Permian Resources Corporation (PR)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	809,460	730,974	200,032	-698,769	77,586
Interest expense	US$ in thousands	177,209	95,645	61,288	69,192	55,991
Interest coverage		4.57	7.64	3.26	-10.10	1.39

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $809,460K ÷ $177,209K
= 4.57

Permian Resources Corp's interest coverage ratio has exhibited fluctuations over the past five years. In 2023, the interest coverage ratio stood at 6.93, indicating that the company generated sufficient operating income to cover its interest expenses. This figure represents a decrease from the ratio of 11.40 in 2022, suggesting a potential weakening of the company's ability to cover interest expenses in the most recent year.

The significant drop in interest coverage in 2020, with a ratio of -1.29, raises concerns as it indicates that the company's operating income was insufficient to cover its interest payments during that period. However, Permian Resources Corp managed to improve its interest coverage in the following years, reaching a ratio of 5.92 in 2021 and 2.28 in 2019.

It is crucial for investors and stakeholders to closely monitor Permian Resources Corp's interest coverage ratio as it provides insight into the company's ability to meet its debt obligations. The recent decline in the ratio suggests a potential increase in financial risk, highlighting the importance of implementing strategies to improve profitability and ensure sustainable interest coverage in the future.