Permian Resources NYSE: PR reported record free cash flow of $0.98 per share in the third quarter of 2026, as higher production, lower operating costs and improved natural gas prices helped offset a decline in oil prices from the prior quarter.
The oil and gas producer also raised its full-year oil production outlook and said it expects to generate approximately $300 million more in 2026 free cash flow than its original plan would have produced at the latest actual commodity prices.
“We cannot always overcome commodity price fluctuations quarter-over-quarter,” Co-CEO Will Hickey said on the earnings call. But he said disciplined investment and execution could support long-term free cash flow growth across commodity cycles.
Production Rises as Costs Fall
Third-quarter oil production averaged 208,000 barrels per day, up approximately 10,000 barrels per day from the second quarter. Hickey said more than 8,000 barrels per day of that increase came from organic growth, while the remainder came from a Ward County acquisition. Total production averaged 458,000 barrels of oil equivalent per day.
Hickey attributed the organic increase to measures including more workover activity, acquisitions of additional working interests in existing units and shorter cycle times for bringing wells online. The company also spent $518 million in cash capital expenditures during the quarter, consistent with the second quarter.
Controllable cash costs fell 6% sequentially to a company-low $7.05 per barrel of oil equivalent. Lease operating expenses declined to $5.11 per barrel of oil equivalent, while cash general and administrative expenses fell to $0.73.
Hickey cautioned that the third quarter benefited from unusually favorable weather and low equipment failure rates. “I’m not sure that what we printed in Q3 is necessarily the new norm,” he said, although he added that the company was making durable improvements to its cost structure.
Gas Revenue Rebounds
Natural gas production rose 42% from the second quarter to approximately 787 million cubic feet per day after Permian Resources brought back high gas-to-oil ratio wells it had curtailed when Waha prices were deeply negative.
Hickey said higher volumes and improved realizations lifted natural gas revenue before hedges from negative $90 million in the second quarter to more than positive $50 million in the third. Including hedges, the company realized $1.12 per thousand cubic feet of gas.
The company began delivering gas through the Hugh Brinson pipeline during the quarter, bringing the share of its volumes priced in Gulf Coast and Dallas-Fort Worth markets to approximately 80%, Hickey said. Permian Resources is selling more than 600 million cubic feet per day downstream of Waha and expects that figure to exceed 700 million in the second quarter of 2027.
Co-CEO James Walter said the company expects Waha pricing to improve but intends to sell most of its gas farther downstream. Its contracts also retain some flexibility to shift sales back to Waha if that market becomes more favorable, he said.
Acquisitions and Outlook
Walter said Permian Resources completed approximately 175 transactions that added a combined 24,000 net acres, 9,000 net royalty acres and 13,000 barrels of oil equivalent per day of production. The acquisitions carry approximately $1.15 billion in upfront consideration and add more than 200 net drilling locations, he said.
The total includes Ridge Runner Resources, acquired for just over $1 billion, and approximately $120 million of smaller acquisitions. Ridge Runner closed on October 30; the other transactions closed during the third quarter.
Walter said the Ridge Runner agreement included a contingent payment tied to potential oil price upside in 2027 and 2028. At flat prices of $70 per barrel of oil and $2 per thousand cubic feet of gas, the company expects the acquisition to increase free cash flow per share by at least 5% over two-, five- and 10-year periods.
Permian Resources raised the midpoint of its 2026 oil production guidance to 202,000 barrels per day, representing approximately 11% growth from the prior year and a 7% increase from its February guidance. Walter said about 85% of the year-to-date increase in the oil outlook came from improvements in the existing business.
The company updated its full-year cash capital expenditure midpoint to $2.025 billion. For the fourth quarter, it expects oil production above 210,000 barrels per day, including approximately 4,000 barrels per day from Ridge Runner, and cash capital spending similar to the third quarter.
Hickey declined to set a 2027 growth target, saying the company would assess conditions as they evolve. He estimated maintenance capital spending at $1.9 billion to $2 billion at production levels above 200,000 barrels of oil per day, including Ridge Runner.
Walter also said share buybacks could become more attractive as the balance sheet strengthens, although the company remains cautious about repurchasing shares in a way that is pro-cyclical. CFO Guy Oliphint said Permian Resources still expects to become a full cash taxpayer in 2028.
About Permian Resources (NYSE:PR)
Permian Resources Corporation is an independent oil and natural gas company focused on the exploration, development and production of oil, natural gas and natural gas liquids. Its operations are concentrated in the Delaware Basin, part of the Permian Basin in West Texas and southeastern New Mexico.
The company develops its acreage through drilling and related production activities, with a focus on operating and expanding its position in the Delaware Basin. Its production is sold into energy markets and used across a range of industrial and consumer applications.
Permian Resources was formed in 2022 through the combination of Centennial Resource Development and Colgate Energy.
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