From the Austin Business Journal

Parsley Energy Inc. shares moved sharply higher Thursday after the Austin oil and gas driller beat Wall Street’s expectations in the fourth quarter.

Though it’s been a rough start to the year for the company’s stock, which had dipped more than 20 percent, Parsley (NYSE: PE) saw its shares reach a high of $25.23 before closing at $25.05, a gain of $1.95 or 8.4 percent, helping to pare some of those prior losses. Go here to track the stock.

After the markets closed Wednesday, Parsley reported Q4 net income of $49.4 million, or 16 cents a share, compared to a loss of $30.7 million or 17 cents per share in the fourth quarter of 2016.

Driving Wall Street’s enthusiasm was the fact that the company also reported non-GAAP income of 30 cents per share for Q4 2017, much higher than analysts’ estimates of 18 cents per share. The company also saw revenue surge to $311.5 million last quarter, which also beat Wall Street estimates. Read the company’s full announcement here.

Analysts with Jeffries LLC issued an upbeat report late Wednesday on the news, though they maintained a $36 target on the shares that they had set in early February — down from $42 — after Parsley reported higher-than-expected production costs in Q4 and predicted even higher costs in 2018.

For the full year, Parsley reported net income of $106.8 million, or 42 cents per share on revenue of $967 million.

Separately, the company said it had made several executive appointments: Larry Parnell was promoted to senior vice president-development operations, Carrie Endorf was named vice president-reservoir engineering and planning and Jody Jordan was promoted to vice president-marketing, all effective Feb. 1.

CEO Bryan Sheffield recently announced he would step down at the end of 2018, to be replaced by Matt Gallagher, now the company’s president and chief operating officer. Sheffield has been chief executive since founding the company in 2008.

The company has also committed to a huge lease of more than 300,000 square feet in a new downtown Austin office tower that’s in the works, across the street from its current headquarters inside Colorado Tower.


From The Motley Fool

What happened

Shares of Parsley Energy (NYSE:PE) dropped on Tuesday and were down nearly 13% at 10:45 a.m. EST. Fueling the sell-off was the Permian Basin producer’s operational update for the fourth quarter and its plans for 2018, neither of which analysts liked.

So what

Parsley Energy said that it produced between 80,000 to 81,000 barrels of oil equivalent per day (BOE/D) during the fourth quarter, which pushed its full-year average to 68,000 BOE/D. That was at the top of the company’s guidance range, and up a remarkable 78% from 2016. That said, the company noted that it needed to spend $1.2 billion to achieve this rate, which was more than its guidance for capital spending, which was between $1 billion and $1.15 billion.

Parsley also said that the higher spending rate would continue in 2018. The company noted that while it initially expected capital spending to be between $1.35 billion and $1.55 billion this year, it now believes it will be at the high end of that range due to the rapid inflation of service and equipment costs. Further, the company noted that despite spending at that the upper end of its budget, oil production would only average 65,000 to 70,000 barrels per day (BPD) this year. While that would be 50% higher than last year, it’s slightly less than its preliminary outlook that crude output would average 67,500 to 72,500 BPD this year. Driving the decline was the cold start to the year and the recent sale of some non-core properties.

The announcement that Parsley Energy would spend more and yet produce less fueled a rash of downgrades on Tuesday, with several analysts cutting the stock from bullish ratings such as buy and overweight to more neutral stances like hold or equal weight. Those downgrades are giving investors another reason to bail on the stock.

Now what

On the one hand, Parsley Energy’s report is disappointing because its costs are going up while production won’t grow quite as fast as anticipated. That said, the driller is expecting output to rise more than 50% this year, which should produce a gusher of cash flow for the company since costs aren’t growing as fast as profitability. Because of that, this sell-off could be short-lived if oil prices hold up since that should enable the company to report strong profit growth in the coming quarters.


Legal Notice