Permian Resources Corporation Class A

Good morning and welcome to Permian Resources conference call to discuss its fourth quarter and full year 2024 earnings. Today's call is being recorded. A replay of the call will be accessible until March 6, 2025 by dialing 888-660-6264 and entering the replay access code 75050 or by visiting the company's website at www.permianres.com. At this time, I will turn the call over to Hayes Mabry, Permian Resources Vice President of Investor Relations, for some opening remarks. Please go ahead.

Thanks, Ina. And thank you all for joining us. On the call today are Will Hickey and James Walter, our Chief Executive Officers, and Guy Oliphant, our Chief Financial Officer. I would like to note that many of the comments during this call are forward-looking statements. that involve risk and uncertainties that could affect our actual results or plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors and the forward-looking statement sections of our filings with the SEC. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance. and actual results may differ materially. We may also refer to non-GAAP financial measures. For any non-GAAP measure we use, a reconciliation to the nearest corresponding GAAP measure can be found in our earnings release or presentation. With that, I will turn the call over to Will Hickey, Co-CEO.

Thanks, Hayes. We're excited to discuss our fourth quarter results as well as lay out our 2025 plan this morning. We reported a record quarter in both production and free cash flow per share in Q4, demonstrating that the business continues to perform extremely well, led by outstanding execution in the field. Additionally, we saw our relentless focus on cost control manifest into lower DMC cost and controllable cash cost when compared to Q3. Over the full year of 2024, our team delivered outstanding results, resulting in a nearly 50% increase in free cash flow per share compared to 2023. Even more impressive, we achieved this without increasing leverage, reflecting the strength and consistency of our core operations. As a result, we believe 2024 represents a highly repeatable year, positioning us for sustained performance and growth. As we look to 2025, we expect to continue maximizing shareholder value by executing on our highly capital-efficient Delaware Basin Drilling Program. We're proud to lay out a 2025 plan that's expected to continue to generate significant free cash flow for share growth. Moving into quarterly results, Q4 production exceeded expectations with oil production of 171,000 barrels of oil per day and total production of 368,000 barrels of oil equivalent per day. Our DNC team also continues to execute at an extremely high level, which led to 275 wells tilled in 2024. Importantly, we executed on this plan with capex remaining well within our original guidance range of 1.9 to 2.1 billion. In addition, we delivered leading cash costs supporting strong margins, with Q4 LOE of $5.42 per BOE, cash G&A of $0.93 per BOE, and GP&T of $1.49 per BOE. Strong production results paired with low cash costs and capex of $504 million in the quarter resulted in adjusted operating cash flow of $904 million and adjusted free cash flow of $400 million. Turning to slide four, we wanted to provide a quick review of how strong a year 2024 was for PR. We were able to beat and or raise production guidance every quarter on just the base outperformance. When including the bolt-on acquisitions we closed throughout the year, we delivered 8% higher oil production when compared to our original 2024 guidance. Our cost controls also performed extremely well, as most recent oil costs were almost 20% lower compared to 2023. Most importantly, a little over half of this reduction was a direct result of structural efficiency improvements gained throughout the year, with the balance a result of service cost deflation. We also rolled out an enhanced capital return program during 2024 that prioritizes a leading base dividend for our shareholders. This change was underpinned by the material improvements in free cash flow per share generation of our business, which we will touch on more in just a little bit. Lastly, during 2024, we were able to increase our liquidity by approximately $1 billion, showcasing our ability to maintain a very strong financial position with no change in leverage. while executing on $1.2 billion of accreted M&A. We have and will continue to prioritize maintaining a fortress balance sheet, as we believe this allows us to maintain flexibility and be opportunistic through the commodity price cycles. Slide 5 illustrates our expertise and cost leadership in the Delaware Basin. Our relentless focus on low-cost leadership allows us to drive both D&C and controllable cash costs to peer-leading levels. Our 2025 plan, which James will outline here in a minute, benefits greatly from the reduction in all-in costs we've seen over the past year. Given the marginal nature of free cash flow, running a low-cost business is critical in supporting strong free cash flow for share. Turning to slide six, we wanted to highlight the success of our 2024 M&A program. We executed on approximately $1.2 billion of acquisitions for 50,000 net acres and about 20,000 barrels of oil equipment per day across our acreage position. The mix of acquisitions consisted of a large asset deal in Bria Draw, several smaller bolt-on acquisitions, and finally a substantial ground game that consisted of over 500 transactions for 4,000 net acres. We believe that expertise in executing each of these type of transactions provides PR the means to continue to replace our drilled locations with high rate of return inventory that immediately competes for capital. As you can see, these acquisitions more than replaced the inventory that we drilled throughout 2024 with similar or better rates of return to our 2024 development. We plan on continuing our strong track record of pursuing a creative M&A that adds near-term, mid-term, and long-term value to shareholders. Now, looking at slide seven, we want to highlight a big reason for why we've been so successful at M&A that creates value for shareholders. One of our sustainable competitive advantages is our ability to buy acreage in areas where we can apply PR's leading cost structure to the acquired assets immediately. Specifically, when we compared the last several months of LOE on assets prior to acquisition, we've already driven a $3 per BOE reduction in that asset base. This was largely achieved through our lean field organization, technical expertise in artificial lift, optimized chemical programs, and a leading field compression team that maximizes production while reducing downtime. Similarly, on the DNC side, we've reduced costs by over $300 per lateral foot when compared to the prior operator's most recent wells. Our leading cycle times, completion optimization, and sourcing of key materials with scale support these improvements. We're confident that our ability to execute this level will allow us to continue to find Delaware-based opportunities at attractive rates of return. With that, I will turn it over to James to go over our 2025 plan.