PARSLEY ENERGY, INC. AUSTIN, Texas, Nov. 7, 2017 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the "Company") today announced financial and operating results for the quarter ended September 30, 2017. The Company has posted to its website a presentation that supplements the information in this release.
Third Quarter 2017 Highlights
-- Net production averaged 71.5 MBoe per day, up 11% versus 2Q17 and 66%
year-over-year. Daily net oil production increased 10% versus 2Q17 and
63% year-over-year.
-- The Company continues to execute acreage trades that optimize the
development potential of its Midland Basin footprint. Net of acreage
traded away, Parsley added more than 1.2 million net lateral feet to the
Company's horizontal drilling inventory through trades executed since
its last quarterly update in August. Including this footage, Parsley has
added approximately 2.6 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 2017, while
consolidating key development areas.
-- Parsley built upon an encouraging 2Q17 result from a well utilizing a
compressed stage completion design with several additional compressed
stage tests during 3Q17. Relative to offset wells utilizing the
Company's standard completion design, these compressed stage wells in
the Midland Basin exhibit a meaningful uplift in oil production
accompanied by a more modest cost increase, translating to an enhanced
return profile.
-- The Company amended its revolving credit agreement on October 11, 2017,
thereby increasing its borrowing base to $1.8 billion while maintaining
the Company's elected commitment amount of $1.0 billion. As of the end
of 3Q17, pro forma for the October issuance of $700 million of senior
unsecured notes due 2027, liquidity stands at approximately $1.9
billion, including $934 million of cash on hand.
Preliminary 2018 Outlook
-- Parsley's preliminary 2018 capital program targets high-margin oil
volume growth with top-tier capital efficiency on a steady development
pace.
-- The Company estimates that capital expenditures of $1.35-$1.55 billion
would translate to oil production of 67.5-72.5 MBo per day.
-- While almost half of the wells Parsley has drilled and completed over
the past four quarters have been located in new counties, targeted new
formations, and/or implemented new spacing arrangements, the Company
intends to focus on relatively established areas, formations, and
configurations in 2018.
"Parsley Energy's core objective is to create long-term shareholder value by investing large amounts of capital at high rates of return," said Bryan Sheffield, Parsley's Chairman and CEO. "Having added almost 100,000 net acres and essentially doubled our activity level since the beginning of the year, we intend to stabilize at a measured development pace that prioritizes operational continuity and advances our progress toward free cash flow generation. Based on the momentum we have generated and our track record of capital efficient investment, if we were to maintain our current development pace for the next two years, at current strip prices we would expect to generate free cash flow from operations by the end of 2019. In the interim, we would expect to fund the associated development program entirely with operating cash flow and current cash on hand. In addition, with services and equipment largely secured and a robust hedge position in place, we have taken steps to insure a compelling 2018 development program."
Operational Highlights
During the third quarter, the Company spud 38 and completed 36 gross horizontal wells. Parsley's working interest on completed wells was approximately 97%, with an average completed lateral length of approximately 7,700 feet. Drilling and completion activity was concentrated in the Midland Basin, where the Company spud 24 and completed 27 gross operated horizontal wells; the balance were spud and completed in the Southern Delaware Basin.
In light of enhanced lease geometry as facilitated by recent acreage trades, the Company anticipates a significant step up in the average lateral lengths of the wells it will bring online in future periods. Through the end of 2018, for example, the Company expects that the wells it turns to production will be characterized by average lateral lengths of more than 9,000 feet.
Production Trends
Parsley is replacing its one million Boe type curve (based on a 7,000 foot lateral) with a 1.6 million Boe Midland Basin reference curve (based on a 10,000 foot lateral). This revised Midland Basin curve better reflects the Company's expanded acreage footprint, recognizes the shift to higher average lateral lengths, and captures incremental gas and NGL production based on actual results. The Company is also introducing a 1.5 million Boe reference curve for the Southern Delaware Basin (likewise based on a 10,000 foot lateral). Details on these new curves can be found in the 3Q17 investor presentation posted to the Company's website.
Parsley continued to deliver solid well performance during 3Q17, helping to offset previously disclosed impacts from Hurricane Harvey-related curtailments. The 20 Midland Basin wells that achieved 30-day peak production periods since the Company's last quarterly update registered an average peak 30-day rate of 1,177 Boe per day with an average lateral length of 7,229' and an average three-stream oil cut of 72%. The four Southern Delaware wells that reached peak production since the Company's last update achieved an average 30-day initial production rate of 1,333 Boe per day with an average lateral length of 7,867' and an average three-stream oil cut of 67%.
Parsley's first well targeting the Wolfcamp C formation, the Taylor 45-33-4601H, continues to generate robust volumes, with cumulative production of over 525 MBoe (56% oil) after 240 days. The Taylor well achieved payout within six months and was still producing over 700 Bbls of oil per day after eight months on production. The Company's second Wolfcamp C well, the Paige 13A-12A-4810H, reported a peak 60-day production rate of nearly 1,600 Boe per day (~56% oil) and has generated cumulative volumes that are consistent with the Company's Midland Basin reference curve.
Parsley built upon an encouraging 2Q17 result from a well utilizing a compressed stage completion design with six additional compressed stage tests during 3Q17. These seven wells were drilled with one-mile laterals and completed with 50 stages on average, equating to 100-foot stage spacing versus Parsley's heretofore standard design of 170-foot stage spacing. Compared to the nearest offset wells using a standard stage spacing design, these seven compressed stage wells have registered a 10-25% uplift in cumulative oil production, with an incremental well cost of 5-7%. This cost/benefit relationship continues to imply a compelling economic profile, motivating additional tests during 2018.
Financial Highlights
During 3Q17, the Company recorded net loss attributable to its stockholders of $13.3 million, or $0.05 per weighted average share, compared to net income of $40.7 million, or $0.17 per weighted average share, during 2Q17. 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 3Q17 was $29.3 million, or $0.12 per diluted share, compared to $12.5 million, or $0.05 per diluted share, in 2Q17.((1))
Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense ("Adjusted EBITDAX") for 3Q17 was $164.9 million, up 15% compared to 2Q17.((1))
During the third quarter, Parsley successfully reduced production costs on recently acquired wells, leading to an 11% decrease in lease operating expense ("LOE") per Boe to $4.49 in 3Q17 from $5.03 in 2Q17. Parsley reported general and administrative expense ("G&A") per Boe of $5.10, down 5% versus 2Q17. The Company reported cash G&A per Boe, which excludes stock-based compensation expense, of $4.32, down 4% over the same period. Depreciation, depletion, and amortization expense per Boe increased to $14.41 in 3Q17 from $14.15 in 2Q17.
Parsley reported capital expenditures of $307 million during the quarter, comprised of $281 million for drilling and completion and $26 million for facilities and infrastructure. In addition to spending associated with the 38 horizontal spuds and 36 horizontal completions noted above, 3Q17 capital expenditures include expenses associated with drilling and completing three saltwater disposal wells.
Strong Balance Sheet and Robust Hedge Position
As of September 30, 2017, pro forma for the October issuance of $700 million of senior unsecured notes due 2027, the Company had approximately $1.9 billion of liquidity, consisting of $934 million of cash on hand and an undrawn amount of $997.3 million on the Company's revolver.((2)) Based on the midpoint of Parsley's preliminary 2018 oil production outlook, the Company is fully hedged through 2018 with an average floor price of approximately $50/Bbl.((3))
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 September 30, 2017.
Conference Call Information
Parsley Energy will host a conference call and webcast to discuss its results for the third quarter of 2017 on Wednesday, November 8 at 9:00 a.m. Eastern Time (8:00 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 November 15 by dialing 877-660-6853 (United States/Canada) or 201-612-7415 (International). Conference ID: 13671668. 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
definitions
and
reconciliations
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
September 30, 2017 June 30, 2017 September 30, 2016
------------------ ------------- ------------------
Net production volumes:
Oil (MBbls) 4,342 3,917 2,669
Natural gas (MMcf) 6,265 5,421 3,553
Natural gas liquids
(MBbls) 1,194 1,069 695
Total (MBoe) 6,581 5,890 3,956
Average net daily
production (Boe/d) 71,534 64,725 43,000
====== ====== ======
Average sales prices (1) :
Oil, without realized
derivatives (per Bbl) $45.80 $45.46 $42.23
Oil, with realized
derivatives (per Bbl) $45.51 $45.49 $46.19
Natural gas, without
realized derivatives
(per Mcf) $2.49 $2.39 $2.38
Natural gas, with
realized derivatives
(per Mcf) $2.45 $2.36 $2.38
NGLs (per Bbl) $22.23 $19.02 $15.50
Total, without realized
derivatives (per Boe) $36.62 $35.89 $33.35
Total, with realized
derivatives (per Boe) $36.39 $35.87 $36.03
====== ====== ======
Average costs (per Boe):
Lease operating
expenses $4.49 $5.03 $4.15
Production and ad
valorem taxes $2.25 $1.93 $2.12
Depreciation, depletion
and amortization $14.41 $14.15 $16.62
General and
administrative
expenses (including
stock-based
compensation) $5.10 $5.39 $6.24
General and
administrative
expenses (cash based) $4.32 $4.50 $5.40
(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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
REVENUES
Oil sales $198,865 $112,705 $546,676 $255,865
Natural gas sales 15,601 8,457 41,051 19,834
Natural gas liquids sales 26,547 10,770 64,296 24,811
Other 8 605 3,533 1,388
--- --- ----- -----
Total revenues 241,021 132,537 655,556 301,898
------- ------- ------- -------
OPERATING EXPENSES
Lease operating expenses 29,525 16,407 76,783 44,509
Production and ad valorem taxes 14,808 8,391 37,367 18,993
Depreciation, depletion and
amortization 94,819 65,741 247,104 171,113
General and administrative expenses
(including stock-based
compensation) 33,573 24,695 89,376 61,301
Exploration costs 88 3,113 5,293 12,779
Acquisition costs 2,449 440 10,969 926
Accretion of asset retirement
obligations 268 190 597 575
Other operating expenses 2,419 1,220 7,205 3,767
Total operating expenses 177,949 120,197 474,694 313,963
OPERATING INCOME (LOSS) 63,072 12,340 180,862 (12,065)
------ ------ ------- -------
OTHER INCOME (EXPENSE)
Interest expense, net (21,866) (15,561) (59,417) (38,954)
Loss on sale of property - - - (119)
Loss on early extinguishment of
debt - - (3,891) -
(Loss) gain on derivatives (61,955) 1,374 6,175 (23,842)
Change in TRA liability - - (20,549) -
Other income (expense) 508 (1,073) 1,281 (1,605)
--- ------ ----- ------
Total other expense, net (83,313) (15,260) (76,401) (64,520)
(LOSS) INCOME BEFORE INCOME TAXES (20,241) (2,920) 104,461 (76,585)
INCOME TAX BENEFIT (EXPENSE) 5,080 1,279 (25,538) 21,765
----- ----- ------- ------
NET (LOSS) INCOME (15,161) (1,641) 78,923 (54,820)
LESS: NET LOSS (INCOME)
ATTRIBUTABLE TO NONCONTROLLING
INTERESTS 1,828 (1,065) (22,068) 11,383
----- ------ ------- ------
NET (LOSS) INCOME ATTRIBUTABLE TO
PARSLEY ENERGY, INC. STOCKHOLDERS $(13,333) $(2,706) $56,855 $(43,437)
======== ======= ======= ========
Net (loss) income per common share:
Basic $(0.05) $(0.02) $0.24 $(0.28)
Diluted $(0.05) $(0.02) $0.24 $(0.28)
Weighted average common shares outstanding:
Basic 246,518 173,241 237,725 156,018
Diluted 246,518 173,241 238,785 156,018
* 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)
September 30, 2017 December 31, 2016
------------------ -----------------
(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $242,547 $133,379
Restricted cash 4,448 3,290
Accounts receivable:
Joint interest owners and other 31,875 12,698
Oil, natural gas and NGLs 94,790 59,174
Related parties 207 290
Short-term derivative instruments, net 94,709 39,708
Other current assets 5,791 50,949
----- ------
Total current assets 474,367 299,488
------- -------
PROPERTY, PLANT AND EQUIPMENT
Oil and natural gas properties, successful
efforts method 8,150,403 4,063,417
Accumulated depreciation, depletion and
impairment (732,690) (506,175)
-------- --------
Total oil and natural gas properties, net 7,417,713 3,557,242
--------- ---------
Other property, plant and equipment, net 87,562 59,318
------ ------
Total property, plant and equipment, net 7,505,275 3,616,560
--------- ---------
NONCURRENT ASSETS
Long-term derivative instruments, net 60,953 16,416
Other noncurrent assets 8,838 6,318
----- -----
Total noncurrent assets 69,791 22,734
------ ------
TOTAL ASSETS $8,049,433 $3,938,782
========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $313,905 $162,317
Revenue and severance taxes payable 95,939 69,452
Current portion of long-term debt 8,037 67,214
Short-term derivative instruments, net 90,244 44,153
Current portion of asset retirement
obligations 5,624 1,818
----- -----
Total current liabilities 513,749 344,954
NONCURRENT LIABILITIES
Long-term debt 1,487,271 1,041,324
Asset retirement obligations 14,323 9,574
Deferred tax liability 9,234 5,483
Payable pursuant to TRA liability 114,876 94,326
Long-term derivative instruments, net 50,037 12,815
Total noncurrent liabilities 1,675,741 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, 247,890,053 shares
issued and 247,739,464 shares outstanding
at September 30, 2017 and 179,730,033
shares issued and 179,590,617 shares
outstanding at December 31, 2016 2,479 1,797
Class B, $0.01 par value, 125,000,000
shares authorized, 66,655,716 and
28,008,573 shares issued and outstanding
at September 30, 2017 and December 31,
2016 667 280
Additional paid in capital 4,608,515 2,151,197
Accumulated deficit (6,400) (63,255)
Treasury stock, at cost, 150,589 shares and
139,416 shares at September 30, 2017 and
December 31, 2016 (681) (381)
---- ----
Total stockholders' equity 4,604,580 2,089,638
Noncontrolling interest 1,255,363 340,668
--------- -------
Total equity 5,859,943 2,430,306
--------- ---------
TOTAL LIABILITIES AND EQUITY $8,049,433 $3,938,782
========== ==========
Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Nine Months Ended September 30,
2017 2016
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $78,923 $(54,820)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and
amortization 247,104 171,113
Accretion of asset retirement
obligations 597 575
Loss on sale of property - 119
Loss on early extinguishment
of debt 3,891 -
Amortization and write off of
deferred loan origination
costs 2,826 2,293
Amortization of bond premium (387) (617)
Stock-based compensation 14,630 9,466
Deferred income tax expense
(benefit) 25,538 (21,765)
Change in TRA liability 20,549 -
(Gain) loss on derivatives (6,175) 23,842
Net cash received for
derivative settlements 13,845 28,678
Net cash paid for option
premiums (19,905) (2,270)
Net premiums (paid) received
on options that settled
during the period (22,404) 26,181
Other 366 6,026
Changes in operating assets and liabilities, net
of acquisitions:
Restricted cash (1,158) (1,616)
Accounts receivable (54,793) (23,295)
Accounts receivable-related
parties 83 59
Other current assets 67,543 (38,436)
Other noncurrent assets (739) 682
Accounts payable and accrued
expenses 94,442 28,168
Revenue and severance taxes
payable 26,487 20,817
Other noncurrent liabilities - 2
--- ---
Net cash provided by operating
activities 491,263 175,202
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Development of oil and natural
gas properties (733,179) (385,076)
Acquisitions of oil and
natural gas properties (2,131,361) (864,870)
Additions to other property
and equipment (31,947) (20,818)
Proceeds from sales and
exchanges of oil and natural
gas properties 13,366 -
Other 2,893 -
Net cash used in investing
activities (2,880,228) (1,270,764)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long-term
debt 452,780 404,000
Payments on long-term debt (68,410) (813)
Debt issuance costs (9,281) (8,958)
Proceeds from issuance of
common stock, net 2,123,344 930,315
Repurchase of common stock (300) (213)
Vesting of restricted stock
units - (91)
Net cash provided by financing
activities 2,498,133 1,324,240
--------- ---------
Net increase in cash and cash
equivalents 109,168 228,678
Cash and cash equivalents at
beginning of period 133,379 343,084
------- -------
Cash and cash equivalents at
end of period $242,547 $571,762
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $49,565 $42,909
======= =======
Cash paid for income taxes $350 $315
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Asset retirement obligations
incurred, including changes
in estimate $8,144 $(1,124)
====== =======
Additions (reductions) to oil
and natural gas properties -
change in capital accruals $57,014 $(46,669)
======= ========
Additions to other property
and equipment funded by
capital lease borrowings $3,571 $1,517
====== ======
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, net premium realizations on options that settled during the period, and certain additional items.
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 (loss) income for each of the periods indicated.
Parsley Energy, Inc. and Subsidiaries
Adjusted EBITDAX
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Adjusted EBITDAX reconciliation to net
(loss) income:
Net (loss) income
attributable to
Parsley Energy, Inc.
stockholders $(13,333) $(2,706) $56,855 $(43,437)
Net (loss) income
attributable to
noncontrolling
interests (1,828) 1,065 22,068 (11,383)
Depreciation,
depletion and
amortization 94,819 65,741 247,104 171,113
Exploration costs 88 3,113 5,293 12,779
Interest expense, net 21,866 15,561 59,417 38,954
Income tax (benefit)
expense (5,080) (1,279) 25,538 (21,765)
------ ------ ------ -------
EBITDAX 96,532 81,495 416,275 146,261
------ ------ ------- -------
Change in TRA
liability - - 20,549 -
Stock-based
compensation 5,170 3,316 14,630 9,466
Acquisition costs 2,449 440 10,969 926
Loss on sale of
property - - - 119
Accretion of asset
retirement
obligations 268 190 597 575
Loss on early
extinguishment of
debt - - 3,891 -
Loss (gain) on
derivatives 61,955 (1,374) (6,175) 23,842
Net settlements on
derivative
instruments 10,982 5,373 15,654 24,560
Net premium
realization on
options that settled
during the period (12,487) 5,215 (22,404) 26,181
Adjusted EBITDAX $164,869 $94,655 $453,986 $231,930
======== ======= ======== ========
* 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 Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Net (loss) income -as
reported $(13,333) $(2,706) $56,855 $(43,437)
Adjustments:
Loss (gain) on
derivatives 61,955 (1,374) (6,175) 23,842
Net settlements on
derivative instruments 10,982 5,373 15,654 24,560
Net premium realization
on options that settled
during the period (12,487) 5,215 (22,404) 26,181
Loss on sale of property - - - 119
Exploration costs 88 3,113 5,293 12,779
Acquisition costs 2,449 440 10,969 926
Loss on early
extinguishment of debt - - 3,891 -
Change in TRA liability - - 20,549 -
Noncontrolling interest (13,472) 799 (6,872) (11,643)
Change in estimated
income tax (6,839) (4,203) 4,819 (25,280)
Adjusted net income $29,343 $6,657 $82,579 $8,047
======= ====== ======= ======
Net (loss) income per
diluted share -as
reported(1) $(0.05) $(0.02) $0.24 $(0.28)
Adjustments:
Loss (gain) on
derivatives $0.25 $(0.01) $(0.03) $0.13
Net settlements on
derivative instruments 0.04 0.03 0.07 0.13
Net premium realization
on options that settled
during the period (0.05) 0.03 (0.09) 0.14
Exploration costs - 0.02 0.02 0.07
Acquisition costs 0.01 - 0.05 -
Loss on early
extinguishment of debt - - 0.02 -
Change in TRA liability - - 0.08 -
Noncontrolling interest (0.05) - (0.03) (0.06)
Change in estimated
income tax (0.03) (0.02) 0.02 (0.13)
Adjustment for change in
weighted average
diluted share
count(1)(2) - - - 0.04
Adjusted net income per
diluted share(2) $0.12 $0.03 $0.35 $0.04
===== ===== ===== =====
Basic weighted average
shares outstanding -as
reported(1) 246,518 173,241 237,725 156,018
Effect of dilutive securities:
Class B Common Stock - - - -
Restricted Stock and
Restricted Stock Units - - 1,060 -
Diluted weighted average
shares outstanding -as
reported(1) 246,518 173,241 238,785 156,018
======= ======= ======= =======
Effect of dilutive securities:
Class B Common Stock - 29,223 - 31,164
Restricted Stock and
Restricted Stock Units - 1,129 - 965
Diluted weighted average
shares outstanding for
adjusted net income(2) 246,518 203,593 238,785 188,147
======= ======= ======= =======
___________
(1) For the
three and
nine
months
ended
September
30, 2016
and and
the three
months
ended
September
30, 2017,
the number
of
weighted
average
diluted
shares
used to
calculate
actual net
income per
share is
based on
the fact
that,
under the
"if
converted"
and
treasury
stock
methods,
Class B
Common
Stock and
restricted
stock and
restricted
stock
units were
note
recognized
because
they would
have been
antidilutive.
(2) For
purposes
of
calculating
adjusted
net income
per
diluted
share for
the three
and nine
months
ended
September
30, 2017,
Class B
Common
Stock was
not
recognized
because it
would have
been
antidilutive
using the
"if
converted"
method
and, for
the three
months
ended
September
30, 2017,
restricted
stock and
restricted
stock
units were
not
recognized
because
they would
have been
antidilutive
using the
treasury
stock
method.
Supplemental Information
Parsley Energy, Inc. and Subsidiaries
Open Crude Oil Derivatives Positions (1)
---------------------------------------
4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
---- ---- ---- ---- ---- ---- ---- ---- ----
Put Spreads (MBbls/d) (2) 45.5 38.3 37.9 39.1 42.4 11.7 11.5
Put Price ($/Bbl) $50.96 $51.74 $51.09 $46.69 $49.71 $50.00 $50.00
Short Put Price ($/Bbl) $41.43 $40.65 $41.09 $39.69 $39.71 $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) $(9.6) $(19.6) $(18.0) $(18.3) $(19.6) $(5.9) $(5.9) $(1.5) $(1.5)
Collars (MBbls/d) (5) 4.0 3.0 3.0 3.0
Short Call Price ($/Bbl) $59.98 $61.31 $61.31 $61.31
Put Price ($/Bbl) $46.75 $45.67 $45.67 $45.67
Swaps (MBbls/d) 0.5
Strike Price ($/Bbl) $55.00
Total MBbls/d Hedged 50.0 60.0 68.9 73.1 76.4 20.0 19.8 8.2 8.2
Mid-Cush Basis Swaps (MBbls/d) 16.7 11.5 11.4 11.3 11.3
Swap Price ($/Bbl) $(1.00) $(0.86) $(0.86) $(0.86) $(0.86)
Parsley Energy, Inc. and Subsidiaries
Open Natural Gas Derivatives Positions (1)
4Q17 1Q18
---- ----
Three Way Collars
(MMBtu/d) (3) 15.5 26.7
Call Price ($/MMBtu) $4.02 $4.70
Put Price ($/MMBtu) $2.75 $3.25
Short Put Price
($/MMBtu) $2.36 $2.60
Swaps (MMBtu/d) 5.0 5.0
Strike Price ($/MMBtu) $3.46 $3.50
Total MMBtu/d Hedged 20.5 31.7
__________
(1) As of
11/7/2017.
(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.
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SOURCE Parsley Energy, Inc.
