Parsley Energy Provides Supplementary Update On 2020 And 2021 Hedge Program

AUSTIN, Texas, March 13, 2020 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the "Company") today provided an update to its oil hedge position for 2020 and 2021. Parsley's baseline capital budget assumes $30-$35 WTI oil price for the remainder of 2020.

Hedging Update

Parsley continues to actively manage its hedge position and has continued to restructure some of its existing 2020 hedge positions to provide additional protection against lower oil prices by reducing certain short put prices. Additionally, Parsley has also moved aggressively to protect its 2021 cash flow by adding swap positions. The Company would now expect net settlement gains of approximately $400 million and $300 million during 2020 and 2021, respectively, under a go forward $30 WTI oil price and current basis differentials((1)). This represents an increase of nearly $400 million in aggregate downside protection from the Company's hedge position on March 4, 2020((1)).

"In a world of uncertainty, we are taking decisive actions to light a path that allows us to deliver an advantaged free cash generating model, support our current dividend, and preserve long-term shareholder value in a $30-$35 WTI oil environment," commented Matt Gallagher, Parsley's President and CEO. "We will continue to be adaptive and responsive in these challenging times - demonstrating the resilience of our assets and our team."

For details on Parsley's updated hedge position as of March 12, 2020, please see the tables below.

                                Open Oil Derivative
                                 Positions

    ---



                                                       1Q20    2Q20     3Q20      4Q20      1Q21       2Q21      3Q21       4Q21



                                OPTION CONTRACTS:

    ---

                   CUSHING


                   Swaps -Cushing
                    (MBbls/d)(2)                       11.0     11.0      11.0       11.0


        Swap Price ($/Bbl)                           $57.87   $57.87    $57.87     $57.87


                   MIDLAND


                   Three Way Collars -
                    Midland (MBbls/d)(3)               27.0     22.5      15.8       15.8


        Short Call Price
         ($/Bbl)                                     $61.81   $54.63    $56.03     $56.03


        Long Put Price ($/Bbl)                       $51.10   $43.39    $45.21     $45.21


        Short Put Price
         ($/Bbl)                                     $41.10   $33.39    $35.21     $35.21


                   Put Spreads -Midland
                    (MBbls/d)(4)                        1.1      3.3


        Long Put Price ($/Bbl)                       $50.00   $50.00


        Short Put Price
         ($/Bbl)                                     $40.00   $40.00


                   Two Way Collars -
                    Midland (MBbls/d)(5)                2.2      6.6       6.5        6.5


        Short Call Price
         ($/Bbl)                                     $48.00   $48.00    $48.00     $48.00


        Long Put Price ($/Bbl)                       $43.00   $43.00    $43.00     $43.00


                   Swaps -Midland
                    (MBbls/d)(2)                        3.3      3.3                           5.0         5.0        5.0         5.0


        Swap Price ($/Bbl)                           $55.20   $55.20                        $40.50      $40.50     $40.50      $40.50


                   MAGELLAN EAST HOUSTON
                    ("MEH")


                   Three Way Collars -
                    MEH (MBbls/d)(3)                   46.4     51.0      33.9       33.9       13.3        13.2


        Short Call Price
         ($/Bbl)                                     $71.95   $64.07    $59.86     $59.86     $64.38      $64.38


        Long Put Price ($/Bbl)                       $57.14   $50.95    $45.74     $45.74     $53.12      $53.12


        Short Put Price
         ($/Bbl)                                     $47.14   $40.95    $35.74     $35.74     $43.12      $43.12


                   Put Spreads - MEH
                    (MBbl/d)(4)                         2.7      8.2      24.5       24.5


        Long Put Price ($/Bbl)                       $50.00   $50.00    $44.67     $44.67


        Short Put Price
         ($/Bbl)                                     $40.00   $40.00    $34.67     $34.67


                   Swaps -MEH (MBbls/
                    d)(2)                                                4.2        4.2       52.0        52.0       52.0        52.0


        Swap Price ($/Bbl)                                            $56.30     $56.30     $41.17      $41.17     $41.17      $41.17


                   BRENT


                   Three Way Collars -
                    Brent (MBbls/d)(3)                          4.9       3.3        3.3


        Short Call Price
         ($/Bbl)                                             $75.00    $75.00     $75.00


        Long Put Price ($/Bbl)                               $62.00    $62.00     $62.00


        Short Put Price
         ($/Bbl)                                             $52.00    $52.00     $52.00


                   Two Way Collars -
                    Brent (MBbls/d)(5)                          3.3       6.5        6.5


        Short Call Price
         ($/Bbl)                                             $52.10    $52.30     $52.30


        Long Put Price ($/Bbl)                               $47.10    $47.30     $47.30


                   Swaps -Brent (MBbls/
                    d)(2)                                       3.0       3.0        3.0       22.0        22.0       22.0        22.0


        Swap Price ($/Bbl)                                   $50.01    $50.01     $50.01     $44.44      $44.44     $44.44      $44.44


                   Total Hedged Volume
                    (MBbls/d)                          93.8    117.1     108.7      108.7       92.3        92.2       79.0        79.0


                   Premium Realization
                    ($MM)(6)                        ($13.4)  ($0.6)   ($3.5)    ($3.5)    ($2.0)     ($2.0)


                                BASIS SWAPS:

    ---

                   Midland-Cushing Basis
                    Swaps (MBbls/d)(7)                 18.9     18.9      14.0       14.0


        Basis Differential
         ($/Bbl)                                    $(1.00) $(1.00)  $(1.44)   $(1.44)

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)              Net
                                  settlement
                                  gains
                                  represent
                                  the
                                  aggregate
                                  settlements
                                  from oil
                                  derivatives
                                  during the
                                  applicable
                                  period, less
                                  premium
                                  realizations
                                  (and
                                  deferred
                                  premiums).
                                  For the
                                  purposes of
                                  settlement
                                  gains
                                  discussed in
                                  this news
                                  release, WTI
                                  Cushing is
                                  assumed to
                                  be
                                  $30.00/Bbl
                                  from April
                                  2020 through
                                  December
                                  2021. For
                                  the same
                                  time period,
                                  Midland,
                                  MEH, and
                                  Brent prices
                                  are assumed
                                  to be
                                  $30.00/Bbl
                                  plus market
                                  differentials
                                  to WTI
                                  Cushing as
                                  of March 12,
                                  2020.



              (2)              Parsley
                                  receives the
                                  swap price.



              (3)              When the
                                  reference
                                  price
                                  (Midland,
                                  MEH, or
                                  Brent) is at
                                  or above the
                                  call price,
                                  Parsley
                                  receives the
                                  call price.
                                  When the
                                  reference
                                  price is
                                  between the
                                  long put
                                  price and
                                  the short
                                  put price,
                                  Parsley
                                  receives the
                                  long put
                                  price. When
                                  the
                                  reference
                                  price is
                                  below the
                                  short put
                                  price,
                                  Parsley
                                  receives the
                                  reference
                                  price plus
                                  the
                                  difference
                                  between the
                                  short put
                                  price and
                                  the long put
                                  price.



              (4)              When the
                                  reference
                                  price is
                                  above the
                                  long put
                                  price,
                                  Parsley
                                  receives the
                                  reference
                                  price. When
                                  the
                                  reference
                                  price is
                                  between the
                                  long put
                                  price and
                                  the short
                                  put price,
                                  Parsley
                                  receives the
                                  long put
                                  price. When
                                  the
                                  reference
                                  price is
                                  below the
                                  short put
                                  price,
                                  Parsley
                                  receives the
                                  reference
                                  price plus
                                  the
                                  difference
                                  between the
                                  short put
                                  price and
                                  the long put
                                  price.



              (5)              When the
                                  reference
                                  price is
                                  above the
                                  short call
                                  price,
                                  Parsley
                                  receives the
                                  short call
                                  price. When
                                  the
                                  reference
                                  price is
                                  between the
                                  short call
                                  price and
                                  the put
                                  price,
                                  Parsley
                                  receives the
                                  reference
                                  price. When
                                  the
                                  reference
                                  price is
                                  below the
                                  put price,
                                  Parsley
                                  receives the
                                  put price.



              (6)              Premium
                                  realizations
                                  represent
                                  net premiums
                                  paid
                                  (including
                                  deferred
                                  premiums),
                                  which are
                                  recognized
                                  as income or
                                  loss in the
                                  period of
                                  settlement.



              (7)              Swaps that
                                  fix the
                                  basis
                                  differentials
                                  representing
                                  the index
                                  prices at
                                  which
                                  Parsley
                                  sells its
                                  oil and gas
                                  produced in
                                  the Permian
                                  Basin less
                                  the WTI
                                  Cushing
                                  price.

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SOURCE Parsley Energy, Inc.