Parsley Energy (PE) Q4 Results

[dan_s]

Can you imagine what the stock of a tech company would do if they announced a 23% improvement in cash margins on sales. - Dan

AUSTIN, Texas, Feb. 21, 2018 /PRNewswire/ -- Parsley Energy, Inc. (PE) ("Parsley," "Parsley Energy," or the "Company") today announced financial and operating results for the quarter ended December 31, 2017. The Company has posted to its website a presentation that supplements the information in this release.

Fourth Quarter 2017 Highlights

> Net production averaged 80.3 MBoe per day, up 12% versus 3Q17 and 78% year-over-year. Net oil production increased 9% quarter-over-quarter and 69% year-over-year. < This compares to my forecast of 80.0 boe per day. However, crude oil production did come in below my forecast.

> Parsley's previously announced 2018 oil production guidance of 65-70 MBo per day represents year-over-year growth of 50% at the midpoint.

> Lease operating expense ("LOE") per Boe decreased 23% versus 3Q17 to $3.44. < This is incredibly low!

> Favorable trends in unit costs supported a 23% quarter-over-quarter increase in Parsley's pre-hedge cash margin to $31.45 per Boe.

> The Company recently executed several high-impact acreage trades that will facilitate extended lateral lengths in its core Upton County footprint. Net of acreage traded away, Parsley added approximately 0.4 million net lateral feet to the Company's horizontal drilling inventory through trades executed since its last quarterly update in November.

> Proved reserves of 416 MMBoe as of December 31, 2017 represent an 87% increase versus proved reserves as of December 31, 2016. Proved developed reserves of 209 MMBoe as of December 31, 2017 represent a 97% increase versus proved developed reserves as of December 31, 2016. < VERY GOOD.

"Following a transformative 2017 for Parsley Energy, we are eager to efficiently harvest the ample resource base our team has assembled, tested, and optimized," said Bryan Sheffield, Parsley's Chairman and CEO. "Even at a steady activity pace, we look forward to delivering compelling high-margin growth on a simplified 2018 development program."

[dan_s]

In the last 3 months, 12 ranked analysts set 12-month price targets for PE. The average price target among the analysts is $36.45. Price targets range from $30 to $48.

I have updated my forecast model for Q4 results and the company's guidance. My valuation is $44.00/share.

PE closed today at $23.10.

My updated forecast/valuation model will be posted to the EPG website this evening.

This is a "Super Aggressive Growth Company" that is a pure play on the Permian Basin. Operating cash flow of $541 million in 2017 is going to over $1 Billion in 2018.