Shares of PrimeEnergy Resources Corporation PNRG have gained 3.6% since the company reported earnings for the third quarter of 2024, outperforming the S&P 500 index’s decline of 1.1% during the same period. Over the past month, PNRG shares rose 30.7%, significantly outpacing the S&P 500’s 1.6% growth.
Financial Performance Highlights
For the third quarter of 2024, PNRG reported revenues of $69.46 million, an 84.7% surge from $37.58 million in the prior-year period.
The company reported third-quarter diluted earnings per share of $8.80, more than doubling from $4.13 in the prior year, as net income skyrocketed 105.9% year over year to $22.08 million from $10.72 million.
Higher production volumes aided the company’s quarterly results.
PrimeEnergy Corporation Price, Consensus and EPS Surprise
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Other Key Business Metrics
Oil production volumes for the third quarter of 2024 totaled 757,000 barrels, a 134.4% year-over-year surge. Similarly, natural gas production climbed 98.4% year over year to 2.14 million Mcf in the reported quarter, whereas natural gas liquids (NGLs) production skyrocketed 144.7% year over year to 394,000 barrels.
On a nine-month basis, oil production more than doubled to 1.88 million barrels. Gas production rose 81.9% year over year to 5.03 million Mcf. NGLs’ production also upsurged 112.1% year over year to 874,000 barrels.
Average realized prices for oil in the third quarter of 2024 were $74.23 per barrel, down 9.2% from the prior-year quarter. Gas prices averaged 30 cents per Mcf in the third quarter of 2024, a sharp year-over-year decline of 86.9%. NGLs fetched $18.21 per barrel, down 6.9% year over year.
Net income soared 105.9% to $22.08 million from $10.72 million in the year-ago quarter.
Management Commentary
PrimeEnergy credited its robust performance to aggressive horizontal drilling activities in the Permian Basin and Oklahoma. The company completed 56 horizontal wells in the first nine months of 2024, investing approximately $141 million. This operational push has significantly expanded production capacity, offsetting declines in commodity prices.
Factors Influencing Results
Year-over-year revenue growth was driven by increased production across all categories. However, declines in natural gas and NGL prices partially affected oil revenues. Operating expenses, including production costs, ad valorem taxes and general administrative expenses, rose in line with increased activity levels. Depreciation, depletion and amortization expenses more than doubled in the third quarter, reflecting higher production volumes and recent capital investments.
Guidance
The company reiterated its commitment to maintaining a strong balance sheet and robust liquidity. With $92.9 million in availability under its credit facility, PNRG plans to fund its capital expenditure program primarily through cash flow and available credit.
PrimeEnergy plans to continue its aggressive horizontal drilling strategy in the Permian Basin. The company has allocated $84 million for 2025 projects, including completing six horizontal wells currently in progress. Management expects these investments to enhance long-term production capacity and cash flow.
Other Developments
In the third quarter of 2024, PrimeEnergy divested non-core assets, including 7.8 surface acres in Midland County, TX, and its working interests in New Mexico properties, generating combined proceeds of $737,760. Additionally, it exited the well-servicing business by selling Eastern Oil Well Service Company for $2.8 million, recording a gain of $1.92 million.
With these transactions, PNRG has sharpened its focus on core operations, particularly its prolific West Texas holdings. The company’s strategy of asset rationalization is expected to enhance operational efficiency and align with long-term growth objectives.
PrimeEnergy also repurchased 93,130 shares for $10.2 million in the first nine months of 2024, underscoring its commitment to shareholder returns.
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