Parsley Energy (PE): Raising PT On Accretive Acquisition - UBS

August 26, 2016 9:02 AM EDT
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Price: $36.88 +0.05%

Rating Summary:
    30 Buy, 4 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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UBS analyst, William Janela, reiterated his Buy rating on shares of Parsley Energy (NYSE: PE) after the company issued ~8.34MM Class A common shares for expected net proceeds of ~$271MM and completed a $200MM private placement of senior notes due 2024. Net proceeds from the transactions will be used to fund the acquisition of ~9,140 net acres in Glasscock County with the balance directed to capex and general corporate purposes.

The headline price implies PE is paying a steep production-adjusted >$42,000/acre (comfortably above recent valuation markers in the Permian) but the associated NRI uplift & modest increase to its inventory-wide lateral length make the deal accretive to our 2P NAV estimate (+$5 to ~$42/share) & boost PE's unbooked:proved ratio from 6.8x to 8.7x, above the peer median of ~7.0x and the second highest within our Permian universe (behind PXD).

The price target increases to $38 from $33.

For an analyst ratings summary and ratings history on Parsley Energy click here. For more ratings news on Parsley Energy click here.

Shares of Parsley Energy closed at $33.95 yesterday.

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