On Monday, Citi reaffirmed its Buy rating on Permian Resources Corp (NYSE: PR) with a steady price target of $18.00. The company's third-quarter earnings for 2024 showed an adjusted cash flow of approximately $821.9 million, surpassing both the consensus and Citi's own projections. Permian Resources' financial outcome was attributed to production numbers that slightly exceeded expectations. However, capital expenditures were on the higher end of the forecast range, while operating expenses and pricing results were mixed.
The firm has updated its full-year 2024 guidance, now expecting an average daily production of around 341,000 barrels of oil equivalent per day (boe/d), with approximately 46.5% being oil. This represents an increase of 4.9%, including contributions from Barilla Draw. Despite the adjustments in production guidance, the company's capital expenditure forecast remains unchanged, with anticipated spending between $1.9 billion and $2.1 billion, of which about 75% is allocated to drilling and completion activities.
Citi's stance on Permian Resources is supported by the company's robust and improving drilling outcomes and operational efficiencies. This positive perspective holds even as the firm acknowledges the challenges posed by the current volatile pricing environment in the energy sector. The investment firm's price target of $18 per share reflects confidence in the company's ability to navigate through market fluctuations while capitalizing on its strong operational performance.
In other recent news, Permian Resources has reported noteworthy third-quarter results for 2024, exceeding oil production expectations with a daily output of 161,000 barrels. The company's strong performance led to an increase in its full-year oil guidance for the third time this year, now raised by 11,000 barrels per day since February. In terms of financials, the Q3 capital expenditures were $520 million, with adjusted operating cash flow at $823 million and adjusted free cash flow at $303 million.
Permian Resources also expanded its base dividend by 150% to $0.60 per share and increased its buyback authorization to $1 billion. In their future outlook, the company targets approximately $800 in drilling and completion well cost with the potential for further reductions through efficiency improvements. They anticipate a slight increase in Q4 capital expenditures due to working interest fluctuations and a slight rise in operating expenses due to the Barilla Draw operations managed by Oxy.
Despite a minor decrease in gas output, Permian Resources successfully integrated the Earthstone assets, contributing to lower operating expenses, and increased natural gas sales at the Gulf Coast by 50%.
InvestingPro Insights
Permian Resources Corp's (NYSE: PR) financial performance aligns with Citi's positive outlook, as reflected in recent InvestingPro data. The company's P/E ratio of 8.55 and PEG ratio of 0.12 suggest that it may be undervalued relative to its earnings growth potential, supporting Citi's Buy rating. This is further reinforced by an InvestingPro Tip indicating that PR is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's robust financial health is evident in its impressive revenue growth of 74.92% over the last twelve months, with a strong operating income margin of 37.77%. These metrics underscore Permian Resources' operational efficiency, which Citi highlighted in their analysis.
Additionally, an InvestingPro Tip notes that PR "Has raised its dividend for 3 consecutive years," with a current dividend yield of 4.69%. This demonstrates the company's commitment to shareholder returns, even as it maintains significant capital expenditures for growth.
For investors seeking more comprehensive analysis, InvestingPro offers 10 additional tips for Permian Resources Corp, providing deeper insights into the company's financial position and market performance.
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