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Parsley Energy (PE) Q2 Earnings Jump on Production, Oil Price

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Parsley Energy, Inc. (PE - Free Report) recently reported second-quarter 2018 adjusted net earnings per share of 39 cents, missing the Zacks Consensus Estimate of 41 cents due to increased operating expenses. The bottom line, however, improved from the prior-year quarter’s adjusted earnings of 5 cents per share. The year-over-year improvement was caused by higher oil prices and production.

Operating income in the second quarter of 2018 was $210.3 million, significantly higher than the year-ago quarter’s $45.3 million.

Parsley Energy’s total revenues in the second quarter amounted to $467.8 million, increasing substantially from $213.7 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $431 million.

Parsley Energy, Inc. Price, Consensus and EPS Surprise

 

Parsley Energy, Inc. Price, Consensus and EPS Surprise | Parsley Energy, Inc. Quote

Production & Price Realizations

Parsley Energy's average quarterly volume increased 66.6% year over year to 107.8 thousand barrels of oil equivalent per day (MBoe/d) — 84% liquids — on the back of rising production of oil, natural gas and natural gas liquids (NGLs). In the quarter under review, the company put 44 net horizontal wells in production.

Average realized oil price jumped about 41.4% from the year-ago quarter to $64.29 per barrel, while average natural gas price realization decreased 44.8% to $1.32 per thousand cubic feet. Realized price for NGLs in the quarter was $27.20 per barrel, higher than the year-ago quarter’s $19.02. Overall, the company fetched $47.48 per barrel compared with $35.89 a year ago.

Expenditure

The company’s total operating expenses rose to $257.5 million from the year-ago figure of $168.4 million. Lease operating costs rose to $35.9 million in the quarter under review from the year-ago period’s $29.6 million. Exploration and abandonment expenses in the quarter were $3.4 million, higher than the year-ago period’s $2.4 million.

However, lease operating expenses per barrel decreased to $3.66 from $5.03 in the second quarter of 2017.

Capital Expenditure & Balance Sheet

During the quarter under review, capital expenditure of the company totaled $477 million, of which 81.1% was attributed to drilling and completion activities.

As of Jun 30, Parsley Energy had cash and cash equivalents of $201.7 million. Long-term debt of the company stands at around $2.2 billion, representing a debt-to-capitalization ratio of 26.3%.

Revised 2018 Guidance

Parsley Energy revised its full-year capital expenditure outlook due to increased well costs from steel tariffs, higher working interest and shorter cycle times. Capital expenditures are anticipated within $1.65-$1.75 billion, up from the prior guidance of $1.35-$1.55 million. Of the total capital program, 85-90% is expected to be used in drilling and completion activities.

The company increased its full-year equivalent production expectation from 98-108 MBoe/d to 106-111 Mboed/d. Oil production is expected in the range of 68-70.5 thousand barrels.

The company expects its lease operating expenses in the range of $3.50-$4.25 per barrel, lower than previous expectation of $3.75-$5.00 per barrel of oil equivalent. For the full year, the company expects to put 158 net wells in production, higher than previous estimate of 144 net wells, with support from operational efficiency.

Zacks Rank & Key Picks

Currently, Austin, TX-based Parsley Energy has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Canadian Natural Resources Limited (CNQ - Free Report) , ConocoPhillips (COP - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 41.3% year over year, while its bottom line is expected to increase more than 200%.

Houston, TX-based ConocoPhillips is an integrated energy company. The company’s top line for 2018 is likely to improve 14.1% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 27.6%.

Houston, TX-based Cheniere Energy mainly focuses on liquefied natural gas-related businesses. The company’s top line for 2018 is anticipated to improve 26% year over year, while its bottom line is expected to increase more than 225%.

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