Stock Analysis & Valuation Permian Resources Corporation (0HVD.L)

• Previous Close: £15.96
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	31.10	95
Intrinsic value (DCF)	15.34	-4
Graham-Dodd Method	8.40	-47
Graham Formula	77.30	384

Strategic Investment Analysis

Company Overview

Permian Resources Corporation (LSE: 0HVD.L) is a leading independent oil and natural gas company focused on the development of crude oil and liquids-rich natural gas reserves in the United States. Specializing in the prolific Delaware Basin, a key sub-basin of the Permian Basin, the company holds strategic acreage blocks in Reeves County, Texas, and Lea County, New Mexico. With approximately 73,675 net leased or acquired acres and 991 net mineral acres as of December 2021, Permian Resources is well-positioned to capitalize on one of the most productive hydrocarbon regions in North America. Formerly known as Centennial Resource Development, the company rebranded in September 2022 to reflect its core operational focus. Headquartered in Midland, Texas, Permian Resources leverages advanced drilling techniques and operational efficiency to maximize production and shareholder value in the competitive energy sector.

Investment Summary

Permian Resources Corporation presents an attractive investment opportunity due to its strategic focus on the high-yield Delaware Basin, strong operational cash flow ($3.41B in FY 2024), and disciplined capital expenditures. The company's net income of $989.88M and diluted EPS of $1.45 reflect robust profitability, while a dividend yield of $0.51 per share adds income appeal. However, investors should consider the inherent volatility of oil prices (beta of 1.192) and the company's substantial total debt ($4.32B). With a market cap of $8.9B, Permian Resources is a mid-cap player offering growth potential in the Permian Basin, but remains sensitive to commodity price swings and regulatory changes in the energy sector.

Competitive Analysis

Permian Resources Corporation competes in the highly competitive Permian Basin, where operational efficiency and scale determine success. The company's competitive advantage lies in its focused Delaware Basin position, which offers some of the highest returns in the shale industry due to superior reservoir quality. Its 2022 rebranding and strategic acquisitions demonstrate a commitment to consolidating its position in this core area. While larger peers benefit from greater diversification, Permian Resources' concentrated asset base allows for optimized operations and lower breakeven costs. The company's $3.41B operating cash flow indicates strong cash generation capabilities, though its $4.32B debt load is higher than some pure-play Permian peers. In the current environment, Permian Resources' ability to maintain production growth while managing leverage will be critical. The company's technical expertise in horizontal drilling and completion techniques helps maintain competitive well productivity, but it faces constant pressure from both larger integrated players and more nimble private operators in the basin.

Major Competitors

• Pioneer Natural Resources (PXD): Pioneer Natural Resources is a Permian Basin leader with massive scale (market cap ~$50B) and vertical integration advantages. Its strong balance sheet and hedging program provide stability, but the company faces challenges in maintaining production growth amid capital discipline. Compared to Permian Resources, Pioneer offers lower risk but potentially less upside.
• Diamondback Energy (FANG): Diamondback Energy is a pure-play Permian operator with best-in-class operating metrics and a strong hedge book. Its midstream integration through Rattler Midstream provides cost advantages. While more diversified across the Permian than Permian Resources, Diamondback's larger scale comes with higher valuation multiples.
• Matador Resources (MTDR): Matador Resources is another Delaware Basin-focused E&P with similar asset quality to Permian Resources. Matador has shown strong production growth but carries higher financial leverage. Its smaller scale makes it more comparable to Permian Resources in terms of growth potential and risk profile.
• Ovintiv (OVV): Ovintiv operates across multiple basins including the Permian, offering diversification benefits. However, its Permian position is less concentrated than Permian Resources', and the company has historically struggled with higher costs. Ovintiv's broader portfolio reduces single-basin risk but may limit upside from Permian-specific efficiencies.
• Coterra Energy (CTRA): Formed from the Cabot-Oil & Gas and Cimarex merger, Coterra combines Permian assets with Marcellus gas operations. This diversification provides cash flow stability but means Coterra isn't a pure Permian play like Permian Resources. Coterra's strong balance sheet contrasts with Permian Resources' higher leverage.