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-$35 WTI oil
environment," commented Matt
Gallagher, Parsley's President and CEO. "We will continue to
be adaptive and responsive in these challenging times –
demonstrating the resilience of our assets and our team."
For details on Parsley's updated hedge position as of
March 12, 2020, please see the tables
below.
Open Oil
Derivative Positions
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1Q20
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2Q20
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3Q20
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4Q20
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1Q21
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2Q21
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3Q21
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4Q21
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OPTION
CONTRACTS:
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CUSHING
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Swaps - Cushing
(MBbls/d)(2)
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11.0
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11.0
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11.0
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11.0
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Swap Price
($/Bbl)
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$
57.87
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$
57.87
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$
57.87
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$
57.87
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MIDLAND
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Three Way Collars
- Midland (MBbls/d)(3)
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27.0
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22.5
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15.8
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15.8
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Short Call Price
($/Bbl)
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$
61.81
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$
54.63
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$
56.03
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$
56.03
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Long Put Price
($/Bbl)
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$
51.10
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$
43.39
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$
45.21
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$
45.21
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Short Put Price
($/Bbl)
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$
41.10
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$
33.39
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$
35.21
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$
35.21
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Put Spreads -
Midland (MBbls/d)(4)
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1.1
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3.3
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Long Put Price
($/Bbl)
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$
50.00
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$
50.00
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Short Put Price
($/Bbl)
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$
40.00
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$
40.00
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Two Way Collars -
Midland (MBbls/d)(5)
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2.2
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6.6
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6.5
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6.5
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Short Call Price
($/Bbl)
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$
48.00
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$
48.00
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$
48.00
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$
48.00
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Long Put Price
($/Bbl)
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$
43.00
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$
43.00
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$
43.00
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$
43.00
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Swaps - Midland
(MBbls/d)(2)
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3.3
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3.3
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5.0
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5.0
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5.0
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5.0
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Swap Price
($/Bbl)
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$
55.20
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$
55.20
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$
40.50
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$
40.50
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$
40.50
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$
40.50
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MAGELLAN EAST
HOUSTON ("MEH")
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Three Way Collars
- MEH (MBbls/d)(3)
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46.4
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51.0
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33.9
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33.9
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13.3
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13.2
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Short Call Price
($/Bbl)
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$
71.95
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$
64.07
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$
59.86
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$
59.86
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$
64.38
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$
64.38
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Long Put Price
($/Bbl)
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$
57.14
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$
50.95
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$
45.74
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$
45.74
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$
53.12
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$
53.12
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Short Put Price
($/Bbl)
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$
47.14
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$
40.95
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$
35.74
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$
35.74
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$
43.12
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$
43.12
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Put Spreads
- MEH (MBbl/d)(4)
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2.7
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8.2
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24.5
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24.5
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Long Put Price
($/Bbl)
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$
50.00
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$
50.00
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$
44.67
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$
44.67
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Short Put Price
($/Bbl)
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$
40.00
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$
40.00
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$
34.67
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$
34.67
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Swaps - MEH
(MBbls/d)(2)
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4.2
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4.2
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52.0
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52.0
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52.0
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52.0
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Swap Price
($/Bbl)
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$
56.30
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$
56.30
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$
41.17
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$
41.17
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$
41.17
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$
41.17
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BRENT
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Three Way Collars
- Brent (MBbls/d)(3)
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4.9
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3.3
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3.3
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Short Call Price
($/Bbl)
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$
75.00
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$
75.00
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$
75.00
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Long Put Price
($/Bbl)
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$
62.00
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$
62.00
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$
62.00
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Short Put Price
($/Bbl)
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$
52.00
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$
52.00
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$
52.00
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Two Way Collars -
Brent (MBbls/d)(5)
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3.3
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6.5
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6.5
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Short Call Price
($/Bbl)
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$
52.10
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$
52.30
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$
52.30
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Long Put Price
($/Bbl)
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$
47.10
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$
47.30
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$
47.30
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Swaps - Brent
(MBbls/d)(2)
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3.0
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3.0
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3.0
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22.0
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22.0
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22.0
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22.0
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Swap Price
($/Bbl)
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$
50.01
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$
50.01
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$
50.01
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$
44.44
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$
44.44
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$
44.44
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$
44.44
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Total Hedged
Volume (MBbls/d)
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93.8
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117.1
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108.7
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108.7
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92.3
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92.2
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79.0
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79.0
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Premium
Realization ($MM)(6)
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($13.4)
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($0.6)
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($3.5)
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($3.5)
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($2.0)
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($2.0)
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BASIS
SWAPS:
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Midland-Cushing
Basis Swaps (MBbls/d)(7)
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18.9
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18.9
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14.0
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14.0
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Basis Differential
($/Bbl)
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$
(1.00)
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$
(1.00)
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$
(1.44)
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$
(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.
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(1)
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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.
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(2)
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Parsley receives the
swap price.
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(3)
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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.
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(4)
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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.
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(5)
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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.
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(6)
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Premium realizations
represent net premiums paid (including deferred premiums), which
are recognized as income or loss in the period of
settlement.
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(7)
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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.