Permian Resources NYSE: PR reported what executives described as a record quarter for free cash flow and operational efficiency, while emphasizing that the company is preserving flexibility amid volatile commodity markets.
On the company’s first-quarter 2026 earnings call, Co-CEO Will Hickey said Permian Resources generated free cash flow per share of $0.60, the highest level in the company’s history, and record free cash flow of more than $500 million for the quarter. Oil production averaged 192,000 barrels per day, while total production reached 413,000 barrels of oil equivalent per day, both exceeding company expectations.
Hickey said the outperformance was driven by better-than-expected results from recent wells and reduced downtime in March, when the company added workover rigs in response to higher oil prices. He said the company accelerated oil production volumes “in response to higher oil prices in March” and is focused on bringing barrels forward into what management views as a constructive price environment.
Costs Fall as Drilling and Completion Records Improve
Permian Resources reported drilling and completion costs of approximately $685 per lateral foot in the first quarter, with both drilling cost per foot and completion cost per foot setting company records. Hickey said the company drilled the fastest well in its history, averaging more than 2,500 feet per day, and delivered its longest quarterly average lateral length, with roughly one-quarter of wells exceeding 2.5 miles.
On the completion side, Hickey said recycled water utilization reached about 70%, which he said lowers completion costs and can also reduce lease operating expense. The company also installed four microgrids during the quarter, eliminating more than 25 generators and reducing electricity costs on associated well sites by about 30%.
Controllable cash costs remained within 2026 guidance, with lease operating expense of $5.19 per BOE, gathering, processing and transportation expense of $1.36 per BOE, and cash general and administrative expense of $0.77 per BOE. Hickey said first-quarter LOE was unusually low, helped by mild winter conditions outside of Winter Storm Blair, and indicated the company still expects to average around the midpoint of its LOE guidance, which he cited as $5.45 per BOE.
Natural Gas Strategy Cushions Waha Weakness
Management said Permian Resources continues to benefit from firm transportation and hedging arrangements as Waha natural gas prices remain weak. Hickey said the company’s realized natural gas price, including hedges, was $1.33 per Mcf in the first quarter, representing a $2.44 premium to Waha during the period.
He said roughly half of that uplift came from firm transportation agreements and the balance from existing natural gas hedges. Permian Resources currently has about 400 million cubic feet per day of firm transportation to Gulf Coast and Dallas-Fort Worth markets, which is expected to grow to more than 700 million cubic feet per day in 2027 and beyond.
In response to analyst questions, Co-CEO James Walter said the company has shut in gas wells and very high gas-oil-ratio wells that do not make economic sense in a negative gas price environment. He said those wells would return to production when economic, which management expects could occur in the second half of the year, but added that the company would continue to make decisions based on maximizing cash flow.
Investment-Grade Ratings and Capital Allocation
Walter highlighted that Permian Resources has received investment-grade ratings from all three major rating agencies. He said that status lowers the company’s cost of debt and supports access to capital across cycles. The company has reduced absolute debt by about $1.2 billion since the beginning of 2025, according to Walter.
Walter said the company’s capital allocation framework remains unchanged. The base dividend is the top priority, followed by debt repayment, building cash on the balance sheet and pursuing accretive acquisitions. He said management evaluates the best risk-adjusted long-term returns among those options, including potential share repurchases, dividend increases, acquisitions or further debt reduction.
Walter also emphasized employee ownership and management alignment with shareholders. He said all employees receive common equity as part of annual compensation, officer compensation is heavily weighted toward equity and performance shares, and the co-CEOs receive no cash salary or cash bonus. Permian Resources employees own roughly 7% of the company, representing more than $1 billion in equity value, he said.
Production Flexibility and M&A Pipeline
Management said second-quarter production and capital expenditures are expected to be modestly higher than in the first quarter, driven by an elevated workover program and efforts to accelerate additional wells turned to sales. Hickey said workover activity increased from roughly 30 to 40 workovers per month to closer to 70 to 90 per month.
For the second half of the year, Walter said the company is maintaining flexibility. If crude prices remain strong, Permian Resources expects to come in at the high end of both production and capital ranges using its existing rigs and equipment. If conditions soften materially, the company would expect to reduce activity and move toward the low end of those ranges.
Walter said the current midpoint of the company’s updated guidance implies 6% year-over-year production growth in 2026 compared with 2025. He added that any outcome within the current range is expected to generate higher free cash flow in 2026 than the company’s original guidance.
On acquisitions, Walter said the Delaware Basin market has become more active, with more high-quality assets potentially coming to market than in recent years. He said Permian Resources is well positioned to participate, but would only pursue transactions at the right price and where management is highly confident they would improve the existing business.
Walter concluded that the company’s business is in “a stronger position today than at any point in PR’s history,” citing its investment-grade balance sheet, simplified corporate structure, low-cost Delaware Basin operations and continued operational records.
About Permian Resources NYSE: PR
Permian Resources NYSE: PR is an independent exploration and production company focused on the acquisition, development and optimization of oil and natural gas assets in the Permian Basin. The company’s operations encompass all phases of upstream activity, including geological and geophysical analysis, drilling, completion and production. By employing horizontal drilling and hydraulic fracturing technologies, Permian Resources aims to efficiently unlock hydrocarbon reserves and deliver consistent production growth.
Headquartered in Oklahoma City, Permian Resources concentrates its asset portfolio in the Delaware and Midland sub-basins of West Texas and southeastern New Mexico.
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