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:
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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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$
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57.87
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$
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57.87
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$
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57.87
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$
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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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30.3
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32.4
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22.3
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22.3
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Short Call Price ($/Bbl)
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$
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65.87
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$
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65.97
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$
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65.67
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$
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65.67
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Long Put Price ($/Bbl)
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$
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55.18
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$
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55.24
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$
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55.27
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$
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55.27
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Short Put Price ($/Bbl)
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$
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45.18
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$
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45.24
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$
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45.27
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$
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45.27
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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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Swap Price ($/Bbl)
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$
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55.20
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$
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55.20
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MAGELLAN EAST HOUSTON ("MEH")
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Three Way Collars - MEH (MBbls/d)
(3)
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44.9
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46.4
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37.8
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37.8
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13.3
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13.2
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Short Call Price ($/Bbl)
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$
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73.48
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$
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67.75
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$
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66.90
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$
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66.90
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$
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64.38
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64.38
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Long Put Price ($/Bbl)
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$
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58.74
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$
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54.99
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$
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55.09
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$
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55.09
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$
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53.12
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53.12
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Short Put Price ($/Bbl)
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$
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48.74
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$
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44.99
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$
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45.09
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$
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45.09
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$
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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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11.4
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11.4
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Put Price ($/Bbl)
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$
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50.00
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$
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50.00
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$
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50.00
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$
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50.00
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Short Put Price ($/Bbl)
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$
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40.00
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$
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40.00
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$
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40.00
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$
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40.00
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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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Swap Price ($/Bbl)
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$
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56.30
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$
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56.30
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BRENT
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Three Way Collars - Brent (MBbls/d)
(3)
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11.5
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13.0
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13.0
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Short Call Price ($/Bbl)
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$
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74.29
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$
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73.13
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$
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73.13
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Long Put Price ($/Bbl)
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$
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62.29
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$
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62.25
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$
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62.25
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Short Put Price ($/Bbl)
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$
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52.29
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$
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52.25
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$
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52.25
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Total Option Contracts (MBbls/d)
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92.2
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112.8
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99.7
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99.7
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13.3
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13.2
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Premium Realization ($MM)
(5)
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$
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(14.5)
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$
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(10.8)
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$
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(10.3)
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$
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(10.3)
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$
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(2.0)
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$
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(2.0)
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BASIS SWAPS:
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Midland-Cushing Basis Swaps (MBbls/d)
(6)
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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 ($/Bbl)
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$
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(1.00)
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$
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(1.00)
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$
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(1.44)
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$
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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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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.
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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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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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(6)
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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.