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Parsley to Acquire Jagged Peak in All-Stock Deal Worth $2.27B

Announced Date
October 14,2019
Deal Value $
2,270,000,000
Net Acres
78,000
Location Count
1,800
Transaction Type
Corporate
Buyer
Seller
Price Per BOE $
40,000
Source Documents:
   Source Link
   Source Link
Location
Region
Permian - Delaware Basin

Country
United States

State
Texas

County
Ward ,Pecos ,Reeves

Play


Production & Reserves
Production
38,300 Boe/d

Production Mix
76 % Oil

Reserves
118.9 MMboe (1P)


Multiples
Production ($/boe/d)
59,269

$Price/Net Acre
29,103

$Price/Adj. Net Acre
9,462

$1P Boe
19

$/Location
410,000

Adj. $/acre is based on production @40,000 Boe/d

Transaction Details: 

Parsley Energy is acquiring Jagged Peak Energy in an all stock deal worth $2.27 billion (including $625 million in debt).  

Jagged Peak's production is among among the oilest of its peers, with a whopping 76% oil.

The transaction has been unanimously approved by each company's board of directors. Following the close of the transaction, Parsley shareholders will own approximately 77% of the combined company, and Jagged Peak shareholders will own approximately 23% of the combined company, in each case on a fully diluted basis.

This deal closed on January 10, 2020.

Here is a quick read on the deal.

  • Land : 78,000 net acres
  • Purchase Price : $1.67 billion + $625 million (debt)
  • Production  : 38,300 (boe/d) 76% oil
  • 1P Reserve : 118.9 MMBOE
  • Locations : 1,800 gross un-risked
Map

 

Pro Forma Position / 2020 Outlook

The company will only be cutting acivity by one rig in 2020 (going from 16 to 15). The combined company will plan a 2020 capex of $1.6-1.9 billion.

On a pro forma basis, Parsley will have approximately 267,000 net acres in the Permian, comprised of 147,000 net acres in the Midland Basin and a highly contiguous 120,000 net acre footprint in the Delaware Basin.

 

Matt Gallagher, Parsley's President and CEO, said: "The combination of Parsley and Jagged Peak is a natural fit,. Jagged Peak's oily, high-margin asset base slots in nicely to our returns-focused development approach, its acreage footprint and water infrastructure dovetails into our legacy Delaware Basin position, and its corporate culture aligns with our core values. In short, we now have a premier Delaware Basin business that rivals our foundational Midland Basin business. This transaction also creates tangible synergies that will enhance our corporate free cash flow profile and will be shared by the combined shareholder base. Ultimately, I am proud of the high level of execution Parsley has delivered throughout 2019, and I am excited by the prospects of what the combination of Parsley and Jagged Peak can deliver for shareholders in 2020."

Jim Kleckner, President and Chief Executive Officer of Jagged Peak, commented, "The combined assets of Jagged Peak and Parsley Energy are a great fit that create a stronger combined Permian company. The pro-forma company provides our shareholders with premier acreage in both the Midland and Delaware sub-basins, while providing additional scale, significant operational synergies, and free cash flow in this competitive environment. Our team has made tremendous progress to increase efficiencies as we evolved to pad development on our acreage position. We look forward to working closely with Parsley to ensure that we provide an efficient changeover of asset-level institutional knowledge, so our shareholders and the shareholders of Parsley Energy can reap the maximized benefits of this transaction."

S. Wil VanLoh, Jr., a Jagged Peak director and the Founder and Chief Executive Officer of Quantum Energy Partners, Jagged Peak's controlling shareholder, commented, "The inevitable consolidation in the Permian has started and Jagged Peak made a decisive move to team up with the right partner. Quantum has known Bryan, Matt and the Parsley team for many years and has tremendous respect for the industry-leading execution capabilities and top-tier rock they possess. The combination of the two companies will create a unique platform that will benefit from scale, capital allocation optionality, and peer-leading economics (IRRs, oil-weighting and netback margins) that we believe will represent one of the most compelling investment vehicles in the Permian. We look forward to partnering with the Parsley team as they mature into a Permian pure-play large cap. I would also like to thank every current and former employee of Jagged Peak for creating a great private equity success story and for positioning Jagged Peak's shareholders for continued value creation in a very tough macro energy environment. It's been an honor being your partner."

Advisors

Tudor, Pickering, Holt & Co is serving as exclusive financial advisor to Parsley Energy, and Kirkland & Ellis LLP is serving as Parsley's legal counsel. Citi and RBC Capital Markets, LLC are serving as financial advisors to Jagged Peak and Vinson & Elkins L.L.P. is serving as Jagged Peak's legal counsel.

Permian - Delaware Basin Deal Activity In Last 12 Months



Other Permian - Delaware Basin Region's Deals



Announced DateBuyerSellerDeal Value($mm)LocationCategory
Sep-11-2020 - - Click here New Mexico  E&P
Jul-20-2020 - - Click here Colorado  E&P
Jun-04-2020 - - Click here   E&P
Apr-14-2020 - - Click here Texas  E&P
Feb-17-2020 - - Click here New Mexico  E&P

Price History



Date Deal Headline Price$/acre
Sep-11-2020 Northern Oil Dives into the Delaware Basin; Acquires Non-Op Assets $11.90  Million
Apr-14-2020 Ring Energy Sells Off Delaware Basin Asset for $31.5 Million $31.50  Million
Feb-17-2020 Lilis Sells Delaware Basin Acreage for $25MM as Debt Load Mounts $24.10  Million 20,338

Other Parsley Energy Inc. Deals



Announced DateBuyerSellerDeal Value($mm)LocationCategory
Nov-01-2018 - - Click here Texas  E&P
Jan-30-2018 - - Click here Texas  E&P
Feb-08-2017 - - Click here Texas  E&P
Jan-10-2017 - - Click here Texas  E&P
Jan-10-2017 - - Click here Texas  E&P