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Date

Thursday, August 7, 2025, at 10 a.m. ET

Call participants

  • Co-Chief Executive Officer — Will Hickey
  • Co-Chief Executive Officer — James Walter
  • Chief Financial Officer — Guy Oliphint

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Takeaways

  • Oil Production-- 176,500 barrels per day in Q2 2025, including approximately 900 barrels per day from the Apache acquisition.
  • Total Production-- 385,000 barrels of oil equivalent per day in Q2 2025, reflecting higher base well performance and recent positive well completions.
  • Adjusted Operating Cash Flow-- Adjusted operating cash flow was $817 million in Q2 2025, driven by production outperformance and operational efficiencies.
  • Adjusted Free Cash Flow-- Adjusted free cash flow was $312 million in Q2 2025, with $505 million of cash CapEx.
  • Share Repurchases-- $43 million of shares repurchased at an average price of $10.52 per share in April 2025 as part of the downturn playbook.
  • Apache Acquisition-- Closed an approximately $600 million Apache acquisition in May, adding meaningful asset overlap and inventory, with the integration completed within a week.
  • Ground Game Acreage-- 1,300 net new acres added via 130 grassroots deals in Q2 2025, building future drilling inventory.
  • Investment-Grade Credit Status-- Fitch assigned an investment-grade rating to Permian Resources, and management anticipates similar ratings from other agencies soon.
  • Leverage and Liquidity-- Maintained approximately one times leverage and $3 billion in liquidity after investments and buybacks in Q2 2025.
  • Revised 2025 Guidance-- Increased full-year 2025 production guidance by 3% and reduced the full-year 2025 capital budget by 2% following the bolt-on acquisition.
  • Marketing and Midstream Agreements-- Entered into multiple new gas and crude contracts expected to provide 75 MMcf/d of firm gas transportation by year-end 2025, increasing to 450 MMcf/d by year-end 2028.
  • Improved Netbacks-- Agreements are expected to improve gas netbacks by over $0.10 per Mcf and crude oil netbacks by over $0.50 per barrel.
  • 2026 Free Cash Flow Uplift-- Management projects a $50 million increase in 2026 free cash flow versus 2024, attributable to new contracts.
  • Cash Taxes-- Current cash taxes are expected to be below $5 million in 2025 and under $50 million cumulatively in 2026 and 2027 due to new U.S. tax legislation.
  • Drilling Efficiencies-- Achieved five of the company’s top 10 fastest drills in Q2 2025.
  • Well Costs-- Well cost per foot was flat sequentially compared to Q1 2025 due to shorter average lateral lengths, but costs per foot are expected to decline in the second half of 2025 as efficiencies increase.
  • Operational Cost Controls-- "Microgrid" power installations reduced field power costs by 30% at two locations, supporting low lease operating expenses.
  • Capital Allocation Flexibility-- Management emphasized, “we don't have to choose between debt repayment, acquisitions, buybacks, or building cash.”
  • Acreage Sales Mix Shift-- Targeting a long-term gas sales mix of 20%-25% at Waha and 75%-80% outside basin, reversing historical exposure.
  • Hedging Policy-- Maintaining a “roughly 30%, 20%, 10% hedge—one, two, and three years out,” with this approach applying to 2025 and 2026 and flexible execution based on market conditions.

Summary

Permian Resources(PR -2.50%) reported record execution in well drilling and completion speed, supporting both increased full-year 2025 production guidance and a reduced capital expenditure outlook. The company completed an approximately $600 million Apache bolt-on acquisition in Q2 2025 and was able to integrate these assets rapidly, attributing early gains to shared personnel and water logistics. Newly signed gas and crude contracts are set to materially improve netbacks by over $0.10 per Mcf for gas and over $0.50 per barrel for crude, as disclosed in Q2 2025 and provide a $50 million uplift to 2026 free cash flow compared to 2024, with firm gas transportation secured through 2028. The receipt of investment-grade credit status from Fitch enhances financial flexibility, which management leveraged by executing buybacks and acquisitions using cash on hand while maintaining approximately one times leverage. Tax reform results in a cash tax expectation of below $5 million for 2025. Management notes the company's focus on both operational efficiencies and “ground game” acreage additions, with net costs per foot are expected to decline as further drilling efficiencies are implemented in the second half of 2025.

  • Integration of the Apache assets has generated immediate cost savings, with rapid integration allowing staff efficiencies and water disposal synergies that may drive further benefits as optimization continues.
  • CEO Hickey said, “drilling team has not just one well, but a, you know, a handful or almost two handfuls of wells that have shown this is doable, and now they just gotta go see if they can make that the norm.”
  • Legal changes enabling federal and state commingling in New Mexico have reduced both capital requirements and operational complexity for field battery installations, supporting further cost containment.
  • Strategic “ground game” acreage deals totaled 1,300 net acres in Q2 2025, with management signaling an intent to accelerate activity given the expanded opportunity set and recent asset acquisitions.
  • Management stated firm intent to prioritize capital allocation towards high-return drilling and completion rather than direct ownership of large-scale midstream infrastructure, citing consistently higher wellhead returns.

Industry glossary

  • Netback: Realized selling price for oil or gas at the point of sale, less transportation, marketing, and other direct costs, representing true margin to the producer.
  • Ground Game: Pursuit of small, opportunistic acreage acquisitions through negotiated transactions, typically to consolidate, expand, or optimize drilling positions.
  • POP: Stands for "put on production," meaning a well has been completed and is now flowing hydrocarbons to sales.
  • Waha: Refers to the Waha hub in West Texas, an important pricing point for natural gas in the Permian region.
  • LOE (Lease Operating Expense): The recurring costs of operating a producing oil and gas lease, excluding capital expenditures.
  • Microgrid: A localized power generation and distribution system used to service energy needs of grouped wellsites independent of or supplemental to the main grid.

Full Conference Call Transcript

Will Hickey: Thanks, Hays. We are excited to discuss our second-quarter results this morning. The operations team delivered our eleventh consecutive quarter of solid operational execution in Q2, which included the fastest well drilled, the most drilled feet per day, and the lowest completion cost per foot in company history. This execution, combined with continued strong well results, supports us raising our full-year production guidance while delivering a lower CapEx guidance than originally announced. In February, it was also a very volatile quarter that presented an opportunity for us to demonstrate our downturn playbook. In April, we opportunistically executed our buyback program with repurchases of $43 million of shares at an average price of $10.52 per share.

And then in May, we signed the approximately $600 million Apache acquisition at lower than cycle commodity prices. This acquisition is the exact type of deal we like to do with meaningful overlap with our existing assets, strong free cash flow, and inventory that competes for capital immediately. We closed the acquisition approximately six weeks ago and are even more excited about our ability to optimize operations and the acreage position. These types of countercyclical investments are exactly what we want to do to be able to deliver leading shareholder returns throughout the cycles. And we've done so while maintaining leverage of approximately one times and liquidity of approximately $3 billion.

After executing on all aspects of our downturn playbook and taking advantage of recent market volatility, we are still in a prime position to pursue further investment opportunities to create long-term shareholder value. Moving to Q2 reporting details, production exceeded expectations. With oil production of 176,500 barrels of oil per day, which includes approximately 900 barrels of oil per day from the Apache acquisition, which is in line with our prior messaging. Total production for the quarter was 385,000 barrels of oil equivalent per day.

Results were driven by strong well performance from both our base wells and recent POP, which resulted in adjusted operating cash flow of $817 million and adjusted free cash flow of $312 million with $505 million of cash CapEx. Additionally, our ground game machine continues to fire on all cylinders as we added 1,300 net acres across 130 different grassroots acquisitions in Q2 to build additional interest ahead of near-term development. These opportunities remain some of the highest returning investments in our portfolio and are a core piece of the PR story to maximize the value of our assets. With that, I'll turn it over to James.

James Walter: Thanks, Will. Turning to Slide five, our strong balance sheet is what gives us the confidence to prudently invest capital across all cycles in our business. This has been a key part of our business model for the last ten years and will remain a core part of our strategy going forward. One of our primary goals has always been to achieve investment-grade status, and we're thrilled to announce that we have received our first investment-grade rating from Fitch. We are proud that Fitch recognized our strong credit metrics and track record of operating with a financial strategy consistent with an investment-grade company and would expect the other rating agencies to reflect investment-grade status in the near term.

We are fortunate that the PR business generates tremendous free cash flow, allowing us to execute a $600 million bolt-on and $45 million share buybacks with cash on hand. All aligned in Q2 with leverage at one times and $3 billion of liquidity. And we generate significant free cash flow going forward. The beauty of the PR business today is we don't have to choose between debt repayment, acquisitions, buybacks, or building cash. We can execute on all of these as soon as opportunities present themselves. This provides the ultimate flexibility to efficiently allocate capital and drive value for shareholders.

Turning to Slide six, we want to spend some time discussing our Permian Resources approach to the marketing of our hydrocarbons. With our rapid growth, we've historically focused our midstream and marketing efforts on flow assurance and low fees. And we've been extremely effective in ensuring all of our hydrocarbons get to market with zero interruptions over the past ten years. But as our business has grown to the scale it is today, it has become apparent that our marketing strategy needs to evolve. Over the past twelve months, we've built out a full midstream and marketing team in Midland that has made great progress selling more hydrocarbons downstream in the Permian Basin and improving our netbacks.

We're fortunate to have had significant flexibility to change the sales point for a large percentage of our crude and gas volumes, and we are pleased to announce we have recently entered into multiple new transportation and marketing agreements to optimize PR's pricing. Slide seven goes into a little more detail on the impact of the recent downstream contracts we have executed. On the gas side, we have entered into multiple transportation and marketing agreements to sell a significant portion of residue natural gas to non-Waha hubs on the Gulf Coast, Central Texas, and East Texas.

These agreements should provide an incremental 75 million cubic feet a day of firm transport by year-end 2025, which ramps to 450 million a day by year-end 2028. On the crude side, we've entered into multiple new crude oil purchase agreements providing improved netbacks, diversified pricing, and increasing exposure to Gulf Coast markets. We expect the net impact of these agreements to improve our gas netbacks by over $0.10 per Mcf and our crude netbacks by over $0.50 per barrel. The cumulative effect of all this effort by our team resulted in a $50 million uplift to 2026 free cash flow versus 2024.

We're excited about what we've done in the past twelve months on the marketing side and still retain significant flexibility for further optimization. Turning to slide eight, we're excited to roll out a revised plan that incorporates our recent bolt-on that closed in June. This plan reflects an increase to the original full-year 2025 production guidance by 3% while lowering the capital budget by 2%. The only other major update to point out is the impact of the One Big Beautiful Bill Act. Overall, we view the recent bill as a strong step towards further unlocking the potential of US shale.

The tax provisions further incentivize investment in domestic shale production and meaningfully reduce Permian Resources taxes over the coming years. We expect current cash taxes to be less than $5 million in 2025, less than $50 million cumulatively in 2026 and 2027. In addition, our industry will benefit from the reduction in red tape associated with federal drilling permits and federal lease sales, the reduction in complexity of commingling federal and state production, and the further incentives for research and development. It is our belief that these tax and regulatory benefits far outweigh the modest impact we expect to have on steel and other input costs.

I'll be concluding today's prepared remarks on Slide nine where we reemphasize our value for investors. We are proud of the hard work our team has put in and the strong returns that work has delivered for investors so far. I think it's important to point out that this peer-leading total shareholder return has been driven by the growth in free cash flow per share rather than a rerating of our multiple. We believe our balance sheet, initiating cost structure, and low breakevens position the company to succeed and create value for investors in any commodity price environment. Thank you for tuning in today, and now we'll turn it back to the operator for Q&A.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. Once again, press star and one if you wish to ask a question. If you wish to withdraw from the polling process, please press 2. Please standby while we compile the Q&A queue. Thank you for waiting. We now have our first question. And this comes from Scott Hanold from RBC Capital Markets. Your line is now open.

Scott Hanold: Thanks. Good morning. I wouldn't mind a little bit of color on your recent production performance. It looks like you've drilled, what, less than half your planned program for 2025 and Q2's outperformance, I guess, relative to my model was pretty strong. I think there might have been some improved NGL yields in there, but can you just generally talk about, like, maybe with the timing of sales or, you know, the type of well you're drilling because performance did feel, you know, pretty robust this quarter.

Will Hickey: Yeah. I mean, the first half of the year has been we drilled some awesome wells. I think that, you know, it's been a combination of a lot of places. The base production is the overwhelming majority of the barrels we produce every quarter, and, you know, we've been fortunate to have had a pretty mild summer, good weather, so, you know, really, really good downtime statistics. And then well results continue to impress. You know, the Delaware Basin's kind of been the place to be, and, you know, good rock outperforms more often than not.

So, we've been in a fortunate position that we kind of keep hitting our numbers or beating the numbers quarter over quarter, and I think that's just kind of representation of the good rock that we have.

Scott Hanold: Okay. Thanks for that. And as my follow-up, you know, when you sort of look at the landscape right now, I mean, obviously, it feels a lot better than it did back in the first quarter. But you know, as you look going forward in this relative outperformance, you know, I guess this year, you did step up your production guidance, obviously, related to the upper outperformance, but on a relative basis, unchanged CapEx. And how do you think about maybe letting some of that benefit accrue to the capital side versus the production side? And is it in part due to the commodity price outlook, or is it more just what's most efficient operationally?

James Walter: Yeah. I mean, I think for us, like, we did take down standalone CapEx by $50 million to kind of this quarter, as you can see in our updated guidance. So I think a little bit less activity. I think for us, it's really going to be a judgment call depending on what we view the macro environment looking like over time. Like, I definitely agree with you that the market and the downside risk feels a little better today, but I'd say there's still a tremendous amount of uncertainty with regards to commodity prices and what the overall economy does. So I think for us, we're being patient. We're in wait-and-see mode.

Like Will said, if you have a little bit of outperformance in Q2, that's going to show itself, I think, very modestly in our production numbers. But going forward, I think it's going to be really a judgment call, and we're going to react to what we feel like is the best real-time information we have and make a call as we get there. But it'll be more commodity price returns driven than efficiencies of operations. I say within reason, I have all the confidence in the world that our team can add activity, drop activity without missing a beat. They've shown it in the past.

So we are there is value in, you know, keeping the same crews and the same rigs out there, but it's not something that we're scared to do if it makes sense.

Scott Hanold: Okay. Thanks for that. Thanks.

Operator: Thank you. And the next question comes from John Freeman from Raymond James. Your line is now open. Please go ahead.

John Freeman: Really like the steps that were taken with these marketing agreements that you outlined on slide seven. Any help you all can provide on just sort of how to think about the impact of a to GP and T sort of unit costs the next couple of years in light of these agreements?

James Walter: Yep. Right now, there won't be a change to GP and T based on those agreements. We have some flexibility to do different things with gas over time that could change that, but we talk about that then. So now, I don't need to adjust GP and T. And what we've shown on slide seven that the 10¢ per MCF and the $0.50 per barrel, that's net of all expected implied costs?

John Freeman: Okay. That's good to know. And then on the same topic, I mean, y'all highlighted that the midstream strategy has evolved over time as you all become one of the largest, both oil and gas producers in the Permian. You talked about kind of doubling the size of the mid and the marketing team. We've recently seen some of the large E and P start moving more towards kind of stepping up or expanding their kind of midstream presence taking ownership of midstream assets? Just as you all think about just giving size, the evolution of the company, is that some is that a direction that y'all may head eventually?

James Walter: Yeah. I think we've definitely evaluated options like that. Part of the deals we've announced in this Q2 release. Some other ones that we've been working on. I think our view on that by and large has been the same with regards to midstream and kind of large-scale infrastructure projects is that those really don't compete with the returns of our upstream business and that's by a wide margin. I think we're seeing such attractive rates of returns at the wellhead that we think it's more prudent as capital allocators to focus our efforts on doing what we do best, which is drilling and completing wells and making oil. I think those projects are good.

I think probably better fit for more like capital for us. And able to get all of the benefits other than the equity investment kind of from the types of deals that we've done. And I think that's probably the right base case going forward.

John Freeman: Great. Appreciate it, guys.

James Walter: Thanks, John.

Operator: Thank you. And the next question comes from Neil Mehta from Goldman Sachs. Your line is now open.

Neil Mehta: Yeah. Good morning, Will, James, and team. I just would love you to unpack a little bit more about your downturn playbook, which you alluded to in your remarks and in the release. Just for those of us on the line, talk about what your downturn strategy is to make sure that if we are going to appear to softer commodity, how do you ensure that you come out of it stronger?

James Walter: Yeah. I mean, I think the kind of most important part of that is having a high-quality business and a strong balance sheet. You know, I think the quality of our business shows itself on our leading low breakevens in the Permian. And a balance sheet that has been in a tip-top position of strength for really as long as we've been running this business. So I think if you're going to go through a downturn, it starts with asset quality and balance sheet. And then I think that's probably the ante.

And then beyond that, I think we've actually proven over time that we really think the best opportunities for investing in E and P can be periods of kind of market panic and dislocation. And like Will said, that can show itself in a lot of ways and we did a lot of this, albeit on a somewhat smaller scale in Q2, which is buying high-quality assets at lower than mid-cycle prices, buying back shares when we believe the pricing is truly dislocated. And you know, I think it's doing all of that while making sure your balance sheet is strong throughout, kind of from peak to trough.

So I think for us, you know, that's something we've been talking about for the last couple of years, and we're actually excited about the opportunity to do some of those strategies and execute those pretty well in Q2. Although, probably a shorter period of dislocation than a lot of the ones we've seen, you know, that things could turn again at some point in the future, and we'll always be ready.

Neil Mehta: And then the follow-up is just there's been a lot of talk about M and A in some of the larger cap conference calls and just your perspective. Certainly, you guys have been a great consolidator of assets opportunistically with really smart bolt-ons and transformative M and A as well. But your perspective on, you know, whether you see PR as a consolidator or potentially a seller over time? Recognizing it's a tricky question, but it's, I think, an important one.

James Walter: No. That's a fair question and a good one. I mean, I think given our leading cost structure, we've always said we view Permian Resources as the logical consolidator of Delaware Basin assets today. And frankly, we're really excited about that opportunity set and what's in front of us. Talked about it, but our ground game efforts remain strong. We've continued to find larger scale acquisitions like the Berea Draw acquisition last year. The Apache bolt-on earlier this year and several $100 million deals kind of in between. But we're I think we're confident too that pipeline remains robust and we'll be able to find those types of attractive acquisitions that make our business better.

So I think we're not a perfect crystal ball, but I'd say really excited about what the opportunity set looks like as a consolidator in the Delaware. But, you know, the flip side of your question, I'd say we really do believe that our business has a tremendous amount of go-forward potential on a standalone basis. I think we believe that if we continue to execute at the levels we're executing on today that we can continue to grow free cash flow per share like we've done since inception.

And as a result of that drive significant outperformance kind of versus the broader market and peers on a total shareholder return basis like we've in past and frankly, like you can see on slide nine, but look, ultimately, the goal has always been to do what we believe creates the most long-term value for shareholders, whether that be acquiring assets or divesting them, buying businesses or ultimately selling our business. And we've made every decision we've ever made running this business as shareholders. And together, our team owns over 6% of the outstanding equity of Permian Resources stock. And as such, I think investors can rest assured going to continue to be super aligned with the entire investor base.

And do whatever we think will make the highest long-term returns and create the most value for investors whichever path that may be. So I think really fortunate to be in the position of kind of purpose aligned with investors and got to be focused on doing what makes the most sense over the long term.

Neil Mehta: Yeah. Really good answer. Thank you so much.

Operator: Thanks. Thank you. And the next question comes from Kevin McCarthy from Pickering Energy Partners. Your line is now open.

Kevin McCarthy: Hey. Good morning. The market may be a little spoiled as we usually get an update on lower well cost from you guys. I realized maybe there's some moving pieces with the tariffs. But your quarterly CapEx was very good, and you started off the call mentioning record drilling times. Any thoughts on the magnitude of efficiency or drilling improvements you still see down the pipeline?

Will Hickey: Look. I think we proved to ourselves this quarter that the best wells can be better than we've seen in the past. And I didn't even mention it, but we drilled five of our fastest 10 wells ever in Q2. So starting to really push the envelope of the best wells. You know, we need to keep making progress on the average wells and on the worst wells. But on the drilling side, you know, time directly correlates to the bottom line. You save about $100,000 every day you can cut. And so I think we've proven to ourselves there's a lot of stuff we can go get, and we've done it now a handful of wells.

We just gotta go do it on the average. Yeah, you're right. Like, Q2, our well cost on a per foot basis is probably flattish to Q1. I think some of that we drill a little bit shorter lateral lengths. You don't get quite the efficiencies just the way the schedule shook out. But you look at the kind of what we've on the frac side, and the progress we've made on the kind of top quartile of drilling side, I think there's a lot of tailwinds into the back half of the year.

Kevin McCarthy: Great. Sounds like there's still some improvement to come. And as a follow-up, any change to how you're seeing the cadence of turner lines this year? And how much of your program do you have left to execute in the back half of the year? Thanks.

Will Hickey: It's the same numbers we've put out there, you know, two seventy-five net of the 10 that we dropped from the original budget. I think we're slightly back half weighted. But it's the same as we last time we talked to y'all.

James Walter: Great. Thanks, Kevin.

Kevin McCarthy: Thank you.

Operator: And the next question comes from Philip Chungwerk from BMO. Go ahead.

Philip Chungwerk: On Permian gas marketing, there's a number of projects in development to take gas to the Gulf Coast, but we're also seeing proposed projects to move volumes to the Rockies. And even based on yesterday's news, the West Coast. So while it's early on those options, just wondering how much you're considering these other outlets as a way to maximize netbacks and ultimately, how much Waha exposure would you look to maintain given there should be some tightening in the differential after 2026?

James Walter: Yeah. I mean, I think the shortage is where about all these projects. You know, I think we've been firm believers for a long time that we need more pipes out of the basin sooner. I think we're pretty excited about just the broader backdrop and I'd say the willingness of pipeliners to get out ahead of the kind of growth in gas we've seen and expect to continue to see in the Permian. I think this is a great thing for Permian Resources, a great thing for the Permian Basin, and it also would be a great thing for the owners of these pipelines.

Will Hickey: Thanks.

James Walter: We're not kind of as you saw in our in my notes, like, we're not just set on going to the Gulf Coast on the gas side. I think we're open and excited to explore different markets. I think for us, really trying to solve what we think is going to bring the best net back for every molecule of gas that we make. So I think we'll be constantly evaluating kind of each and every one of these.

I'd say in terms of how much Waha do want long term, I think historically we said we used to sell about 20% to 25% of our gas outside of the basin and, you know, 75 to 80% in basin, and we'd like to reverse that over time. So I think the right kind of long-term answer for PR is probably 20% to 25% of our gas sales at Waha, something like that. I think we like that. Flexibility and kind of having the options continue to sell base it. Gas in the basin over the long term because there's just a lot of interesting things that can happen and potentially some exciting developments.

But I'd say that we kind of go from twenty eighty to eighty twenty over time.

Philip Chungwerk: Okay. And then congrats on the fit upgrade. Sounds like the others are gonna follow here shortly, but besides the lower cost of capital, with the marketing angle here, just how the IG rating at all three agencies kind of benefit you in terms of these opportunities, and could it open up any potential deals that would otherwise not be available?

Will Hickey: Yeah. I think investment grade, I think, I call it modestly helpful relative to these two things. Like, we've entered into really attractive agreements with the ratings that we have. So, like, all these things, whether it's incrementally better terms on the midstream agreements, whether it's more flexibility to do longer-term debt or whether it's more availability of credit through the cycle, those are all positives for us. From a balance sheet perspective. And I'd say we're glad Fitch recognized kind of the fact that our financial metrics and financial strategies are consistent with or superior to a lot of our IG peers and we're focused on getting the rest of the way there. Great. Thanks.

Operator: Thank you. And the next question comes from Zach Parham from JPMorgan.

Zach Parham: Thanks for taking my questions. I wanted to follow-up on the marketing deals. We've seen a couple of your peers sign some power deals in the base linked to power pricing. Is that something you've had any negotiations on or that you're considering doing?

James Walter: Yeah. We've looked at all of them. I think that's something we've actually spent a lot of time on over the past kind of twelve or eighteen months. I think we haven't seen any in-basin gas sales deals that we think we have confidence that can improve our netback relative to the other opportunities. And haven't seen anything interesting on the power side kind of in the areas where I think we need the power the most. I think most of what we've seen on the power side has been in Texas where we have really good grid connectivity and frankly really good telecom pricing going forward.

I think the area where we've needed more power connectivity has continued to be in New Mexico, and we haven't seen a lot of projects there to date, but are certainly open to them in Texas, New Mexico, wherever they come, and we'll continue to evaluate them as they come across our desk.

Zach Parham: Thanks. And then my follow-up is just on your hedge book. You added a little bit during the quarter. Can you just update us on how you're thinking about hedging on a go-forward basis?

Guy Oliphint: Yeah. No change on kind of overall hedge strategy, which is roughly 30%, 20%, 10% hedge. One, two, and three years out. We're there on '25. I have good progress on '26. I think what you've seen from us is, we're flexible on how we get there. We're not gonna force ourselves into those equations, but we try to be nimble and lean in when, yep, what seems like pretty clear dislocations like we saw in June.

James Walter: With our balance sheet where it is today, we're fortunate we can, like I said, be really patient. Like, you know, I think we're gonna try to hedge more if we think prices are higher, and we could be comfortable hedging less if there's fewer opportunities to lock in. What we do is attractive prices. So I think we're building flexibility as the quality of our business grows and I think being opportunistic in late June and locking in kind of prices during that period of positive volatility was a great opportunity for us.

Zach Parham: Makes sense. Thanks, James. Thanks, Scott.

Operator: Thank you. And the next question comes from John Abbott from Wolfe Research. Your line is now open. Please go ahead.

John Abbott: Hey. Thank you very much for taking our question. I want to go back to Slide seven in the marketing agreements and appreciate the free cash flow guidance on 2026 but the looks like the amount of the capacity increased about 2,028. So I guess just to help us sort of triangulate things, as you sort of look out to 02/1928, you look sort of strip pricing, how would you describe the potential impact to free cash flow beyond 2026 lease agreements?

James Walter: Yeah. I mean, I think for us, I'd say there's a lot of movement in kind of different markets and strip pricing all the way out to 2028. So I think the answer we're comfortable giving is the existing contracts we expect to see kind of greater benefit than what's outlined in 2026. And I think we're continuing to find new opportunities to optimize. If you look at those charts in the middle of slide seven, like we're kind of two-thirds contracted on the gas side using current volumes and about half contracted on the crude side.

So I think for us kind of combination of the existing contracts that are shown on slide seven and kind of future optimization we expect to do, I think you should expect to see that number go up as we get beyond 2026.

John Abbott: Appreciate it. Then just following up, you did close on the Delaware acquisition. During the quarter. I mean, assets are in half of their in-house. Could you maybe speak to a little bit more about the opportunities in terms of savings and optimization now that you have the assets in hand?

Will Hickey: Yes. We closed six weeks ago, kind of took over operations shortly thereafter. I'd say, this is right in our backyard. So this is, you know, from an integration I'd say it was kind of integrated within a week. There's some quick wins on the production side, just kind of obvious, you know, shared of people. Like, we didn't we don't need near as many people because we already have pumpers, like, in the exact area. I think, ultimately, there'll be some wins on the water disposal side or water recycling side just given the kind of connectivity of the assets.

I think that what's unique to this deal in particular is what our land team will do with the assets. If you think about kind of when we rolled that deal out, it was very unique in that it came with a lot of really good operated tenants. And a lot of non-op under PR, but it also had some kind of really good high-quality, more scattered acreage that our team will go to work on right away.

And we have, you know, we are in the middle of discussing multiple trades right now that kind of get us into either core up in areas where, you know, we'd like to core up or get us into new units that we otherwise wouldn't be in. So not a lot of, like, super specifics, and I haven't looked back on the numbers yet because we're, you know, four weeks in from operating or something like that. But we've had some quick wins on the people and water disposal side, and I'm expecting some big wins too on the land side.

John Abbott: Appreciate it. Thank you very much for taking our questions.

Guy Oliphint: Thank you. Thank you. And the next question comes from

Operator: John Ennis from Texas Capital.

John Ennis: For my first one, I assume the margin for error is extremely narrow to drill top decile wells, let alone five of 10 fast in one quarter. Can you remind us of what has to go right to be able to do this? And what did you do to have it go right five times in one quarter? And then just how far the average is to these high watermarks?

Will Hickey: Yeah. So to drill a top decile well, you've gotta have no unplanned trips. You have to basically have no MPT or near zero NPT. And then we need to be rotating when we're drilling most of the time, you know, so basically, no sliding, no NPT, and no unplanned trips. I think you're right. For all three of those to go well, it's an outlier that's not the average, but we are I'd say those best wells are probably, I mean, the two that we drilled this quarter were calm, you know, five and a half and six days, something like that, and our average is probably closer to 10 and a half or eleven.

So not quite half of the average, but close to it. So I look. For us, I think this is super exciting. Like, our drilling team has not just one well, but a, you know, a handful or almost two handfuls of wells that have shown this is doable, and now they just gotta go see if they can make that the norm. And if we do, it's very meaningful. You know, five or six days call it 5 or 600,000 on a gross basis per well. Like, that's, you know, coming up on almost 10% of our well cost we could cut out.

I don't think that's something y'all should expect to happen in the second half of this year, but I do think that is a long-term goal for us to try to go get.

John Ennis: Terrific. For my follow-up, in the release, you highlight chemical and power optimization projects as drivers of maintaining low LOE during the quarter. Can you provide some more color around those drivers and more specifically what you are doing on the power side?

Will Hickey: Yeah. Look, our production team is always working hard to try to both increase run time and cut cost, and that's a balance because as you increase run time, it typically comes with more capital to get there. One project or we've done two of these, we call microgrids, is basically kind of behind the meter power where we'll set kind of larger scale power generation behind the meter and interconnect it to a bunch of different locations. It has a bunch of benefits. One, you know, field hands who are out servicing that equipment or spend less time driving to multiple locations, they just go to one spot.

There's also some kind of economies of scale in larger scaled power generation and better run time. So that's been a kind of the kind of wins we look for where you get both better run time and lower cost. We've done two of those today. They've both been extremely successful. I think power costs are down 30% on both of them. We're kind of working through now how many of these opportunities do we have. You know, as you can imagine, if you have a high concentration of wells in one area, it makes a lot of sense because the capital for the power line is less.

And if the wells are more spread out, it starts to get skinnier on kind of your all-in return on investment. So I think it's just other creative ways that we are always trying to get better. The production team takes a lot of pride in what they do, and this quarter, they really demonstrated with some cool projects.

John Ennis: Great color. Thanks, guys.

Will Hickey: Thank you.

Operator: Thank you. And the next question comes from Leo Mariani from Roth Capital.

Leo Mariani: Hi. Just wanted to clarify your commentary on well costs. If I heard you guys right, you know, the second quarter was kind of flattish dollar per foot. Sounds like shorter laterals sort of drove that. But I heard you right. It sounds like the expectation is that those well costs will come down in the second half of the year. I just wanted to clarify that. And then additionally, could you talk about how much of that you think can be driven by, you know, kind of sticky efficiencies? And is there a cost component as well that you may benefit from?

Will Hickey: Yeah. Look, I think the three things that we have in the back half of the year is my expectation are you're gonna see an efficiency step up. We've demonstrated the ability to do it, and I have no reason to believe that we can't replicate what we did in Q2. The back half of the year. With the volatility we've seen and kind of depressed oil prices, I'd say service costs in general are coming down a little bit.

It's not, you know, there wasn't a ton of room to give, but where we've had it, we've gotten some, and we've made some, you know, vendor changes and are always trying to figure out kind of the best way to optimize kind of the balance of efficiencies and cost per unit on our side. And then there's a little offset in casing cost. You know, obviously, casing costs are up. Just due to tariffs and, you know, I'd say you give a little bit back there. But, yeah, net, I'd expect cost per foot to be down in the back half of the year.

Leo Mariani: Okay. Appreciate that. And I guess just from a high-level perspective, obviously, talked about kind of the macro, if I read your tone right. Sounds like, you know, you maybe there's a little bit of caution just given the current landscape. Should people generally expect you guys to try to kind of hold oil flattish for the foreseeable future in this kind of uncertain macro landscape and just kind of remain laser-focused on reducing costs?

Will Hickey: Yeah. I think that's probably a good generalization. I'd say we've kind of come out of several years of, you know, very pronounced growth and have said time and again this year that it does not feel like it's the right kind of market to return to what's been if you combine organic and inorganic, you know, several years of double-digit production growth, you know, I think just with the amount of uncertainty and supply side and the demand side we've seen today, don't think that makes sense.

So I think that they're kind of forecast for the near term, and that could be months or that could be quarters until we kind of have more confidence in returning to growth. I think kind of flattish to kind of low single-digit growth is the right expectation, and that's this year's looked like.

Leo Mariani: Okay. Thanks.

Will Hickey: Thank you.

Operator: And the next question comes from Noah Hungness from Bank of America. Your line is now open. Please go ahead.

Noah Hungness: Morning, Will, James, and team. To start off, I was hoping if you guys could expand on the comments around the federal lands and the commingling that's kind of been opened up. What does that mean for Permian Resources? Does that kind of allow you to access what was potentially stranded acreage or extended PSUs?

Will Hickey: No. It doesn't do that. It's really, what it does is it allows us to build kind of central tank batteries in New Mexico like we used like we currently do in Texas. Like, think if you've got two units that back up to each other and one had state and one had federal acreage, prior to that, we would have to build basically completely separate batteries, which is for us to waste the capital and, I think, generally just not the most efficient way to run our business. And with the new ability to commingle in New Mexico, we can build one battery and just meter the wells like we do in Texas.

So a little bit of capital savings, really, I just say the world's a better place. You know, smaller footprint, less places to drive to, a little bit of capital savings. So we're excited about it. I think it's a really common-sense thing that needed to happen for a long time, and we're happy that it finally got done.

Noah Hungness: That makes sense. And then on the updated guidance, capital increased by the $20 million that I think you guys had previously flagged. But the till count working interest and lateral footage was unchanged. So is the increase the CapEx from, is it from just moving capital into, higher cost part of the Delaware. Or is it or is there other spending involved there?

Will Hickey: No. The increased $20 million was just there was there were eight wells that were work in progress wells that we took over from Apache that, you know, a little bit of capital flowed through to us kind of between effective date and closing or just post-closing.

Noah Hungness: Gotcha. Makes sense. Thanks, guys.

Operator: And the next question comes from Paul Diamond from Citi. Your line is now open. Please go ahead.

Paul Diamond: Thank you. Good morning, all. Thanks for taking the call. Just wanted to quickly touch on the balance sheet. We're all sitting at about $450 million in cash. And our number is that, you know, accretes pretty solidly over the course of the second half of the year. Can you remind us what you think is the right number to carry there? Or is there a plus or minus? Or if what's the right number you want to hold on the balance sheet?

Guy Oliphint: Yeah. This is Guy. I think the right number is $500 million to a billion. I think we've seen and kind of demonstrated the benefit of having, you know, this liquidity. I think we talked about last quarter. We went into Q2 with the best balance sheet we've ever had. We executed on the downturn playbook as we described, and we sit here with half a billion dollars of cash on the balance sheet and one times leverage. So I think kind of our approach to the balance sheet and to just making sure we have firepower for when we go into these downturns is a huge part of how we think we can deliver shareholder return over time.

Paul Diamond: Got it. Makes sense. And then just one quick follow-up on the ground game cadence. You guys have done a pretty good job over the first half of the year. Should we expect those numbers to remain relatively stable, 1,000 plus acreage per quarter? Or is there any reason to think the opportunity set is growing or shrinking?

James Walter: Yeah. I mean, I think it's definitely lumpy. I'd say we feel awesome, like I said in my opening remarks, about our ground game pipeline. I think that recent Apache Mexico acquisition really helps open up some kind of new fairways and new windows to pursue that. So I think probably more I'd expect more ground game from here. I think Q2 is probably a little bit lighter than it would have otherwise been with all the volatility. You know, I just think kind of it what happened at the beginning of the quarter from an oil price perspective, it just takes a little time for both seller and buyer expectations to reset.

So I think, you know, all in, I'd say we'd expect to do more ground game on the back half from here.

Paul Diamond: Understood. Appreciate the clarity on the entire

Operator: Thank you.

Operator: And we have no further questions that came through at this time. I'll now hand the call over back to Will Hickey for closing remarks. Please go ahead, sir.

Will Hickey: Thanks, John. This was an outstanding quarter for the PR team. Not only did we continue our operational track record in the field, but also quickly executed on our downturn playbook, which we believe will drive real value for shareholders. Given our high-quality asset base and fortress balance sheet, we believe we can continue this execution and value creation going forward in any commodity price environment. Thanks to everyone for joining the call today and following the Permian Resources story.

Operator: Thank you. This concludes our conference call for today. Thank you all for participating. You may now disconnect.