Parsley Energy Announces Second Quarter 2017 Financial And Operating Results; Raises Production Guidance And Announces Successful Delineation Results
AUSTIN, Texas, Aug. 2, 2017 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the "Company") today announced financial and operating results for the quarter ended June 30, 2017. The Company has posted to its website a presentation that supplements the information in this release.
Second Quarter 2017 Highlights
-- Net production averaged 64.7 MBoe per day, up 18% versus 1Q17 and 81%
year-over-year. Daily net oil production increased 14% versus 1Q17 and
82% year-over-year.
-- The Company is increasing full-year 2017 net production guidance from
65-71 MBoe per day to 67-73 MBoe per day and also increasing estimated
4Q17 net production from 78-88 MBoe per day to 80-90 MBoe per day. At
the midpoints, the updated ranges translate to estimated production
growth of 83% in 2017 versus 2016 and 88% in 4Q17 versus 4Q16.
-- Parsley reiterates estimated full-year 2017 capital expenditures of
$1.0-$1.15 billion.
-- The Company has executed several acreage trades that enhance the
development potential of its Midland Basin footprint. Net of acreage
traded away, Parsley added more than 500,000 net lateral feet to the
Company's horizontal drilling inventory through trades executed since
its last quarterly update in May. Including this footage, Parsley has
added approximately 1.4 million net lateral feet through acreage trades
since announcing the acquisition of Midland Basin assets from Double
Eagle Permian, LLC and certain of its affiliates in February, while
consolidating key development areas.
-- Parsley completed several successful delineation projects in 2Q17:
-- Midland Basin Upper/Lower Wolfcamp A stacked test confirms presence
of two prospective Wolfcamp A targets.
-- Midland Basin Upper/Lower Wolfcamp B stacked downspacing pilot
validates 330-foot spacing concept.
-- Southern Delaware Basin Upper/Lower Wolfcamp A stagger test and
Southern Delaware Basin Lower Wolfcamp A/Wolfcamp B stack test
verify presence of three Southern Delaware Basin Wolfcamp targets.
-- Early results from a well completed with a compressed stage completion
design show material outperformance on limited incremental cost compared
to the Company's standard completion design.
-- As previously disclosed, Parsley amended its revolving credit agreement
on April 28, 2017, thereby increasing its borrowing base by 60% to $1.4
billion, with a Company-elected commitment amount of $1.0 billion. As of
the end of 2Q17, liquidity stands at $1.5 billion, including $503
million of cash on hand.
"Parsley Energy continues to generate value from multiple sources, registering several noteworthy accomplishments in the second quarter of 2017," said Bryan Sheffield, Parsley's Chairman and CEO. "Strong production growth in 2Q17 was accompanied by significant delineation success, promising new well designs, and accretive acreage trades, all of which increase the value of our premier acreage position. With a strong balance sheet and abundant operational flexibility, Parsley is poised to deliver differentiated results across a range of commodity price scenarios."
Operational Highlights
In light of anticipated tightness in the market for high-specification drilling rigs, Parsley proactively secured and has taken delivery of all of the rigs necessary to execute the Company's 2017 drilling program. Consequently, Parsley spud 49 gross horizontal wells in the second quarter while completing 27 gross horizontal wells. Parsley's working interest on completed wells was approximately 95%, with an average completed lateral length of approximately 7,600 feet. Drilling and completion activity was concentrated in the Midland Basin, where the Company spud 35 and completed 21 gross operated horizontal wells; the balance were spud and completed in the Southern Delaware Basin.
Delineation Success
Roughly half of the wells Parsley brought online in 2Q17 targeted new zones or were drilled and completed with new spacing configurations, resulting in several important delineation milestones.
Midland Basin
Successful execution of an Upper/Lower Wolfcamp A stack test confirmed the presence of two target intervals within the Wolfcamp A formation. After 30 days of production, the Elwood 16-21-4107H and the Elwood 16-21-4207H, completed in Upton County with 1.5-mile laterals, are currently producing an average of approximately 1,200 Boe per day and have generated cumulative volumes that are consistent with the Company's one million Boe type curve. Encouraged by early results, Parsley expects to test two more stacked Wolfcamp A wells in 2H17, this time on top of two wells stacked in the Wolfcamp B formation. Confirmatory success could add to Parsley's drilling inventory, as the Company's stated inventory currently ascribes no credit for the Upper Wolfcamp A formation in the Midland Basin.
Parsley validated a stacked Upper/Lower Wolfcamp B downspacing concept with early production history from an 8-well project in Reagan County. This density test consists of four wells in the Upper Wolfcamp B atop four wells in the Lower Wolfcamp B, with 330-foot lateral spacing between wells (or 15 wells per target per section equivalent). To date, seven of the eight wells have achieved peak 30-day production rates, which on average are tracking at 84% of the average rate for offset Wolfcamp B wells at 660-foot spacing. Relatively modest productivity degradation combined with pad- and facilities-related cost savings yield a projected net present value uplift of more than 30% for an 8-well project at 330-foot spacing when compared to a 4-well project at 660-foot spacing. Application of less intensive completion designs could increase the cost savings and net present value impact of downspaced development. Parsley bases its current Midland Basin Wolfcamp B inventory on 660-foot spacing between laterals (or 8 wells per section equivalent).
Parsley's first well targeting the Wolfcamp C formation, the Taylor 45-33-4601H, continues to generate robust volumes, with cumulative production of 370 MBoe (58% oil) after 150 days. The well is still flowing naturally at nearly 2,000 Boe per day and is on track to achieve payout within its first six months of production. The Company's second Wolfcamp C well, the Paige 13A-12A-4810H, has yet to reach a peak-24 hour rate after several days online but is already producing more than 1,300 Bbls of oil per day while registering favorable pressure trends during its initial flowback period. Parsley possesses more than 900 Wolfcamp C drilling locations in what the Company has identified as the fairway of the Wolfcamp C play, encompassing portions of Reagan, Glasscock, Midland, and Upton Counties.
Southern Delaware Basin
During 2Q17, Parsley successfully tested two new flow units in Pecos County. Building on a series of strong standalone wells in the Lower Wolfcamp A interval, the Company executed a stacked two-well Lower Wolfcamp A/Wolfcamp B test and a staggered two-well Upper/Lower Wolfcamp A test. To date, both combinations have performed well relative to the average production generated by the Company's standalone wells in Pecos County when normalized for lateral length. After 40 days, the Lower Wolfcamp A/Wolfcamp B wells, drilled with one-mile laterals, have produced 26 MBoe on average, in line with the standalone average. After 50 days, the Upper/Lower Wolfcamp A wells, drilled with two-mile laterals, have produced 65 MBoe on average, or roughly 20% less than the standalone average for that timeframe. Three confirmed Wolfcamp targets support the Company's current Southern Delaware Wolfcamp inventory assumption of 16 wells per section equivalent.
Production Trends
Parsley continued its strong production momentum in 2Q17, driven by robust well performance from its core development activity. The 15 Midland Basin development wells that achieved 30-day peak production periods since the Company's last quarterly update registered an average peak 30-day rate of 1,379 Boe per day with an average stimulated lateral length of 7,720' and an average three-stream oil cut of 75%. Including the Upper/Lower Wolfcamp B density pilot, newly-peaked Midland Basin wells registered an average 30-day initial production rate of 1,245 Boe per day with an average stimulated lateral length of 7,730' and an average three-stream oil cut of 74%. The five Southern Delaware wells that reached peak production since the Company's last update achieved an average 30-day initial production rate of 1,056 Boe per day with an average stimulated lateral length of 7,090' and an average three-stream oil cut of 78%.
Favorable results from Parsley's initial compressed stage spacing test bode well for ongoing productivity gains. The Louis 4413H, drilled in Upton County with a one-mile lateral, was completed with 50 stages, equating to 100-foot stage spacing versus Parsley's heretofore standard design of 170-foot stage spacing. After 120 days, the compressed stage well is the Company's most prolific one-mile Wolfcamp B well to date with cumulative production of 110 MBoe and a peak 30-day rate of 1,397 Boe per day (or 272 Boe per day per thousand stimulated feet). Moreover, compared to a well drilled 660 feet away in the same target formation and completed simultaneously with standard stage spacing, the Louis 4413H has registered 20% higher cumulative production, even with reduced proppant loading that limited incremental well cost to less than 5%. This cost/benefit relationship implies a compelling economic profile, motivating several additional tests during 2H17.
The Company experienced a slight shift in production mix in 2Q17, with oil as a percentage of total production down from 69% to 67%. The shift in production composition was a function of contributions from recently acquired vertical production and a seasonal increase in plant efficiencies that boosted the recovery of NGLs. Delays on the eight-well Wolfcamp B downspacing project also limited the contribution of high oil-cut flush production in the second quarter, adversely impacting both absolute oil volumes and overall production mix. More generally, oil recoveries from Parsley's portfolio of horizontal wells continue to track in line with expectations, even as gas and NGL volumes broadly exceed expectations. Notably, liquids as a percentage of overall production tied a Company-record in the second quarter at 85%. In light of these considerations as well as increasing contribution from Wolfcamp C wells, Parsley is reducing its estimated full-year 2017 oil percentage to 67-70%, a range that the Company believes is likely to be appropriate through 2018, as well.
Financial Highlights
During 2Q17, the Company recorded net income attributable to its stockholders of $40.7 million, or $0.17 per weighted average share, compared to net income of $29.4 million, or $0.13 per weighted average share, during 1Q17. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, and adding back the non-controlling interest allocated to Class B stockholders, adjusted net income for 2Q17 was $12.5 million, or $0.05 per diluted share, compared to $34.2 million, or $0.15 per diluted share, in 1Q17.((1))
Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense ("Adjusted EBITDAX") for 2Q17 was $143.4 million, down 2% compared to 1Q17.((1))
Parsley recorded lease operating expense ("LOE") per Boe of $5.03 in 2Q17, up from $3.57 in 1Q17. Second quarter LOE was impacted by higher workover costs, an infusion of relatively high-cost vertical production, and lifting costs on non-operated wells, all of which relate to recent acquisitions. Parsley reported general and administrative expense ("G&A") per Boe of $5.39, up 10% versus 1Q17. The Company reported cash G&A per Boe, which excludes stock-based compensation expense, of $4.50, up by 12% over the same period. The sequential increase in G&A per Boe reflects increased staffing associated with early rig additions and recent acquisitions. Depreciation, depletion, and amortization expense per Boe was relatively stable in 2Q17 at $14.15 compared to $13.99 in 1Q17.
Parsley reported capital expenditures of $295 million during the quarter, comprised of $252 million for drilling and completion and $43 million for facilities and infrastructure. In addition to spending associated with the 49 horizontal spuds and 27 horizontal completions noted above, 2Q17 capital expenditures include expenses associated with drilling and completing two vertical wells and two saltwater disposal wells.
Strong Balance Sheet and Robust Hedge Position
As of June 30, 2017, the Company had approximately $1.5 billion of liquidity, consisting of $503 million of cash on hand and an undrawn amount of $997 million on the Company's revolver.((2)) Parsley added to its oil hedge portfolio during the quarter and now has an average of 58 MBbls per day of oil hedged during 2018 with an average floor price of approximately $50/Bbl.((3)) "Parsley Energy continues to operate from strong financial footing," said Ryan Dalton, Parsley's CFO. "A differentiated cash position and an advantaged hedge book provide a buffer if oil prices decline and facilitate strategic growth in more constructive commodity scenarios."
For details on Parsley's hedging position, please see the tables below under Supplemental Information and/or the Company's Quarterly Report on Form 10-Q, upon availability, for the three months ended June 30, 2017.
Full-year 2017 Guidance Update
Parsley is increasing guidance for full-year 2017 and 4Q17 daily net production, reflecting broadly stronger well performance and higher NGL volumes. The Company is reducing its estimated full-year 2017 oil percentage to account for its 2Q17 production mix, as discussed above, and for increasing contributions from Wolfcamp C wells. Parsley is also reducing its expected completion count in the Southern Delaware Basin to reflect extended project cycle times earlier this year. Estimated full-year 2017 capital expenditures are unchanged, as fewer expected completions are offset by incremental drilling activity associated with early rig delivery. All other guidance remains unchanged, as well.
2017 2017
Previous Updated
-------- -------
Production
----------
Annual net production (MBoe/d) 65.0-71.0 67.0-73.0
% Oil 68%-73% 67%-70%
4Q17 net production (MBoe/d) 78.0-88.0 80.0-90.0
Capital Program
---------------
Drilling and completion ($MM) $840-$960 $840-$960
Infrastructure and other ($MM) $160-$190 $160-$190
Total development expenditures
($MM) $1,000-$1,150 $1,000-$1,150
% Non-operated 3%-5% 3%-5%
Activity
--------
Gross operated horizontal
completions 130-150 120-140
Midland Basin 95-105 95-105
Delaware Basin 35-45 25-35
Average lateral length ~8,000' ~8,000'
Gross operated vertical completions 5-10 5-10
Average working interest 85%-95% 85%-95%
Unit Costs
----------
Lease operating expenses ($/Boe) $3.50-$4.50 $3.50-$4.50
Cash general and administrative
expenses ($/Boe) $4.00-$5.00 $4.00-$5.00
Production and ad valorem taxes (%
of revenue) 6.0%-7.0% 6.0%-7.0%
Conference Call Information
Parsley Energy will host a conference call and webcast to discuss its results for the second quarter of 2017 on Thursday, August 3 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). Participants should call 877-407-0672 (United States/Canada) or 412-902-0003 (International) 10 minutes before the scheduled time and request the Parsley Energy conference call. A telephone replay will be available shortly after the call through August 10 by dialing 877-660-6853 (United States/Canada) or 201-612-7415 (International). Conference ID: 13666261. A live broadcast will also be available on the internet at www.parsleyenergy.com under the "Events & Presentations" section of the website. The Company has also posted to its website a presentation that supplements the information in this release.
About Parsley Energy, Inc.
Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin in West Texas. For more information, visit the Company's website at www.parsleyenergy.com.
Forward Looking Statements
Certain statements contained in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Parsley Energy's expectations or beliefs concerning future events, and it is possible that the results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Parsley Energy's control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Parsley Energy does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Parsley Energy to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in the Company's filings with the SEC, including its Annual Report on Form 10-K. The risk factors and other factors noted in the Company's SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement.
(1) "Adjusted EBITDAX"
and "adjusted net
income" are not
presented in
accordance with
generally accepted
accounting
principles in the
United States
("GAAP"). Please see
the supplemental
financial
information at the
end of this news
release for a
reconciliation of
the non-GAAP
financial measures
of adjusted EBITDAX
and adjusted net
income to GAAP
financial measures.
(2) Fully undrawn
revolver balance is
net of letters of
credit.
(3) Average floor price
refers to the
Company's weighted
average long put
price for 2018.
- Tables to Follow -
Parsley Energy, Inc. and Subsidiaries
Selected Operating Data
(Unaudited)
Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
------------- -------------- -------------
Net production volumes:
Oil (MBbls) 3,917 3,394 2,157
Natural gas (MMcf) 5,421 4,419 3,154
Natural gas liquids
(MBbls) 1,069 800 566
Total (MBoe) 5,890 4,931 3,249
Average net daily
production (Boe/d) 64,725 54,789 35,703
====== ====== ======
Average sales prices (1) :
Oil, without realized
derivatives (per Bbl) $45.46 $50.01 $42.25
Oil, with realized
derivatives (per Bbl) $45.49 $48.52 $47.49
Natural gas, without
realized derivatives
(per Mcf) $2.39 $2.82 $1.85
Natural gas, with
realized derivatives
(per Mcf) $2.36 $2.80 $1.85
NGLs (per Bbl) $19.02 $21.77 $16.51
Total, without
realized derivatives
(per Boe) $35.89 $40.48 $32.72
Total, with realized
derivatives (per Boe) $35.87 $39.44 $36.20
====== ====== ======
Average costs (per Boe):
Lease operating
expenses $5.03 $3.57 $4.37
Production and ad
valorem taxes $1.93 $2.26 $1.97
Depreciation,
depletion and
amortization $14.15 $13.99 $17.23
General and
administrative
expenses (including
stock-based
compensation) $5.39 $4.88 $5.33
General and
administrative
expenses (cash based) $4.50 $4.02 $4.28
(1) Average prices shown in the table
include transportation and
gathering costs and reflect
prices both before and after the
effects of the Company's realized
commodity hedging transactions.
The Company's calculation of such
effects includes both realized
gains and losses on cash
settlements for commodity
derivative transactions and
premiums paid or received on
options that settled during the
period.
Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except for per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
REVENUES
Oil sales $178,066 $91,129 $347,811 $143,160
Natural gas sales 12,983 5,834 25,450 11,377
Natural gas liquids sales 20,336 9,347 37,749 14,041
Other 2,292 562 3,525 782
----- --- ----- ---
Total revenues 213,677 106,872 414,535 169,360
------- ------- ------- -------
OPERATING EXPENSES
Lease operating expenses 29,631 14,204 47,258 28,102
Production and ad valorem taxes 11,397 6,407 22,559 10,602
Depreciation, depletion and
amortization 83,315 55,988 152,285 105,372
General and administrative
expenses (including stock-
based compensation) 31,761 17,307 55,803 36,606
Exploration costs 2,442 8,978 5,205 9,666
Acquisition costs 7,176 486 8,520 486
Accretion of asset retirement
obligations 193 215 329 385
Other operating expenses 2,503 1,651 4,786 2,547
Total operating expenses 168,418 105,236 296,745 193,766
OPERATING INCOME (LOSS) 45,259 1,636 117,790 (24,406)
------ ----- ------- -------
OTHER INCOME (EXPENSE)
Interest expense, net (20,586) (12,199) (37,551) (23,393)
Loss on sale of property - (469) - (119)
Loss on early extinguishment of
debt - - (3,891) -
Gain (loss) on derivatives 43,514 (27,304) 68,130 (25,216)
Change in TRA liability - - (20,549) -
Other (expense) income (177) (70) 773 (531)
---- --- --- ----
Total other income (expense),
net 22,751 (40,042) 6,912 (49,259)
INCOME (LOSS) BEFORE INCOME
TAXES 68,010 (38,406) 124,702 (73,665)
INCOME TAX (EXPENSE) BENEFIT (12,216) 10,918 (30,618) 20,486
------- ------ ------- ------
NET INCOME (LOSS) 55,794 (27,488) 94,084 (53,179)
LESS: NET (INCOME) LOSS
ATTRIBUTABLE TO NONCONTROLLING
INTERESTS (15,048) 6,111 (23,896) 12,448
------- ----- ------- ------
NET INCOME (LOSS) ATTRIBUTABLE
TO PARSLEY ENERGY, INC.
STOCKHOLDERS $40,746 $(21,377) $70,188 $(40,731)
======= ======== ======= ========
Net income (loss) per common share:
Basic $0.17 $(0.13) $0.30 $(0.28)
Diluted $0.17 $(0.13) $0.30 $(0.28)
Weighted average common shares outstanding:
Basic 245,698 158,662 233,255 147,313
Diluted 246,792 158,662 234,315 147,313
* Certain reclassifications and
adjustments to prior period amounts
have been made to conform with current
presentation.
Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
June 30, 2017 December 31, 2016
------------- -----------------
(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $502,616 $133,379
Restricted cash 3,889 3,290
Accounts receivable:
Joint interest owners and other 17,826 12,698
Oil, natural gas and NGLs 76,621 59,174
Related parties 216 290
Short-term derivative instruments, net 117,825 39,708
Other current assets 8,053 50,949
----- ------
Total current assets 727,046 299,488
------- -------
PROPERTY, PLANT AND EQUIPMENT
Oil and natural gas properties, successful
efforts method 7,803,119 4,063,417
Accumulated depreciation, depletion and
impairment (640,926) (506,175)
-------- --------
Total oil and natural gas properties, net 7,162,193 3,557,242
--------- ---------
Other property, plant and equipment, net 77,197 59,318
------ ------
Total property, plant and equipment, net 7,239,390 3,616,560
--------- ---------
NONCURRENT ASSETS
Long-term derivative instruments, net 109,940 16,416
Other noncurrent assets 9,226 6,318
----- -----
Total noncurrent assets 119,166 22,734
------- ------
TOTAL ASSETS $8,085,602 $3,938,782
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $336,926 $162,317
Revenue and severance taxes payable 87,425 69,452
Current portion of long-term debt 3,806 67,214
Short-term derivative instruments, net 73,660 44,153
Current portion of asset retirement
obligations 5,500 1,818
----- -----
Total current liabilities 507,317 344,954
NONCURRENT LIABILITIES
Long-term debt 1,490,597 1,041,324
Asset retirement obligations 14,157 9,574
Deferred tax liability 10,375 5,483
Payable pursuant to TRA liability 114,876 94,326
Long-term derivative instruments, net 75,104 12,815
Total noncurrent liabilities 1,705,109 1,163,522
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value,
50,000,000 shares authorized, none issued
and outstanding - -
Common stock
Class A, $0.01 par value, 600,000,000
shares authorized, 246,667,121 shares
issued and 246,523,242 shares outstanding
at June 30, 2017 and 179,730,033 shares
issued and 179,590,617 shares outstanding
at December 31, 2016 2,467 1,797
Class B, $0.01 par value, 125,000,000
shares authorized, 67,857,091 and
28,008,573 shares issued and outstanding
at June 30, 2017 and December 31, 2016 679 280
Additional paid in capital 4,582,932 2,151,197
Retained earnings (accumulated deficit) 6,933 (63,255)
Treasury stock, at cost, 143,879 shares and
139,416 shares at June 30, 2017 and
December 31, 2016 (518) (381)
---- ----
Total stockholders' equity 4,592,493 2,089,638
Noncontrolling interest 1,280,683 340,668
--------- -------
Total equity 5,873,176 2,430,306
--------- ---------
TOTAL LIABILITIES AND EQUITY $8,085,602 $3,938,782
========== ==========
Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Six Months Ended June 30,
2017 2016
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $94,084 $(53,179)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and
amortization 152,285 105,372
Accretion of asset retirement
obligations 329 385
Loss on sale of property - 119
Loss on early extinguishment
of debt 3,891 -
Amortization and write off of
deferred loan origination
costs 1,803 1,385
Amortization of bond premium (258) (383)
Stock-based compensation 9,460 6,150
Deferred income tax expense
(benefit) 30,476 (20,486)
Change in TRA liability 20,549 -
(Gain) loss on derivatives (68,130) 25,216
Net cash received for
derivative settlements 2,115 25,133
Net cash (paid) received for
option premiums (13,281) 7,014
Net premiums (paid) received
on options that settled
during the period (9,917) 20,965
Other 261 5,677
Changes in operating assets and liabilities, net
of acquisitions:
Restricted cash (599) (1,019)
Accounts receivable (22,575) (52,521)
Accounts receivable-related
parties 74 (345)
Other current assets 56,235 (39,037)
Other noncurrent assets (842) 482
Accounts payable and accrued
expenses 52,672 12,388
Revenue and severance taxes
payable 17,973 8,487
Other noncurrent liabilities - 2
--- ---
Net cash provided by
operating activities 326,605 51,805
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Development of oil and
natural gas properties (361,742) (252,764)
Acquisitions of oil and
natural gas properties (2,088,286) (548,724)
Additions to other property
and equipment (19,520) (6,487)
Proceeds from sales and
exchanges of oil and natural
gas properties 13,557 -
Other (630) -
Net cash used in investing
activities (2,456,621) (807,975)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long-term
debt 452,480 200,000
Payments on long-term debt (67,411) (503)
Debt issuance costs (9,206) (4,561)
Proceeds from issuance of
common stock, net 2,123,527 659,387
Repurchase of common stock (137) (213)
Net cash provided by
financing activities 2,499,253 854,110
--------- -------
Net increase in cash and cash
equivalents 369,237 97,940
Cash and cash equivalents at
beginning of period 133,379 343,084
------- -------
Cash and cash equivalents at
end of period $502,616 $441,024
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $15,102 $21,241
======= =======
Cash paid for income taxes $200 $315
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Asset retirement obligations
incurred, including changes
in estimate $8,084 $(1,257)
====== =======
Additions (reductions) to oil
and natural gas properties -
change in capital accruals $121,663 $(6,281)
======== =======
Additions to other property
and equipment funded by
capital lease borrowings $2,500 $505
====== ====
Common stock issued for oil
and natural gas properties $1,183,501 $ -
========== === ===
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDAX
Adjusted EBITDAX is not a measure of net income as determined by GAAP. Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDAX as net income (loss) before depreciation, depletion and amortization, exploration costs, net interest expense, income tax expense (benefit), change in Tax Receivable Agreement ("TRA") liability, stock-based compensation, acquisition costs, (gain) loss on sale of property, asset retirement obligation accretion expense, loss on early extinguishment of debt, (gain) loss on derivatives, net settlements on derivative instruments, and net premium realizations on options that settled during the period.
Management believes Adjusted EBITDAX is useful because it allows the Company to more effectively evaluate its operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company excludes the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of the Company's operating performance. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. The Company's computations of Adjusted EBITDAX may not be comparable to other similarly titled measure of other companies. The Company believes that Adjusted EBITDAX is a widely followed measure of operating performance.
The following table presents a reconciliation of Adjusted EBITDAX to the GAAP financial measure of net income (loss) for each of the periods indicated.
Parsley Energy, Inc. and Subsidiaries
Adjusted EBITDAX
(Unaudited, in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Adjusted EBITDAX reconciliation to net
income (loss):
Net income (loss)
attributable to
Parsley Energy, Inc.
stockholders $40,746 $(21,377) $70,188 $(40,731)
Net income (loss)
attributable to
noncontrolling
interests 15,048 (6,111) 23,896 (12,448)
Depreciation,
depletion and
amortization 83,315 55,988 152,285 105,372
Exploration costs 2,442 8,978 5,205 9,666
Interest expense, net 20,586 12,199 37,551 23,393
Income tax expense
(benefit) 12,216 (10,918) 30,618 (20,486)
EBITDAX 174,353 38,759 319,743 64,766
------- ------ ------- ------
Change in TRA
liability - - 20,549 -
Stock-based
compensation 5,251 3,391 9,460 6,150
Acquisition costs 7,176 486 8,520 486
Loss on sale of
property - 469 - 119
Accretion of asset
retirement
obligations 193 215 329 385
Loss on early
extinguishment of
debt - - 3,891 -
(Gain) loss on
derivatives (43,514) 27,304 (68,130) 25,216
Net settlements on
derivative
instruments 4,973 747 4,672 19,187
Net premium
realization on
options that settled
during the period (5,063) 10,551 (9,917) 20,965
Adjusted EBITDAX $143,369 $81,922 $289,117 $137,274
======== ======= ======== ========
* Certain reclassifications to prior
period amounts have been made to
conform with current presentation.
Adjusted Net Income
Adjusted net income is a performance measure used by management to evaluate financial performance, prior to non-cash gains or losses on derivatives, net cash received for derivative settlements, net premiums received on options that settled during the period, (gain) loss on sale of property, exploration costs, acquisition costs, loss on early extinguishment of debt, and change in TRA liability, while adjusting for noncontrolling interest and the associated changes in estimated income tax. Management believes adjusted net income is useful because it may enhance investors' ability to assess Parsley's historical and future financial performance. Adjusted net income should not be considered an alternative to consolidated net income, operating income, or any other measure of financial performance presented in accordance with GAAP. The following table presents a reconciliation of the non-GAAP financial measure of adjusted net income to the GAAP financial measure of net income (loss).
Parsley Energy, Inc. and Subsidiaries
Adjusted Net Income and Net Income Per Share
(Unaudited, in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss) -as
reported $40,746 $(21,377) $70,188 $(40,731)
Adjustments for certain non-cash and
unusual items:
(Gain) loss on
derivatives (43,514) 27,304 (68,130) 25,216
Net settlements on
derivative instruments 4,973 747 4,672 19,187
Net premium realization
on options that
settled during the
period (5,063) 10,551 (9,917) 20,965
Loss on sale of
property - 469 - 119
Exploration costs 2,442 8,978 5,205 9,666
Acquisition costs 7,176 486 8,520 486
Loss on early
extinguishment of debt - - 3,891 -
Change in TRA liability - - 20,549 -
Noncontrolling interest - (6,085) - (12,441)
Change in estimated
income tax 5,762 (14,224) 11,658 (21,077)
Adjusted net income $12,522 $6,849 $46,636 $1,390
======= ====== ======= ======
Net income (loss) per
diluted share -as
reported(1) $0.17 $(0.13) $0.30 $(0.28)
Adjustments for certain non-cash and
unusual items:
(Gain) loss on
derivatives $(0.18) $0.14 $(0.29) $0.15
Net settlements on
derivative instruments 0.02 - 0.02 0.11
Net premium realization
on options that
settled during the
period (0.02) 0.06 (0.04) 0.12
Loss on sale of
property - - - -
Exploration costs 0.01 0.05 0.02 0.05
Acquisition costs 0.03 - 0.04 -
Loss on early
extinguishment of debt - - 0.02 -
Change in TRA liability - - 0.09 -
Noncontrolling interest - (0.03) - (0.07)
Change in estimated
income tax 0.02 (0.07) 0.04 (0.12)
Adjustment for change
in weighted average
diluted share
count(1)(2) - 0.02 - 0.05
Adjusted net income per
diluted share(2) $0.05 $0.04 $0.20 $0.01
===== ===== ===== =====
Basic weighted average
shares outstanding -
as reported(1) 245,698 158,662 233,255 147,313
Effect of dilutive securities:
Class B Common Stock - - - -
Restricted Stock and
Restricted Stock Units 1,094 - 1,060 -
Diluted weighted
average shares
outstanding -as
reported(1) 246,792 158,662 234,315 147,313
======= ======= ======= =======
Effect of dilutive securities:
Class B Common Stock - 32,145 - 32,145
Restricted Stock and
Restricted Stock Units - 898 - 796
Diluted weighted
average shares
outstanding for
adjusted net income(2) 246,792 191,705 234,315 180,254
======= ======= ======= =======
(1) For the three and six
months ended June
30, 2016, the number
of weighted average
diluted shares used
to calculate actual
net income per share
is based on the fact
that, under the "if
converted" and
treasury stock
methods, Class B
Common Stock and
restricted stock and
restricted stock
units were not
recognized because
they would have been
antidilutive.
(2) For purposes of
calculating adjusted
net income per
diluted share for
the three and six
months ended June
30, 2016, Class B
Common Stock was
dilutive using the
"if converted"
method and
restricted stock and
restricted stock
units were dilutive
using the treasury
stock method.
Supplemental Information
Parsley Energy, Inc. and Subsidiaries
Open Crude Oil Derivatives Positions (1)
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Put Spreads (MBbls/d) (2) 35.7 45.5 26.7 26.4 26.1 26.1 6.7 6.6
Put Price ($/Bbl) $51.23 $50.96 $52.81 $51.88 $50.00 $50.00 $50.00 $50.00
Short Put Price ($/Bbl) $41.14 $41.43 $41.88 $41.88 $40.00 $40.00 $40.00 $40.00
Three Way Collars (MBbls/d) (3) 21.7 28.0 31.0 31.0 8.3 8.2 8.2 8.2
Short Call Price ($/Bbl) $68.85 $70.79 $75.65 $75.65 $80.40 $80.40 $80.40 $80.40
Put Price ($/Bbl) $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00
Short Put Price ($/Bbl) $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00
Premium Realization ($ MM) (4) $(12.5) $(14.6) $(16.1) $(14.5) $(13.7) $(13.7) $(4.2) $(4.2) $(1.5) $(1.5)
Collars (MBbls/d) (5) 4.0 4.0 3.0 3.0 3.0 3.0
Short Call Price ($/Bbl) $59.73 $59.98 $61.31 $61.31 $61.31 $61.31
Put Price ($/Bbl) $46.75 $46.75 $45.67 $45.67 $45.67 $45.67
Swaps (MBbls/d) 0.5 0.5 0.5 0.5 0.5 0.5
Strike Price ($/Bbl) $55.00 $55.00 $55.00 $55.00 $55.00 $55.00
Total MBbls/d Hedged 40.2 50.0 51.8 57.9 60.6 60.6 15.0 14.8 8.2 8.2
Mid-Cush Basis Swaps (MBbls/d) 16.7 16.7 4.5 4.5 4.5 4.5
Swap Price ($/Bbl) $(1.00) $(1.00) $(0.91) $(0.91) $(0.91) $(0.91)
Parsley Energy, Inc. and Subsidiaries
Open Natural Gas Derivatives Positions (1)
3Q17 4Q17 1Q18
---- ---- ----
Three
Way
Collars
(MMBtu/
d) (3) 15.5 15.5 26.7
Call
Price
($/MMBtu) $4.02 $4.02 $4.70
Put
Price
($/MMBtu) $2.75 $2.75 $3.25
Short
Put
Price
($/MMBtu) $2.36 $2.36 $2.60
Swaps
(MMBtu/
d) 5.0 5.0 5.0
Strike
Price
($/MMBtu) $3.39 $3.46 $3.50
Total
MMBtu/
d
Hedged 20.5 20.5 31.7
(1) As of 8/1/2017
(2) When the NYMEX price is
above the put price,
Parsley receives the
NYMEX price. When the
NYMEX price is between
the put price and the
short put price,
Parsley receives the
put price. When the
NYMEX price is below
the short put price,
Parsley receives the
NYMEX price plus the
difference between the
short put price and the
put price.
(3) Functions similarly to
put spreads except that
when the index price is
at or above the call
price, Parsley receives
the call price.
(4) Premium realizations
represent net premiums
paid (including
deferred premiums),
which are recognized as
income or loss in the
period of settlement.
(5) When the NYMEX price is
above the call price,
Parsley receives the
call price. When the
NYMEX price is below
the put price, Parsley
receives the put price.
When the NYMEX price is
between the call and
put prices, Parsley
receives the NYMEX
price.
SOURCE Parsley Energy, Inc.
