Imperial Capital Raises Price Target on Parsley Energy (PE) to $42
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Imperial Capital reiterated an Outperform rating on Parsley Energy (NYSE: PE), and raised the price target to $42.00 (from $40.00), following the company's announcement of a $400mn PSA to acquire 11,672 (9,140 net) acres in the core of the Midland Basin. Imperial Capital views the acquisition positively and believes that it is immediately accretive to PE’s NAV and PE was able to execute on the transaction without straining liquidity.
Analyst Kim Pacanovsky commented, "On 8/15/16, PE announced a $400mn PSA to acquire 11,672 (9,140 net) acres in western Glasscock County, Texas, in the core of the Midland Basin. The acquired leasehold package is largely contiguous and in close proximity to PE’s existing Glasscock County acreage, with Diamondback (FANG) and RSP Permian (RSPP) as likely offset operators. Financed by an upsized $243.2mn equity offering and additional $200mn of debt tacked onto PE’s existing 6.25% senior unsecured notes, we believe that the acquisition is immediately accretive to PE’s RNAV owing to the combined drilling inventory boost (approximately 215 net locations) as well as mineral and overriding royalty interests improving PE’s NRI by around 5%."
Shares of Parsley Energy closed at $33.74 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
Related EntitiesDefinitive Agreement, Equity Offerings, Imperial Capital
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