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Parsley Energy Third Quarter 2020 Results

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   |    Wednesday,October 28,2020

Parsley Energy, Inc. announced financial and operating results for the quarter ended September 30, 2020.

Recent Highlights:

• Generated positive free cash flow⁽¹⁾ in 3Q20.
• Paid 3Q20 quarterly dividend of $0.05 per share on September 18, 2020 and declared 4Q20 quarterly dividend of $0.05 per share⁽²⁾ payable on December 18, 2020.
• 3Q20 net oil production decreased 1% quarter-over-quarter and increased 21% year-over-year to 111.0 MBo per day. Total 3Q20 net production averaged 183.2 MBoe per day.
• Recently announced a definitive merger agreement to be acquired by Pioneer Natural Resources Company ("Pioneer") in an all-stock transaction valued at approximately $7.6 billion, inclusive of assumed debt, expected to close in 1Q21.

Operational Update

During the third quarter of 2020, the Company placed on production 26 gross operated horizontal wells. Parsley's average working interest on wells placed on production was approximately 88%, with an average completed lateral length of approximately 9,700 feet. The Company placed on production 15 gross operated horizontal wells in the Midland Basin, with the remainder placed on production in the Delaware Basin.

After reactivating development activity in July, Parsley delivered steady improvements in drilling and completion efficiency⁽³⁾ within each basin. Notably, in the Delaware Basin, Parsley drilled its first two three-mile lateral wells in under 29 days each, which helped drive a new Company-record for Delaware drilling efficiency in 3Q20. Parsley attributes these recent drilling efficiency gains to enhancements made to the Company's remote operational command center during the activity shutdown in May and June. As operational efficiency gains take hold, the Company is delivering leading edge well costs below $850 per foot in the Delaware Basin.

In line with prior Company commentary, Parsley deployed two additional rigs in late October, bringing the current number of active operated rigs to four. The Company expects to continue operating four rigs and one-to-two frac spreads for the remainder of 2020.

Financial Update

Profitability

During 3Q20, the Company recorded net income attributable to its stockholders of $22.6 million, or $0.06 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 3Q20 was $82.6 million, or $0.22 per share.⁽¹⁾

Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense ("Adjusted EBITDAX") for 3Q20 was $290.2 million.⁽¹⁾

Realized Pricing

During 3Q20, Parsley reported an average unhedged oil price realization of $37.19 per Bbl net of transportation costs, representing a discount of $3.73 to the average WTI Cushing price⁽⁴⁾ for the quarter.

Operating Costs

During the third quarter of 2020, the Company reported lease operating expense ("LOE") per Boe of $3.19, down 14% versus 2Q20 expense levels despite stable production volumes. Favorable LOE unit cost trends were driven by supplier price reductions and continued utilization of the Company's integrated water handling system.

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 to $1.97 and $1.59, respectively. Encouraging G&A cost trends are a function of ongoing corporate cost savings initiatives.

Capital Expenditures

Parsley reported capital expenditures of $85 million during the third quarter of 2020, comprised of $84 million for operated drilling, completion, and equipment activity, and $1 million associated with water infrastructure and non-operated development activity.

Return of Capital Program

Today, Parsley Energy's board of directors declared a quarterly dividend of $0.05 per share.⁽²⁾ The dividend is payable on December 18, 2020, to shareholders of record on December 8, 2020.

Liquidity and Hedging

The Company entered into an amendment to its revolving credit agreement on October 19, 2020, which reaffirmed its borrowing base at $2.7 billion and increased the elected commitment amount from $1.075 billion to $1.1 billion.

As of September 30, 2020, Parsley had approximately $767.7 million of liquidity, consisting of $4.7 million of cash and cash equivalents and an availability of $763.0 million on the Company's revolver.⁽⁵⁾

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 September 30, 2020.

Guidance

In light of Parsley's recent entry into a definitive merger agreement with Pioneer, Parsley has discontinued providing guidance and long-term outlook information regarding its results of operations.