Five Shale Stocks to Watch Before Third-Quarter Earnings

Permian producers spent much of this year paying buyers to haul away the natural gas that comes up with their oil. Waha Hub spot prices stayed below zero for a record 90 days in a row before turning positive on June 16, Reuters reported, and the hub had averaged minus $2.19 per million British thermal units for the year up to that point.Four of the five companies below still posted record results in the second quarter. Three of the five don’t drill at all, and one of the two that do works mostly in North Dakota, far from Waha. The U.S. Energy Information Administration’s October outlook has domestic crude output rising from 13.9 million barrels per day this year to 14.3 million in 2027 and assumes Middle East oil flows stay constrained through the fourth quarter. Permian-focused executives surveyed by the Dallas Fed in June named gas takeaway capacity and regulatory issues as the constraints on drilling they cited most often. Third-quarter earnings start arriving in the coming weeks, so the second-quarter figures below are the latest each company has reported.Permian ResourcesPermian Resources Corporation (NYSE: PR) netted 38 cents per thousand cubic feet for its natural gas in the second quarter, hedges included, in a period when Waha averaged negative $3.14. Management said on the earnings call that it curtailed gas from wells with a high gas-to-oil ratio, which cut gas output by about 20 percent from the first quarter, and that firm transportation and hedges did the rest. Unhedged, the company still realized negative $1.74, though that was $1.40 better than Waha, and the hedges added $2.12 on top. It turned every curtailed well back on in late June once prices recovered. Adjusted free cash flow came in at a record $751 million, up from $312 million a year earlier, on oil production of 198,071 barrels per day. The company raised its full-year oil guidance to 199,000 barrels per day, 10,000 more than it projected in February, and expects second-half production above 200,000 barrels per day on less than $1 billion of capital spending. Co-CEO James Walter said it will produce nearly 10 percent more oil than last year on less capital than it spent in 2025.Permian Resources also spent $1.05 billion this year on about 190 acquisitions, picking up roughly 54,000 net acres and 20,000 net royalty acres in the Delaware Basin in deals struck at a weighted average front-month WTI price of $72.50 a barrel. Net debt is down to about 0.5 times EBITDAX, and total debt has fallen roughly 35 percent since the end of 2024, from $4.2 billion to $2.7 billion.Derivatives cost Permian Resources $12.44 a barrel in the second quarter, which took its realized oil price from $97.81 to $85.37, and about 70,000 barrels per day, roughly a third of production, are swapped at between $67 and $69 through December. Realized prices in the quarter were well above those swap levels, so that portion of production missed the rally.KinetikKinetik Holdings Inc. (NYSE: KNTK) processed 1.74 billion cubic feet of gas per day in the second quarter, the same as a year earlier, even though producers shut in an estimated 250 million cubic feet per day because of Waha prices. Adjusted EBITDA still reached a record $280.8 million, up from $242.9 million, and free cash flow roughly tripled to $105.2 million. The company credited better natural gas liquids recoveries and condensate yields, optimization work and favorable commodity prices and spreads, so part of the beat came from commodity margins and not from volumes.Kinetik raised its 2026 adjusted EBITDA guidance to between $1.04 billion and $1.1 billion, a midpoint 7 percent above the February forecast, and assumes curtailments will average only about 25 million cubic feet per day in the second half. In May it approved Kings Landing II, a roughly $260 million sour gas processing expansion that will lift system capacity to 2.7 billion cubic feet per day in 2028. It is also building a 40-megawatt power plant at its Diamond Cryo complex, due in service in the second quarter of 2027, and has secured firm Gulf Coast market access for residue gas starting that year. CEO Jamie Welch said customer activity is “pulling forward” now that curtailments have eased.Kinetik guided third-quarter adjusted EBITDA to between $260 million and $270 million, below the second quarter’s record, and its $3.94 billion of net debt works out to about 3.8 times trailing EBITDA. The guidance assumes a fourth-quarter processed gas exit rate of nearly 2.2 billion cubic feet per day, up roughly 20 percent exit to exit, and a full-year Waha average of minus 26 cents per million British thermal units. Both depend on the new pipeline capacity holding up and producers keeping their wells on.Kodiak Gas ServicesKodiak Gas Services Inc. (NYSE: KGS) burned through $87.5 million of free cash flow in the second quarter and raised its full-year guidance anyway. The cash is going into power, where Kodiak closed its $576 million purchase of Distributed Power Solutions on April 1, spent $134 million of growth capital in the quarter and agreed to buy up to one gigawatt of gas turbines for delivery by 2030. It expects $400 million to $450 million of power capital spending this year against $95 million to $125 million of power revenue, and it raised about $836 million by selling stock at $71 a share in May. Total debt was $2.8 billion at the end of June, or 3.2 times EBITDA under its credit agreement, and adjusted earnings per share slipped to 55 cents from 59 cents in the first quarter.Contract compression still produces roughly 90 percent of segment adjusted gross margin. Kodiak, which calls itself a market leader in the Permian, had 98.2 percent of its compression fleet earning revenue in the second quarter, held adjusted gross margin on that business at 70 percent and posted record segment revenue of $315.1 million, with full-year compression revenue guided to between $1.25 billion and $1.28 billion. Average unit size rose to 991 horsepower from 952 a year earlier, and CEO Mickey McKee pointed to a “tight supply environment for compression equipment” when explaining why he stays constructive on the business. Adjusted EBITDA hit a record $216.8 million, up 21.7 percent from a year earlier, and full-year guidance now stands at $830 million to $860 million. The new power segment ended the quarter with a 405-megawatt fleet that was 89.6 percent utilized in its first full quarter.Texas Pacific LandChevron’s planned power plant in Reeves County will need land and water, and Texas Pacific Land Corporation (NYSE: TPL) has agreed to provide both. Under a June agreement for Chevron’s Project Kilby, which is meant to power a customer’s data center, TPL contributed surface acreage for cash and received the exclusive right to source groundwater for the plant. CEO Tyler Glover said the project “validates West Texas as a premier location for compute infrastructure.” Oilprice.com has reported that Kilby is tied to a 20-year agreement with Microsoft and that a final investment decision is due before the end of the year.TPL also spent $110.2 million in the quarter on land acquisitions, including tracts in Shackelford and Jones counties meant for data center and power projects beyond the immediate Permian Basin, and it began commissioning a 10,000-barrel-per-day produced water desalination plant in Orla, Texas.TPL’s royalty production set a record at 39.7 thousand barrels of oil equivalent per day, up 7 percent from the first quarter, and because the company doesn’t hedge, oil royalty revenue jumped to $119.3 million from $90.6 million as realized prices climbed to $97.55 a barrel. Net income of $153.9 million and free cash flow of $155.5 million were both records, on revenue of $246.1 million and adjusted EBITDA of $215.6 million, an 88 percent margin.Water sales volumes fell 19 percent from the first quarter to 663,000 barrels per day, and water sales revenue dropped to $39.7 million from $46.9 million. Management said on the earnings call that weak in-basin gas prices led operators to shift some development away from the Delaware Basin.Gas royalties took the same hit, falling to $2.6 million from $9.8 million on a realized price of 40 cents per thousand cubic feet. Produced water royalties went the other way, rising to $37.1 million on a record 4.9 million barrels per day, up 6 percent from the first quarter.Chord EnergyThe deepest well in the Williston Basin now belongs to Chord Energy Corporation (NASDAQ: CHRD), which drilled it to a measured depth of 33,810 feet as part of a push into four-mile laterals. The company has executed 26 four-mile wells so far, says costs and early results are in line with its expectations and expects the longer wells to become a larger part of its program.Adjusted free cash flow was $414 million in the second quarter, up from $141 million a year earlier, on oil production of 165,400 barrels per day, which landed at the top of guidance. Chord returned 54 percent of that cash to shareholders, through a $1.30 per share dividend and $147.4 million of buybacks at an average of $133.47 a share, and plans to raise the payout to 75 percent in the third quarter now that leverage is below half a turn. For the full year it expects about $3.0 billion of adjusted EBITDA and $1.3 billion of adjusted free cash flow, down from $3.1 billion and $1.4 billion in May, with its second-half price assumption lowered to $75 WTI from $80.Chord plans to drop its second frac crew in the third quarter, with capital spending guided to $375 million at the midpoint against $417 million in the second quarter, and it expects fourth-quarter oil volumes of 156,000 to 159,000 barrels per day, below the third quarter’s range. Derivatives cost the company $106.2 million on oil in the second quarter, and its realized oil price, which averaged $1.27 a barrel above WTI, is expected to lose that premium, with the full-year differential guided at between zero and 80 cents below WTI. The company has hedged about 38 percent of its second-half oil volumes and about 18 percent of 2027.By Michael Kern for Oilprice.comMore Top Reads From Oilprice.comSmall Indian Factories Face Blackouts as Coal Stocks PlungeWhy Diesel Prices Are So Much Higher Than GasolinePrinceton Researchers Find a Lower-Energy Route to Fusion Ignition