10.91 +0.04 (0.37%)
After hours: 6:27PM EDT
|Bid||10.62 x 4000|
|Ask||10.92 x 1200|
|Day's range||10.55 - 11.10|
|52-week range||3.92 - 20.80|
|Beta (5Y monthly)||2.13|
|PE ratio (TTM)||N/A|
|Earnings date||05 Aug 2020|
|Forward dividend & yield||0.20 (1.87%)|
|Ex-dividend date||08 Jun 2020|
|1y target est||14.08|
The Zacks Analyst Blog Highlights: EOG Resources, Parsley Energy, Concho Resources, Exxon Mobil and Devon Energy
As crude prices plunged, Parsley Energy (NYSE: PE) pressed regulators in Texas to enact a coordinated production cut to help ease the growing oil storage glut. For example, WPX Energy reaffirmed its plan to exit this year operating six rigs.
The Zacks Analyst Blog Highlights: Diamondback Energy, Cimarex Energy, Pioneer Natural Resources, EOG Resources and Parsley Energy
The Zacks Analyst Blog Highlights: Halliburton, Baker Hughes, EOG Resources, Parsley Energy and Pioneer Natural Resources
The big oil production curtailment in the U.S. shale patch continues as more companies announced on Monday output reductions to protect their balance sheets in the face of unsustainably low oil prices
(Bloomberg Opinion) -- Amid a historic oil crash, frackers are ditching rigs at a rapid pace. The number of operating horizontal rigs stood at 338 on Friday. That’s down more than half since February, though still above the trough in early 2016. So, churlish as it may seem, it must be asked: Why is anyone still drilling shale right now?Speaking on an earnings call a month after petitioning the Texas Railroad Commission to impose supply cuts, Matt Gallagher, CEO of Parsley Energy Inc., summed up the situation facing frackers:Currently, the world does not need more of our product, and we only get one chance to produce this precious resource for our stakeholders.The commission didn’t organize shut-ins of wells. So Parsley, taking its cue from prices instead, is just shutting in some of its own anyway. It has also suspended drilling and completing new wells.The economics of each well — and the companies that own them — differ enormously. But grab an envelope and imagine a well tapping one million barrels of oil equivalent, 75% of it crude oil, the rest natural gas. Benchmark prices: $30 oil and $2.50 gas, translating to, say, $27 and $2 at the wellhead. That implies total revenue from those resources of $23.3 million. Royalties and severance taxes take about $7 million of that; operating expenses and overhead take another $7 million(1). That leaves $9.3 million versus the $9 million spent drilling and completing the well upfront. Factor in time value of money, and that well is seriously underwater.Besides the back-of-crumpled-envelope quality of that calculation, there are other reasons a producer might keep drilling anyway. Rigs are often contracted for months at a time; for example, Helmerich & Payne Inc., a leading provider, reported roughly a third of its U.S. onshore rig fleet operated under fixed-term contracts at the end of March. Contracted pipeline space, too, must be paid for whether or not barrels flow through it. Taking a company’s activity down to zero is also traumatic for workers and, like a shut-in well, makes it harder to eventually crank back up. Hedges, meanwhile, shield against low spot prices and represent oil and gas contracted for delivery.Then again, hedges could be settled for cash; it’s not like anyone is screaming for more of the actual stuff these days. Rig and pipeline contracts can also be renegotiated (an order from the Texas Railroad Commission could have helped on that front, but still). And the difficulty of going into hibernation must be set against the implacable demands of low oil prices.On that note, another rationale for continuing to drill is an expectation of oil and gas prices recovering reasonably soon. Parsley and some other shale operators, such as Diamondback Energy Inc. (which is reducing but not suspending drilling), have indicated they could increase activity again if oil gets back above $30 a barrel (it was trading around $25 Monday morning). Because shale output is very front-loaded, movements in near-term prices matter a lot. For instance, using my basic example above, while the economics don’t work at flat $30 oil, assuming oil rises to $40 in year two and then $50 from year three would generate a low positive return. Those prices actually lag the consensus forecast, which averages $46 for 2021.On the other hand, that consensus stood at $58 only two months ago, so it’s fair to say expectations can change in the middle of an unprecedented oil shock. The current list of unknowns encompasses how quickly people resume something like normality even after lockdowns ease; whether Covid-19 inflicts a second wave; how long the glut of oil inventory building now lasts; and how quickly Saudi Arabia and Russia resume a market-share strategy.The rational thing to do is to wait for higher prices — indeed, conserving barrels, rather than pushing them into a glutted market, is a prerequisite for those higher prices. As EOG Resources Inc. said Friday, oil kept underground is “low-cost storage.”E&P companies carrying more debt (and there are more than a few) may be stuck on the treadmill. Covenants demand cash flow today even if that means destroying value over time. But this is a reminder of why the industry finds itself vulnerable in the first place: managing to production rather than value, and thereby dragging down prices by putting more sub-economic oil onto the market. The Saudi-Russian spat in early March was a warning the market won’t just absorb that from here on. Breaking the existing shale model, and redirecting cash away from wells toward creditors and shareholders, must be one outcome from all this.On that front, it’s worth noting the E&P sector now offers a higher dividend yield than the broader market for only the second time this decade.E&P stocks traded at a premium on yield because they weren’t valued on yield. Unlike the majors and refiners, frackers were owned for growth and a bet on oil prices. That rationale was fraying even before Covid-19, but is especially out of favor now. The yield spread to the market needs to widen, not just to compete against both other oil stocks and other sectors. It would also be a tangible sign of fewer dollars heading into drilling. Like Gallagher said, the world doesn’t need any more of the industry’s “product” right now. That includes investors.(1) Assumes royalties of 25% and severance taxes of 4.6% for oil and 7.5% for natural gas. G&A expenses of $2 per barrel of oil equivalent and $5 of other operating expenses.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
With me on the call are Matt Gallagher, President, and CEO; David Dell'Osso, Chief Operating Officer; Ryan Dalton, Chief Financial Officer; and Stephanie Reed, Senior Vice President of Corporate Development, Land and Midstream. During this call, we will refer to an investor presentation that can be found on our website, and our prepared remarks will begin with reference to slide three of that presentation.
The Parsley Energy Inc (NYQ:PE) share price has risen by 59.3% over the past month and it’s currently trading at 9.45. For investors considering whether to buy8230;
Parsley Energy (PE) delivered earnings and revenue surprises of 16.00% and -4.22%, respectively, for the quarter ended March 2020. Do the numbers hold clues to what lies ahead for the stock?
Parsley Energy (NYSE:PE) shareholders are no doubt pleased to see that the share price has bounced 45% in the last...
(Bloomberg Opinion) -- The Texas Railroad Commission has been petitioned to go back in time.The commission just held a marathon hearing on whether it ought to do something it hasn’t done in almost 50 years: organize curbs on the state's oil output. I say “organize” because cuts are happening anyway; there’s simply no choice when the Covid-19 crisis has wiped out maybe a third of global oil demand. Several companies, including large frackers such as Pioneer Natural Resources Co., have called on the commission to “pro-ration” production to support oil prices.A recurring theme was “waste.” The person who raised it most often, outgoing commissioner Ryan Sitton, even parodied himself repeating the word in a video clip doing the rounds on social media.Clearly, this isn’t your grandfather’s oil market — a point reinforced by James Mann, attorney for the Texas Pipeline Association and formerly a commission employee in the 1970s. He observed that the folks familiar with the data-intensive work of apportioning quotas for thousands upon thousands of wells across the state were no longer contractually employed, so to speak:They’re all dead now. Everybody that knew how to do the arithmetic is gone.When I spoke with Mann the day after the hearing, he recounted other ways in which the world has changed. “Waste,” for example, meant actual waste when it was first used to justify pro-rationing. In the early 1930s, a swarm of wildcatters drawn by the gushing East Texas field sought to out-pump their neighbors, regardless of what the market could absorb. Plus ça change, as they say in Midland. Back then, though, “oil was coming out the ground with no place for it to go; they were putting it in dirt pits and leaky wooden tanks,” as Mann says. A lot of oil soaked into the ground or evaporated — waste in its very worst sense.That can’t happen today provided regulators do their job. If oil is running out of places to go, then futures prices will tell you ahead of time and wells will get shut in, with the weakest usually going first. Rather than a physical issue, “waste” today is a euphemism for lost money. As James Teague, co-CEO of Enterprise Products Partners LP, put it bluntly: “I think I’d define waste as inefficient producers continuing to produce at a time like this.”Speaking of which, much concern was expressed about the fate of smaller producers, in particular. There are over 2,900 producers that account for less than 10% of Texas’ output, according to Matt Gallagher, CEO of Parsley Energy Inc. This implies that, at best, they produce almost 1 million barrels of oil equivalent per day in aggregate but just a few hundred each on average. The vast majority of wells in Texas are dribblers rather than gushers:Bernstein Research estimates that when oil is at $25, a typical marginal well needs to produce 12 barrels a day just to break even, before counting any natural gas. Two-thirds of Texas’ wells produce less than 10 barrels a day equivalent, including gas, and benchmark West Texas Intermediate crude crashed below $13 on Monday morning. And low prices are only one problem; several small producers complained about getting shut out of pipelines, tanks and refineries altogether as those businesses prioritize bigger companies.The inescapable truth is that scale economies are vital in this business. Even before Covid-19 hit, the economic case for sinking money, water, labor and power into lifting maybe just one truckload of oil every other day from a backyard was hardly compelling.Yet the idea of bowing to that reality is anathema. Advocates argue shutting down these wells even temporarily could leave them unable to start up again, wasting the remaining oil and gas. But this presupposes the remainder has positive economic value, an increasingly dubious proposition in an oil market barreling toward peak demand. Factoring in the cost of decommissioning these wells only reinforces this math but, ironically, avoiding that cost also reinforces the desire to cling on.Pro-rationing would reinforce this further, especially if smaller producers were made exempt. It would mean more-efficient wells subsidizing higher-cost ones. Any number of factors may explain why there is such concern to preserve this part of the industry. Immediate impacts such as unpaid bills and layoffs often loom larger than considerations of long-term viability. Moreover, sheer numbers matter more than scale when it comes to one thing: Barrels don’t vote, people do. Zooming out, the state’s pro-rationing debate is a fractal, with the pattern repeating. Most obviously, OPEC+ tries to do the same thing at the global level, just as Texas used to. By holding cheaper barrels off the market, countries such as Saudi Arabia leave room for higher-cost ones, raising the price overall. OPEC+ does this for similar reasons. Like the small producers in Texas, countries such as Saudi Arabia and Russia have economic models that simply wouldn’t work too well if oil was priced like a regular commodity.Oil’s centrality to development over the past century made it indispensable, and demand both ubiquitous and inelastic. Combine that with the geographic concentration of resources, and the result is an edifice of political and economic structures built on the back of this miracle substance. The oil “market” is just different.But it is becoming less different. That’s the underlying reason for the commission’s virtual gathering this week. Covid-19 is like a fever dream of all the pressures that were bearing down on oil already. The last time Texas was pro-rationing, in the early 1970s, the conventional wisdom on resources and their fast-approaching exhaustion was captured in reports like “The Limits to Growth”. Such ideas supported both OPEC’s power and the notion it was better to ration oil supply and conserve resources — even under those Texas backyards — in the expectation prices would only rise in the future.Today, we know we won’t run out of oil. Mann makes the excellent point that the sheer “capability of oil production” holds prices down today rather than physical barrels being poured into bathtubs for want of a buyer. Capital markets have run out of patience with the industry’s current business model of high and often inefficient growth. There’s simply no economic justification for having thousands of operators with all their associated overhead. Meanwhile, the planet is running out of capacity to absorb oil’s emissions. Demand for oil remains high, but is no longer as inelastic as it was. That trend will intensify.It is striking that this enormous, vital market is now dominated by a shale industry that couldn’t pay a decent return even before Covid-19 showed up, and two sclerotic petro-states, Saudi Arabia and Russia, living off their foreign exchange reserves. These are the edifices built for a different time of dependable demand and managed supply.We are transitioning, painfully and chaotically, to a market with more competition, both between producers fighting for market share (and geopolitical influence) and between oil itself and encroaching rival energy sources. The edifices aren’t built for that and must reconfigure or fall. Like oil itself, the Texas Railroad Commission simply cannot deliver all that is being asked of it.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As oil prices plunge, Parsley Energy CEO Matt Gallagher tells Yahoo Finance the recent drop in crude has been an ‘unprecedented slide,’ equating the decline to a ‘train wreck in full speed.’
Tuesday’s Railroad Commission virtual meeting has ended with more questions than answers as the commissioners continue to debate whether the agency should curb production as coronavirus crushes demand
(Bloomberg Opinion) -- The long arc of the American dream of energy independence, having recently soared Icarus-like toward energy dominance, has finally crashed ignominiously into energy incoherence.Since early on in his term, President Donald Trump has boasted about U.S. fossil fuels giving him the whip hand. Yet there was a fatal flaw in his cunning plan: The domestic industries backing him weren’t quite up to the job. Coal policy has been one long exercise in white-boarding ways of forcing the market by fiat to take more of something it manifestly doesn’t want. With oil and gas, freedom fracks turned out to rest on the unconditional support of capital markets — and the latter now have some rather exacting conditions.Hence, this week’s spectacle of Trump calling on Russian President Vladimir Putin to ease up on his oil price war with Saudi Arabia. Meanwhile, Pioneer Natural Resources Co. and Parsley Energy Inc. have written to the Texas Railroad Commission seeking an OPEC-style coordinated cut in oil production in order to preserve “U.S. energy independence,” which they say was a result of “private enterprise and innovation.”There’s much to unpack there, but it’s crucial to take a moment to acknowledge one other development this week: Trump’s announcement of measures to gut the vehicle fuel-economy targets set by the previous administration.Allow me to summarize: America is now so energy dominant that its president seeks favors from an adversary to help bail out domestic oil producers, while simultaneously rolling back policies that would reduce U.S. dependence on oil. Think about another oil shock, the one in 1973 that scarred the baby boomers and sparked America’s independence fetish in the first place. That year, oil demand in the OECD countries outstripped their own supply by almost 27 million barrels a day. A decade later, that gap was just under 18 million a day. Where did those 8.9 million barrels a day go? Half of it was increased production as regions like the North Sea and Alaska really got going. But the other half was reduced demand; partly a function of recession but, more structurally, a concerted effort to stop using oil in power plants and make do with more efficient vehicles.Given the call to the Kremlin this week, let’s add a geopolitical layer to this. Somehow, the U.S. survived and prospered after Saudi Arabia, among others, effectively turned off the oil taps in the 1970s. The following decade, the Soviet Union collapsed partly because it couldn’t handle Saudi Arabia opening the oil taps. The U.S. did well because it used its “private enterprise and innovation” — to borrow Pioneer’s and Parsley’s phrase — to diversify its energy options. The Soviet Union, never particularly famous for those attributes, remained addicted to oil, albeit as a hopeless dealer unable to weather a price drop for what it was pushing.The frackers seeking political help are correct in observing that Covid-19 is an “extraordinary, unforeseeable crisis.” But just as Trump tries to give the coronavirus a Chinese passport to gloss over his administration’s shortcomings, the E&P industry seeks to blame its predicament entirely on external forces. Only last week, Scott Sheffield, Pioneer’s CEO, said in an interview with CNBC that the crash would leave only about 10 publicly traded U.S. oil producers with decent balance sheets versus dozens of “ghosts and zombies” carrying too much debt. That somehow didn’t make it into his letter on Monday, but it rather hints at an underlying problem in this business all of its own making. Here’s a stab at a new approach. First, admit that the Covid-19 demand shock won’t be offset by a coordinated supply cut even if you could arrange it. A supply cut is coming anyway as storage space fills and prices crater. It will be painful, and the government should help the workers and communities affected most by this ( not highly paid CEOs). Second, recognize that the supposed leverage over foreign powers provided by fracking has evaporated along with the industry’s access to the high-yield bond market. The industry will survive, but it will have to restructure and cool its jets.Finally, rather than debase America by horse-trading for an extra $5 on the price of oil (sorry, drivers, there are Texas’ electoral college votes to think about), how about using our technological edge to reduce dependence on oil in the first place? Then the country might be able to act with a bit more (what’s the word?) independence. Step one on that front: Don’t launch a war on efficiency standards that makes even some car manufacturers uneasy. Suggested slogan? “Energy intelligence” has a nice, if somewhat less macho, ring to it.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
To the annoyance of some shareholders, Parsley Energy (NYSE:PE) shares are down a considerable 70% in the last month...
Last week saw the newest full-year earnings release from Parsley Energy, Inc. (NYSE:PE), an important milestone in the...
Parsley Energy (PE) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
(Bloomberg Opinion) -- It is possible that even now, after five years of bruising re-education, Saudi Arabia harbors dreams of finally overcoming the U.S. fracking industry’s cockroach-like grip on life.Unfortunately for Riyadh, coronavirus threatens its own health, so instead of letting rip, it’s talking about further supply cuts. Unfortunately for the frackers, such talk — absent full-throated endorsement from Moscow — still leaves Nymex oil futures pegged at just $50 a barrel. Make no mistake, virus or no, there is a deep malaise in the oil market.Immunity is bolstered best with a healthy (or healthy-ish) balance sheet. On Thursday evening, Parsley Energy Inc. priced eight-year bonds at 4.125%. As exploration and production companies go, Parsley’s leverage counts as relatively OK. It ended September with net debt of just under 1.9 times trailing Ebitda, and Fitch Ratings has it just inside investment grade. It is taking the opportunity to raise longer-dated money with a lower coupon to take out 2024 paper costing 6.25% a year, albeit paying a hefty premium of almost 5% of par to do so.Parsley is a relative rarity. Energy’s high-yield market is largely closed, with the option-adjusted spread on the ICE BofA U.S. High Yield Energy Index back above 700 basis points. The lowest-rated energy credits are utter pariahs, with CCC-rated bonds sporting an average spread of almost 2,000 basis points, according to CreditSights, versus an ex-energy average of about 860 points, which seems almost welcoming by comparison.This split between the sort-of-haves and the most-definitely-have-nots is reflected in stocks too. I wrote back in November about how leverage had become a differentiating factor in an E&P sector coming under increasing pressure. The new year’s bout of fear and loathing has exacerbated that. Here’s how the sector has done, split by levels of indebtedness(1):The message from the stock market, and Parsley’s opportunism, is clear: Any fracker wanting to survive 2020 had best ditch the freewheeling habits of yesteryear and hunker down.(1) The four groups are: as follows. Very high leverage (net debt >3x Ebitda) comprising Antero Resources, Chesapeake Energy, Comstock Resources, EQT, Laredo Petroleum, Oasis Petroleum, Range Resources. High leverage (2-3 x Ebitda) comprising Apache, Callon Petroleum, CNX Resources, Matador Resources, QEP Resources, Southwestern Energy. Moderate leverage (1-2x Ebitda) comprising Berry Petroleum, Centennial Resource Development, Cimarex Energy, Continental Resources, Diamondback Energy, Diversified Oil & Gas, Jagged Peak Energy, Marathon Oil, Murphy Oil, Northern Oil and Gas, Parsley Energy, PDC Energy, SM Energy, SRC Energy, Talos Energy, W&T Offshore, WPX Energy. Low leverage (To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2020 Bloomberg L.P.Subscribe now to stay ahead with the most trusted business news source.
Could Parsley Energy, Inc. (NYSE:PE) be an attractive dividend share to own for the long haul? Investors are often...
Big Oil will be in focus this week with supermajors ExxonMobil (XOM) and Chevron (CVX) reporting fourth-quarter earnings on Friday.
Following the completion of Jagged Peak Energy acquisition earlier this month, Parsley (PE) foresees first quarter 2020 net oil production to average 123 --129 MBo/d.