Form 8-K Parsley Energy, Inc. For: Apr 04
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 4, 2016
PARSLEY ENERGY, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-36463 | 46-4314192 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
303 Colorado Street, Suite 3000
Austin, Texas 78701
(Address of Principal Executive Offices)
(Zip Code)
(737) 704-2300
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
On April 4, 2016, Parsley Energy, Inc. (the “Company”) issued a news release announcing the commencement of an underwritten public offering of 16,000,000 shares of its Class A common stock (the “Offering”). The Company expects to grant the underwriters a 30-day option to purchase up to an additional 2,400,000 shares of Class A common stock. A copy of the news release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Item 7.01 (including the exhibit) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 8.01 | Other Events. |
(i) On April 4, 2016, the Company issued a news release announcing that it has entered into agreements to acquire certain undeveloped acreage and producing oil and gas properties located adjacent to the Company’s existing operating areas in the Southern Delaware and Midland Basins for an aggregate purchase price of $359 million in cash (subject to customary purchase price adjustments). A copy of the news release is attached hereto as Exhibit 99.2 and incorporated herein by reference.
(ii) In connection with the Offering, the Company provided the additional risk factors set forth below in the disclosures provided to investors in the Offering. Capitalized terms used but not defined below have the meaning given such terms in the prospectus supplement related to the Offering.
We may not consummate the Acquisitions, and this offering is not conditioned on the consummation of the Acquisitions.
A portion of the net proceeds from this offering will be used to fund the aggregate purchase price for the Acquisitions, as described under “Summary—Recent Developments.” However, we may not consummate the Acquisitions, which are subject to the satisfaction of customary closing conditions. There can be no assurance that such conditions will be satisfied or that the Acquisitions will be consummated.
This offering is not conditioned on the consummation of the Acquisitions. Therefore, upon the closing of this offering, you will become a holder of our Class A common stock regardless of whether the Acquisitions are consummated, delayed or terminated. If the Acquisitions are delayed or terminated, the price of our Class A common stock may decline to the extent that the current market price of our Class A common stock reflects a market assumption that the Acquisitions will be consummated on the terms described herein. In addition, if the Acquisitions are not consummated, our management will have broad discretion in the application of the net proceeds of this offering and could apply the proceeds in ways that you or other stockholders may not approve, which could adversely affect the market price of our Class A common stock.
Our ability to use our net operating loss carryforwards may be limited.
As of December 31, 2015, we had approximately $50.4 million of U.S. federal net operating loss carryforwards (“NOLs”). Our NOLs begin to expire in 2033. Utilization of these NOLs depends on many factors, including our future income, which cannot be assured. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone an “ownership change” (as determined under Section 382). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least 5% of our stock change their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change has occurred, or were to occur, utilization of our NOLs would be subject to an annual limitation under Section 382, determined by multiplying the value of our stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in Section 382. Any unused annual limitation may be carried over to later years. We cannot assure you that we will not have an ownership change as a result of this offering, which would result in an annual limitation under Section 382. However, even if we did have an ownership change as a result of this offering, we do not believe that such
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limitation would prevent our utilization of our NOLs prior to their expiration. Future ownership changes or future regulatory changes could limit our ability to utilize our NOLs. To the extent we are not able to offset our future income with our NOLs, this would adversely affect our operating results and cash flows if we attain profitability.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit |
Description | |
| 99.1 | News Release, dated April 4, 2016, titled “Parsley Energy Announces Public Offering of Class A Common Stock.” | |
| 99.2 | News Release, dated April 4, 2016, titled “Parsley Energy Announces Acquisitions and Updates Full-Year Guidance.” | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 4, 2016
| PARSLEY ENERGY, INC. | ||
| By: | /s/ Colin W. Roberts | |
| Name: | Colin W. Roberts | |
| Title: | Vice President—General Counsel | |
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EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | News Release, dated April 4, 2016, titled “Parsley Energy Announces Public Offering of Class A Common Stock.” | |
| 99.2 | News Release, dated April 4, 2016, titled “Parsley Energy Announces Acquisitions and Updates Full-Year Guidance.” | |
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Exhibit 99.1
NEWS RELEASE
Parsley Energy Announces Public Offering
of Class A Common Stock
AUSTIN, Texas, April 4, 2016—(BUSINESS WIRE)—Parsley Energy, Inc. (NYSE: PE) (“Parsley Energy” or the “Company”) today announced that it has commenced an underwritten public offering of 16,000,000 shares of Class A common stock. The Company expects to grant the underwriters an option to purchase up to an additional 2,400,000 shares of Class A common stock from the Company.
Parsley Energy intends to use the net proceeds of the offering to fund the aggregate purchase price for the acquisitions of oil and gas interests in the Southern Delaware and Midland Basins (the “Acquisitions”) the Company announced today. Any remaining net proceeds will be used to fund a portion of the Company’s capital program and for general corporate purposes, including future acquisitions. The offering is not conditioned on the consummation of the Acquisitions.
Morgan Stanley & Co. LLC and Raymond James & Associates, Inc. are acting as joint bookrunners for the offering.
The offering is being made pursuant to an effective shelf registration statement, which has been filed with the Securities and Exchange Commission (the “SEC”) and became effective June 5, 2015. The offering will be made only by means of a preliminary prospectus supplement and the accompanying base prospectus, copies of which may be obtained on the SEC’s website at www.sec.gov. Alternatively, the joint bookrunners will arrange to send you the preliminary prospectus supplement and related base prospectus if you request them by contacting:
Morgan Stanley & Co. LLC
Attn: Prospectus Department
180 Varick Street, 2nd Floor
New York, NY 10014
Raymond James & Associates, Inc.
Attn: Equity Syndicate
880 Carillon Parkway
St. Petersburg, Florida 33716
This press release is neither an offer to sell nor a solicitation of an offer to buy any securities, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Parsley Energy, Inc.
Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin in West Texas.
Forward-Looking Statements
Certain statements contained in this news release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Parsley Energy’s expectations or beliefs concerning future events, and it is possible that the
results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Parsley Energy’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Parsley Energy does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Parsley Energy to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in our filings with the SEC, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2015. The risk factors and other factors noted in our SEC filings could cause our actual results to differ materially from those contained in any forward-looking statement.
Contact Information
Brad Smith, Ph.D., CFA
Parsley Energy, Inc.
Vice President, Corporate Strategy and Investor Relations
or
Stephanie Reed
Investor Relations Manager
(512) 505-5199
Source: Parsley Energy, Inc.
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Exhibit 99.2
NEWS RELEASE
Parsley Energy Announces Acquisitions and Updates Full-Year Guidance
AUSTIN, Texas, April 4, 2016—(BUSINESS WIRE)—Parsley Energy, Inc. (NYSE: PE) (“Parsley Energy” or the “Company”) today announced that it has entered into agreements to acquire certain undeveloped acreage and producing oil and gas properties located adjacent to the Company’s existing operating areas in the Southern Delaware and Midland Basins for an aggregate purchase price of $359 million in cash (subject to customary purchase price adjustments).
Acquisition Highlights
| • | 22,908 net surface acres |
| • | Estimated current net production of approximately 2,300 Boe per day from nine producing horizontal wells and 97 vertical wells |
| • | Acquired assets include six horizontal wells in various stages of drilling and completion |
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Southern Delaware Basin
| • | 14,197 net acres in Reeves and Ward Counties, TX for approximately $144 million |
| • | Estimated current net production of approximately 1,200 Boe per day from seven horizontal wells and 20 vertical wells |
| • | Adds approximately 700,000 drillable lateral feet based on projected horizontal drilling inventory in one Wolfcamp flow unit; incremental value from additional Wolfcamp flow units and multiple Bone Spring targets |
| • | Parsley to receive one drilled but uncompleted horizontal well at closing |
| • | Select offset wells demonstrated 24-hour initial production rates per thousand completed feet ranging from 180 Boe to 320 Boe in Reeves County and 152 Boe to 623 Boe in Ward County |
| • | Scheduled to close on or before May 3, 2016, subject to the satisfaction of customary closing conditions |
Midland Basin
| • | 8,711 net acres in Midland, Upton, Reagan, and Glasscock Counties, TX for approximately $215 million |
| • | Estimated current net production of approximately 1,100 Boe per day from two horizontal wells and 77 vertical wells |
| • | Adds 257 net horizontal drilling locations |
| • | Extends eight existing horizontal drilling locations by approximately 5,000’ on average |
| • | Parsley to receive four drilled but uncompleted horizontal wells at closing, as well as one horizontal well to be completed by closing |
| • | Select offset wells demonstrated 24-hour initial production rates per thousand completed feet ranging from 236 Boe to 281 Boe in Glasscock County, 193 Boe to 195 Boe in Midland County, 254 Boe to 553 Boe in Upton County, and 176 to 270 Boe in Reagan County |
| • | Scheduled to close on or before May 16, 2016, subject to the satisfaction of customary closing conditions |
“We are excited to announce a set of bolt-on acquisitions that add to our premier asset bases in both the Midland and Southern Delaware Basins,” stated Bryan Sheffield, CEO of Parsley Energy. “These additions extend our running room in the Midland Basin and provide the critical mass necessary to make the Southern Delaware a core part of our ongoing development program. Together, the acquired properties increase our net acreage by 20%, and all have top-tier return potential.”
Full-Year 2016 Guidance Update
Parsley Energy estimates that production from acquired producing wells and acquired wells to be completed will contribute approximately 1,500 Boe per day in 2016, and therefore raises full-year production guidance from 30.0-33.0 MBoe per day to 31.5-34.5 MBoe per day. In addition, to accommodate several incremental completions associated with acquired wells along with accompanying facilities and infrastructure spending to support these wells and ongoing development on acquired properties, the Company now expects capital expenditures of $410-$460 million in 2016, up from a previous range of $380-$430 million.
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| 2016 Previous |
2016 Updated | |||
| Production |
||||
| Production (MBoe/d) |
30.0-33.0 | 31.5-34.5 | ||
| % Oil |
65%-70% | 65%-70% | ||
| Capital Program |
||||
| Drilling and completion ($MM) |
$330-$370 | $355-$395 | ||
| Infrastructure and other ($MM) |
$50-$60 | $55-$65 | ||
| Total development expenditures ($MM) |
$380-$430 | $410-$460 | ||
| Activity |
||||
| Gross operated horizontal completions |
60-70 | 65-75 | ||
| Midland Basin |
57-65 | 60-68 | ||
| Delaware Basin |
3-5 | 5-7 | ||
| Average Lateral Length |
~7,000’ | ~7,000’ | ||
| Gross vertical completions |
3-6 | 3-6 | ||
| Average Working Interest |
85%-95% | 85%-95% | ||
| Unit Costs |
||||
| Lease operating expenses ($/Boe) |
$5.50-$6.50 | $5.50-$6.50 | ||
| Cash general and administrative expenses ($/Boe) |
$4.75-$5.75 | $4.75-$5.75 | ||
| Production and ad valorem taxes (as a % of revenue) |
6.5%-7.5% | 6.5%-7.5% | ||
Registration Statement
The Company has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting Morgan Stanley & Co. LLC, Attn: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014 or Raymond James & Associates, Inc., Attn: Equity Syndicate, 880 Carillon Parkway, St. Petersburg, Florida 33716.
About Parsley Energy, Inc.
Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin in West Texas. For more information, visit our website at www.parsleyenergy.com.
Forward-Looking Statements
Certain statements contained in this news release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Parsley Energy’s expectations or beliefs concerning future events, and it is possible that the results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Parsley Energy’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Parsley Energy does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Parsley Energy to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in our filings with the SEC, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2015. The risk factors and other factors noted in our SEC filings could cause our actual results to differ materially from those contained in any forward-looking statement.
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Contact Information
Brad Smith, Ph.D., CFA
Parsley Energy, Inc.
Vice President, Corporate Strategy and Investor Relations
or
Stephanie Reed
Investor Relations Manager
(512) 505-5199
Source: Parsley Energy, Inc.
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