Parsley Energy (PE) Update - Jan 25

[dan_s]

In the last 3 months, 23 ranked analysts set 12-month price targets for PE. The average price target among the analysts is $29.55.
In January, 7 ranked analysts sent fresh reports on PE to Reuters. They all rate it a BUY with price targets of $23.00 to $38.00.
PE is trading at $18.50 today.

Parsley Energy is a pure play on the Permian Basin. Production increased more than 61% year-over-year in 2018.
> Production growth will slow in 1H2019 and accelerate in 2H2019 as West Texas gets more pipeline capacity.
> Parsley's realized natural gas price was only $1.35/mcf in Q3 2018. Gas prices should also move toward HH prices as more pipelines come online. LNG exports from Corpus should also help.
> Parsley has a lot of running room, so it deserves a higher multiple than most upstream companies.

Parsley is profitable at $45/bbl oil and will be extremely profitable when oil gets back to $60/bbl. On what may turn out to be a very conservative production forecast for 2019 (less than 20% YOY growth), Parsley will generate over $1.2 Billion of cash flow from operations in 2019 if their realized oil price averages $52/bbl.

There is a lot of BS in the media about how upstream companies cannot make money at $50/bbl oil. Our Sweet 16 will all be profitable if oil stays over $50.