Parsley Energy (PE)

[dan_s]

The best way to describe PE is to say it is a smaller version of Diamondback Energy (FANG).

I have updated my forecast model and it will be posted to the EPG website this afternoon. My valuations inches up to $24.00/share, compared to First Call's price forecast of $22.10.

PE trades at a high multiple of CFPS, which is justified by its strong production and proven reserves growth. Production increased 54.8% YOY in 2015 and, based on their guidance, will increases another 40% in 2016. There are very few upstream companies with this kind of growth locked in.

Parsley is a pure play on the Permian Basin and it is heavily weight to oil. Almost all of their oil production for 2016 is hedged. See hedge table at the bottom of the forecast model.