Parsley Energy Increases Quarterly Dividend By 67%; Lowers 2020 Capital Budget And Provides 2020 Guidance
AUSTIN, Texas, Jan. 23, 2020 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the "Company") today announced that its Board of Directors increased the Company's quarterly dividend from $0.03 per share to $0.05 per share((1)). Additionally, Parsley provided an overview of its 2020 development program and updated expectations for certain full-year 2019 results.
Summary Comment and Outlook
"Parsley's 2019 action plan was a resounding success as our team delivered a step-change improvement in capital efficiency and inflected to free cash flow generation ahead of schedule," commented Matt Gallagher, Parsley's President and CEO. "We remain committed to an enhanced free cash flow profile in 2020, and, importantly, we have reinforced this commitment with a meaningful increase to our regular dividend program. Integration of our Jagged Peak acquisition has our urgent focus and I am proud of our teams' collective dedication and efforts out of the gate. Ultimately, though, 'well done' is better than 'well said'. We look forward to delivering on our 2020 objectives in the coming quarters."
2020 Guidance
Parsley is reiterating the development plan outlined in its preliminary 2020 outlook issued on October 14, 2019, and plans to deploy 15 development rigs and four-to-five frac spreads on average in 2020. Parsley is also reaffirming its pro forma 2020 oil production outlook, but is decreasing its pro forma 2020 capital budget range at the midpoint, reflecting continued efficiency gains and savings on services following a comprehensive integrated budgeting process. Parsley is also providing initial guidance on its projected unit costs for 2020.
Parsley's baseline capital budget assumes a $50 WTI oil price. In this context, the Company would expect to generate free cash flow((2)) of at least $200 million during 2020. In a higher oil price scenario, Parsley would expect to generate additional free cash flow and would not plan to increase its development activity in 2020. For further detail on Parsley's 2020 guidance, please see the table below.
Preliminary
Closing
Updated
2020 Outlook(3)
Adjustment(4)
2020 Guidance
Production
---
Annual net oil
production (MBo/d)
126.0-134.0 (1.0)
125.0-133.0
Annual net total
production (MBoe/d)
200.0-210.0
Capital Program
---
Total development
expenditures ($MM)
$1,600-$1,900 ($15)
$1,600-$1,800
Drilling, Completion,
& Equipment ($MM)
$1,500-$1,650
Other ($MM)(5)
$100-$150
Activity
---
Gross operated
horizontal POPs(6)
180-190
Midland Basin (% of
total) ~65%
Delaware Basin (% of
total) ~35%
Average lateral
length
9,500'-10,000'
Gross operated
lateral footage
(000's)
1,710'-1,900'
Average working
interest ~90%
Unit Costs
---
Lease operating
expenses ($/Boe)
$3.50-$4.50
Cash general and
administrative
expenses ($/Boe)(7)
$2.00-$2.40
Production and ad
valorem taxes (% of
total revenue) 6%-7%
Return of Capital Program
Parsley's Board of Directors approved an increase to the Company's quarterly dividend from $0.03 per share to $0.05 per share((1)). The dividend is payable on March 20, 2020, to shareholders of record on March 10, 2020.
1Q20 Guidance
Parsley closed its acquisition of Jagged Peak on January 10, 2020. After adjusting for the transaction closing date((4)), the Company expects first quarter 2020 net oil production to average 123-129 MBo/d. With a full quarter of contribution from Jagged Peak, Parsley would expect first quarter pro forma 2020 net oil production to average 126-132 MBo/d.
Fourth Quarter and Full-Year 2019 Update
Activity Overview
During the fourth quarter of 2019, Parsley placed on production 37 gross operated horizontal wells with more than half of those wells coming online in December. Parsley expects to report fourth quarter capital expenditures of approximately $275-285 million, translating to full-year 2019 capital expenditures below the low end of the full-year guidance range of $1.40-$1.47 billion. Fourth quarter development spending decreased relative to third quarter spending, driven by lower well costs and quarter-over-quarter decreases in facilities and infrastructure spending. For the fourth quarter of 2019, Parsley expects net oil production of 89.5-89.7 MBo per day.
Parsley continues to lower its cost structure in the Delaware Basin, recently completing a four-well project in Pecos County with an estimated average drilling, completion and equipment cost of under $1,100 per lateral foot.
"The Parsley team finished the year strong, carrying efficient operational momentum through year-end and paving the way for a compelling start to 2020," said David Dell'Osso, Parsley's COO. "I am proud of the strides our team continues to make in the Delaware Basin, and look forward to delivering the capital efficiency gains we have previously outlined across our recently expanded acreage footprint."
4Q19 Earnings Release and Conference Call Information
Parsley Energy plans to report fourth quarter 2019 financial results on Wednesday, February 19, 2020 after the close of trading on the New York Stock Exchange. The Company will host its quarterly conference call at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) on Thursday, February 20, 2020. Participants should call 877-709-8150 (United States/Canada) or 201-689-8354 (International) 10 minutes before the scheduled time and request the Parsley Energy earnings conference call. A telephone replay will be available through February 27, 2020 by dialing 877-660-6853 (United States/Canada) or 201-612-7415 (International). Conference ID: 13698261. A live broadcast will also be available on the internet at www.parsleyenergy.com under the "Investors-Events & Presentations" section of the website.
About Parsley Energy, Inc.
Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration, and production of unconventional oil and natural gas properties in the Permian Basin. For more information, visit the Company's website at www.parsleyenergy.com.
Cautionary Statement Regarding 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 Securities and Exchange Commission ("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) Dividend to be paid
to all Company
equity holders,
including
shareholders of
Class A common stock
and holders of
Parsley Energy, LLC
units/Class B
common stock.
(2) As used in this news
release, free cash
flow (outspend), a
non-GAAP financial
measure, means net
cash provided by
operating activities
before transaction
expenses related to
the acquisition of
Jagged Peak Energy
Inc. ("Jagged Peak")
and changes in
operating assets and
liabilities, net of
acquisitions, less
accrual-based
development capital
expenditures. The
Company is unable to
present a
reconciliation of
forward-looking
free cash flow
(outspend) because
components of the
calculation,
including changes in
working capital
accounts, are
inherently
unpredictable.
Additionally,
estimating the most
directly comparable
GAAP measure with
the required
precision necessary
to provide a
meaningful
reconciliation is
extremely difficult
and could not be
accomplished without
unreasonable effort.
(3) Assumes full-year
contribution of the
acquisition of
Jagged Peak Energy
announced October
14, 2019 and closed
on January 10, 2020.
(4) "Closing Adjustment"
reflects net oil
production and
development
expenditures
attributable to
Jagged Peak during
the period beginning
on January 1, 2020
and ending on the
closing of the
acquisition of
Jagged Peak on
January 10, 2020.
(5) Other capital
expenditures
includes non-
operated activity,
water
infrastructure, gas
gathering
infrastructure, and
geological/
geophysical.
(6) Wells placed on
production. Includes
wells placed on
production by Jagged
Peak between January
1, 2020 and January
10, 2020.
(7) Cash general and
administrative
expense ("cash G&A")
is a non-GAAP
financial measure.
As used in this news
release, cash G&A
means GAAP general
and administrative
expense, exclusive
of the Company's
stock based
compensation.
View original content to download multimedia:http://www.prnewswire.com/news-releases/parsley-energy-increases-quarterly-dividend-by-67-lowers-2020-capital-budget-and-provides-2020-guidance-300992358.html
SOURCE Parsley Energy, Inc.
