Parsley Energy (PE) rated BUY by Stifel
Posted: Tue Apr 05, 2016 8:57 am
April 5:
Stifel sent out a new report on Parsley Energy this morning. [My valuation prior to the announcement yesterday was $24/share. - Dan]
Midland and Delaware Acquisitions Boost Net Asset Value (NAV) - Fully Funded By Equity Offering
[/]"Acquisitions boost Permian acreage footprint 20% - increasing risked NAV 18% to $27/share following addition of Southern Delaware resource potential to risked NAV. Taking into account PE's stout and profitable growth, strong balance sheet, and significant resource upside, we are reiterating our BUY rating."
PE Announces Midland Bolt-On and Delaware Acquisitions: After the close on 4/4,
PE announced it has entered into agreements to acquire 22,908 net acres in the
Midland and Southern Delaware Basins for an aggregate price of $359 million. The
combined assets are currently producing 2,300 Boe/d from 9 horizontal and 97
vertical wells and has 6 horizontal wells in various stages of D&C.
Midland Acquisition Overview: The $215 million bolt-on acquisition is expected to
add 8,711 net acres throughout Upton (2,700 net acres), Reagan (2,600), Midland
(2,000), and Glasscock (1,400) Counties, TX (adding 257 unrisked horizontal
drilling locations) and includes 1,100 Boe/d currently producing from 77 vertical
and 2 horizontal wells as well as 4 horizontal DUCs and one horizontal well
expected to be completed by closing (on or before 5/16/16). For the aggregate
Midland acquisitions, we estimate PE paid approximately $20,000/acre, excluding
$25 million for PDP ($25,000/flowing Boe) and $15 million for the DUC inventory.
Southern Delaware Acquisition Overview: PE added 14,197 net acres in Reeves
and Ward Counties, TX for $144 million ($9,000/acre, after backing out 1,200
Boe/d of production we valued at $22,000/flowing Boe). The acquisition increases
PE's Southern Delaware acreage footprint by 54%, adding an unrisked 70-140 net
locations assuming development of a single Wolfcamp bench.
Equity Offering Fully Funds Acquisition: PE announced it priced an upsized
public offering of 18.25 million common shares generating gross proceeds of $390
million (not including the 2.4 million overallottment), which will fund the announced
acquisitions and cover a portion of the announced capex increase.
Updating Guidance, Adjusting Estimates: Taking into account the acquired PDP
and the plans to complete five additional gross Wolfcamp wells (three in Midland,
two in Delaware), management increased its FY16 production guidance 1.5
MBoe/d, or 5% (at the mid-point), to 33 MBoe/d and its capital budget $30 million,
or 7%, to $435 million. Adjusting for the new guidance and share dilution, we are
lowering our FY16 and FY17 CFPS estimates 2% and 1% to $1.15 and
$2.35/share. Taking into account PE's successful initial result in Pecos County
followed by its aggressive acreage expansion west into Reeves County, we are
now assuming 50% of the company's Southern Delaware acreage is ultimately
developed, increasing our pro forma NAV 18% to $27/share.
Stifel sent out a new report on Parsley Energy this morning. [My valuation prior to the announcement yesterday was $24/share. - Dan]
Midland and Delaware Acquisitions Boost Net Asset Value (NAV) - Fully Funded By Equity Offering
[/]"Acquisitions boost Permian acreage footprint 20% - increasing risked NAV 18% to $27/share following addition of Southern Delaware resource potential to risked NAV. Taking into account PE's stout and profitable growth, strong balance sheet, and significant resource upside, we are reiterating our BUY rating."
PE Announces Midland Bolt-On and Delaware Acquisitions: After the close on 4/4,
PE announced it has entered into agreements to acquire 22,908 net acres in the
Midland and Southern Delaware Basins for an aggregate price of $359 million. The
combined assets are currently producing 2,300 Boe/d from 9 horizontal and 97
vertical wells and has 6 horizontal wells in various stages of D&C.
Midland Acquisition Overview: The $215 million bolt-on acquisition is expected to
add 8,711 net acres throughout Upton (2,700 net acres), Reagan (2,600), Midland
(2,000), and Glasscock (1,400) Counties, TX (adding 257 unrisked horizontal
drilling locations) and includes 1,100 Boe/d currently producing from 77 vertical
and 2 horizontal wells as well as 4 horizontal DUCs and one horizontal well
expected to be completed by closing (on or before 5/16/16). For the aggregate
Midland acquisitions, we estimate PE paid approximately $20,000/acre, excluding
$25 million for PDP ($25,000/flowing Boe) and $15 million for the DUC inventory.
Southern Delaware Acquisition Overview: PE added 14,197 net acres in Reeves
and Ward Counties, TX for $144 million ($9,000/acre, after backing out 1,200
Boe/d of production we valued at $22,000/flowing Boe). The acquisition increases
PE's Southern Delaware acreage footprint by 54%, adding an unrisked 70-140 net
locations assuming development of a single Wolfcamp bench.
Equity Offering Fully Funds Acquisition: PE announced it priced an upsized
public offering of 18.25 million common shares generating gross proceeds of $390
million (not including the 2.4 million overallottment), which will fund the announced
acquisitions and cover a portion of the announced capex increase.
Updating Guidance, Adjusting Estimates: Taking into account the acquired PDP
and the plans to complete five additional gross Wolfcamp wells (three in Midland,
two in Delaware), management increased its FY16 production guidance 1.5
MBoe/d, or 5% (at the mid-point), to 33 MBoe/d and its capital budget $30 million,
or 7%, to $435 million. Adjusting for the new guidance and share dilution, we are
lowering our FY16 and FY17 CFPS estimates 2% and 1% to $1.15 and
$2.35/share. Taking into account PE's successful initial result in Pecos County
followed by its aggressive acreage expansion west into Reeves County, we are
now assuming 50% of the company's Southern Delaware acreage is ultimately
developed, increasing our pro forma NAV 18% to $27/share.