Creating Value

With premier acreage, a leading growth profile, robust returns, abundant resource upside, and a strong financial position, Parsley Energy is poised for high-return growth across market cycles, creating value for our shareholders.

Parsley Energy Announces First Quarter 2019 Financial And Operating Results

May 01, 2019

AUSTIN, Texas, May 1, 2019 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," "Parsley Energy," or the "Company") today announced financial and operating results for the quarter ended March 31, 2019. The Company has posted a presentation to its website that supplements the information in this release.

First Quarter 2019 Highlights

  • Net oil production increased 2% quarter-over-quarter and 33% year-over-year to 78.9 MBo per day. Total net production averaged 125.4 MBoe per day.
  • The Company registered favorable overall trends in operating costs during the first quarter of 2019.
    • Both general and administrative expense ("G&A") per Boe and cash based G&A per Boe(1), which excludes stock-based compensation expense, decreased quarter-over-quarter and year-over-year to $3.37 and $2.90, respectively, representing Company-record levels in each case.
    • Parsley reported lease operating expense ("LOE") per Boe of $3.65, up only 1% versus 4Q18 expense levels.
  • Parsley delivered encouraging operational results spread across the Company's acreage footprint in the Delaware Basin, as detailed below.
  • The Company entered into an amendment to its revolving credit facility on April 23, 2019, which increased its borrowing base from $2.3 billion to $2.7 billion while maintaining an elected commitment amount of $1.0 billion.

Summary Comment and Outlook

"With our 2019 development plan, we set a course that prioritized a progression to sustainable free cash flow generation and an improvement in capital efficiency in a $50 oil world. Parsley Energy is on track to deliver on this action plan," said Matt Gallagher, Parsley's President and CEO. "The recent rise in oil prices provides an opportunity to compress our timeline to self-funded growth, but does not alter the Company's activity plans or returns-focused mindset."

Operational Update

Parsley delivered healthy execution across multiple disciplines during the first quarter of 2019, highlighted by efficient development operations.

Notable Well Results

Parsley turned nine wells to production in the Delaware Basin during 1Q19, comprised of four pads spread across the Company's acreage footprint in Pecos and Reeves Counties. Early results from these two-mile lateral wells are consistently strong, with all nine wells registering peak 24-hour oil rates over 1,400 Bo per day. This well set includes the Trees State 51-54 pad, which represents the eastern-most wells Parsley has completed in Pecos County to date. Early results from these two wells targeting the Lower Wolfcamp A zone are encouraging, with average peak 24-hour rates of 2,238 Boe per day (88% oil) and recent oil production averaging 1,750 Bo/d after more than 30 days online. The wells have not reached anticipated peak 30-day rates.

Cost control remains a key priority for Parsley in the Delaware Basin. On this front, Parsley delivered a meaningful improvement in drilling and completion efficiency versus 2017-2018 averages, translating to faster cycle times and lower equipment rental costs. The Company also recorded promising results from its first completion utilizing local sand, a design change that resulted in savings of over $0.5 million per well. The Company has additional local sand tests planned in the Delaware Basin later this year.

"I am encouraged by the positive recent developments in our Delaware Basin assets," said David Dell'Osso, Parsley's COO. "Furthermore, our sizable mineral ownership in this area helps amplify any capital efficiency improvements we are able to capture. Overall, our teams continue to build on the operational momentum they generated during 2018."

Activity Overview

During the first quarter of 2019, the Company spud 35 and placed on production 34 gross operated horizontal wells. Parsley's working interest on wells placed on production was approximately 93%, with an average completed lateral length of approximately 10,100 feet. Completion activity was weighted toward the Midland Basin, where the Company placed on production 25 gross operated horizontal wells, with the remainder placed on production in the Delaware Basin. Parsley expects that development activity will be more heavily weighted to the Midland Basin for the remainder of the year, consistent with prior commentary.

As part of the Company's ongoing focus to bolster operational efficiency, Parsley high-graded its rig fleet and dropped two rigs in aggregate during 1Q19. Parsley expects to maintain an activity level of 12 development rigs and three-to-four frac spreads through the end of 2019, as the Company intends to continue to operate in conformity with full-year capital spending expectations.

Financial Update

Healthy execution in 1Q19 translated to strong performance in key financial measures.

Profitability

During 1Q19, the Company recorded net loss attributable to its stockholders of $24.1 million, or $0.09 per share. Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, adjusted net income for 1Q19 was $62.3 million, or $0.22 per share.(1)

Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense ("Adjusted EBITDAX") for 1Q19 was $301.1 million.(1)

Realized Pricing

During 1Q19, Parsley reported an average unhedged oil price realization of $51.83/Bbl net of transportation costs, representing a discount of $3.07 to the average WTI Cushing price(2) for the quarter.

Operating Costs

Parsley registered favorable overall trends in operating costs and margins during the first quarter of 2019. Both G&A per Boe and cash based G&A per Boe(1), which excludes stock-based compensation expense, decreased quarter-over-quarter and year-over-year to $3.37 and $2.90, respectively, representing Company-record levels in each case. Encouraging G&A cost trends are a function of ongoing corporate cost savings initiatives, including an eight percent reduction to our total employee count since year-end 2018.

Healthy realized oil pricing and favorable trends in the aforementioned cash operating costs drove a strong operating cash margin of $28.07 per Boe, or 74% of the Company's average realized price per Boe.(1)

The Company reported LOE per Boe of $3.65, up only 1% versus 4Q18 expense levels. Stable LOE costs were driven by the Company's cost-effective water management system and lower than anticipated workover activity.

Capital Expenditures

Parsley reported capital expenditures of $406 million during the first quarter of 2019, comprised of $335 million for operated drilling and completion activity, $63 million for operated facilities and infrastructure, and $8 million associated with non-operated development activity.

Liquidity and Hedging

The Company entered into an amendment to its revolving credit facility on April 23, 2019, which increased its borrowing base from $2.3 billion to $2.7 billion while maintaining an elected commitment amount of $1.0 billion. As of March 31, 2019, Parsley had approximately $1.0 billion of liquidity, consisting of $10 million of cash and cash equivalents and an undrawn amount of $991 million on the Company's revolver.(3)

After recent additions to its hedge positions, a significant majority of Parsley's expected 2019 oil production is subject to hedge protection. The Company also recently added to its 2020 hedge positions. Parsley's portfolio of option contracts provides significant protection for its balance sheet and anticipated cash flow while retaining meaningful exposure to higher commodity prices. The Company has also entered into various basis swaps to protect against expansion of regional oil and gas price differentials. For details on Parsley's hedge position, please see the tables below under Supplemental Information and/or, upon availability, the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2019.

2019 Guidance

Parsley reiterates its 2019 annual guidance outlined in February. The Company expects second quarter 2019 net oil production to average 81-85 MBo/d. For further detail, please see the tables below.




2019E

Production


Annual net oil production (MBo/d)

80.0-85.0

Annual net total production (MBoe/d)

124.0-134.0



Capital Program


Total development expenditures ($MM)

$1,350-$1,550

   Drilling and completion  (% of total)

~85%

   Facilities, Infrastructure & Other (% of total)

~15%



Activity


Gross operated horizontal POPs(4)

130-140

   Midland Basin (% of total)

~85%

   Delaware Basin (% of total)

~15%

   Average lateral length

10,000'-10,500'

   Gross operated lateral footage (000's)

1,350'-1,470'

   Average working interest

~90%



Unit Costs


Lease operating expenses ($/Boe)

$3.50-$4.50

Cash general and administrative expenses ($/Boe)

$2.75-$3.25

Production and ad valorem taxes (% of total revenue)

6%-7%

Conference Call Information

Parsley Energy will host a conference call and webcast to discuss its results for the first quarter of 2019 on Thursday, May 2 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time). 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 May 9 by dialing 877-660-6853 (United States/Canada) or 201-612-7415 (International). Conference ID: 13689547. A live broadcast will also be available on the internet at www.parsleyenergy.com under the "Investors-Events & Presentations" section of the website. The Company has also posted a presentation to its website that supplements the information in this release.

Upcoming Conference Participation

Parsley plans to participate in Tudor, Pickering, Holt & Co.'s 15th Annual Hotter 'N Hell conference in Houston, Texas on May 14 and the UBS Global Oil and Gas Conference in Austin, Texas on May 21-22.

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.

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.

- Tables to Follow -




(1)

"Cash based G&A per Boe", "Adjusted EBITDAX", "operating cash margin", and "adjusted net income" are not presented in accordance with generally accepted accounting principles in the United States ("GAAP"). For definitions and reconciliations of the non-GAAP financial measures of adjusted EBITDAX, operating cash margin, and adjusted net income to GAAP financial measures, please see the tables and associated commentary below under Reconciliation of Non-GAAP Financial Measures.

(2)

Represents Bloomberg-sourced 1Q19 average WTI Cushing price.

(3)

Fully undrawn revolver balance is net of letters of credit.

(4)

Wells placed on production.

 

Parsley Energy, Inc. and Subsidiaries

Selected Operating Data

(Unaudited)



Three Months Ended


March 31, 2019


December 31, 2018


March 31, 2018

Net production volumes:






Oil (MBbls)

7,102



7,087



5,341


Natural gas (MMcf)

10,488



9,696



8,556


Natural gas liquids (MBbls)

2,436



2,323



1,643


Total (MBoe)

11,286



11,026



8,410


Average daily net production (Boe/d)

125,400



119,848



93,444


Average sales prices (1) :






Oil, without realized derivatives (per Bbl)

$

51.83



$

54.22



$

61.99


Oil, with realized derivatives (per Bbl)

$

49.40



$

52.69



$

58.32


Natural gas, without realized derivatives (per Mcf)

$

1.38



$

0.90



$

2.04


Natural gas, with realized derivatives (per Mcf)

$

1.33



$

0.94



$

2.06


NGLs (per Bbl)

$

17.97



$

25.00



$

24.72


Average price per Boe, without realized derivatives

$

37.78



$

40.91



$

46.27


Average price per Boe, with realized derivatives

$

36.20



$

39.96



$

43.97


Average costs (per Boe):






Lease operating expenses

$

3.65



$

3.61



$

3.43


Transportation and processing costs

$

0.73



$

1.03



$

0.75


Production and ad valorem taxes

$

2.43



$

2.38



$

2.88


Depreciation, depletion and amortization

$

15.39



$

14.58



$

14.41


General and administrative expenses (including stock-based compensation)

$

3.37



$

3.85



$

4.16


General and administrative expenses (cash based)

$

2.90



$

3.42



$

3.56





(1)

Average prices shown in the table reflect prices both before and after the effects of the Company's realized commodity hedging transactions. The Company's calculations of such effects include both realized gains and losses on cash settlements for commodity derivative transactions and premiums paid or received on options that settled during the period. Realized oil prices are net of transportation costs.

 

Parsley Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except for per share data)(1)



Three Months Ended March 31,


2019


2018

REVENUES




Oil sales

$

368,126



$

331,103


Natural gas sales

14,452



17,424


Natural gas liquids sales

43,785



40,620


Other

1,308



3,594


Total revenues

427,671



392,741


OPERATING EXPENSES




Lease operating expenses

41,172



28,832


Transportation and processing costs

8,257



6,267


Production and ad valorem taxes

27,407



24,186


Depreciation, depletion and amortization

173,723



121,199


General and administrative expenses (including stock-based compensation)

38,037



34,995


Exploration and abandonment costs

22,994



5,411


Acquisition costs



4


Accretion of asset retirement obligations

345



354


Loss on sale of property



111


Other operating (income) expenses

(811)



2,175


   Total operating expenses

311,124



223,534


OPERATING INCOME

116,547



169,207


OTHER INCOME (EXPENSE)




Interest expense, net

(33,002)



(31,968)


Loss on derivatives

(119,687)



(10,793)


Change in TRA liability



(82)


Interest income

291



2,123


Other income

58



301


Total other expense, net

(152,340)



(40,419)


(LOSS) INCOME BEFORE INCOME TAXES

(35,793)



128,788


INCOME TAX BENEFIT (EXPENSE)

7,790



(23,325)


NET (LOSS) INCOME

(28,003)



105,463


LESS: NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

3,939



(22,573)


NET (LOSS) INCOME ATTRIBUTABLE TO PARSLEY ENERGY, INC. STOCKHOLDERS

$

(24,064)



$

82,890






Net (loss) income per common share:




Basic

$

(0.09)



$

0.32


Diluted

$

(0.09)



$

0.32


Weighted average common shares outstanding:




Basic

278,794



260,654


Diluted

278,794



261,639





(1)

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)



March 31, 2019


December 31, 2018

ASSETS




CURRENT ASSETS




Cash and cash equivalents

$

10,380



$

163,216


Accounts receivable, net of allowance for doubtful accounts:




Joint interest owners and other

36,657



36,062


Oil, natural gas and NGLs

176,381



138,987


Related parties

2,204



94


Short-term derivative instruments, net

82,327



191,297


Other current assets

9,618



11,056


Total current assets

317,567



540,712


PROPERTY, PLANT AND EQUIPMENT




Oil and natural gas properties, successful efforts method

10,327,178



9,948,246


Accumulated depreciation, depletion and impairment

(1,464,040)



(1,295,098)


Total oil and natural gas properties, net

8,863,138



8,653,148


Other property, plant and equipment, net

178,854



170,739


Total property, plant and equipment, net

9,041,992



8,823,887


NONCURRENT ASSETS




Operating lease assets, net of accumulated depreciation

157,655




Long-term derivative instruments, net

27,301



20,124


Other noncurrent assets

9,632



6,640


Total noncurrent assets

194,588



26,764


TOTAL ASSETS

$

9,554,147



$

9,391,363






LIABILITIES AND EQUITY




CURRENT LIABILITIES




Accounts payable and accrued expenses

$

402,496



$

364,803


Revenue and severance taxes payable

126,339



127,265


Short-term derivative instruments, net

138,784



152,330


Current operating lease liabilities

69,104




Other current liabilities

4,657



4,547


Total current liabilities

741,380



648,945


NONCURRENT LIABILITIES




Long-term debt

2,180,616



2,181,667


Deferred tax liability

121,336



131,523


Operating lease liability

92,793




Payable pursuant to tax receivable agreement

71,077



68,110


Long-term derivative instruments, net

29,212



16,633


Asset retirement obligations

25,315



24,750


Financing lease liability

1,847




Total noncurrent liabilities

2,522,196



2,422,683


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, 281,525,513 shares issued and 280,567,240 shares outstanding at March 31, 2019 and 280,827,038 shares issued and 280,205,293 shares outstanding at December 31, 2018

2,815



2,808


Class B, $0.01 par value, 125,000,000 shares authorized, 36,127,731 and 36,547,731 shares issued and outstanding at March 31, 2019 and December 31, 2018

362



366


Additional paid in capital

5,175,012



5,163,987


Retained earnings

388,582



412,646


Treasury stock, at cost, 958,273 shares and 621,745 shares at March 31, 2019 and December 31, 2018

(17,058)



(11,749)


Total stockholders' equity

5,549,713



5,568,058


Noncontrolling interest

740,858



751,677


Total equity

6,290,571



6,319,735


TOTAL LIABILITIES AND EQUITY

$

9,554,147



$

9,391,363


 

Parsley Energy, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Three Months Ended March 31,


2019


2018

CASH FLOWS FROM OPERATING ACTIVITIES:




Net (loss) income

$

(28,003)



$

105,463


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation, depletion and amortization

173,723



121,199


Leasehold abandonments and impairments

22,189



5,179


Accretion of asset retirement obligations

345



354


Loss on sale of property



111


Stock-based compensation

5,322



5,069


Deferred income tax (benefit) expense

(7,790)



23,325


Change in TRA liability



82


Loss on derivatives

119,687



10,793


Net cash paid for derivative settlements

(5,072)



(1,903)


Net cash paid for option premiums

(10,440)



(13,506)


Other

1,056



1,096


Changes in operating assets and liabilities, net of acquisitions:




Accounts receivable

(37,989)



(43,214)


Accounts receivable—related parties

(2,110)



77


Other current assets

1,438



3,835


Other noncurrent assets

(3,308)



(635)


Accounts payable and accrued expenses

(15,063)



(5,427)


Revenue and severance taxes payable

(926)



15,057


Net cash provided by operating activities

213,059



226,955


CASH FLOWS FROM INVESTING ACTIVITIES:




Development of oil and natural gas properties

(352,650)



(411,073)


Acquisitions of oil and natural gas properties

(13,846)



(27,447)


Additions to other property and equipment

(11,106)



(28,248)


Proceeds from sales of property, plant and equipment

17,486



43,228


Other

809



349


Net cash used in investing activities

(359,307)



(423,191)


CASH FLOWS FROM FINANCING ACTIVITIES:




Borrowings under long-term debt

120,000




Payments on long-term debt

(120,000)



(694)


Payments on financing lease obligations

(676)




Debt issuance costs



(32)


Repurchase of common stock

(5,309)



(6,465)


Distributions to owners from consolidated subsidiary

(603)




Net cash used in financing activities

(6,588)



(7,191)


Net decrease in cash, cash equivalents and restricted cash

(152,836)



(203,427)


Cash, cash equivalents and restricted cash at beginning of period

163,216



554,189


Cash, cash equivalents and restricted cash at end of period

$

10,380



$

350,762


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:




Cash paid for interest

$

(30,493)



$

(29,455)


Cash received for income taxes

$

240



$


SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:




Asset retirement obligations incurred, including changes in estimate

$

219



$

359


Additions to oil and natural gas properties - change in capital accruals

$

53,654



$

13,013


Net premiums on options that settled during the period

$

(9,516)



$

(16,526)


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 the Company's 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 (loss) income before depreciation, depletion and amortization, exploration and abandonment costs, net interest expense, interest income, income tax (benefit) expense, change in Tax Receivable Agreement ("TRA") liability, stock-based compensation, acquisition costs, loss on sale of property, accretion of asset retirement obligations, inventory write down, loss on derivatives, net settlements on derivative instruments and net premiums on options that settled during the period.

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 measures 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)(1) 



Three Months Ended March 31,


2019


2018

Adjusted EBITDAX reconciliation to net income:




Net (loss) income attributable to Parsley Energy, Inc. stockholders

$

(24,064)



$

82,890


Net (loss) income attributable to noncontrolling interests

(3,939)



22,573


Depreciation, depletion and amortization

173,723



121,199


Exploration and abandonment costs

22,994



5,411


Interest expense, net

33,002



31,968


Interest income

(291)



(2,123)


Income tax (benefit) expense

(7,790)



23,325


EBITDAX

193,635



285,243


Change in TRA liability



82


Stock-based compensation

5,322



5,069


Acquisition costs



4


Loss on sale of property



111


Accretion of asset retirement obligations

345



354


Inventory write down



61


Loss on derivatives

119,687



10,793


Net settlements on derivative instruments

(8,339)



(2,873)


Net premiums on options that settled during the period

(9,516)



(16,526)


Adjusted EBITDAX

$

301,134



$

282,318





(1)

Certain reclassifications to prior period amounts have been made to conform with current presentation.

Operating Cash Margin

Operating cash margin is not a measure of operating income as determined by GAAP. Operating cash margin is a supplemental non-GAAP performance measure used by the Company as an indicator of the Company's profitability and ability to manage its operating income. The Company defines operating cash margin as net (loss) income before income tax (benefit) expense, other revenues, depreciation, depletion and amortization, exploration and abandonment costs, stock-based compensation, acquisition costs, accretion of asset retirement obligations, other operating (income) expense, net interest expense, loss on sale of property, derivative loss, change in TRA liability, interest income, and other income. The amounts included in the calculations of operating cash margin were computed in accordance with GAAP.

Operating cash margin is provided in addition to, and not as an alternative for, and should be read in conjunction with, the information contained in the Company's condensed consolidated financial statements prepared in accordance with GAAP (including the notes), included in its SEC filings and posted on its website. The following table provides a reconciliation of operating cash margin to net income attributable to Parsley Energy, Inc. stockholders.

Parsley Energy, Inc. and Subsidiaries

Operating Cash Margin

(Unaudited, in thousands, except for per unit data)(1)



Three Months Ended March 31,


2019


2018

Net (loss) income attributable to Parsley Energy, Inc. stockholders

$

(24,064)



$

82,890


Net (loss) income attributable to noncontrolling interests

(3,939)



22,573


Income tax (benefit) expense

(7,790)



23,325


Other revenues

(1,308)



(3,594)


Depreciation, depletion and amortization

173,723



121,199


Exploration and abandonment costs

22,994



5,411


Stock-based compensation

5,322



5,069


Acquisition costs



4


Accretion of asset retirement obligations

345



354


Other operating (income) expense

(811)



2,175


Interest expense, net

33,002



31,968


Loss on sale of property



111


Derivative loss

119,687



10,793


Change in TRA liability



82


Interest income

(291)



(2,123)


Other income

(58)



(301)


Operating cash margin

$

316,812



$

299,936


Operating cash margin per Boe

$

28.07



$

35.66






Average price per Boe, without realized derivatives

$

37.78



$

46.27


Operating cash margin percentage

74

%


77

%




(1)

Certain reclassifications to prior period amounts have been made to conform with current presentation.

Adjusted Net Income

Adjusted net income is not a measure of net income determined in accordance with GAAP. Adjusted net income is a supplemental non-GAAP performance measure used by the Company's management to evaluate financial performance, prior to (gains) losses on derivatives, net settlements on derivative instruments, net premiums received on options that settled during the period, loss on sale of property, exploration and abandonment costs, acquisition costs, 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, or more meaningful than, 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)(1)



Three Months Ended March 31,


2019


2018

Net (loss) income - as reported

$

(24,064)



$

82,890


Adjustments:




Loss on derivatives

119,687



10,793


Net settlements on derivative instruments

(8,339)



(2,873)


Net premiums on options that settled during the period

(9,516)



(16,526)


Loss on sale of property



111


Exploration and abandonment costs

22,994



5,411


Acquisition costs



4


Change in TRA liability



82


Change in noncontrolling interest

(14,321)



647


Change in estimated income tax

(24,132)



522


Adjusted net income

$

62,309



$

81,061


Net (loss) income per diluted share - as reported(2)

$

(0.09)



$

0.32


Adjustments:




Loss on derivatives

$

0.42



$

0.04


Net settlements on derivative instruments

(0.02)



(0.01)


Net premiums on options that settled during the period

(0.03)



(0.06)


Loss on sale of property




Exploration and abandonment costs

0.08



0.02


Change in noncontrolling interest

(0.05)




Change in estimated income tax

(0.09)




Adjusted net income per diluted share(3)

$

0.22



$

0.31


Basic weighted average shares outstanding - as reported(2)

278,794



260,654


Effect of dilutive securities:




Restricted Stock and Restricted Stock Units



985


Diluted weighted average shares outstanding - as reported(2)

278,794



261,639


Effect of dilutive securities:




Restricted Stock and Restricted Stock Units

369




Diluted weighted average shares outstanding for adjusted net income(3)

279,163



261,639





(1)

Certain reclassifications to prior period amounts have been made to conform with current presentation.

(2)

For the three months ended March 31, 2019 and 2018, 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" method, Class B Common Stock was not recognized because it would have been antidilutive.

(3)

For purposes of calculating adjusted net income per diluted share for the three months ended March 31, 2019 and 2018, Class B Common Stock was not recognized because the shares would have been antidilutive using the "if converted" method.

 

Open Derivatives Positions


Parsley Energy, Inc. and Subsidiaries

Open Crude Oil Derivatives Positions(1)



2Q19


3Q19


4Q19


1Q20


2Q20


3Q20


4Q20

OPTION CONTRACTS:














CUSHING














Put Spreads - Cushing (MBbls/d)(2)

11.5



19.6



19.6










   Long Put Price ($/Bbl)

$

51.43



$

59.79



$

59.79










   Short Put Price ($/Bbl)

$

44.29



$

49.79



$

49.79










Three Way Collars - Cushing (MBbls/d)(3)

21.4



26.1



26.1










   Short Call Price ($/Bbl)

$

70.89



$

72.69



$

72.69










   Long Put Price ($/Bbl)

$

48.85



$

51.88



$

51.88










   Short Put Price ($/Bbl)

$

41.15



$

42.81



$

42.81










Collars - Cushing (MBbls/d)(4)

24.7



21.2



21.2










   Short Call Price ($/Bbl)

$

57.67



$

58.26



$

58.37










   Long Put Price ($/Bbl)

$

53.94



$

54.50



$

54.56










MIDLAND














Put Spreads - Midland (MBbls/d)(2)

14.8



4.9



4.9










   Long Put Price ($/Bbl)

$

50.56



$

60.00



$

60.00










   Short Put Price ($/Bbl)

$

40.56



$

50.00



$

50.00










Three Way Collars - Midland (MBbls/d)(3)



4.9



4.9



6.7



6.6






   Short Call Price ($/Bbl)



$

64.65



$

64.65



$

77.50



$

77.50






   Long Put Price ($/Bbl)



$

50.00



$

50.00



$

61.25



$

61.25






   Short Put Price ($/Bbl)



$

45.00



$

45.00



$

51.25



$

51.25






MAGELLAN EAST HOUSTON ("MEH")














Put Spreads - MEH (MBbls/d)(2)

3.3



8.2



8.2



5.0



4.9






   Long Put Price ($/Bbl)

$

70.00



$

64.00



$

64.00



$

70.00



$

70.00






   Short Put Price ($/Bbl)

$

60.00



$

54.00



$

54.00



$

60.00



$

60.00






Three Way Collars - MEH (MBbls/d)(3)







31.7



31.3



11.4



11.4


   Short Call Price ($/Bbl)







$

76.53



$

76.53



$

80.00



$

80.00


   Long Put Price ($/Bbl)







$

60.13



$

60.13



$

61.07



$

61.07


   Short Put Price ($/Bbl)







$

50.14



$

50.14



$

51.07



$

51.07


Total Option Contracts (MBbls/d)

75.7



84.9



84.9



43.4



42.8



11.4



11.4


Premium Realization ($MM)(5)

$

(10.2)



$

(14.5)



$

(14.5)



$

(9.9)



$

(9.9)



$

(2.9)



$

(2.9)


BASIS SWAPS:














Midland-Cushing Basis Swaps (MBbls/d)(6)

25.4



35.9



35.9



5.0



5.0






  Basis Differential ($/Bbl)

$

(5.10)



$

(1.63)



$

(0.78)



$

0.25



$

0.25






MEH-Cushing Basis Swaps (MBbls/d)(6)

2.1



2.1



2.1










  Basis Differential ($/Bbl)

$

5.10



$

5.10



$

5.10










 

Parsley Energy, Inc. and Subsidiaries

Open Natural Gas Derivatives Positions(1)



2Q19


3Q19


4Q19

OPTION CONTRACTS:






HENRY HUB






Three Way Collars (MMBtu/d)(3)

32,967



32,609



32,609


Short Call Price ($/MMBtu)

$

3.93



$

3.93



$

3.93


Long Put Price ($/MMBtu)

$

3.00



$

3.00



$

3.00


Short Put Price ($/MMBtu)

$

2.50



$

2.50



$

2.50


Total MMBtu/d Hedged

32,967



32,609



32,609


BASIS SWAPS:






Waha-Henry Hub Basis Swaps (MMBtu/d)(6)

32,967



32,609



32,609


Basis Differential ($/MMBtu)

$

(1.92)



$

(1.78)



$

(1.64)





(1)

As of 5/1/2019. Prices represent the weighted average price of contracts scheduled for settlement during the period.

(2)

When the reference price (WTI, Midland, or MEH) 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.

(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)

When the reference price (WTI) is above the call price, Parsley receives the call price. When the reference price is below the long put price, Parsley receives the long put price. When the reference price is between the short call and long put prices, Parsley receives the reference 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 the Company sells its oil and gas produced in the Permian Basin less the WTI Cushing price and Henry Hub price, respectively.

 

Parsley Energy

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/parsley-energy-announces-first-quarter-2019-financial-and-operating-results-300842131.html

SOURCE Parsley Energy, Inc.