Permian Resources Corp (PR) stock intrinsic value fair value estimate & owner earnings analysis

Permian Resources is an independent oil and natural gas producer with its assets in the Permian Basin, concentrated in the core of the Delaware Basin. It sells what it pumps at market prices, so it has no control over price, and its value rests on how much cash the wells produce after paying to drill the next ones. How we measured earnings. We start from operating cash flow, remove the swing from working capital, subtract stock compensation as a real cost, and subtract all drilling and development spending. We treat all of that drilling spending as the cost of standing still, because in 2025 it ($1.98 billion) roughly matched the depreciation and depletion charge on existing wells ($2.03 billion). Acquisitions of properties ($1.07 billion in 2025) are left out of the earnings figure and no growth from future acquisitions is credited, since the company's purchases have varied widely from year to year. Earnings are shared across Class A shares plus the Class C shares that carry the same economic rights, about 850 million shares in total, because the cash flow belongs to the whole operating company. That total was unchanged by the January 2026 corporate reorganization, which converted about 49 million Class C shares into Class A shares. Owner earnings per share were about $0.76 in 2023 (only two months of the Earthstone merger, so understated), $1.48 in 2024 and $1.89 in 2025. Older years belong to the much smaller Centennial Resource Development and were negative or small, so we measure from the merger era. We anchor on $1.50 a share, the middle of 2023 to 2025, rather than the 2025 peak. Owner earnings rose 27% per share in 2025, but our base case starts at $1.50, below that, because 2025 came with 14% higher production (392,633 barrels of oil equivalent per day) at a lower oil price ($64.06 a barrel versus $74.87 in 2024), and we will not assume that combination repeats. First-half 2026 operating cash flow was $2.32 billion versus $1.94 billion a year earlier; this is encouraging, but one half-year does not move our level. What supports the earnings. Proved reserves were 1,116 million barrels of oil equivalent at the end of 2025, up from 1,027 million a year earlier and 925 million at the end of 2023, after producing about 143 million barrels in 2025. That is roughly eight years of current output already proved, 71% of it developed. The company's own standardized measure of those reserves was $8.4 billion. Base case, $12.5 a share: $1.50 a year for ten years, then fading to zero by year 15 because nothing in the filings shows drilling inventory beyond that point. The ten flat years rest on the reserve growth shown above, not on any price recovery. No growth is credited, and no acquisitions. Bear case, $3.2 a share: owner earnings fall back to the 2023 level of about $0.75 for two years. Then cash income taxes arrive. In 2025 the company paid essentially no cash tax (a small refund of $0.8 million) while booking $285 million of deferred tax expense, and its tax loss carryforward asset was only $266 million. If that expense turned into cash, it would cost about $0.34 a share, leaving about $0.41 for six more years. After roughly eight years, roughly the current proved life, nothing is credited because replacement is not assured. Debt is $3.5 billion and cash interest was $289 million in 2025, already reflected in the earnings. Bull case, $17.8 a share: the 2025 result of $1.89 holds for ten years, backed by the 14% production rise in 2025 on slightly lower drilling spending than in 2024, then fades to zero by year 20. What would make this wrong. The largest risk is that cash taxes arrive sooner or larger than in the bear case. A second risk is that drilling spending has to rise to hold production, which would lower the $1.50 anchor. Sales are also concentrated: Enterprise Crude Oil bought 34% of 2025 revenue. The margin-of-safety price is about $6.50 a share: roughly half the base value and about twice the bear value, reflecting a business that cannot set its own prices.