Permian Resources Corporation (PR)

Interest coverage

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	1,840,460	1,212,860	965,777	200,032	-701,131
Interest expense	US$ in thousands	289,608	177,209	95,645	61,288	69,192
Interest coverage		6.36	6.84	10.10	3.26	-10.13

December 31, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,840,460K ÷ $289,608K
= 6.36

The interest coverage ratio of Permian Resources Corporation has shown variability over the years, as evidenced by the data provided. As of December 31, 2020, the interest coverage ratio was -10.13, indicating that the company's operating income was insufficient to cover its interest expenses. However, there has been a positive trend in the following years, with the ratio improving to 3.26 as of December 31, 2021, and further increasing to 10.10 by December 31, 2022. This significant improvement suggests that the company's ability to cover its interest obligations has strengthened substantially.

Subsequently, the interest coverage ratio decreased slightly to 6.84 as of December 31, 2023, and further to 6.36 by December 31, 2024. While these ratios are lower than the peak in 2022, they still remain at relatively healthy levels, indicating that Permian Resources Corporation continues to generate sufficient operating income to cover its interest expenses comfortably.

Overall, the company's interest coverage ratio has improved significantly from the negative territory in 2020 to healthier levels in the following years, showcasing a positive financial performance in terms of its ability to meet interest obligations from operating income.