Permian Resources Raises Oil Target To 202.5 MBbls/d, Closes $1.025 Billion Ridge Runner Deal
Third-quarter profit rose from a year earlier, and the driller declared a $0.16 quarterly dividend.
Permian Resources, an independent oil and gas company focused on the Delaware Basin, raised the midpoint of its 2026 oil production guidance to 202.5 MBbls/d after third-quarter net income attributable to Class A stock reached $420.2 million, or $0.49 per diluted share, against $59.2 million, or $0.08, a year earlier. The company reported the results Wednesday and said it has closed the Ridge Runner acquisition, which it bought for initial cash of about $1.025 billion.
Output and cash flow climb
Total production averaged 457.5 MBoe/d, up 22% from the second quarter. Oil rose 5% to 208.0 MBbls/d, and realized oil prices averaged $85.73 a barrel. The company said higher natural gas and NGL volumes came partly from putting back online high gas-to-oil wells that it had curtailed in the second quarter because regional gas prices were negative.
Adjusted free cash flow, which is operating cash flow stripped of working-capital swings, less capital spending, was $846 million. Operating cash flow was $1,255 million and capital spending $518 million. Net income was lower than the second quarter's $792.5 million, which the company's reconciliation shows.
Costs fell from the prior quarter: lease operating expense dropped 8% to $5.11 per Boe and cash G&A 16% to $0.73 per Boe. Co-CEO Will Hickey called it a quarter of "record low total controllable cash costs per Boe."
Ridge Runner and a New Mexico land spree
Ridge Runner Resources II and its affiliated royalty company, both portfolio companies of EnCap Investments, closed on October 30, 2026. The business was producing about 6 MBbls/d of oil at closing and is expected to add about 4 MBbls/d in the fourth quarter. Permian Resources funded it with cash on hand and commercial paper.
Across about 175 transactions, the company added roughly 24,000 net acres, 9,000 net royalty acres and 13,000 Boe/d of production for about $1.15 billion upfront, subject to post-closing adjustments. It also agreed to contingent payments of up to $125 million tied to quarterly WTI prices from January 1, 2027. In 2027 it owes $9.375 million a quarter if WTI averages above $70 and $18.75 million above $80. In 2028 the amounts are $6.25 million and $12.5 million.
Co-CEO James Walter said the company's current plan should generate an incremental $300 million of free cash flow this year versus its February plan, normalized for commodity prices.
Guidance, balance sheet and dividend
The oil target is 13.5 MBbls/d above the February guidance. The company expects fourth-quarter oil output of over 210 MBbls/d and set capital spending guidance at $1.975 billion to $2.075 billion, with a midpoint of $2.025 billion.
Leverage stood at about 0.5x, and the company expects less than 0.5x at year-end. It redeemed $325 million of Earthstone notes in the quarter, which with $550 million in the second quarter cuts annual cash interest by about $75 million.
The board declared a fourth-quarter base dividend of $0.16 a share, payable December 31 to holders of record on December 17.
The company hosts its earnings call Thursday at 10:00 a.m. Eastern and expects to file its quarterly report that day.
