Key facts
- Permian Resources realized negative $1.74 per thousand cubic feet for unhedged natural gas in Q2, but hedges added $2.12.
- Kinetik Holdings' net debt is $3.94 billion, or 3.8 times trailing EBITDA.
- Kodiak Gas Services closed its $576 million purchase of Distributed Power Solutions on April 1.
- Texas Pacific Land Corporation agreed to provide land and water for Chevron's Project Kilby, a data center power plant.
- The EIA projects US crude output to rise to 14.3 million barrels per day by 2027.
- Waha Hub spot natural gas prices were below zero for a record 90 consecutive days this year.
Permian Basin energy companies are navigating a complex market environment as they prepare for third-quarter earnings reports. While some producers faced significant challenges with negative natural gas prices, others have leveraged strategic decisions to achieve record results.
Permian Resources reported record adjusted free cash flow of $751 million in the second quarter, an increase from $312 million a year prior. The company's oil production reached 198,071 barrels per day, and it raised its full-year oil guidance. Despite negative Waha Hub spot prices averaging minus $3.14 per million British thermal units for the quarter, Permian Resources managed its gas output by curtailing wells with high gas-to-oil ratios and utilizing firm transportation and hedges. Unhedged, the company realized negative $1.74 per thousand cubic feet for its natural gas, but hedges added $2.12. The company also completed approximately $1.05 billion in acquisitions this year, expanding its acreage in the Delaware Basin.
Kinetik Holdings also posted record adjusted EBITDA of $280.8 million in the second quarter, up from $242.9 million a year ago, with free cash flow tripling to $105.2 million. The company attributed its performance to better natural gas liquids recoveries, optimization efforts, and favorable commodity prices and spreads. Kinetik raised its 2026 adjusted EBITDA guidance and is expanding its processing capacity with the Kings Landing II project. However, the company guided third-quarter adjusted EBITDA to be between $260 million and $270 million, below its second-quarter record.
Kodiak Gas Services reported record adjusted EBITDA of $216.8 million, a 21.7 percent increase year-over-year. The company is investing heavily in its power segment, acquiring Distributed Power Solutions and planning significant capital spending on gas turbines. Contract compression remains its core business, with 98.2 percent of its fleet earning revenue and a record segment revenue of $315.1 million in the second quarter.
Texas Pacific Land Corporation (TPL) has entered into an agreement with Chevron to provide land and water for Chevron's Project Kilby, a data center power plant. TPL also acquired land for data center and power projects beyond the Permian Basin and began commissioning a produced water desalination plant. The company set records for royalty production and net income in the second quarter, driven by higher oil prices and its lack of hedging. However, water sales volumes and revenue decreased compared to the first quarter.
The U.S. Energy Information Administration's October outlook projects domestic crude output to rise to 14.3 million barrels per day by 2027, with Middle East oil flows expected to remain constrained through the fourth quarter. Executives in the Permian Basin have cited gas takeaway capacity and regulatory issues as key constraints on drilling.