Permian Resources Announces Full Redemption of 6.875% Senior Notes Due 2027
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The announcement by Permian Resources Operating, LLC to redeem its $356,351,000 aggregate principal amount 6.875% Senior Notes due 2027 is a significant financial move. This action indicates the company's liquidity position is robust enough to retire debt ahead of schedule. The redemption at 100% of the principal amount, plus accrued interest, suggests a strategic financial management decision, possibly to reduce interest expenses or to restructure the company's debt profile.
From an investor's perspective, this could signal confidence in the company's financial health and future cash flows. It may also impact the company's credit rating positively, potentially lowering the cost of future borrowing. However, investors should consider the source of the funds used for this redemption, as the use of operational cash flow versus new debt will have different implications for the company's balance sheet and financial flexibility.
The decision to redeem high-interest bearing notes can reflect broader market conditions. In an environment where interest rates are fluctuating, a company might choose to redeem notes to take advantage of lower rates through refinancing, or to deleverage if the market expects rates to rise. This move could also be interpreted as a proactive measure in anticipation of a less favorable credit market.
For the energy sector and specifically for companies like Permian Resources operating in the Permian Basin, this could indicate a strategic pivot in the allocation of capital, possibly towards investments in production or technology that could enhance operational efficiency. Stakeholders should monitor the company's future financial disclosures to assess the impact of this redemption on its investment strategies and operational priorities.
The redemption of the Senior Notes by Permian Resources Operating, LLC before their maturity may reflect the company's capital structure optimization strategy. By redeeming these notes, the company is likely aiming to reduce its cost of capital. The 6.875% interest rate is relatively high compared to current market rates, suggesting that the company could be looking to refinance its debt at a lower rate, thereby improving its interest coverage ratio and freeing up cash flows for other uses.
It is essential for market observers to evaluate the terms of the indenture to understand any call protection period and the call premium, which could affect the company's redemption costs. Additionally, the early redemption of debt might lead to a temporary dip in the bond market value for the company's remaining securities, as investors recalibrate their expectations based on the new debt structure.
The Company has instructed UMB Bank, National Association, the trustee under the Indenture, to distribute a Notice of Redemption to all currently registered holders of the Notes on March 6, 2024. Copies of such Notice of Redemption and additional information relating to the procedure for redemption of the Notes may be obtained from the Company’s investor relations contacts provided below.
This press release shall not constitute a notice of redemption under the optional redemption provisions of the Indenture, nor does it constitute an offer to sell or the solicitation of an offer to buy the Notes or any other securities, nor shall there be any sale of any Notes or other securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jurisdiction.
About Permian Resources
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Cautionary Note Regarding Forward-Looking Statements
The information in this press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this press release, regarding the completion of the redemption, the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this press release, the words “could,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “goal,” “plan,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Be cautioned that these forward-looking statements are subject to all of the risk and uncertainties, most of which are difficult to predict and many of which are beyond Permian Resources’ control, incident to the development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, risks relating to the Company’s ability to realize the anticipated benefits and synergies of its merger with Earthstone Energy, Inc. Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth in the Company’s filings with the SEC, its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and its subsequent Quarterly Reports on Form 10-Q, under the caption “Risk Factors,” as may be updated from time to time in the Company’s periodic filings with the SEC. Any forward-looking statement in this press release speaks only as of the date of this release. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
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Hays Mabry – Sr. Director, Investor Relations
Mae Herrington – Engineering Advisor, Investor Relations
(832) 240-3265
ir@permianres.com
Source: Permian Resources Corporation
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