Energy Prospectus

Parsley Energy Announces First Quarter 2020 Financial And Operating Results; Provides Update On 2020 Development Plans

During 1Q20, the Company recorded net loss attributable to its stockholders of $3.4 billion , or $9.20 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 1Q20 was $107.2 million , or $0.29 per share. (1)

Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense ("Adjusted EBITDAX") for 1Q20 was $457.2 million . (1)

As a result of the recent fall in oil prices and Parsley's decision to significantly reduce its near-term development activity plans, the Company recognized a non-cash impairment charge of $4.4 billion for certain proved reserves during 1Q20. In addition, the Company recognized leasehold abandonment and impairment charges associated with unproved oil and natural gas properties of $557 million during 1Q20.

AUSTIN, Texas , May 4, 2020 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the "Company") today announced financial and operating results for the quarter ended March 31, 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

On March 11, 2020 , the World Health Organization declared the novel coronavirus 2019 ("COVID-19") a pandemic. COVID-19 has had a material negative impact on global economic activity and, as a result, has also caused significant global oil demand destruction. This unprecedented decline, combined with recent periods of increased production from foreign oil producers (most notably Saudi Arabia and Russia ), resulted in a sharp drop in near-term oil prices.

In light of this lower commodity price environment, Parsley is revising its baseline capital budget assumption from a $30 - $35 WTI oil price to a $20 - $30 WTI oil price for the remainder of 2020. In this environment, the Company is reducing its 2020 capital budget to less than $700 million , with reported 1Q20 capital expenditures of $379 million representing more than 50% of this revised full-year budget.
With regional oil prices recently trading below $20 per barrel, Parsley has suspended all new drilling and completion activity in the near-term. 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 $20 - $30 WTI oil prices for the remainder of the year, is now targeting at least $300 million of free cash flow (1) in 2020. In a lower oil price environment, Parsley will adjust as needed to preserve its balance sheet.
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I will post my updated forecast/valuation model for PE tomorrow morning (May 5). This one will take some time to update.

I will have the Parsley Energy forecast/valuation model updated by noon on May 5.

Significant paragraph in the May 4th press release:
"The Company entered into an amendment to its revolving credit agreement on April 27, 2020 , which reaffirmed its borrowing base at $2.7 billion , increased the elected commitment amount from $1.0 billion to $1.075 billion , and extended the maturity date by two years to October 28, 2023 . As of March 31, 2020, Parsley had approximately $739 million of liquidity, consisting of $45 million of cash and cash equivalents and an availability of $693 million on the Company's revolver."

Each company is different, but so far it appears that the bankers are being "flexible" by reaffirming revolving credit facilities. This is bullish for all of the upstream companies.

I have updated my forecast/valuation model for PE and it will be posted to the EPG website this afternoon.
My valuation increases by $3 to $15/share.
Three Wall Street analysts have also updated their price targets after this morning's Parsley conference call.
Their price targets are:
$17.00 Stifel
$15.00 Williams
$10.00 Northland

At the time of this post, PE is trading for $10.26.

Parsley has significantly increased the amount of oil that they've hedged, which locks in over $1 Billion of cash flow from operations in 2020 and over $300 million of free cash flow from operations.