Parsley Energy announces extensive Midland and Delaware basin acquisitions

1/11/2017

AUSTIN, Texas -- Parsley Energy announced that it has entered into agreements to acquire, in unrelated transactions, certain undeveloped acreage and producing oil and gas properties located adjacent to the company's existing operating areas in the Midland and southern Delaware basins.  The aggregate purchase price is $607 million in cash, with certain transactions still subject to customary closing conditions

The company has also acquired certain mineral interests in the southern Delaware basin for an aggregate purchase price of $43 million. Parsley intends to finance these acquisitions through an equity offering announced concurrently with the acquisitions. Parsley also introduced 2017 capital plans and operating guidance that contemplate a 75% increase in net lateral footage and production growth of almost 60% versus 2016, effectively pulling forward value from a growing asset base.

Acquisition highlights

Approximately 23,000 net leasehold acres

Estimated current net production of approximately 2,300 boepd

Approximately 340 net horizontal drilling locations in primary target intervals

Approximately 660 net royalty acres

Midland basin

About 17,800 net leasehold acres in Upton, Reagan, Glasscock, and Midland counties

Estimated current net production of approximately 1,200 boepd

About 230 net horizontal drilling locations in the Wolfcamp A, Wolfcamp B, and Lower Spraberry targets

Southern Delaware basin

Approximately 5,200 net acres in Reeves, Pecos, and Ward counties

Estimated current net production of 1,100 boepd

Approximately 110 net horizontal drilling locations in the upper Wolfcamp and Bone Spring targets

Mineral rights averaging 17% royalty interest in 3,900 net acres in Reeves and Pecos counties

"We are excited to announce a set of acquisitions that add to our premier asset bases in both the Midland and southern Delaware basins," stated Bryan Sheffield, chairman and CEO of Parsley Energy. "We continue to focus on digestible bolt-on acreage that can be rapidly assimilated into our development program. All of the acquisition properties meet our high standards for acreage quality, return profile, and upside potential. Together, these properties will increase our net acreage by more than 15%, and we believe that our track record of operational excellence, productivity enhancement, and cost leadership makes us the best owner of these assets."

Matt Gallagher, Parsley's president and COO, commented, "Having maintained healthy activity levels, steadily supplemented our acreage portfolio, and increased our operational capacity throughout the downturn, Parsley has a head start toward leading production and cash flow growth in a more benign commodity price environment. The company's 2017 capital program spans our development areas and demonstrates our commitment to pulling value forward from new and legacy assets, alike.”

“On top of sustainable growth from our reliably prolific and expanding Midland basin resource base, we believe 2017 will mark an inflection point for Parsley in the southern Delaware basin as years of exploration and delineation begin to pay substantial dividends. We expect production from Delaware to increase fourfold by the end of the year and, boosted by this contribution, we expect to generate significant production momentum through the end of 2017. This production growth should be characterized by robust returns and expanding margins as a function of meaningfully higher average lateral lengths, net revenue interest, and oil as a percent of total production, accompanied by lower unit costs and development costs per lateral ft."

Parsley expects to bring 85-95 horizontal wells online in the Midland basin with drilling and completion activity focused on the Wolfcamp A and B intervals.  Additional activity is planned for the Spraberry and Wolfcamp C formations.

The company expects to bring 35-45 horizontal wells online in the southern Delaware basin with drilling and completion activity focused on upper Wolfcamp, with additional activity planned in middle Wolfcamp and Bone Spring.

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