Parsley Energy (PE) Q4 Results - Feb 21

[dan_s]

The Company recorded net income attributable to its stockholders of $53.8 million, or $0.19 per share, in 4Q18 and $369.1 million, or $1.35 per share, for the year. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, adjusted net income was $82.5 million, or $0.30 per share, in 4Q18 and $385.1 million, or $1.41 per share, for the year.

Adjusted net income compares to my forecast of $94.5 million, or $0.34/share.

The miss is because they sold their natural gas and NGLs in Q4 at a much lower price than what I used in the forecast model.
Pipeline capacity for gas is much worse in the Permian than it is for crude oil. Parsley's revenues are heavily weighted to oil, so the low gas price is not a significant item.
Parsley uses the "Successful Efforts" method of accounting, which is more conservative than the "Full Cost" method that is used by most of the companies.

I have updated my forecast/valuation model for PE and it will be posted to the EPG website this evening. My valuation stays at $35.00/share.