Permian Resources reports record free cash flow in Q1 2025, to acquire APA’s Delaware Basin assets

Permian Resources Corporation (NYSE: PR) delivered its best quarterly performance on record, reporting adjusted free cash flow of $460 million in the first quarter of 2025. The company credited the results to strong operational execution, low-cost development, and improved drilling efficiencies. Permian’s average daily oil production for the quarter reached 175,000 barrels, contributing to total output of 373,200 barrels of oil equivalent per day. This outperformance came alongside drilling and completion costs that fell to $750 per lateral foot, marking an 8% reduction compared to 2024. Total capital expenditures were reported at $501 million.

The company also strengthened its financial position, with cash on hand increasing to $702 million and total available liquidity reaching $3.2 billion. Net debt-to-EBITDAX was 0.8x as of March 31, 2025. In addition to strong cash generation, Permian Resources repurchased 4.1 million shares at a weighted average price of $10.52 and declared a $0.15 per share dividend, equating to a 5% yield. The company’s ability to execute under volatile market conditions was further demonstrated by the closing of a $180 million non-core divestiture and continued cost control across lease operating expenses, G&A, and GP&T charges.

Acquisition Expands Core Position in the Delaware Basin

Permian Resources entered into a definitive agreement with APA Corporation to acquire approximately 13,320 net leasehold acres, 8,700 net royalty acres, and 12,000 Boe/d of low-decline production for a total cash consideration of $608 million. The acquired acreage is located in Eddy County, New Mexico, and shares a contiguous border with Permian’s core assets. With an average net revenue interest of 83% on an 8/8ths basis, the acquisition delivers immediate capital-efficient drilling inventory.

The bolt-on acquisition provides more than 100 gross operated locations with two-mile laterals, all featuring low breakeven costs around $30 per barrel WTI. The asset’s production is expected to be accretive to all per-share metrics. The acquired locations will be integrated into Permian’s development schedule, especially within the Parkway asset, one of the most capital-efficient platforms in the company’s portfolio. Permian also noted that over 65% of the acreage is operated, allowing for enhanced execution control. Closing of the transaction is expected by the end of Q2 2025, subject to customary adjustments.

Updated Operational and Financial Guidance Reflects Strategic Discipline

Permian Resources updated its 2025 capital guidance while maintaining production targets. The company reduced its full-year cash capex range to $1.9–$2.0 billion, down from the previous $1.9–$2.1 billion. The production guidance, however, remains unchanged, highlighting the operational efficiency of the asset base. Permian expects to turn-in-line approximately 275 gross wells during 2025. The APA assets are expected to contribute approximately 12,000 Boe/d during the second half of the year, but these volumes have not yet been incorporated into the revised standalone guidance.

Management stated that the combination of capital efficiency and strategic hedging positions the company to match 2024’s free cash flow, even if WTI averages $60 per barrel through the remainder of the year. The firm’s drilling program continues to focus on returns-based allocation, particularly in Parkway and adjacent acreage that generate the highest capital productivity.

Financial Results and Shareholder Returns

In addition to production gains, Permian Resources demonstrated strong commodity pricing and operational cost control. Realized prices in Q1 were $70.48 per barrel for oil, $1.35 per Mcf for gas, and $23.90 per barrel for NGLs. Lease operating expense for the quarter was $5.35 per Boe, GP&T costs were $1.39 per Boe, and cash G&A stood at $0.80 per Boe, bringing total controllable costs to $7.54 per Boe. Net cash provided by operating activities reached $898 million, with adjusted operating cash flow reported at $961 million.

The company used excess cash to repurchase equity and redeem $175 million of principal from legacy Earthstone 9.875% Senior Notes, continuing its strategy to de-lever while returning capital. At the end of Q1, the revolving credit facility remained undrawn, and total debt was reduced by 4% quarter-over-quarter to $4 billion.

Why the APA Deal Strengthens Permian’s Long-Term Growth Outlook

Permian Resources’ leadership sees the APA acquisition as a countercyclical investment aligned with its downturn strategy. The asset’s inventory includes high-margin, low-decline wells with a reinvestment rate of approximately 35%, supporting long-term free cash flow. Additionally, the company gains increased working interest in over 100 existing operated locations due to acreage overlap, enhancing development efficiency. The deal also includes high-quality non-operated acreage with potential for asset trades and unit consolidation through Permian’s ground game.

Co-CEO James Walter remarked that acquiring high-quality acreage adjacent to core operations during a softer price environment provides upside for both short-term capital allocation and long-term shareholder value. He emphasized that the strategic fit of the acquisition would allow Permian Resources to maintain its track record of low reinvestment rates, peer-leading returns, and balance sheet integrity.

How Investors Are Reacting to Permian Resources

Despite strong fundamentals, Permian Resources’ share price has declined significantly over the past year. As of May 6, 2025, the stock was trading at $11.97, down 31.8% from $17.55 a year earlier. The company’s P/E ratio stands at 8.63, suggesting a potentially undervalued stock relative to earnings. The stock exhibits moderate volatility, with a beta of 1.10.

Institutional investors continue to show strong support for the company. Institutional ownership accounts for 91.84% of shares outstanding. Major holders include Vanguard Group, BlackRock Inc., and Price T Rowe Associates. Over the past 12 months, institutional inflows totaled $2.71 billion, compared with outflows of $1.13 billion, signaling confidence in Permian’s strategic direction and financial management.

Analyst consensus remains moderately bullish. The average 12-month price target is $18.46, with estimates ranging from $14.14 to $24.15. RBC Capital Markets recently reaffirmed its “Outperform” rating, though it trimmed its price target to $16 from $18, citing broader sector risks. Analysts have commended Permian’s cost structure, capital discipline, and shareholder return profile, while also noting that the market may be underestimating the company’s embedded NAV from its expanded inventory.

Buy-side sentiment appears mixed in the short term due to oil price volatility, but the stock’s long-term outlook remains positive. Investors with a high-conviction view on shale economics and disciplined capital allocation may view the current price as a buying opportunity.

Strategic Readiness and Long-Term Value Creation

Permian Resources continues to position itself for long-term success through a three-pronged strategy of balance sheet strength, cost leadership, and countercyclical investment. With $3.2 billion in liquidity and sub-1x leverage, the company retains flexibility to act decisively in future market dislocations. Its 2025 hedge book covers 25% of oil production at attractive levels, protecting downside cash flows.

The company’s capital return framework—including dividends, share repurchases, and debt reduction—remains intact, supported by operational performance and cost visibility. As integration of APA’s Delaware Basin assets proceeds, the focus will remain on maximizing productivity, minimizing reinvestment, and sustaining peer-leading returns.

With a resilient asset base, operational flexibility, and robust liquidity, Permian Resources is well-equipped to deliver value across commodity cycles and strengthen its position among top-tier Permian operators.