Back to top

Image: Bigstock

Parsley Hikes Dividend, Outlines 2020 Plans, Cuts Capex

Read MoreHide Full Article

Parsley Energy (PE - Free Report) recently announced quarterly dividend payout of 5 cents per share, reflecting a 66.7% increase from the prior dividend payout of 3 cents. The new dividend is payable on Mar 20 to shareholders of record as of Mar 10. It also outlined its 2020 development program and provided fourth quarter and 2019 activity overview. 

The company is slated to announce fourth-quarter 2019 earnings on Feb19, after the closing bell.

Q4 And 2019 Performance Overview

In the fourth quarter, Parsley brought 37 gross operated horizontal wells online, with more than 50% in December alone. Thanks to lower well costs and quarter-over-quarter decline in facilities and infrastructure spending, capital expenditure during the quarter was around $275 - $285 million, which brings the full year spending below the low end of the guided range of $1.4 - $1.47 billion. Net oil production is expected to have been around 89.5 - 89.7 thousand barrels of oil per day.

Continuing its effort toward cost efficiency in the Delaware Basin, Parsley recently completed a four-well project in Pecos County with an estimated average drilling, completion and equipment cost below $1,100 per lateral foot.

Q1 View

Post wrapping up Jagged Peak Energy’s acquisition earlier this month, Parsley foresees first quarter 2020 net oil production to average 123 - 129 MBo/d.

2020 Guidance

Parsley aims at deploying 15 development rigs and four-to-five frac spreads on average in 2020. While it has maintained pro-forma 2020 oil production at 125-133 MBo/d, it has lowered the 2020 capital budget owing to a drop in development expenses to $1.6 - $1.8 billion (the previous outlook: $1.6 - $1.9 billion).      

It expects to generate free cash flow of a minimum $200 million in 2020 (Parsley's baseline capital budget projects oil prices at $50 a barrel for WTI). A spike in oil price will allow it to generate extra free cash flow, but the company will not deploy the excess in development activity this current year. It has also provided the initial guidance for 2020 unit costs. The company expects lease operating expenses in the range of $3.5 – $4.5 per Boe, and cash general and administrative expenses of $2.00-$2.40 per Boe.

To wrap up, capital efficiency gains and savings on services, coupled with free cash flow generation continue to be Parsley’s primary focus.

About Parsley Energy

Parsley is an independent oil and natural gas explorer and producer which focuses on growth through a combination of acquisitions and active drilling in the lucrative Permian Basin. It currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks from the Zacks Oils and Energy sector are given below:

California Resources (CRC - Free Report) earnings beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive surprise being 711.1%. The company has a Zacks Rank #2 (Buy).

 

CNX Midstream Partners (CNXM - Free Report) earnings beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive surprise being 13.3%. The company has a Zacks Rank #2.

Suncor Energy (SU - Free Report) earnings beat the Zacks Consensus Estimate in two of the prior four quarters, the average positive surprise being 2.2%. The company has a Zacks Rank #2.  

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?

Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top 10 Stocks for 2020 today >>