million shares of Class A Common Stock for $43.3 million under our stock repurchase program during the six months ended June 30, 2025.

Previous wording

In addition, we may, from time to time, seek to retire or purchase our outstanding senior notes through cash purchases and/or exchanges for debt in open-market purchases, privately negotiated transactions or otherwise. During the first quarter of 2025, we redeemed $175 million of our 2031 Senior Notes at a redemption price equal to 109.875% of the aggregate principal amount redeemed plus accrued and unpaid interest up to, but excluding, the redemption date. Following the redemption, the remaining aggregate principal amount of the 2031 Senior Notes outstanding was $325 million.

Current wording

In addition, we may, from time to time, seek to retire or purchase our outstanding senior notes through cash purchases and/or exchanges for debt in open-market purchases, privately negotiated transactions or otherwise. During the six months ended June 30, 2025, we redeemed $175 million of our 2031 Senior Notes at a price equal to 109.875% of the aggregate principal amount redeemed plus accrued and unpaid interest up to, but excluding, the redemption date. Following the redemption, the remaining aggregate principal amount of the 2031 Senior Notes outstanding was $325 million. Additionally, we repurchased $2.7 million of our 2026 Senior Notes at a price equal to 99.7% of the principal amount paid plus accrued and unpaid interest up to, but excluding, the repurchase date. Following the transaction, the remaining aggregate principal amount of the 2026 Senior Notes outstanding was $286.7 million.

Previous wording

For the three months ended March 31, 2025, we generated $898.0 million of cash from operating activities, an increase of $250.4 million from the same period in 2024. Cash provided by operating activities increased primarily due to higher production volumes and higher realized prices of gas and NGLs as well as the timing of collections on our receivables and payments to our suppliers during the three months ended March 31, 2025 as compared to the same 2024 period. These increasing factors were partially offset by lower realized prices for oil, higher severance and ad valorem taxes, lease operating expenses, GP&T and interest expense during the three months ended March 31, 2025 as compared to the same 2024 period. Refer to “Results of Operations” for more information on the impact of volumes and prices on revenues and on fluctuations in our operating costs between periods.

Current wording

For the six months ended June 30, 2025, we generated $1.9 billion of cash from operating activities, an increase of $350.7 million from the same period in 2024. Cash provided by operating activities increased primarily due to higher production volumes, realized derivative gains, realized prices for gas and lower merger and integration expense as well as the timing of payments to our suppliers and collections on our receivables during the six months ended June 30, 2025 as compared to the same 2024 period. These increasing factors were partially offset by lower realized prices for oil and NGLs, higher lease operating expenses, GP&T, severance and ad valorem taxes and interest expense during the six months ended June 30, 2025 as compared to the same 2024 period. Refer to “Results of Operations” for more information on the impact of volumes and prices on revenues and on fluctuations in our operating costs between periods.

Previous wording

During the three months ended March 31, 2025, cash flows from operating activities and proceeds of $176.0 million from the sale of natural gas and oil gathering systems that were acquired during a prior year acquisition were used to (i) fund $500.7 million of drilling and development cash capital expenditures; (ii) redeem $175.0 million of our senior notes; (iii) pay $121.0 million in dividends and cash distributions to our shareholders and holders of our Common Units; and (iv) fund acquisitions of oil and gas properties of $35.4 million.

Current wording

During the six months ended June 30, 2025, cash flows from operating activities and proceeds of $176.0 million from the sale of natural gas and oil gathering systems that were acquired during a prior year acquisition were used to (i) fund $1.0 billion of drilling and development cash capital expenditures; (ii) fund acquisitions of oil and gas properties of $650.3 million; (iii) pay $241.6 million in dividends and cash distributions to our shareholders and holders of our Common Units; (iv) redeem $177.7 million of our senior notes; and (v) repurchase $43.3 million of our Class A Common Stock.

Previous wording

During the three months ended March 31, 2024, cash flows from operating activities, cash on hand and net borrowings under our revolving credit facility were used to (i) fund $519.6 million of drilling and development cash expenditures; (ii) pay $115.5 million in dividends and cash distributions to our shareholders and holders of our Common Units; (iii) fund acquisitions of oil and gas properties of $97.0 million; and (iv) repurchase $31.5 million of our common stock.

Current wording

During the six months ended June 30, 2024, cash flows from operating activities, cash on hand and net borrowings under our revolving credit facility were used to (i) fund $1.0 billion of drilling and development cash capital expenditures; (ii) redeem $356.4 million of our senior notes; (iii) pay $270.1 million in dividends and cash distributions to our shareholders and holders of our Common Units; (iv) fund acquisitions of oil and gas properties of $262.3 million; and (v) repurchase $61.0 million of our Class C Common Stock (and underlying Common Units).

Previous wording

Our contractual obligations include operating and transportation agreements, drilling rig contracts, office and equipment leases, asset retirement obligations, long-term debt obligations and cash interest expense on long-term debt obligations, which we routinely enter into, modify or extend. Since December 31, 2024, there have not been any significant, non-routine changes in our contractual obligations other than (i) a drilling rig contract entered into as discussed in Note 1—Basis of Presentation and Summary of Significant Accounting Policies under Part I, Item I of this Quarterly Report.

Current wording

Our contractual obligations include operating and transportation agreements, drilling rig contracts, office and equipment leases, asset retirement obligations, long-term debt obligations and cash interest expense on long-term debt obligations, which we routinely enter into, modify or extend. Since December 31, 2024, there have not been any significant, non-routine changes in our contractual obligations other than (i) a drilling rig contract entered into and (ii) a series of firm transportation agreements that guarantee volumetric capacity on pipelines for gas transportation entered into as discussed in Note 1—Basis of Presentation and Summary of Significant Accounting Policiesand Note 11—Commitments and Contingencies, respectively, under Part I, Item 1 of this Quarterly Report.