Parsley Energy (PE) Tops Q1 EPS by 5c

Parsley Energy (NYSE: PE) reported Q1 EPS of $0.29, $0.05 better than the analyst estimate of $0.24. Revenue for the quarter came in at $564.8 million versus the consensus estimate of $619.62 million.

Updated 2020 Outlook

• On March 11, 2020, the World Health Organization declared the novel coronavirus 2019 (\"COVID-19\") a pandemic. COVID-19 has had a material negative impact on global economic activity and, as a result, has also caused significant global oil demand destruction. This unprecedented decline, combined with recent periods of increased production from foreign oil producers (most notably Saudi Arabia and Russia), resulted in a sharp drop in near-term oil prices.
• In light of this lower commodity price environment, Parsley is revising its baseline capital budget assumption from a $30-$35 WTI oil price to a $20-$30 WTI oil price for the remainder of 2020. In this environment, the Company is reducing its 2020 capital budget to less than $700 million, with reported 1Q20 capital expenditures of $379 million representing more than 50% of this revised full-year budget.
• With regional oil prices recently trading below $20 per barrel, Parsley has suspended all new drilling and completion activity in the near-term. Parsley\'s future activity plans will continue to be driven by unhedged return profiles.
• Parsley remains committed to free cash flow generation and, in the context of $20-$30 WTI oil prices for the remainder of the year, is now targeting at least $300 million of free cash flow(1) in 2020. In a lower oil price environment, Parsley will adjust as needed to preserve its balance sheet.

Summary Comment and Outlook

"In the face of unparalleled global demand destruction, one thing of certainty is that demand will recover from recent lows, but the magnitude and timing are less clear," commented Matt Gallagher, Parsley's President and CEO. "In these challenging times, we remain focused on controlling what we can control and making sound incremental investment decisions based on the facts at hand. Parsley responded decisively on multiple fronts to adapt to rapidly changing market conditions over the past two months and our company is well built for the endurance test now facing the industry. Parsley\'s 2020 activity plans will remain flexible, but we remain inflexible in our commitment to allocate incremental capital based on unhedged rates of return in prevailing market conditions. Regardless of the activity scenario we pursue for the remainder of the year, we are committed to generating healthy free cash flow in 2020, exiting the year with a solid balance sheet, ample scale, a shallower oil base decline, and visibility to sustained free cash flow in 2021 and beyond. In short, we will endure with relevance."

For earnings history and earnings-related data on Parsley Energy (PE) click here.

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