Permian Resources Corp (PR)

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes. The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those factors discussed in “Cautionary Statement Concerning Forward-Looking Statements” and under the heading “Item 1A. Risk Factors” in this Quarterly Report and the 2025 Annual Report; all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may or may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Overview

Permian Resources Corporation is an independent oil and natural gas company focused on driving returns to our stockholders through the acquisition, optimization and development of high-return oil and natural gas properties. Our assets and operations are located in the Permian Basin, with a concentration in the core of the Delaware Basin. Our principal business objective is to increase shareholder value by efficiently developing our oil and natural gas assets, with an overall objective of improving our rates of return and generating sustainable free cash flow. Unless otherwise specified or the context otherwise requires, all references in these discussions to “Permian Resources,” “we,” “us,” or “our” are to Permian Resources Corporation and its consolidated subsidiaries, including Permian Resources Operating, LLC (“OpCo”).

Market Conditions

Our revenue, profitability and ability to return cash to stockholders can depend substantially on factors beyond our control, such as economic, political and regulatory developments. Prices for crude oil, NGLs and natural gas have experienced significant fluctuations in recent years and may continue to fluctuate widely in the future.

Oil prices declined through the end of 2025 and into early 2026, reflecting concerns regarding global economic growth, elevated interest rates, persistent inflation, increased global oil supply, and evolving tariffs and international trade policies. While global demand remained relatively strong and geopolitical risks persisted, higher‑than‑anticipated production increases from OPEC and the potential impact on global inventory levels contributed to additional downward pressure on prices during this period. More recently, oil prices have increased, with NYMEX WTI prices reaching a high of $112.95 per barrel on April 7, 2026, driven primarily by supply disruptions associated with heightened geopolitical tensions in the Middle East, including disruptions to key shipping routes in the Strait of Hormuz and the Red Sea, which has adversely affected global supply conditions. Significant uncertainty remains regarding the ability to resolve these conflicts, reopen trade and shipping routes and their ultimate impact on global oil supply and prices.

Throughout 2025 and 2026, natural gas prices in the Permian Basin have been adversely impacted by low demand as a result of pipeline capacity constraints out of the basin, pipeline maintenance, and higher production levels. These factors have led to lower or, during certain periods, negative regional gas prices being realized for natural gas sales at the Waha Hub in West Texas. Notably during the second quarter of 2026, Waha natural gas prices averaged negative $3.14 per Mcf and traded as low as negative $9.52 per Mcf on April 16, 2026.

The oil and natural gas industry is cyclical, and it is likely that commodity prices, as well as commodity price differentials, will continue to be volatile due to fluctuations in global supply and demand, inventory levels, geopolitical events and conflicts, federal and state government regulations, weather conditions, growth in alternative energy sources, supply chain constraints and other factors. The following table highlights the quarterly average price trends for NYMEX WTI spot prices for crude oil and NYMEX Henry Hub index price for natural gas since the first quarter of 2024:

Lower commodity prices and lower futures curves for oil and gas prices can result in impairments of our proved oil and natural gas properties or undeveloped acreage and may materially and adversely affect our operating cash flows, liquidity, financial condition, results of operations, future business and operations, and/or our ability to finance planned capital expenditures.

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Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. The cost of oilfield goods and services are closely linked to commodity price trends, rising when prices increase and decreasing when prices fall. In addition, the U.S. saw higher levels of inflation during 2025 and 2026 due to concerns, among other things, over international conflicts, tariffs, potential sanctions and trade policies. Inflationary pressures such as these may also result in increases to the costs of our oilfield goods, services and personnel, which can in turn cause our capital expenditures and operating costs to rise.

2026 Highlights

Corporation Reorganization

On January 7, 2026, we completed a corporate reorganization pursuant to which we, among other things, reorganized under a new public holding company (the “Reorganization”). In connection with the Reorganization, the public holding company prior to the Reorganization became a wholly owned subsidiary of the new public holding company, which, following completion of the Reorganization, changed its name to “Permian Resources Corporation,” became the successor issuer of the prior public holding company and replaced the prior public holding company, with its shares of Class A Common Stock continuing to trade on the NYSE on an uninterrupted basis.

In connection with the Reorganization, certain holders of our Class C Common Stock exchanged all of their Common Units for Class A Common Stock on a one-for-one basis (and their corresponding shares of Class C Common Stock were cancelled for no consideration).

Separate from and subsequent to the Reorganization, the remaining Class C Common stockholders exchanged all of their outstanding Common Units for Class A Common Stock, which fully eliminated our noncontrolling interest as of March 31, 2026.

2026 Bolt-On Acquisitions

During the six months ended June 30, 2026, we completed multiple acquisitions of oil and natural gas properties for a cumulative adjusted purchase price of approximately $482.3 million. These acquisitions are part of our ongoing bolt-on and grassroots acquisition programs.

Subsequently on July 31, 2026, we completed an acquisition of approximately 20,500 net leasehold acres and approximately 950 net royalty acres inclusive of both operated and non-operated wells and associated infrastructure for an unadjusted purchase price of $520.0 million. The acreage acquired is located in Ward County, Texas, directly offset our existing position in the core of the Southern Delaware Basin, which allows for seamless integration into our existing operations and provides for extended lateral lengths in future drilling and completion locations and higher working interest on existing properties.

Return of Capital Program

We have declared and paid quarterly base dividends of $0.16 per share of Class A Common Stock each quarter for a total of $0.32 per share for the six months ended June 30, 2026. The cash dividends paid totaled $269.1 million for the six months ended June 30, 2026.

Financing

During the first quarter of 2026, we achieved investment grade corporate and issuer credit ratings from Standard & Poor’s Financial Services LLC (“S&P”). Subsequently, on April 1, 2026, we achieved investment grade corporate and issuer credit ratings from Moody’s Ratings (“Moody’s”). Previously, in July 2025, we achieved investment grade corporate and issuer credit ratings from Fitch Ratings Inc. (“Fitch”). As a result, we are now rated investment grade by all three rating agencies, which we believe reflects the strength of our balance sheet, our disciplined acquisition and capital financing, and our growing scale. We anticipate this achievement will result in reduced interest expense, improved access to capital markets, and enhanced liquidity, among other benefits.

On April 15, 2026, we redeemed all of our outstanding 8.00% senior notes due 2027 at a redemption price equal to 100% of the aggregate principal amount outstanding of $550 million plus accrued and unpaid interest up to, but excluding, the redemption date.

On April 30, 2026, we entered into a new credit agreement with a syndicate of banks that provides for a $3.0 billion senior unsecured revolving credit facility maturing on April 30, 2031 (the “Credit Agreement”). In connection with entering into the Credit Agreement, we terminated our existing secured revolving credit facility without penalty. Refer to Liquidity and Capital Resources for additional information regarding the Credit Agreement.

On July 15, 2026, we redeemed all of the outstanding 9.875% senior notes due 2031 at a redemption price equal to 104.938% of the aggregate principal amount outstanding of $325.0 million plus accrued and unpaid interest up to, but excluding, the redemption date.

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Results of Operations

Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

The following table provides the components of our net revenues and net production (net of all royalties, overriding royalties and production due to others) for the periods indicated, as well as each period’s average prices and average daily production volumes:

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” in this Annual Report. The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, future market prices for oil, NGLs and natural gas, future production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, inflation, regulatory changes, and other uncertainties, as well as those factors discussed in “Cautionary Statement Concerning Forward-Looking Statements” and “Item 1A. Risk Factors” in this Annual Report, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may or may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Overview

We are an independent oil and natural gas company focused on driving returns to our stockholders through the acquisition, optimization and development of high-return oil and natural gas properties. Our assets and operations are located in the Permian Basin, with a concentration in the core of the Delaware Basin. Our principal business objective is to increase shareholder value by efficiently developing our oil and natural gas assets, with an overall objective of improving our rates of return and generating sustainable free cash flow.

Market Conditions

Our revenue, profitability and ability to return cash to stockholders can depend substantially on factors beyond our control, such as economic, political and regulatory developments. Prices for crude oil, NGLs and natural gas have experienced significant fluctuations in recent years and may continue to fluctuate widely in the future.

Concerns regarding global economic growth, elevated interest rates, inflation, increases in global oil supply, tariffs and international trade policies have resulted in lower oil prices over the past year. Despite recent geopolitical tensions and strong global demand, higher than anticipated supply increases from OPEC and their potential impact to global inventories resulted in further downward pressure on prices through the end of 2025.

Throughout 2024 and 2025, natural gas prices in the Permian Basin were negatively impacted by low demand as a result of pipeline capacity constraints out of the basin, pipeline maintenance, and higher production levels. These factors have led to lower or, during certain periods, negative regional gas prices being realized for natural gas sales at the Waha hub in West Texas resulting in lower gas realizations on our production sold at these regional price points.

The oil and natural gas industry is cyclical, and it is likely that commodity prices, as well as commodity price differentials, will continue to be volatile due to fluctuations in global supply and demand, inventory levels, geopolitical events, federal and state government regulations weather conditions, growth in alternative energy sources, supply chain constraints and other factors. The following table highlights the quarterly average price trends for NYMEX WTI spot prices for crude oil and NYMEX Henry Hub index price for natural gas since the first quarter of 2023:

Lower commodity prices and lower futures curves for oil and gas prices can result in impairments of our proved oil and natural gas properties or undeveloped acreage and may materially and adversely affect our operating cash flows, liquidity, financial condition, results of operations, future business and operations, and/or our ability to finance planned capital expenditures, which could in turn impact our ability to comply with covenants under our Credit Agreement and senior notes. Lower realized prices may also reduce the borrowing base under our Credit Agreement, which is determined at the discretion of the lenders and is based on the collateral value of our proved reserves that have been mortgaged to such lenders. Upon a redetermination, if any borrowings in excess of the revised borrowing capacity were outstanding, we could be forced to immediately repay a portion of the debt outstanding under the Credit Agreement.

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Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. The cost of oilfield goods and services are closely linked to commodity price trends, rising when prices increase and decreasing when prices fall. In addition, the U.S. saw higher levels of inflation during 2024 and 2025 due to concerns over international conflicts, tariffs and trade policies. Inflationary pressures such as these may also result in increases to the costs of our oilfield goods, services and personnel, which can in turn cause our capital expenditures and operating costs to rise.

2025 Highlights and Future Considerations

2025 Bolt-On Acquisitions

On June 16, 2025, we completed an acquisition of approximately 13,000 net leasehold acres with Apache Corporation for an unadjusted purchase price of $608 million. The acreage acquired is predominately located directly offsetting our existing asset position in the core of our New Mexico operating area.

Additionally, during the year ended December 31, 2025, we completed multiple acquisitions of oil and natural gas properties for a cumulative adjusted purchase price of approximately $471.1 million. These acquisitions are part of our ongoing bolt-on and grassroots acquisition programs.

Return of Capital Program

During the year ended December 31, 2025, we declared and paid quarterly base dividends totaling $0.60 per share of Class A Common Stock and distributions totaling $0.60 per share of Class C Common Stock (each of which has an underlying common unit of OpCo (“Common Units”)). The cash dividends and distributions paid totaled $502.9 million for the year ended December 31, 2025.

During the year ended December 31, 2025, we paid a total of $73.7 million to repurchase 4.4 million shares of our Class A Common Stock and 2.0 million Class C Common Stock at a weighted average price of $11.57 per share as part of our Repurchase Program. The shares that were repurchased were subsequently canceled.

Financing

During September 2025, we completed the redemption of all of our outstanding 3.25% senior unsecured convertible notes due 2028 (the “Convertible Senior Notes”) for a combination of shares of Class A Common Stock and cash (the “Redemption”). The Redemption resulted in the issuance of 30.6 million shares of our Class A Common Stock at a 179.9208 conversion rate per $1,000 principal amount of the Convertible Senior Notes as well as a cash payment of $0.1 million.

During June 2025, we repurchased $2.7 million of our senior notes due 2026 (the “2026 Senior Notes”) at a price equal to 99.7% of the principal amount paid plus accrued and unpaid interest up to, but excluding, the repurchase date. Subsequently, during September 2025, we redeemed all remaining 2026 Senior Notes at a price equal to 100% of the aggregate principal amount outstanding of $286.7 million plus accrued and unpaid interest up to, but excluding, the redemption date.

During January 2025, we redeemed $175 million of our senior notes due 2031 (the “2031 Senior Notes”) at a redemption price equal to 109.875% of the aggregate principal amount redeemed plus accrued and unpaid interest up to, but excluding, the redemption date. Following the redemption, the remaining aggregate principal amount of the 2031 Senior Notes outstanding was $325 million.

Corporation Reorganization

On January 7, 2026, we completed a corporate reorganization pursuant to which we, among other things, reorganized under a new public holding company (the “Reorganization”). In connection with the Reorganization, the public holding company prior to the Reorganization became a wholly owned subsidiary of the new public holding company, which, following completion of the Reorganization, changed its name to “Permian Resources Corporation,” became the successor issuer of the prior public holding company and replaced the prior public holding company, with its shares of Class A Common Stock continuing to trade on the NYSE on an uninterrupted basis.

In connection with the Reorganization, certain holders of our Class C Common Stock exchanged all of their Common Units for Class A Common Stock on a one-for-one basis (and their corresponding shares of Class C Common Stock were cancelled for no consideration). This resulted in approximately 35.5 million shares of Class C Common Stock remaining outstanding, reducing the noncontrolling interest ownership of OpCo to approximately 4% immediately following the Reorganization. Refer to Note 16—Subsequent Events under Part II, Item 8 of this Annual Report for additional information on the Reorganization that occurred after the reporting period.

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Results of Operations

For the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

The following table provides the components of our net revenues and net production (net of all royalties, overriding royalties and production due to others) for the periods indicated, as well as each period’s average prices and average daily production volumes:

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