In the June quarter Permian Resources sold natural gas for negative $120.7 million — not a markdown, not a hedge loss, an actual negative revenue line — and still printed what management called record adjusted free cash flow, $751 million, or $0.88 a share . That pairing tells you most of what you need to know. This is a Delaware Basin oil producer, roughly 535,000 net acres across West Texas and southeast New Mexico, which by its own description is the second-largest pure-play operator in the Permian . Crude is the business; everything else is a by-product that occasionally costs money to dispose of. In results released August 5, oil sales of $1,763 million carried essentially the entire $1,858 million top line — about 95% of it — with natural gas liquids adding $183 million, purchased gas netting $33 million, and gas itself subtracting .
The question is not whether this is a good operator. It plainly is. The question is what the equity discounts after a year in which the Middle East conflict pushed West Texas Intermediate crude into the nineties and the shares rose 93% off a $11.92 low to a $23.03 close on October 9 . The consensus reflex is that oil-weighted producers carry a risk premium tied to the Strait of Hormuz — the chokepoint through which roughly a fifth of seaborne oil normally moves — and that the premium evaporates the moment tankers sail freely. My read is narrower: on cash flow this stock is already struck closer to a mid-cycle oil deck than to the futures strip, and the next twelve months of return comes out of the balance sheet rather than out of the multiple.
The equity does not embed $90 crude
Start with what you pay. At $23.03 against 855.2 million diluted shares and $2.89 billion of net debt at June 30 , enterprise value is roughly $22.6 billion. Against my FY27 adjusted EBITDAX estimate of $5.5 billion that is 4.1x, which looks absurdly cheap — and is the wrong lens. On a shale producer the roughly...