There’s a new company set to operate in the Permian Basin, born of the merger of Centennial Resource Development and Colgate Energy.
Now known as Permian Resources Corp., the company is headquartered in Midland and plans to list its Class A common stock on NASDAQ under the ticker symbol PR. The stock will then transfer to the New York Stock Exchange around Sept. 12.
“It’s been a long evolution,” observed Will Hickey, one of the founders of Colgate who now serves as co-chief executive officer of Permian Resources.
Speaking by telephone with the Reporter-Telegram, he said Colgate “had a good run of value creation over the last six-and-a-half years” and was looking for ways to drive further value creation, with an initial public offering among the options. He and James Walter, co-founder of Colgate and now co-CEO of Permian Resources, came to believe that combining Colgate and Centennial would maximize efforts to create value, bringing together two complementary, high-quality asset bases in the Delaware Basin.
Hickey said headquartering the company in Midland was a key piece of the deal.
“Being here was important to us, given how long we’ve been in Midland and what Midland means to us,” Hickey said. “It creates a strategic competitive edge for us: It’s close to the fields, our team can get there in a quick drive, the deals and relationships with the service companies are all done on the ground here.”
The combination of Colgate and Centennial has turned Permian Resources into the largest pure-play Delaware Basin exploration and production company with deep inventory of high-quality drilling locations on about 180,000 net acres.
Hickey said that, as the new corporate name implies, the company will remain focused on the Delaware. When he and Walter were forming Colgate, he said, the Delaware was in its infancy. But now operators have “cracked the code” of the Delaware, driving down costs and increasing production.
“The Delaware has gone from what some hoped it could be to become the premier basin in the US,” he said, adding that he and Walter see more growth potential in the Delaware than the Midland Basin.
Currently, the company is operating an eight-rig drilling program and expects to go to a seven-rig program in November, delivering between 140,000 and 150,000 barrels of oil equivalent during the fourth quarter. For 2023, the company plans to continue a seven-rig program with the potential to reduce its rig count assuming operational efficiencies. The rigs will spud around 145 wells and the company will complete approximately 150 gross wells. Crude oil production growth is targeted at 10 percent in the fourth quarter of 2023 over the fourth quarter of 2022.
During 2023, the company anticipates its operating activity to be split relatively evenly between New Mexico and Texas. The company will focus the majority of its New Mexico activity in the Second and Third Bone Spring Sand intervals, while its Texas development will concentrate in the Third Bone Spring Sand and Wolfcamp intervals.
Hickey said he and Walter will continue the model they put in place while developing Colgate: Building the company around generating free cash flow and shareholder returns. “Any growth needs to be founded with the goal of maximizing returns,” he said.
The pandemic, he continued, taught the industry a lot about how to treat a balance sheet and how to run a low-cost operation. For the industry to be sustainable, he said it needs to maximize free cash flow and provide low-cost hydrocarbons.
“For Permian Resources, we want to be a major producer through investing free cash flow, returning cash to shareholders and being good stewards of the environment.” For example, Centennial has a large water recycling facility the company plans to retain, and the company will continue work to reduce flaring.
He said the company will focus on ESG – Environment, Social and Governance – initiatives to show the company plans to be in business for the long run.
“We want to be leaders in the field and in the community,” he said.
Walter added, “We’re excited to grow our presence in Midland. Many of the Centennial people will be moving to Midland and we’re also looking to grow our presence in Midland through hiring. We’re a fast-growing company, we have a great culture, we’re looking to add to the team, and we’re excited about our future as Permian Resources.”
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September 06, 2022 at 06:52AM
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Colgate, Centennial evolves into Permian Resources Corp. - Midland Reporter-Telegram
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