Permian Resources CorpPR
Permian Resources Corp Leases Disclosure
Note 15—Leases
At contract inception, the Company determines whether or not an arrangement contains a lease. Upon determination of a lease, a lease right-of-use (“ROU”) asset and related liability are recorded based on the present value of the future lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make future lease payments arising from the lease.
The Company has operating leases for drilling rig contracts, office rental agreements and other wellhead equipment. As of December 31, 2025, these leases have remaining lease terms ranging from one month to six years, some of which include options to extend the lease term for up to five years, and some of which include options to terminate prior to the end of the contractual lease term. These options are considered in determining the lease term and are included in the present value of future payments that are recorded for leases when the Company is reasonably certain to exercise the option. The Company has one finance lease that was entered into in connection with an office building purchase in Midland, Texas. As part of the building purchase, the Company assumed a ninety-nine year ground lease and accordingly, recorded a finance lease liability. Leases with an initial term of one year or less are not recorded in the consolidated balance sheets. Additionally, none of the Company’s lease agreements contain any material residual value guarantees or material restrictive covenants.
The following table provides additional information related to the Company’s lease assets and liabilities as presented on balance sheet for the periods presented:
(in thousands) | Balance Sheet Classification | December 31, 2025 | December 31, 2024 | ||||||||||||||
| Assets | |||||||||||||||||
| Operating right-of-use assets | Operating lease right-of-use asset | $ | 132,764 | $ | 119,703 | ||||||||||||
Other noncurrent assets | 14,877 | 15,033 | |||||||||||||||
| Liabilities | |||||||||||||||||
| Current | |||||||||||||||||
| Operating lease liabilities | Operating lease liabilities | $ | 79,496 | $ | 57,216 | ||||||||||||
Other current liabilities | 791 | 772 | |||||||||||||||
| Noncurrent | |||||||||||||||||
| Operating lease liabilities | Operating lease liabilities | $ | 55,102 | $ | 64,288 | ||||||||||||
Other noncurrent liabilities | 15,522 | 15,168 | |||||||||||||||
The present value of future lease payments is determined at the lease commencement date based upon the Company’s incremental borrowing rate. The incremental borrowing rate is calculated using a risk-free interest rate adjusted for the Company’s specific risk and the specific lease term. The table below summarizes the Company’s weighted average discount rate and weighted-average remaining lease term as of the periods presented.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Operating Leases | Finance Lease | Operating Leases | Finance Lease | ||||||||||||||||||||
| Weighted-average discount rate | 6.89 | % | 7.3 | % | 6.04 | % | 7.3 | % | |||||||||||||||
| Weighted-average remaining lease term (years) | 2.10 | 95.25 | 2.59 | 96.25 | |||||||||||||||||||
The Company’s drilling rig contracts, office rental agreements and wellhead equipment agreements contain both lease and non-lease components, which are combined and accounted for as a single lease component.
Variable lease payments are recognized in the period in which they are incurred and include operating expenses related to the office rental agreements. Expenses related to short-term leases are recognized on a straight-line basis over the lease term as either expenses to the consolidated statements of operations or capitalized to the consolidated balance sheets. The following table presents the components of the Company’s lease expenses for the periods presented.
| Year Ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
Operating lease costs | |||||||||||
Operating lease cost | $ | 111,918 | $ | 80,135 | |||||||
Variable lease cost | 18,004 | 3,156 | |||||||||
| Short-term lease cost | 263,407 | 242,549 | |||||||||
Finance lease costs | |||||||||||
Amortization of ROU assets | 156 | 156 | |||||||||
Interest on lease liabilities | 1,176 | 1,149 | |||||||||
Total lease Cost | $ | 394,661 | $ | 327,145 | |||||||
The following table presents supplemental cash flow information related to the Company’s leases for the periods presented.
| Year Ended December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Operating lease liability payments: | |||||||||||
| Net cash used in operating activities | $ | 43,850 | $ | 31,026 | |||||||
| Net cash used in investing activities | 68,068 | 49,109 | |||||||||
Finance lease liability payments: | |||||||||||
Net cash used in operating activities | 803 | 783 | |||||||||
| Right-of-use assets recognized (derecognized) with offsetting operating lease liabilities | 83,838 | 113,758 | |||||||||
Maturities of the Company’s long-term operating and finance lease liabilities by fiscal year as of December 31, 2025 are as follows:
| (in thousands) | Operating Leases(1) | Finance Lease | ||||||||||||
2026 | $ | 82,790 | $ | 823 | ||||||||||
2027 | 40,462 | 843 | ||||||||||||
2028 | 12,194 | 864 | ||||||||||||
2029 | 2,483 | 886 | ||||||||||||
2030 | 2,202 | 908 | ||||||||||||
2031 and thereafter | 1,885 | 204,626 | ||||||||||||
| Total lease payments | 142,016 | 208,950 | ||||||||||||
| Less: imputed interest | (7,418) | (192,637) | ||||||||||||
Present value of lease liabilities | $ | 134,598 | $ | 16,313 | ||||||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 24, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.