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Parsley Energy Revises First Quarter 2016 Financial And Operating Results

AUSTIN, Texas, May 4, 2016 /PRNewswire/ -- Parsley Energy, Inc. PE, -1.25% ("Parsley," "Parsley Energy," or the "Company") earlier today announced in a press release (the "Original Release") financial and operating results for the quarter ended March 31, 2016. Subsequent to the issuance of the Original Release, the Company determined that an entry relating to certain derivative income that will be realized in subsequent periods was incorrectly realized in the quarter ended March 31, 2016. The entry affected net income and adjusted EBITDAX, among other financial results. As a result, the Company has revised its financial results for the quarter ended March 31, 2016 as set forth in this revised release. The Company has posted to its website a presentation that supplements the information in this revised release.

First Quarter 2016 Highlights and Recent Developments

  • Net production averaged 29.1 MBoe/d, up 15% versus 4Q15 and 54% year-over-year.
  • Daily oil production increased 20% quarter-over-quarter and 70% year-over-year, with oil volumes representing 65% of total production in 1Q16.
  • Parsley announced agreements to acquire 22,908 net acres in the Southern Delaware and Midland Basins for approximately $359 million in cash. At the time of announcement in early April, estimated production from the acquired properties was approximately 2,300 Boe/d. Acquired assets also include six horizontal wells in various stages of drilling and completion.
  • Lease operating expense ("LOE") per Boe decreased for the fourth consecutive quarter, down 6% versus 4Q15 to $5.25.
  • The Company's bank lending group affirmed Parsley's borrowing base of $575 million, reflecting the Company's strong financial position.
  • As of March 31, 2016, pro forma for the acquisitions announced and equity offering completed in April, the Company had $164 million of cash on hand, $738 million of liquidity, and a net debt to annualized adjusted EBITDAX ratio of 1.7x.
  • Moody's upgraded Parsley's Corporate Family Rating to B2 from B3 and upgraded the rating on the Company's senior unsecured notes to B3 from Caa1.

"The momentum we built last year carried over to the first quarter of 2016," said Bryan Sheffield, Parsley's President and CEO. "With oil prices rebounding and costs still declining, our decision to maintain a steady activity pace is paying off as we deliver robust production growth in a healthy-return environment. In addition, we are thrilled to have added meaningfully to our core acreage positions in both the Midland and Southern Delaware Basins in recent weeks. All in all, Parsley Energy is off to a great start in 2016, with a number of exciting projects on the horizon as we ramp up in the Southern Delaware and delineate new target intervals in the Midland Basin."

Operational Highlights

During the first quarter, Parsley spud 20 and completed 15 gross operated horizontal wells with an average working interest of 92%.

The Company's first operated horizontal well in the Southern Delaware Basin, the Trees State 16-1H, continues to show a strong production trajectory, as does the non-operated Cilantro 2524-C3-1H, drilled onto the northwest corner of Parsley's Southern Delaware acreage position. At the 120-day mark and when normalized to a 7,000' lateral, both wells are tracking at least 25% above the Company's 1 million Boe EUR type curve for Midland Basin Wolfcamp A/B wells.

Among the wells that achieved 30-day peak production periods since the Company's last quarterly update, the Atkins 14-11-4202H, completed on a three-well pad in Upton County, established a Company-record 30-day IP rate for a Wolfcamp A well at 1,883 Boe/d or 242 Boe/d per thousand completed feet. The three wells that comprise this pad project, two of which were completed in the Wolfcamp B formation, produced more than 97,000 barrels of oil during their respective peak 30-day periods. Parsley's Wolfcamp A and Wolfcamp B wells with longer production histories continue to show encouraging decline rates, supporting cumulative production profiles that in aggregate track above those implied by the Company's 1 MMBoe EUR Wolfcamp A/B type curve, which corresponds to a 7,000' completed lateral. Wolfcamp wells with 180 and 360 days of production are outperforming the type curve by 3% and 10%, respectively.

Financial Highlights

During the first quarter of 2016, the Company recorded a net loss attributable to its stockholders of $19.4 million, or $0.14 per weighted average share. Excluding non-recurring items on a tax-adjusted basis and adding back the non-controlling interest allocated to Class B stockholders, the adjusted net loss for the first quarter of 2016 was $5.3 million, or $0.03 per diluted share.

Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense for the first quarter of 2016 was $55.4 million, down just 5% compared to the fourth quarter of 2015 despite significantly lower oil prices on average during 1Q16. ("Adjusted EBITDAX" and "adjusted net loss" are not presented in accordance with generally accepted accounting principles in the United States ("GAAP"). Please see the supplemental financial information at the end of this news release for a reconciliation of the non-GAAP financial measures of adjusted net loss and adjusted EBITDAX to GAAP financial measures.)

LOE per Boe decreased from $5.57 in 4Q15 to $5.25 in 1Q16, driven by ongoing buildout of the Company's in-house gathering and disposal system and electrification projects that reduce fuel and power costs and boost well run-times. Cash G&A per Boe increased from $4.41 in 4Q15 to $6.25 in 1Q16, burdened by a full-year vacation accrual as well as relocation expenses associated with moving departments from Midland to Austin. Depreciation, depletion, and amortization expense per Boe decreased from $21.74 in 4Q15 to $18.66 in the first quarter of 2016 as reserve growth outpaced strong production growth.

Parsley reported development expenditures of $110 million in 1Q16. Reported capital expenditures include costs associated with the horizontal drilling activity noted above, as well as one vertical well and three saltwater disposal wells.

Liquidity Update

As of March 31, 2016 pro forma for the acquisitions announced and equity offering completed in April, the Company had approximately $738 million of liquidity—consisting of $164 million of cash on hand and an undrawn amount of $575 million on the...