Mizuho Securities has sustained its optimistic stance on Permian Resources Corp (NYSE: PR), maintaining an Outperform rating and a price target of $19.00.
The firm forecasts a slight outperformance in oil production for the third quarter of 2024, which is somewhat balanced by weaker natural gas price realizations.
Despite expectations of earnings before interest, taxes, depreciation, and exploration expenses (EBITDX) and cash flow from operations (CFFO) to be approximately 4-5% below the consensus due to these weaker gas prices, the company is anticipated to deliver a solid operational performance.
Permian Resources' oil volumes are expected to be marginally higher than consensus estimates and previous guidance, attributed in part to increased activity during the third quarter, including a higher quarter-over-quarter total of wells brought online.
The increase is still within the upper half of the company's full-year 2024 budget. Additionally, the recent acquisition of Barilla Draw, which was completed on September 17, is likely to contribute to the company's production.
The company is also projected to maintain its operational efficiency, with lease operating expenses (LOE) and cash general and administrative (G&A) costs anticipated to be at the lower end of the guidance range for 2024. Investors are encouraged to focus on Permian Resources' preliminary outlook for 2025, which is expected to indicate flat to modest growth. Another area of interest is the company's revised cash return framework, which promises a significantly higher base dividend and the potential for opportunistic share repurchases.
In other recent news, Permian Resources reported strong Q2 results, with oil production reaching 153,000 barrels per day, and a total of 339,000 barrels of oil equivalent per day. The company also issued $1 billion in 6.25% senior unsecured notes due in 2033, while simultaneously announcing a cash purchase offer for its outstanding 7.75% Senior Notes due 2026. Goldman Sachs initiated coverage on Permian Resources with a Buy rating, and JPMorgan raised its price target to $18.00, maintaining an Overweight rating.
The company's recent acquisition of Barilla Draw is expected to contribute approximately 1.1 thousand barrels of oil per day to JPMorgan's third-quarter oil production estimate for Permian Resources. In addition, Permian Resources' Board of Directors approved a substantial expansion of its share buyback program, doubling the authorization from $500 million to $1 billion. These are recent developments at Permian Resources Corp, highlighting its commitment to strategic growth, financial stability, and shareholder value.
Furthermore, Roth/MKM reiterated a Buy rating for Permian Resources, based on consistent return of capital to shareholders through dividends and buybacks, and reasonable production growth. The company's management is confident in achieving consistent well productivity in 2024 as compared to 2023. Goldman Sachs highlighted Permian Resources' strong fundamentals and competitive edge due to its focus on the Permian Basin.
InvestingPro Insights
Permian Resources Corp's financial metrics and market performance align well with Mizuho Securities' optimistic outlook. According to InvestingPro data, the company's revenue growth is impressive, with a 99.89% increase in the most recent quarter. This robust growth supports the analyst's expectations of solid operational performance.
InvestingPro Tips highlight that Permian Resources has raised its dividend for 3 consecutive years, with a current dividend yield of 5.35%. This aligns with the article's mention of a "significantly higher base dividend" in the company's revised cash return framework. Additionally, the tip indicating that analysts anticipate sales growth in the current year corroborates Mizuho's forecast of slight outperformance in oil production.
The company's profitability is also noteworthy, with an operating income margin of 37.77% for the last twelve months as of Q2 2024. This strong profitability supports the expectation of maintained operational efficiency mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Permian Resources' financial health and market position.
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