Current PE Stock Info

16% sequential production growth on accelerated non-op activity

Parsley Energy (ticker: PE) announced first quarter results today, showing net income of $82.9 million, or $0.32 per share. This result significantly exceeds the $49.9 million in net income Parsley earned in Q4, and this quarter’s $282.3 million in adjusted EBITDAX represents a 30% sequential increase.

Parsley produced an average of 93.4 MBOEPD this quarter, up 16% sequentially and 70% year-over-year. This production growth exceeded expectations, partially due to several non-operated wells coming on production ahead of schedule.

Parsley’s efforts have seen success, as the company reported record well results this quarter. Parsley’s two-well Catfish Hunter pad in Glasscock County had an average IP30 of 2,013 BOEPD, which represents the highest IP30 Parsley has achieved in the County. Both wells targeted the Wolfcamp B with two-mile laterals.

Parsley Energy Delaware records

The company has significantly ramped up Delaware Basin activity, growing oil production from the play by more than 50% sequentially.

Parsley brought 21 gross wells on production in the basin in Q1, which represents more lateral footage than Parsley completed in the Delaware Basin in all of 2017. Record IP rates were also achieved in the Delaware, one of the new wells achieved an IP30 of 2,115 BOEPD, the highest IP Parsley has seen in the Delaware.

Parsley saw realized oil prices of $61.99/bbl

Parsley reports it was able to avoid the effects of the spreading Midland-Cushing WTI differential, and recorded an unhedged oil price realization of $61.99/bbl net of transportation costs, only $0.90/bbl below the average NYMEX WTI price for the quarter. The true test for companies’ marketing abilities will come when results are reported for Q2, as the Midland-Cushing differential widened significantly in late March and April.

Parsley reports it achieved the highest realized oil price among its peers in Q4, so it may be able to avoid the negative effects of the Midland differential. The company has firm transport agreements covering 95 MBOPD, and diversified pricing agreements that price a portion of Parsley’s barrels relative to Magellan East Houston, Cushing, and Midland benchmarks. Parsley has also layered on Midland-Cushing basis swaps that provide additional regional price protection during 2018.

Parsley Reports Company Record in the Delaware Basin

Q&A from PE conference call

Q: you had mentioned that you all have the highest priority on the Medallion line. Could you define how you’ve got that status and what that really means?

PE: As we have been working with Medallion really since the inception of us as a public company. So that’s just been a long nurtured strategic relationship, purchased by competitive bidding as we build out the gathering system. But there have been some synergies there that they have continued to win the work. So that’s really over time that’s allowed us to strategically add these positions and we had a view to get a diversified marketed barrel that we could bring to many of the top tier marketers and purchasers.

And this interconnected system really allows us to do that, gets us barrels to Crane, interconnects get us barrels to Colorado City, interconnects and then from there you have physical pump overconnections to the majority of all the long-haul pipes and our purchasers take the space on that pipe when we bidded up the field, it’s just been a methodical process over the years.

Q: I could ask about what you guys are seeing on kind of the service and activity levels I know you guys already talked a little bit about labor in the Permian Basin, but it seems like a lot of companies are reporting CapEx kind of at the high end or maybe a little bit ahead of an annualized basis quarter, you guys are in that number. But and then I recognized you have reasons for that, that you guys have explained well, but can you talk about what you’re seeing on your service availability, service quality and perhaps inflation, and where, if anything you guys might expect some issues to crop up if they do?

PE: I think if you net it back down to a per well cost, we’re actually really pleased with how we’ve been able to keep per well cost flat in the Midland and Delaware Basins and then our unit costs really pleased with the teams there getting outside of the box and some good solutions to keeping our LOE at industry-leading rates.

So really on the service capability side, our partners are on that front, are working with us to bring good product to market, haven’t seen tremendous amount of pressure on that front. We do expect as with probably the rest of the companies that there will be a labor component throughout the remainder of the year and that’s our 5% to 10% assumed cost increases throughout the year. So, those will trickle in throughout the year, as unemployment is probably at record lows in the Permian Basin. So that really nothing has changed in our view

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