Permian Resources Q2 2026 Earnings Call: Complete Transcript

Permian Resources (NYSE: PR ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Permian Resources reported record free cash flow of $751 million in Q2 2026, marking a significant 50% increase quarter over quarter, driven by strategic responses to volatile oil prices and increased production. Oil production increased by 3% to approximately 198,000 barrels per day, supported by an increased workover rig count and successful efforts to enhance working interest in wells. 38 per MCF, and plans to continue operational efficiency improvements, including surfactant trials and water recycling.

Permian Resources completed a significant acquisition in Ward County, enhancing its operated net locations and lateral lengths, and executed additional bolt-on projects, bringing total acquisitions to approximately 55,000 net acres this year. 5 times and expects to continue its disciplined acquisition strategy while focusing on high-quality asset purchases and maximizing shareholder returns. Updated guidance projects a 10% increase in oil production for 2026, with capital expenditures slightly reduced, highlighting continued capital efficiency improvements.

Full Transcript OPERATOR Good morning and welcome to Permian Resources conference call to discuss its second quarter 2026 earnings. Today's call is being recorded. A replay of the call will be available by visiting the company's website at At this time, I will now turn the call over to Hayes Mabry, Permian Resources Vice President of Investor Relations, for some opening remarks. Please go ahead.

Hayes Mabry, Vice President of Investor Relations Thanks, Eldy, 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. Many of the comments during this call are forward-looking statements that involve risks and uncertainties that could affect our actual results and are discussed in more detail in our filings with the SEC. 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. Will Hickey, Co-CEO Thanks, Hayes. Q2 is a standout quarter for Permian Resources.

88. These results reflect our team's ability to respond quickly and decisively to a volatile commodity environment. Our activities this quarter are a reminder of the uniqueness of PR's business model. We can respond quickly to market conditions, we have a differentiated approach to sourcing and executing acquisitions, and we are relentlessly improving the capital efficiency of our business on a go-forward basis.

All these characteristics support the goal we are all aligned on: increasing free cash flow per share over the long term to create shareholder value. Turning to the quarter, oil production came in at approximately 198,000 barrels per day, up 3% quarter over quarter. Slide 4 shows the key drivers that drove that oil production growth. When oil prices moved higher, our team in the field responded immediately.

We increased the number of workover rigs by 50%, which improved run times and quickly accelerated incremental barrels. At the same time, our successful ground game drove working interest in completed wells to approximately 82% for the quarter, up materially from our original expectations of 75%. Combined with strong well performance, these actions generated 6,000 barrels per day of oil growth quarter over quarter for cash capital expenditures of 521 million. One thing I'd highlight is our continued success increasing working interest ahead of development.

This has always been part of the PR playbook, but our BD and land team have executed at an exceptionally high level this year. We view these acquisitions as some of the highest rate of return deals that we do, given their near-term impact as evidenced from our higher working interest not only in Q2 but also for the remainder of the year. Incremental workovers and ground game transactions are exactly the types of investments we want to make in a volatile market. Both generate incremental oil production and cash flow almost immediately, allowing us to recycle capital quickly and de-risk returns through shorter payback periods.

Turning to natural gas, our team demonstrated their relentless focus on maximizing free cash flow as they navigated a severely depressed Waha market during the quarter. 52 per MCF. So rather than selling natural gas at negative prices, we proactively curtailed production on high GOR wells with Waha exposure, reducing natural gas production by approximately 20% quarter over quarter. 38 per MCF for the quarter and an uplift of over 75 million of revenue on our natural gas sales.

When Waha pricing improved in late June, we returned all previously curtailed wells to production without any operational issues. I want to give a big shout-out to the field team for putting in the hard work to make this possible during the quarter. On the D&C side, we offset inflationary pressures from rising diesel prices with continued operational efficiency gains through longer laterals, increased water recycling, deployment of water-based mud, and new wellbore designs. We've also begun surfactant trials on completion and production operations.

We're still early in evaluating surfactants, but we're encouraged by the initial results. Between continued operational efficiency gains and the potential to improve recoveries, there are a lot of ways for us to continue our path of increasing capital efficiency. As you can see from today's results, the quality of our assets combined with our basin-leading cost structure has driven a step-change improvement to our business over the last several years. As a result, we achieved record free cash flow in Q2 of 751 million.

This is more than we generated in all of 2023, and we expect full year 2026 free cash flow to be nearly double what we generated in 2024. And with that, I'll turn it over to James. James Walter, Co-CEO Thanks, Will. Before we start talking about what's been a great start to our 2026 BD effort, we want to discuss how Permian Resources approaches acquisitions and how that fits with our value creation story.

When we founded Colgate in 2015, we moved to Midland with exactly zero acres, zero production, and Will and I sharing a single 200 square foot office. Our goal at the beginning was to buy high-quality assets, operate them efficiently, and underwrite them conservatively so that our invested capital would generate real cash-on-cash unlevered equity returns. From those humble beginnings, we grew Colgate from an idea to the business it is today with over 500,000 net acres and over 200,000 barrels of oil per day. But our focus was never to build a large-scale business at Permian Resources now, but rather to maximize the return of every dollar we invested in the business.

So how did we get here? Because we've honored the same strategy and philosophy in how we underwrite and how we operate. We're working relentlessly to find deals that meet our very high underwriting standards and targeted full cycle returns, and we use it time and time again. Small deals add up, you create value for shareholders, and the business naturally gets bigger.

With that, I'm excited to talk about what we've done in 2026. Today, starting with the largest deal on Slide 8, we closed on an acquisition of approximately 2,000 net acres and 5,000 BOE a day in Ward County for 520 million. This acreage directly offsets our existing asset base, is 100% held by production, and provides an extended runway of high-return inventory. Shortly after we closed on the Ward County asset in July, we signed a trade agreement with an offset operator utilizing a combination of the recently acquired bolt-on acreage, the legacy PR acreage, and some other acres that we had.

This acreage helps address some of the challenges with the standalone Ward County acquisition, namely it being majority non-operated, low working interest, and somewhat scattered. The trade also increases the number of operated net locations from 50 to 120 while increasing the average lateral lengths by 20%. We view this trade as a true win-win for PRNR and our counterparty, who is a valued industry partner, as it helps them to further core up their acreage position and increase their working interest in their own operated units. We expect the trade to close during Q3.

Finally, the Parkway bolt-on project in Eddy County is a great example of how our proprietary data and Midland relationships create opportunities others simply do not see. 5%. Our partner in this deal, Tascosa Energy Partners, actually brought this deal to us over drinks in Midland. We've been fortunate to know this team for a long time and bought a big deal from them a couple years back.

But I think more importantly, this deal is a scaled example of the Midland-born deals that we do with our friends and partners on a regular basis and that we think provides a real competitive advantage to Permian Resources. 05 billion, executed through roughly 190 separate transactions. These acquisitions added approximately 330 high-confidence, high NRI locations that immediately compete for capital in our portfolio. 5 million per net location.

Slide 11 summarizes why we believe our acquisition strategy is truly differentiated. Our focus is on buying high-quality assets, pursuing accretive transactions where PR has a commercial, technical, or operational advantage. We continuously hunt for off-market deals and look for areas where we have distinct advantages or can create an edge that allows PR to underwrite higher full cycle returns. The edge can come from our leading cost structure, proprietary service information, or simply access to a deal that isn't widely marketed.

While this is not easy and requires a ton of work, we pride ourselves on being creative and not afraid to lean into harder, less obvious deals. We are confident we will be able to continue this successful track record for years to come. 5 times. All this leads us to our updated, improved plan for 2026.

As Will mentioned in his prepared remarks, the success of our ground game has allowed us to significantly increase our working interest for full year 2026. This will allow us to meaningfully grow production while maintaining the same completion crews, rig count, and operating efficiencies we have achieved this year. 95 billion is approximately 1% lower than the capital we spent last year. This all highlights the strides that our team is making to continue to improve the capital efficiency of our business and to grow free cash flow per share every year.

Concluding with Slide 14, our focus on full cycle returns has allowed the company to generate outsized value creation for our investors. A dollar invested in Colgate in 2015 would be worth nearly $50 today, representing a greater than 50% compounded annual return. And we've continued that same philosophy and performance at scale with Permian Resources, nearly tripling our total shareholder returns since formation in 2022. Most importantly, our business model has not changed.

We are confident the combination of our high-quality asset base, peer-leading cost structure, and differentiated approach to acquisitions will continue our track record of long-term value creation. We live in an industry that in some ways has been defined by consolidation and scale. But we'd like to be defined by prudent investment of capital, free cash flow per share growth, and ultimately leading total shareholder returns for our investors. Thank you for tuning in today.

And now we will turn it back to the operator for Q&A. OPERATOR We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again.

Please pick up your handset when asking a question. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Scott Hanold with RBC Capital Markets.

Please go ahead. Scott Hanold, Analyst at RBC Capital Markets Yeah, thanks. Good morning, all. Obviously the ground game, M&A, has been a staple of y'all for the last number of years and it looks like you had a pretty successful run here in the last couple months.

Can you give us a sense of what you see moving forward on the M&A landscape? And also how do you kind of compare and contrast the activity you've been doing versus looking at some of the larger packages that are a little bit more, I guess, competitive like the federal lease sale or marketed deals? James Walter, Co-CEO Yeah, thanks, Scott. I mean, I think on the ground game side, I think that's an effort that's been kind of building and consistent for the whole 11 years we've been running this business.

Got pretty much the same team, the same people that are kind of operating at an extremely high level. So I mean that may ebb and flow a little bit from quarter to quarter, but I think over years we are really confident we can continue to kind of execute and grow that part of our business. You know, I think the opportunity set in front of us looks as good as it ever has and we're kind of excited and confident that we can continue that. Look, it may not be the same every single quarter, but we really do believe in the kind of long-term viability of that part of our business.

In terms of larger packages, look, like we've always, we kind of look at everything in the Delaware. I think you should assume we are kind of in the mix and evaluating any package of quality that is out there on the publicly marketed side. I think what we've seen in some of these deals and some of these federal lease sales or state lease sales is that, you know, they're good assets. I mean, there's been some really good stuff that transacted this year.

But I think our focus on full-cycle returns and generating outsized equity returns for investors I think has us being really disciplined on purchase price and I think kind of, you know, are some of those assets that transacted assets we'd like to own? Absolutely. But were we able to get to those purchase prices and still achieve our targeted returns? The answer was no.

So I think for us it's all about focusing on kind of full cycle and long-term value creation. And if there's bigger packages that meet those return thresholds and standards, then we'll be excited to do them, and if not we'll continue to be patient. Scott Hanold, Analyst at RBC Capital Markets Got it. Thanks for that.

And my follow-up question is more, you know, kind of Permian, I guess, macro related, you know, certainly with new egress coming on for pipelines, you're seeing probably a next surge of gas coming, including, you know, your production that was offline. But like how do you see, you know, activity pace from a lot of, you know, kind of offset operators? Any kind of non-operated activity, you know, with improved egress, and do you expect a surge of production? And I'm just kind of curious on oil takeaway capacity if you think that becomes a constraint in the next couple of years or so.

James Walter, Co-CEO Yeah, good. I think kind of hitting last point first. We feel really good about oil takeaway capacity for the next few years. You know, I think we're also hopeful that we've all learned a good lesson on kind of the gas situation we've been in the past 12 months that you got to get out there years ahead.

We're fortunate on the oil side. We've got a lot of capacity today and expect that to be the case as we continue to grow for years to come in the Permian, which I think is not guaranteed, but certainly possible. You know, I'd say at this point we're confident our midstream partners will be working with people like us to kind of get further ahead of that. And on the gas side, we haven't seen any meaningful reaction kind of from an activity level.

You know, I think it seems like the pipelines that are coming online this quarter are able to handle the new gas that we brought back online, kind of any incremental growth today.