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Parsley Energy to Boost 2019 Capital Efficiency & Production
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Parsley Energy, Inc. recently recapitulated its production guidance for 2019, while concentrating on capital efficiency improvement. Like several other North American upstream companies, Parsley Energy intends to achieve its production target, while slashing capital expenditure for the current year.
2019 Guidance Analysis
Capital Expenditure Decline: Parsley Energy expects 2019 capital expenditure in the range of $1,350-$1,550 million, which is lower than the year-ago figure of $1,762 million. Of the projected expenditure, 85% will be allotted for drilling and completion activities.
Boosting Capital Efficiency: In 2019, the company intends to increase its capital efficiency by 8-10% year over year. It calculates capital efficiency as barrels of organic oil production added per $1 million capital expenditure for development. Parsley Energy intends to achieve the efficiency target through optimizing completion activities and higher activity concentration in the Martin, Midland, and Upton counties. Moreover, it aims at increasing average lateral lengths by almost 15%, decreasing service and equipment costs, and fetching around 75% of proppant from regional sand mines to make a significant reduction in capital expenditures.
Production Rise: Parsley Energy projects total production in the range of 124,000-134,000 barrels of oil equivalent per day (Boe/d) in 2019, much higher than 109,416 Boe/d recorded in 2018. Of the total output, it is expected to produce 80,000-85,000 barrels of oil per day (BPD), which is also higher than 2018 oil production of 69,500 BPD, assuming the effects of the recent divestments. The company’s extensive inventory of premium drilling locations, both in the Midland and Delaware sides of the Permian Basin, will aid in top-tier production growth.
For first-quarter 2019, the company expects oil production in the range of 75,500-78,000 BPD, surging from the year-ago period’s 59,344 BPD.
Cash Flow Discipline:The company intends 2019 spending to not exceed operating cash flow level by more than $250 million. It assumes oil price of $50 per barrel for U.S. benchmark WTI crude in 2019. Its attempt to improve the cash flow situation is a vital step, as the Zacks Rank #3 (Hold) company had a negative free cash flow of $429 million in 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
Austin, TX-based Parsley Energy has jumped 18.4% in the past three months compared with the 13.4% collective gain of the industry it belongs to.
Stocks to Consider
Investors interested in the energy sector can opt for some better-ranked stocks as given below:
Midland, TX-based ProPetro Holding Corp. (PUMP - Free Report) is an oil and gas equipment providing company. In 2019, its bottom line is expected to grow 19.5% year over year. The company currently holds a Zacks Rank #2 (Buy).
Archrock, Inc. (AROC - Free Report) is a Houston, TX-based energy infrastructure company. Its bottom line in 2019 is expected to increase 39.6% year over year. It currently has a Zacks Rank #2.
Dril-Quip, Inc. (DRQ - Free Report) is a Houston, TX-based energy equipment services company. Its bottom line in 2019 is expected to increase 76.2% year over year. It currently has a Zacks Rank #2.
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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Parsley Energy to Boost 2019 Capital Efficiency & Production
Parsley Energy, Inc. recently recapitulated its production guidance for 2019, while concentrating on capital efficiency improvement. Like several other North American upstream companies, Parsley Energy intends to achieve its production target, while slashing capital expenditure for the current year.
2019 Guidance Analysis
Capital Expenditure Decline: Parsley Energy expects 2019 capital expenditure in the range of $1,350-$1,550 million, which is lower than the year-ago figure of $1,762 million. Of the projected expenditure, 85% will be allotted for drilling and completion activities.
Boosting Capital Efficiency: In 2019, the company intends to increase its capital efficiency by 8-10% year over year. It calculates capital efficiency as barrels of organic oil production added per $1 million capital expenditure for development. Parsley Energy intends to achieve the efficiency target through optimizing completion activities and higher activity concentration in the Martin, Midland, and Upton counties. Moreover, it aims at increasing average lateral lengths by almost 15%, decreasing service and equipment costs, and fetching around 75% of proppant from regional sand mines to make a significant reduction in capital expenditures.
Production Rise: Parsley Energy projects total production in the range of 124,000-134,000 barrels of oil equivalent per day (Boe/d) in 2019, much higher than 109,416 Boe/d recorded in 2018. Of the total output, it is expected to produce 80,000-85,000 barrels of oil per day (BPD), which is also higher than 2018 oil production of 69,500 BPD, assuming the effects of the recent divestments. The company’s extensive inventory of premium drilling locations, both in the Midland and Delaware sides of the Permian Basin, will aid in top-tier production growth.
For first-quarter 2019, the company expects oil production in the range of 75,500-78,000 BPD, surging from the year-ago period’s 59,344 BPD.
Cash Flow Discipline:The company intends 2019 spending to not exceed operating cash flow level by more than $250 million. It assumes oil price of $50 per barrel for U.S. benchmark WTI crude in 2019. Its attempt to improve the cash flow situation is a vital step, as the Zacks Rank #3 (Hold) company had a negative free cash flow of $429 million in 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
Austin, TX-based Parsley Energy has jumped 18.4% in the past three months compared with the 13.4% collective gain of the industry it belongs to.
Stocks to Consider
Investors interested in the energy sector can opt for some better-ranked stocks as given below:
Midland, TX-based ProPetro Holding Corp. (PUMP - Free Report) is an oil and gas equipment providing company. In 2019, its bottom line is expected to grow 19.5% year over year. The company currently holds a Zacks Rank #2 (Buy).
Archrock, Inc. (AROC - Free Report) is a Houston, TX-based energy infrastructure company. Its bottom line in 2019 is expected to increase 39.6% year over year. It currently has a Zacks Rank #2.
Dril-Quip, Inc. (DRQ - Free Report) is a Houston, TX-based energy equipment services company. Its bottom line in 2019 is expected to increase 76.2% year over year. It currently has a Zacks Rank #2.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>