AUSTIN, Texas, March 9, 2020 /PRNewswire/ -- Parsley
Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the
"Company") today provided an update on its 2020 development
program.
Updated 2020 Outlook
- Parsley is revising its baseline capital budget assumption from
a $50 WTI oil price to a $30-35 WTI oil price for the remainder of
2020.
- Consistent with the Company's commitment to free cash flow
generation and in response to recent commodity price trends,
Parsley has begun to reduce development activity in 2020. During
January and February, Parsley operated 15 development rigs and five
frac spreads on average. On March 6,
Parsley dropped to three frac spreads and has approved plans to
drop to 12 rigs as soon as practicable. Parsley plans to further
reduce its activity pace in the near-term.
- Parsley had previously indicated it would expect to generate
free cash flow(1) of at least $200 million during 2020 at a $50 WTI oil price. In the context of $30-$35 WTI oil
prices for the remainder of the year, the Company would target at
least $85 million of free cash
flow(1), accomplished through incremental activity
reductions, likely in combination with lower service and equipment
costs. In a lower oil price environment, Parsley will adjust as
needed to preserve its balance sheet.
- Parsley plans to provide additional detail on its formal 2020
guidance ranges when it releases its first quarter 2020 financial
results or as needed.
Summary Comment and Outlook
"The combination of a strong balance sheet and corporate agility
is critical in these challenging and volatile times," commented
Matt Gallagher, Parsley's President
and CEO. "We must act swiftly with an aim to preserve a stable free
cash flow profile and remain committed to doing whatever is
necessary to protect our balance sheet in the weeks and months
ahead."
"Parsley is focused on maintaining value for the long term, this
requires short term responses when posed with external attacks and
shocks. We will focus on our rigorous project returns process
and will not destroy capital if the commodities tape does not
support sufficient returns. This approach worked in the 2015
– 2016 timeframe and will best position us again to emerge from
this volatile time on our front foot ready to fight."
Hedging Update
In early March, Parsley restructured some of its existing hedge
positions to provide additional protection to downside in oil
prices and continues to actively manage its hedge position. A
significant majority of Parsley's expected 2020 oil production is
subject to hedge protection.
For details on Parsley's updated hedge position as of
March 6, 2020, please see the tables
below.
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1Q20
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2Q20
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3Q20
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4Q20
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1Q21
|
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2Q21
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OPTION
CONTRACTS:
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
30.3
|
|
|
32.4
|
|
|
22.3
|
|
|
22.3
|
|
|
|
|
|
|
|
Short Call Price
($/Bbl)
|
$
|
65.87
|
|
|
$
|
65.97
|
|
|
$
|
65.67
|
|
|
$
|
65.67
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|
|
|
|
|
|
|
|
|
Long Put Price
($/Bbl)
|
$
|
55.18
|
|
|
$
|
55.24
|
|
|
$
|
55.27
|
|
|
$
|
55.27
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|
|
|
|
|
|
|
|
|
Short Put Price
($/Bbl)
|
$
|
45.18
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|
|
$
|
45.24
|
|
|
$
|
45.27
|
|
|
$
|
45.27
|
|
|
|
|
|
|
|
|
|
Swaps - Midland
(MBbls/d)(2)
|
3.3
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
Swap Price
($/Bbl)
|
$
|
55.20
|
|
|
$
|
55.20
|
|
|
|
|
|
|
|
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MAGELLAN EAST
HOUSTON ("MEH")
|
|
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Three Way Collars
- MEH (MBbls/d)(3)
|
44.9
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|
|
46.4
|
|
|
37.8
|
|
|
37.8
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|
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13.3
|
|
|
13.2
|
|
Short Call Price
($/Bbl)
|
$
|
73.48
|
|
|
$
|
67.75
|
|
|
$
|
66.90
|
|
|
$
|
66.90
|
|
|
$
|
64.38
|
|
|
|
64.38
|
|
Long Put Price
($/Bbl)
|
$
|
58.74
|
|
|
$
|
54.99
|
|
|
$
|
55.09
|
|
|
$
|
55.09
|
|
|
$
|
53.12
|
|
|
|
53.12
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|
Short Put Price
($/Bbl)
|
$
|
48.74
|
|
|
$
|
44.99
|
|
|
$
|
45.09
|
|
|
$
|
45.09
|
|
|
$
|
43.12
|
|
|
|
43.12
|
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Put Spreads
- MEH (MBbl/d)(4)
|
2.7
|
|
|
8.2
|
|
|
11.4
|
|
|
11.4
|
|
|
|
|
|
|
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Put Price
($/Bbl)
|
$
|
50.00
|
|
|
$
|
50.00
|
|
|
$
|
50.00
|
|
|
$
|
50.00
|
|
|
|
|
|
|
|
|
|
Short Put Price
($/Bbl)
|
$
|
40.00
|
|
|
$
|
40.00
|
|
|
$
|
40.00
|
|
|
$
|
40.00
|
|
|
|
|
|
|
|
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Swaps - MEH
(MBbls/d)(2)
|
|
|
|
|
4.2
|
|
|
4.2
|
|
|
|
|
|
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Swap Price
($/Bbl)
|
|
|
|
|
$
|
56.30
|
|
|
$
|
56.30
|
|
|
|
|
|
|
|
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BRENT
|
|
|
|
|
|
|
|
|
|
|
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Three Way Collars
- Brent (MBbls/d)(3)
|
|
|
11.5
|
|
|
13.0
|
|
|
13.0
|
|
|
|
|
|
|
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Short Call Price
($/Bbl)
|
|
|
$
|
74.29
|
|
|
$
|
73.13
|
|
|
$
|
73.13
|
|
|
|
|
|
|
|
|
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Long Put Price
($/Bbl)
|
|
|
$
|
62.29
|
|
|
$
|
62.25
|
|
|
$
|
62.25
|
|
|
|
|
|
|
|
|
|
Short Put Price
($/Bbl)
|
|
|
$
|
52.29
|
|
|
$
|
52.25
|
|
|
$
|
52.25
|
|
|
|
|
|
|
|
|
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Total Option
Contracts (MBbls/d)
|
92.2
|
|
|
112.8
|
|
|
99.7
|
|
|
99.7
|
|
|
13.3
|
|
|
13.2
|
|
Premium
Realization ($MM)(5)
|
$
|
(14.5)
|
|
|
$
|
(10.8)
|
|
|
$
|
(10.3)
|
|
|
$
|
(10.3)
|
|
|
$
|
(2.0)
|
|
|
$
|
(2.0)
|
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BASIS
SWAPS:
|
|
|
|
|
|
|
|
|
|
|
|
Midland-Cushing
Basis Swaps (MBbls/d)(6)
|
18.9
|
|
|
18.9
|
|
|
14.0
|
|
14.0
|
|
|
|
|
Basis Differential
($/Bbl)
|
$
|
(1.00)
|
|
|
$
|
(1.00)
|
|
|
$
|
(1.44)
|
|
|
$
|
(1.44)
|
|
|
|
|
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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)
|
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.
|
(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)
|
Premium realizations
represent net premiums paid (including deferred premiums), which
are recognized as income or loss in the period of
settlement.
|
(6)
|
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.