Parsley Energy (PE) Q2 Results - Aug 8

Parsley Energy (PE) Q2 Results - Aug 8

Postby dan_s » Sat Aug 08, 2020 5:52 pm

On August 5, 2020 Parsley Energy, Inc. (NYSE: PE) (“Parsley,” “Parsley Energy,” or the “Company”) announced financial and operating results for the quarter ended June 30, 2020. Additionally, Parsley provided an update to its 2020 development program. The Company has posted a presentation to its website that supplements the information in this release.

Updated 2020 Outlook

• In light of improved oil pricing and reduced volatility, Parsley is revising its baseline capital budget assumption from a
$20-$30 WTI oil price to a $35 WTI oil price for the remainder of 2020. In this context, the Company is narrowing its
2020 capital budget to $650-$700 million from less than $700 million.

• With regional oil prices trading below $20 per barrel during a portion of 2Q20, Parsley suspended all new drilling and
completion activity during May and June
. In recent weeks, with regional oil prices trading consistently above the
Company’s baseline capital budget assumption of $35 per barrel, Parsley has reactivated two rigs and two frac spreads.

Parsley’s future activity plans will continue to be driven by unhedged return profiles.
• Parsley remains committed to free cash flow generation and, in the context of $35 WTI oil prices for the remainder of the
year, is now targeting at least $350 million of free cash flow in 2020, which is an increase of $50 million from the
Company’s prior target.

Recent Highlights
• Generated positive free cash flow in 2Q20.
• Paid 2Q20 quarterly dividend of $0.05 per share on June 19, 2020 and declared 3Q20 quarterly dividend of $0.05 per
share payable on September 18, 2020.
• Parsley has reduced natural gas flaring at locations previously operated by Jagged Peak Energy Inc. (“Jagged Peak”) by
approximately 90% since acquiring the properties in January 2020. At a corporate level, Parsley flared less than 1.5% of
its gross natural gas production in 2Q20.
• Parsley's detailed preparation helped steer a collaborative effort across multiple disciplines to manage 2Q20 production
curtailments in a safe, environmentally responsible, and efficient manner. The Company curtailed more than 20% of its oil
production in May and restored the vast majority of these volumes in June
.
• 2Q20 net oil production decreased 11% quarter-over-quarter and increased 30% year-over-year to 112.6 MBo per day.
Total 2Q20 net production averaged 183.2 MBoe per day. < This compares to my forecast of 167,000 Boe per day in Q2.

Summary Comment and Outlook
“From a macro standpoint, the second quarter represented an unforgiving stress test for much of our industry,” commented
Matt Gallagher, Parsley’s President and CEO. “The worst may be behind us - prices have found firmer footing as oil markets
seek a cautious equilibrium. However, at Parsley Energy, we harbor no illusions of the difficulties facing our industry and we
remain well built for that endurance test. During this challenging second quarter, our team did not merely run in place, but
instead progressed our corporate sustainability efforts on multiple fronts. On the financial front, we generated robust free cash
flow and remain committed to free cash flow sustainability in 2021 and beyond.
On the environmental front, we reduced natural
gas flaring on recently acquired properties by approximately 90% and we will continue to advance our environmental
sustainability efforts with tangible goals moving forward. I am proud of the Parsley team for focusing on controlling what was
within our control and for delivering on our action plan during uncertain times.”

Financial Update
Healthy execution in 2Q20, under challenging conditions, translated to strong performance in key financial measures.

Profitability
During 2Q20, the Company recorded net loss attributable to its stockholders of $0.4 billion, or $0.95 per share. Excluding, on
a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, adjusted
net income for 2Q20 was $10.1 million, or $0.03 per share.
< Adjusted net income compares to my Q2 forecast of a net loss of $64.8 million.

Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense (“Adjusted EBITDAX”) for 2Q20 was $211.6 million. < Compares to my Q2 EBITDAX forecast of $186.7 million.

Realized Pricing
During 2Q20, Parsley reported an average hedged oil price realization of $31.47 per Bbl net of transportation costs. Given
heightened volatility in regional oil prices during 2Q20, the Company elected to monetize certain financial hedges and
concurrently entered into fixed price physical sales agreements with select marketers. In a rising oil price environment, this
practice would result in larger realized hedge gains and lower unhedged oil price realizations, but would have no material
impact to cash flow. During 2Q20, Parsley reported an average unhedged oil price realization of $18.30 per Bbl net of
transportation costs. Absent any financial hedge monetization or fixed price physical agreements during 2Q20, the Company’s
average unhedged oil price realization would have increased by approximately $5.00 per Bbl, but there would have been no
material change to the Company’s average hedged oil price realization. Parsley has not entered into any additional fixed price
physical agreements that would impact reported oil price realizations in the future.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 23650
Joined: Fri Apr 23, 2010 8:22 am

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