Parsley (PE) Q3 Earnings Miss, Sales Beat On Output Gain
Zacks Investment Research | Nov 10, 2019 09:30PM ET
Parsley Energy, Inc. (NYSE:PE) reported third-quarter 2019 results wherein earnings missed the Zacks Consensus Estimate.
The company posted adjusted net earnings per share of 29 cents, lagging the Zacks Consensus Estimate of 34 cents. Moreover, the bottom line declined from 45 cents per share in third-quarter 2018 due to weaker year-over-year commodity price realizations. Precisely, average realized price per barrel of oil equivalent (Boe) came in at $36.65, which is 23% lower than the year-ago figure of $47.58.
Parsley’s total revenues in the quarter under review amounted to $510.15 million, marginally lower than $511.02 million a year ago. However, the top line surpassed the Zacks Consensus Estimate of $500 million on higher-than-expected production. As a matter of fact, this upstream player’s output of 150.4 thousand barrels of oil equivalent per day (BOE/d) beat the Zacks Consensus Estimate of 146 thousand BOE/d.
Production Stats and Realized Prices (Minus Derivatives’ Impact)
Parsley's average quarterly volume expanded 29.4% year over year to 150.4 thousand barrels of oil equivalent per day (comprising 82.5% liquids) on the back of rising production of oil, natural gas and natural gas liquids (NGLs). In the quarter under review, the company placed 35 gross horizontal wells on production.
Average realized oil price declined 12.1% from the year-ago quarter to $55.16 per barrel and natural gas price realization decreased 54.6% to 59 cents per thousand cubic feet. Realized price for NGLs in the quarter was $11.08 per barrel, lower than the year-ago level of $31.26.
Total Expenses
Total operating expenses rose to $357.1 million in the quarter under review from the year-ago figure of $290 million. Further, lease operating costs climbed to $45.7 million from $39.7 million in the prior year. Depreciation costs also increased to $211.7 million from $157.3 million in the corresponding quarter of last year.
Capex & Balance Sheet
Capital expenditure totaled $318 million, of which 86% was allotted to drilling and completion activities, and the remaining was spent on facilities and infrastructure.
As of Sep 30, Parsley had cash and cash equivalents of $5 million. Its long-term debt totaled $2,197.1 million, representing a debt-to-capitalization ratio of 27.48%.
Acquisition
In the reported quarter, Parsley reached an agreement to acquire smaller rival Jagged Peak Energy (NYSE:JAG) in an all-stock deal worth $2.27 billion comprising $625-million net debt as of Jun 30. The company also initiated a dividend during this period. It declared fourth-quarter dividend of 3 cents a share, payable Dec 20 to its shareholders of record as of Dec 10.
Per the energy explorer, this “low premium” deal will leave an immediate positive impact on its 2020 cash flow along with net asset value and returns on invested capital. Additionally, this Permian pure play will be able to curtail general and administrative costs by almost $25 million in the first year and subsequently generate $40-$50 million annual savings.
Parsley Energy, Inc. Price, Consensus and EPS Surprise
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