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 30, 2018
 
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:
o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company     o
If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o
 
 
 
 
 


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Item 1.01
Entry into a Material Definitive Agreement.
On April 30, 2018, Parsley Energy, Inc. (the “Company”), Parsley Energy, LLC (“Parsley LLC”), as borrower, certain subsidiaries of Parsley LLC (the “Guarantors”), Wells Fargo Bank, National Association, as administrative agent (the “Administrative Agent”), and the other lenders party thereto entered into the Sixth Amendment to Credit Agreement (the “Sixth Amendment”). The Sixth Amendment amends the Credit Agreement, dated as of October 28, 2016 (as previously amended and as further amended by the Sixth Amendment, the “Credit Agreement”), by and among the Company, Parsley LLC, the Guarantors, the Administrative Agent, JPMorgan Chase Bank, N.A., as syndication agent, BMO Harris Bank, N.A., as documentation agent, and the other lenders party thereto.
The Sixth Amendment, among other things, modifies the terms of the Credit Agreement to (i) increase the borrowing base under the Credit Agreement from $1.8 billion to $2.3 billion (although the aggregate elected commitments under the Credit Agreement will remain at $1.0 billion), (ii) decrease the applicable margins for borrowings under the Credit Agreement to a range of (A) 1.25% to 2.25% for LIBOR based borrowings and (B) 0.25% to 1.25% for alternative base rate based borrowings, with the specific applicable margins determined by reference to borrowing base utilization, (iii) reduce the frequency of scheduled borrowing base redeterminations from semi-annually to annually under certain circumstances, (iv) remove the cap on the amount of additional indebtedness allowed in the form of unsecured senior notes, (v) provide additional flexibility, subject to certain conditions, to make restricted payments, (vi) provide enhanced flexibility, subject to certain dollar limitations, to make investments in unrestricted subsidiaries and joint ventures and to make other investments, (vii) permit, subject to certain conditions, the dispositions of equity interests in unrestricted subsidiaries, and (viii) amend certain other negative covenants.
The Administrative Agent, the other lenders party to the Credit Agreement, and their respective affiliates have from time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and its affiliates in the ordinary course of business for which they have received and would receive customary compensation. In addition, in the ordinary course of their various business activities, such parties and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investments and securities activities may involve the Company’s securities and/or instruments.
The foregoing description of the Sixth Amendment is qualified in its entirety by reference to the Sixth Amendment, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Item 2.02
Results of Operations and Financial Condition.
On May 3, 2018, the Company announced its financial and operating results for the three months ended March 31, 2018.  A copy of the Company’s news release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 (including the exhibit) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“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 (the “Securities Act”), or the Exchange Act.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is hereby incorporated into this Item 2.03 by reference.


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Item 7.01
Regulation FD Disclosure.
In addition, on May 3, 2018 , the Company posted a first quarter presentation on the Company’s website, www.parsleyenergy.com.
 
The information furnished in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of 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 or the Exchange Act.

Item 9.01
Financial Statements and Exhibits.
(d)     Exhibits.


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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.
 
 
 
PARSLEY ENERGY, INC.
 
 
 
 
 
 
 
 
By:
/s/ Colin W. Roberts
 
 
 
 
Colin W. Roberts
 
 
 
 
Executive Vice President—General Counsel
Dated: May 3, 2018
 
 
 



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Exhibit 10.1

Execution Version



SIXTH AMENDMENT
TO
CREDIT AGREEMENT
Dated as of April 30, 2018
Among
PARSLEY ENERGY, LLC,
as Borrower,
PARSLEY ENERGY, INC.,

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
JPMORGAN CHASE BANK, N.A.,
as Syndication Agent,

BMO HARRIS BANK, N.A.,
as Documentation Agent,

and

The Lenders Party Thereto
________________________________

WELLS FARGO SECURITIES, LLC
Sole Lead Arranger and Sole Bookrunner

________________________________





SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “ Sixth Amendment ”) dated as of April 30, 2018, is among Parsley Energy, LLC, a Delaware limited liability company (the “ Borrower ”); Parsley Energy, Inc., a Delaware corporation (“ PEI ”), each of the undersigned guarantors (the “ Guarantors ”, and together with the Borrower, the “ Obligors ”); each of the Lenders party hereto; and Wells Fargo Bank, National Association (in its individual capacity, “ Wells Fargo ”), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”).
R E C I T A L S
A.    The Borrower, PEI, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of October 28, 2016 (as amended, modified, supplemented or restated from time to time prior to the date hereof, the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.
B.    The Borrower and the Guarantors are parties to that certain Guarantee and Collateral Agreement, dated as of October 28, 2016 made by the Borrower and each of the other Grantors party thereto in favor of the Administrative Agent (as amended, modified, supplemented or restated from time to time prior to the date hereof, the “ Guaranty Agreement ”).
C.    The Borrower has requested and the Administrative Agent and the Lenders party hereto have agreed to amend the Credit Agreement, subject to the terms and conditions of this Sixth Amendment.
D.    NOW, THEREFORE, to induce the Administrative Agent and the Lenders to enter into this Sixth Amendment and in consideration of the promises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Defined Terms . Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement, as amended by this Sixth Amendment. Unless otherwise indicated, all section references in this Sixth Amendment refer to sections of the Credit Agreement.
Section 2.      Amendments to Credit Agreement .
2.1      Amendments to Section 1.02 – Certain Defined Terms .
(a)      Each of the following definitions is hereby amended and restated in its entirety to read as follows:
“ Agreement ” means this Credit Agreement, including any schedules and exhibits hereto, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth

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Amendment, and as the same may from time to time be amended, modified, supplemented or restated.
“ Applicable Margin ” means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be, the rate per annum set forth in the Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization Percentage then in effect:
Borrowing Base Utilization Grid
 
<25%
≥25%, but
<50%
≥50%, but
<75%
≥75%, but
<90%
≥90%
ABR Loans
0.250%
0.500%
0.750%
1.000%
1.250%
Eurodollar Loans
1.250%
1.500%
1.750%
2.000%
2.250%
Commitment Fee Rate
0.375%
0.375%
0.500%
0.500%
0.500%

Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change; provided , however, that if at any time the Borrower fails to deliver a Reserve Report pursuant to Section 8.11(a) , then, if so elected by the Majority Lenders, the “Applicable Margin” means the rate per annum set forth on the grid when the Borrowing Base Utilization Percentage is at its highest level.
“ Capital Leases ” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder; provided, that for purposes of calculations made pursuant to the terms of this Agreement, GAAP will be deemed to treat leases in a manner consistent with its current treatment under GAAP as of the Sixth Amendment Effective Date, notwithstanding any modifications or interpretative changes thereto that may occur. For the avoidance of doubt, any lease that would be characterized as an operating lease in accordance with GAAP on the Sixth Amendment Effective Date (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capital Lease) for purposes of this Agreement regardless of any change in GAAP (whether or not such change in GAAP is contemplated as of the Sixth Amendment Effective Date) following the Sixth Amendment Effective Date that would otherwise require such lease to be re-characterized (on a prospective or retroactive basis or otherwise) as a Capital Lease.
(b)      The following definition is hereby added where alphabetically appropriate to read as follows:
“ Annual Scheduled Redetermination ” has the meaning assigned to such term in Section 2.07(b).

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“ Annual Scheduled Redetermination Conditions ” means, for purposes of determining whether the Borrowing Base shall be redetermined on an annual basis or a semi-annual basis pursuant to Section 2.07(b) , as of August 31st of each year, (i) the Aggregate Elected Borrowing Base Commitments as of such date are less than 75% of the Borrowing Base then in effect and (ii) the Consolidated Leverage Ratio is equal to or less than 3.00 to 1.00, as the Consolidated Leverage Ratio is calculated using the financial statements that are available immediately prior to such date for determining (a) Consolidated Total Debt outstanding and (b) EBITDAX for the four fiscal quarters ending on June 30th of such year.
“ Semi-Annual Scheduled Redetermination ” has the meaning assigned to such term in Section 2.07(b).
“ Sixth Amendment ” means that certain Sixth Amendment to Credit Agreement, dated as of April 30, 2018, among the Borrower, PEI, the Guarantors, the Administrative Agent and the Lenders party thereto.
“ Sixth Amendment Effective Date ” has the meaning assigned to such term in the Sixth Amendment.
(c)      The definition of “Debt” is hereby amended by adding the following sentence to the end thereof to read as follows:
Notwithstanding the foregoing, “Debt” shall not include any obligation arising from agreements of the Borrower or any Restricted Subsidiary providing for customary indemnification, adjustment of purchase price, earn-outs (to the extent not included as a liability on the balance sheet of such Person under GAAP) and holdbacks, in each case, incurred or assumed in connection with the disposition or acquisition of any business, assets or Equity Interests of a Restricted Subsidiary in a transaction permitted by this Agreement.
2.2      Amendment to Section 2.07(b) . Section 2.07(b) is hereby amended and restated in its entirety to read as follows:
(b)     Scheduled and Interim Redeterminations . The Borrowing Base shall be redetermined (i) annually, for any year, if the Annual Scheduled Redetermination Conditions have been satisfied on August 31st of such year (an “ Annual Scheduled Redetermination ”), or (ii) semi-annually, for any year, if the Annual Scheduled Redetermination Conditions have not been satisfied on August 31st of such year or if, notwithstanding clause (i) above, the Borrower elects to redetermine the Borrowing Base on a semi-annual basis by written notice to the Administrative Agent no later than August 31st of such year (a “ Semi-Annual Scheduled Redetermination ”) (such Semi-Annual Scheduled Redeterminations to continue until the Borrower notifies the Administrative Agent that it wishes to revert to Annual Scheduled Redeterminations as provided in clause (i) above) in accordance with this Section 2.07 (each, a “ Scheduled Redetermination ”), and, subject to Section

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2.07(d) , such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders, in the case of an Annual Scheduled Redetermination, on April 15th of such year, and in the case of a Semi-Annual Scheduled Redetermination, on April 15th and October 15th of such year. In addition, the Borrower may, by notifying the Administrative Agent thereof, and the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, one time between Scheduled Redeterminations, each elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations, and the Borrower may elect, by notifying the Administrative Agent of any acquisition of Oil and Gas Properties by the Borrower or its Restricted Subsidiaries with a purchase price in the aggregate of at least five percent (5%) of the then effective Borrowing Base, to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “ Interim Redetermination ”) in accordance with this Section 2.07 .
2.3      Amendment to Section 2.07(c)(ii) . Section 2.07(c)(ii) is hereby amended by replacing the phrase “then on or before March 15th and September 15th of such year following the date of delivery” with the phrase “then, in the case of an Annual Scheduled Redetermination, on or before March 31st of such year following the date of delivery, and, in the case of a Semi-Annual Scheduled Redetermination, on or before March 31st and September 30th of such year following the date of delivery”.
2.4      Amendment to Section 2.07(d)(i) . Section 2.07(d)(i) is hereby amended by replacing the phrase “then on April 1st or October 1st, as applicable, following such notice” with the phrase “then, in the case of an Annual Scheduled Redetermination, on April 15th following such notice, and, in the case of a Semi-Annual Scheduled Redetermination, on April 15th or October 15th, as applicable, following such notice”.
2.5      Amendment to Section 3.05(b) . Section 3.05(b) is hereby amended by replacing the reference to “0.25%” with the phrase “0.125%”.
2.6      Amendment to Section 8.11(a) . Section 8.11(a) is hereby amended and restated in its entirety to read as follows:
(a)    (i) On or before March 15th of each year, and in the case of Semi-Annual Scheduled Redeterminations, September 15th of each year, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Loan Parties as of the immediately preceding January 1st and July 1st, respectively. The Reserve Report as of January 1 of each year shall be prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve Report of each year shall be prepared by or under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding January 1 Reserve Report.

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(ii)    If the Borrower is eligible for Annual Scheduled Redeterminations rather than Semi-Annual Scheduled Redeterminations and elects not to provide the July 1 Reserve Report, then on or before September 15th of each relevant year, the Borrower shall, upon request of the Administrative Agent, furnish to the Administrative Agent and the Lenders the most recently prepared internal reserve report evaluating the Oil and Gas Properties of the Borrower and the Restricted Subsidiaries. Such reserve report shall be in the form determined acceptable by the Borrower’s management for the Borrower’s internal use, and shall not be required to qualify as a “Reserve Report” or be prepared in accordance with the procedures used in the preparation of Reserve Reports or otherwise be in form or substance acceptable to the Administrative Agent or any Lender.
2.7      Amendment to Section 8.12(a) . Section 8.12(a) is hereby amended by replacing the phrase “On or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section 8.11(a)” with the phrase “Within sixty (60) days of delivery of the certificate required under Section 8.11(c) (or such longer period as the Administrative Agent may approve in its sole discretion)”.
2.8      Amendment to Section 8.13(a) . Section 8.13(a) is hereby amended by replacing the phrase “within thirty (30) days of delivery of the certificate required under Section 8.11(c)” with the phrase “within sixty (60) days of delivery of the certificate required under Section 8.11(c) (or such longer period as the Administrative Agent may approve in its sole discretion)”.
2.9      Amendment to Section 9.02(f) . Section 9.02(f) is hereby amended and restated in its entirety to read as follows:
(f)    unsecured Senior Notes and any guarantees thereof, so long as after giving effect to the incurrence of such Debt, the Consolidated Leverage Ratio does not exceed 4.00 to 1.00, as the Consolidated Leverage Ratio is recomputed on such date using (I) Consolidated Total Debt outstanding on such date and (II) EBITDAX for the four fiscal quarters ending on the last day of the fiscal quarter immediately preceding such date for which financial statements are available; provided that: (i) the Borrower shall have complied with Section 8.01(q) ; (ii) such Senior Notes do not have any scheduled principal amortization; (iii) such Senior Notes do not mature sooner than the date which is ninety-one (91) days after the Maturity Date; (iv) both before and immediately after giving effect to the incurrence of any such Debt and any concurrent repayment of Debt with the proceeds of such incurrence, no Default, Event of Default or Borrowing Base Deficiency exists or would exist; (v) such Senior Notes do not have any mandatory prepayment or redemption provisions (other than customary change of control or asset sale tender offer provisions) which would require a mandatory prepayment or redemption in priority to the Obligations; (vi) such Senior Notes and any guarantees thereof are on terms, taken as a whole, not materially less favorable to the Borrower and its Subsidiaries as market terms for issuers of similar size and credit quality given the then prevailing market conditions as reasonably determined by the Borrower; (vii)

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if such Senior Notes are senior subordinated Debt, such Senior Notes are expressly subordinate to the payment in full of all of the Obligations on terms and conditions reasonably satisfactory to the Administrative Agent; (viii) no Subsidiary is required to guarantee the Senior Notes unless such Subsidiary has guaranteed the Obligations pursuant to the Guaranty Agreement; (ix) the Borrowing Base then in effect shall be adjusted to the extent required by Section 2.07(f) and the Borrower shall make any prepayment required by Section 3.04(c)(iii) ; provided further that for purposes of clarification, any Senior Notes incurred under this Section 9.02(f) which are repaid may not be reborrowed under this Section 9.02(f) ;
2.10      Amendments to Section 9.02 . Section 9.02 is hereby amended by (a) deleting the word “and” from the end of clause (g), (b) replacing the period at the end of clause (h) with “; and” and (c) adding new clause (i) to the end thereof to read in its entirety as follows:
(i)    other Debt not otherwise permitted pursuant to this Section 9.02 , in an aggregate principal amount not to exceed $125,000,000 at any time.
2.11      Amendments to Section 9.03 .     Section 9.03 is hereby amended by (a) deleting the word “and” from the end of clause (c), (b) replacing the period at the end of clause (d) with “; and” and (c) adding new clause (e) to the end thereof to read as follows:
(e)    Liens securing Debt permitted under Section 9.02(i) on Property not constituting either (i) Oil and Gas Properties or (ii) Equity Interests in Restricted Subsidiaries owning Oil and Gas Properties; provided that the aggregate principal amount of all Debt secured under this Section 9.03(e) shall not exceed $100,000,000 at any time.    
2.12      Amendment to Section 9.04(a) . Section 9.04 is hereby amended and restated to read in its entirety as follows:
(a)     Restricted Payments . The Borrower will not, and will not permit any of its Restricted Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its holders of Equity Interests or make any distribution of its Property to its Equity Interest holders without the prior approval of the Majority Lenders, except (i) each Loan Party may declare and pay dividends or distributions with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock), (ii) Restricted Subsidiaries of the Borrower may declare and pay dividends or distributions ratably with respect to their Equity Interests to the Borrower or any Wholly-Owned Subsidiary Guarantor, (iii) the Permitted PEI Payments shall be permitted, (iv) the Permitted Tax Distributions shall be permitted, so long as both before and after giving effect to each such Permitted Tax Distribution, no Default or Event of Default has occurred and is continuing or would result therefrom and (v) the Borrower may make Restricted Payments in cash, so long as both before and immediately after giving effect to such Restricted Payment (A) no Default or Event of Default has occurred and is continuing or would result therefrom, (B) the total

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Revolving Credit Exposures does not exceed 80% of the total Commitments then in effect and (C) the Consolidated Leverage Ratio is equal to or less than 2.50 to 1.00, as the Consolidated Leverage Ratio is recomputed on such date using (I) Consolidated Total Debt outstanding on such date and (II) EBITDAX for the four fiscal quarters ending on the last day of the fiscal quarter immediately preceding such date for which financial statements are available.
2.13      Amendment to Section 9.05(k) . Section 9.05(k) is hereby amended and restated in its entirety to read as follows:
(k)    Investments in Unrestricted Subsidiaries (including but not limited to Pacesetter) and joint venture entities (including but not limited to SPS) in an aggregate amount at any one time outstanding not to exceed $150,000,000 (net of the fair market value of any dividends, distributions, or any return of capital received by the applicable Loan Party in respect of Investments previously made pursuant to this clause (k)), so long as both before and immediately after giving effect to such Investment, (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) the Consolidated Leverage Ratio is equal to or less than 4.00 to 1.00, as the Consolidated Leverage Ratio is recomputed on such date using (A) Consolidated Total Debt outstanding on such date and (B) EBITDAX for the four fiscal quarters ending on the last day of the fiscal quarter immediately preceding such date for which financial statements are available and (iii) the total Revolving Credit Exposures does not exceed 85% of the total Commitments then in effect.
2.14      Amendment to Section 9.07 . Section 9.07 is hereby amended and restated in its entirety to read as follows:
Section 9.07    [Reserved.]
2.15      Amendments to Section 9.12 . Section 9.12 is hereby amended by (a) deleting “and” from the end of clause (i), (b) changing the period at the end of clause (j) to “; and” and (c) adding a new clause (k) to the end thereof to read as follows:
(k)    So long as no Default, Event of Default or Borrowing Base Deficiency has occurred and is continuing, Dispositions of Equity Interests in Unrestricted Subsidiaries.
Section 3.      Conditions of Effectiveness . This Sixth Amendment will become effective on the date on which each of the following conditions precedent is satisfied or waived in accordance with Section 12.02 of the Credit Agreement (the “ Sixth Amendment Effective Date ”):
3.1      The Administrative Agent shall have received from the Borrower, PEI, each Guarantor, the Issuing Bank and the Lenders, counterparts (in such number as may be requested by the Administrative Agent) of this Sixth Amendment signed on behalf of such Person.

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3.2      The Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the Sixth Amendment Effective Date, including all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement (including fees and expenses invoiced by Paul Hastings LLP).
3.3      No Default or Event of Default shall have occurred and be continuing as of the Sixth Amendment Effective Date.
3.4      The Administrative Agent shall have received such other documents as the Administrative Agent or its special counsel may reasonably require.
The Administrative Agent is hereby authorized and directed to declare this Sixth Amendment to be effective when it has received documents confirming compliance with the conditions set forth in this Section 3 or the waiver of such conditions as agreed to by the Majority Lenders. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.
Section 4.      Borrowing Base Increase . For the period from and including the Sixth Amendment Effective Date (as defined below) to but excluding the next Redetermination Date, the amount of the Borrowing Base shall be equal to $2,300,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.07(e), Section 2.07(f), Section 2.07(g) and Section 8.12(c). For the avoidance of doubt, this Borrowing Base increase shall constitute the April 15, 2018 Scheduled Redetermination.
Section 5.      Limited Waivers.
5.1      Limited Waiver of Mortgage and Title Requirement . Pursuant to Section 8.12(a) of the Credit Agreement, the Borrower is required to deliver, on or prior to the delivery of the Reserve Report to the Administrative Agent and the Lenders in connection with the April 1, 2018 Scheduled Redetermination (the “ April 1, 2018 Scheduled Redetermination Title Delivery Requirement ”), satisfactory title information on at least 85% of the total value of the proved Oil and Gas Properties (and on at least 85% of the total value of the proved, developed and producing reserves) evaluated by such Reserve Report. Pursuant to Section 8.13(a) of the Credit Agreement, in connection with the April 1, 2018 Scheduled Redetermination, the Borrower is required to cause the Mortgaged Properties to represent at least 85% of the total value of the Oil and Gas Properties (and at least 85% of the total value of the proved, developed and producing reserves) evaluated in the most recently completed Reserve Report within 30 days after the delivery of such Reserve Report (the “ April 1, 2018 Scheduled Redetermination Mortgage Requirement ”). The Borrower has requested that the Lenders waive, and the Lenders do hereby waive, the Borrower’s compliance with the April 1, 2018 Scheduled Redetermination Title Delivery Requirement and the April 1, 2018 Scheduled Redetermination Mortgage Requirement; provided that it is a condition to the foregoing waivers that the Borrower must comply with the April 1, 2018 Scheduled Redetermination Title Delivery Requirement and the April 1, 2018 Scheduled Redetermination Mortgage Requirement on or prior to the date that is 30 days after the Sixth Amendment Effective Date (or such later date as the Administrative Agent shall determine in its sole discretion). The failure by the Borrower to

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comply with any of the requirements of this Section 5.1 of this Sixth Amendment shall constitute an immediate Event of Default.
5.2      Waivers . Except as expressly waived herein, all covenants, obligations and agreements of the Borrower contained in the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their terms. Without limitation of the foregoing, the foregoing waivers are hereby granted to the extent and only to the extent specifically stated herein and for no other purpose and shall not be deemed to (a) be a consent or agreement to, or waiver or modification of, or amendment to, any other term or condition of the Credit Agreement, any other Loan Document or any of the documents referred to therein, (b) except as expressly set forth herein, prejudice any right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement, any other Loan Document or any of the documents referred to therein, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument. Granting the waivers set forth herein does not and should not be construed to be an assurance or promise that consents or waivers will be granted in the future, whether for the matters herein stated or on other unrelated matters.
Section 6.      Miscellaneous.
6.1      Confirmation . The provisions of the Credit Agreement, as amended by this Sixth Amendment, shall remain in full force and effect following the effectiveness of this Sixth Amendment.
6.2      Ratification and Affirmation; Representations and Warranties . Each of PEI and each Obligor hereby: (a) acknowledges the terms of this Sixth Amendment; (b) ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect, except as expressly amended hereby; (c) agrees that from and after the Sixth Amendment Effective Date each reference to the Credit Agreement in the other Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Sixth Amendment; and (d) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Sixth Amendment: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such specified earlier date, (ii) no Default or Event of Default has occurred and is continuing and (iii) no event, development or circumstance has occurred or exists that has resulted in, or could reasonably be expected to have, a Material Adverse Effect.
6.3      Counterparts . This Sixth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together

9


shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Sixth Amendment by telecopy, facsimile, as an attachment to an email or other similar electronic means shall be effective as delivery of a manually executed counterpart of this Sixth Amendment.
6.4      NO ORAL AGREEMENT . THIS SIXTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
6.5      GOVERNING LAW . THIS SIXTH AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
6.6      Loan Document . This Sixth Amendment is a “Loan Document” as defined and described in the Credit Agreement and all of the terms and provisions of the Credit Agreement relating to Loan Documents shall apply hereto.
6.7      Payment of Expenses . In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with this Sixth Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.
6.8      Severability . Any provision of this Sixth Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
6.9      Successors and Assigns . This Sixth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
[Signature Pages Follow]


10


IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to be duly executed and delivered by their proper and duly authorized officer(s) as of the day and year first above written.
BORROWER:
PARSLEY ENERGY, LLC
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
 
 
 
PEI:
PARSLEY ENERGY, INC.
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
GUARANTOR:
PARSLEY GP, LLC
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
GUARANTOR:
PARSLEY ENERGY, L.P.
BY: PARSLEY GP, LLC, its general partner
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
 
 
 
 
 
 

[Parsley Energy, LLC - Sixth Amendment Signature Page]


GUARANTOR:
PARSLEY ENERGY OPERATIONS, LLC
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
GUARANTOR:
PARSLEY ADMINISTRATION, LLC
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
GUARANTOR:
PARSLEY MINERALS, LLC
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
GUARANTOR:
PARSLEY FINANCE CORP.
 
By:
/s/ Ryan Dalton




Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
GUARANTOR:
PARSLEY DE LONE STAR LLC
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer


[Parsley Energy, LLC - Sixth Amendment Signature Page]


GUARANTOR:
PARSLEY DE OPERATING LLC
 
 
 
 
 
 
 
By:
/s/ Ryan Dalton




Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
 
 
 
GUARANTOR:
PARSLEY VERITAS ENERGY PARTNERS, LLC
 
 
 
 
 
 
 
By:
/s/ Ryan Dalton
 
Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer
 
 
 
 
 
 
GUARANTOR:
PARSLEY NOVUS LAND SERVICES LLC
 
 
 
 
 
 
 
By:
/s/ Ryan Dalton




Name:
Title:
Ryan Dalton
Executive Vice President – Chief Financial Officer


[Parsley Energy, LLC - Sixth Amendment Signature Page]


ADMINISTRATIVE AGENT, ISSUING BANK AND
LENDER:
WELLS FARGO BANK, NATIONAL ASSOCIATION

 
 
 
 
 
 
 
By:
/s/ Greg Smothers
 
Name:
Title:
Greg Smothers
Director


[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
JPMORGAN CHASE BANK, N.A.

 
 
 
 
 
 
 
By:
/s/ Anca Loghin  
 
Name:
Title:
Anca Loghin
Authorized Officer


[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
BMO HARRIS BANK, N.A.

 
 
 
 
 
 
 
By:
/s/ Matthew L. Davis
 
Name:
Title:
Matthew L. Davis
Director


[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
MORGAN STANLEY BANK, N.A.
 
 
 
 
 
 
 
By:
/s/ John Kuhns
 
Name:
Title:
Name: John Kuhns
Title: Authorized Signatory

LENDER:
MORGAN STANLEY SENIOR FUNDING, INC.
 
 
 
 
 
 
 
By:
/s/ John Kuhns
 
Name:
Title:
John Kuhns
Vice President

 
 
 


[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
 
 
 
 
 
 
 
By:
/s/ Nupur Kumar
 
Name:
Title:
Nupur Kumar
Authorized Signatory
 
 
 
 
 
 
 
 
 
 
By:
/s/ Sophie Bulliard
 
Name:
Title:
Sophie Bulliard
Authorized Signatory




[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
BOKF NA DBA BANK OF TEXAS
 
 
 
 
 
 
 
By:
/s/ Mari Salazar
 
Name:
Title:
Mari Salazar
SVP - Energy Lending






[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
FROST BANK, A TEXAS STATE BANK
 
 
 
 
 
 
 
 
 
 
By:
/s/ Jack Herndon
 
Name:
Title:
Jack Herndon
Senior Vice President






































[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
ROYAL BANK OF CANADA
 
 
 
 
 
 
 
By:
/s/ Don J. McKinnerney
 
Name:
Title:
Don J. McKinnerney
Authorized Signatory







[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
U.S. BANK NATIONAL ASSOCIATION
 
 
 
 
 
 
 
By:
/s/ Nicholas T. Hanford
 
Name:
Title:
Nicholas T. Hanford
Vice President


[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
THE BANK OF NOVA SCOTIA, HOUSTON BRANCH
 
 
 
 
 
 
 
By:
/s/ Alan Dawson
 
Name:
Title:
Alan Dawson
Director

 
 
 

[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
COMPASS BANK
 
 
 
 
 
 
 
By:
/s/ Gabriela Azcarate
 
Name:
Title:
Gabriela Azcarate
Vice President





[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH
 
 
 
 
 
By:
/s/ Trudy Nelson
 
Name:
Title:
Trudy Nelson
Authorized Signatory
 
 
 
 
 
 
 
By:
/s/ Robert Long
 
Name:
Title:
Robert Long
Authorized Signatory
 
 
 



[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
CAPITAL ONE, NATIONAL ASSOCIATION
 
 
 
 
 
 
 
By:
/s/ Michael Higgins
 
Name:
Title:
Michael Higgins
Senior Director


[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
CITIBANK, N.A.


 
 
 
 
 
 
 
By:
/s/ Tariq Masaud
 
Name:
Title:
Tariq Masaud
Vice President




[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
PNC BANK, NATIONAL ASSOCIATION

 
 
 
 
 
 
 
By:
/s/ Sandra Salazar
 
Name:
Title:
Sandra Salazar
Managing Director



[Parsley Energy, LLC - Sixth Amendment Signature Page]


LENDER:
UBS AG, STAMFORD BRANCH
 
 
 
 
 
 
 
By:
/s/ Houssem Daly
 
Name:
Title:
Houssem Daly
Associate Director
Banking Products Services, US

 
 
 
 
 
 
 
By:
/s/ Darlene Arias
 
Name:
Title:
Darlene Arias
Director

 
 
 


[Parsley Energy, LLC - Sixth Amendment Signature Page]

Exhibit 99.1


LOGOA03.JPG
NEWS RELEASE
PARSLEY ENERGY ANNOUNCES FIRST QUARTER 2018 FINANCIAL AND OPERATING RESULTS

AUSTIN, Texas, May 3, 2018 – Parsley Energy, Inc. (NYSE: PE) (“Parsley,” “Parsley Energy,” or the “Company”) today announced financial and operating results for the quarter ended March 31, 2018 . The Company has posted to its website a presentation that supplements the information in this release.
First Quarter 2018 Highlights
•
Net oil production increased 15% quarter-over-quarter and 57% year-over-year to 59.3 MBo per day. Total net production averaged 93.4 MBoe per day. (1)
•
Parsley placed 21 gross operated horizontal wells on production in the Delaware Basin during 1Q18 at an average completed lateral length of approximately 9,600 feet, representing more lateral footage than the Company completed in the Delaware Basin during all of 2017.
•
Parsley registered Company-record initial production rates for wells completed in Glasscock and Pecos Counties, as detailed below.
•
The Company demonstrated strong cost control during the first quarter of 2018. Parsley reported lease operating expense (“LOE”) per Boe of $3.43 , (1) below the Company-provided guidance range for full-year average LOE per Boe. Both general and administrative expense (“G&A”) per Boe and cash based G&A per Boe, which excludes stock-based compensation expense, decreased quarter-over-quarter and year-over-year to $4.16 (1) and $3.56 , (1) respectively.
•
The Company amended its revolving credit agreement on April 30, 2018, thereby increasing its borrowing base from $1.8 billion to $2.3 billion while maintaining the Company’s elected commitment amount of $1.0 billion.
“Parsley Energy made a confident first step toward executing our simplified 2018 development program,” said Bryan Sheffield, Parsley’s Chairman and CEO. “Accelerated development last year not only gave Parsley a head start on securing high quality services and equipment, the corresponding production uplift also means we are benefiting disproportionately from currently higher oil prices. While Parsley is well positioned to benefit from ongoing oil price strength, operational continuity at a steady development pace remains our highest priority this year.”

Operational Update
Parsley’s strong sequential production growth was driven by solid operational execution and favorable well productivity across its acreage footprint, highlighted by efficient Delaware Basin operations and a rapid return to full production following winter weather events in January. Volume growth was also supplemented by an increase in non-operated completion activity.
Activity Overview
During the first quarter, the Company spud 43 and placed on production 41 gross operated horizontal wells. Parsley’s working interest on wells placed on production was approximately 97%, with an average completed lateral length of approximately 9,100 feet. Completion activity was nearly evenly distributed between the Midland Basin and the Delaware Basin, where the Company placed on production 20 and 21 gross operated horizontal wells, respectively. We expect that development activity will be weighted more to the Midland Basin for the remainder of the year, consistent with prior Company commentary.
Notable Well Results
With four rigs currently active in Glasscock County, recent well results in Glasscock bode well for the production contribution associated with this sizable portion of Parsley’s development program. Among these results, the two-well Catfish Hunter 12-1 pad registered strong peak 30-day production rates of 2,022 Boe per day (69% oil) and 2,004 Boe per day (72% oil), respectively. Both wells targeted the Wolfcamp B interval and were completed with approximately two-mile laterals.
Parsley increased Delaware Basin oil production by more than 50% during 1Q18 as compared to 4Q17 through a combination of strong well results, cycle time improvement, and enhanced net revenue interests associated with mineral ownership on 18 of 21 wells placed on production during the quarter. Parsley’s 1Q18 Delaware Basin activity included the three-well Trees State 31-34 pad in Pecos County targeting the Upper Wolfcamp A, Lower Wolfcamp A, and Wolfcamp B zones. Early results from this pad are outstanding, including two Company-record Delaware wells with respective peak 30-day production rates of 2,115 Boe per day (85% oil) and 1,940 Boe per day (86% oil) on approximately two-mile laterals. Notably, these wells are among the first to be completed in the southeast portion of Parsley’s Pecos County acreage position. The 21 gross operated horizontal wells Parsley placed on production during 1Q18 represent more lateral footage than the Company completed in the Delaware Basin during all of 2017.

1

Non-Operated Activity
Non-operated development activity increased during the first quarter with 15 gross (6 net) horizontal wells placed on production, the timing of which was slightly ahead of Company forecasts. Non-operated activity for the remainder of 2018 is expected to be minimal.
Takeaway Positioning
During 1Q18, Parsley reported an unhedged oil price realization of $61.99/Bbl net of transportation costs, representing a differential of just $0.90/Bbl relative to the average NYMEX WTI price for the quarter.
By virtue of proactive steps taken to bolster the Company’s firm transportation capacity and diversify its regional pricing exposure, Parsley now enjoys certain advantages with respect to its takeaway and marketing arrangements. Parsley currently has firm transport agreements covering 95,000 Bo per day of gross operated oil production. Additionally, the Company has diversified pricing agreements with large scale oil purchasers that price a portion of Parsley’s barrels relative to Magellan East Houston, Cushing, and Midland benchmarks. During 2017, Parsley also layered on Midland-Cushing basis swaps that provide additional regional price protection during 2018.
“Our proactive marketing strategy has put us in a position of strength from both a flow assurance and realized pricing standpoint,” said Matt Gallagher, Parsley’s President and COO. “Given the interconnect flexibility, oil quality, scale, and growth visibility we can provide, our crude production is attractive to premier purchasers.”
Financial Update
During 1Q18 , the Company recorded net income attributable to its stockholders of $82.9 million , or $0.32 per share , compared to net income of $49.9 million, or $0.16 per share, during 4Q17 . Excluding, on a tax-adjusted basis, certain items that the Company does not view as indicative of its ongoing financial performance, and adding back the non-controlling interest allocated to Class B stockholders, adjusted net income for 1Q18 was $81.1 million , or $0.31 per share, compared to $95.9 million, or $0.30 per share, in 4Q17. (2)
Adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense (“Adjusted EBITDAX”) for 1Q18 was $ 282.3 million , up 30% compared to the same measure in 4Q17 . (2)  
Parsley demonstrated strong cost control during the first quarter of 2018. The Company reported LOE per Boe of $3.43 , (1) below the Company-provided guidance range for full-year average LOE per Boe. Both G&A per Boe and cash based G&A per Boe, which excludes stock-based compensation expense, decreased quarter-over-quarter and year-over-year to $4.16 (1) and $3.56 , (1) respectively. Favorable trends in cash operating costs and strong realized pricing drove a robust operating cash margin of $35.65 per Boe, or 77% of average realized price per Boe. (3)  
Parsley reported capital expenditures of $424 million during the quarter, comprised of $373 million for drilling and completion activity and $51 million for facilities and infrastructure, including saltwater disposal wells. In addition to spending associated with the above-mentioned 43 operated horizontal spuds and 41 operated horizontal wells placed on production, reported 1Q18 capital expenditures include $14 million of expenses associated with non-operated activity. With planned activity weighted more to the lower-cost Midland Basin for the remainder of 2018, we expect gross development costs per operated well to decrease from 1Q18 levels. We expect net development costs per operated well to decrease for the same reason, along with an expected reduction in average working interest.
Liquidity and Hedging
Parsley amended its revolving credit agreement on April 30, 2018, thereby increasing its borrowing base from $1.8 billion to $2.3 billion while maintaining the Company’s elected commitment amount of $1.0 billion. As of March 31, 2018 , Parsley had approximately $1.5 billion of liquidity, consisting of $500 million of cash, cash equivalents, and short-term investments, and an undrawn amount of $991 million on the Company’s revolver. (4)
Almost all of Parsley’s expected 2018 oil production is subject to hedge protection, and the Company recently added to its 2019 hedge position. Parsley’s hedging strategy protects its balance sheet and anticipated cash flow while retaining significant exposure to higher commodity prices. For details on Parsley’s hedging position, please see the tables below under Supplemental Information and/or the Company’s Quarterly Report on Form 10-Q, upon availability, for the three months ended March 31, 2018 .
Conference Call Information
Parsley Energy will host a conference call and webcast to discuss its results for the first quarter of 2018 on Friday, May 4 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time). Participants should call 877-407-0672 (United States/Canada) or 412-902-0003 (International) 10 minutes before the scheduled time and request the Parsley Energy conference call. A telephone replay will be available shortly after the call through May 18 by dialing 877-660-6853 (United States/Canada) or 201-612-7415 (International). Conference ID: 13678639. A live broadcast will also be available on the internet at www.parsleyenergy.com under the “Events & Presentations” section of the website. The Company has also posted to its website a presentation that supplements the information in this release.

2

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 the Company’s 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 the Company’s filings with the SEC, including its Annual Report on Form 10-K. The risk factors and other factors noted in the Company’s SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement.
Contact Information
Brad Smith, Ph.D., CFA
Senior Vice President, Corporate Strategy and Investor Relations
ir@parsleyenergy.com
(512) 505-5199
or
Kyle Rhodes
Director of Investor Relations
ir@parsleyenergy.com
(512) 505-5199


- Tables to Follow -








 
 
 
(1)
Natural gas and natural gas liquids (“NGLs”) sales and associated production volumes for the three months ended March 31, 2018 reflect adjustments associated with Parsley’s adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers  (“ASC 606”), effective January 1, 2018. Accordingly, all references to 1Q18 production volumes and per Boe unit costs likewise reflect this adoption, which has the effect of increasing certain natural gas and NGLs volumes and revenues, offset by a corresponding transportation and processing cost such that there is no change to reported net income. The recognition and presentation of oil volumes and associated revenues and expenses are unaffected by the adoption of ASC 606.
Previously provided full-year guidance for production volumes and unit costs incorporated the anticipated effect of the adoption of ASC 606.
For more information on ASC 606 and a reconciliation of 1Q18 production and unit costs under ASC 605 and as adjusted under ASC 606, please see the table and associated commentary below under Supplemental Information and/or the Company’s Quarterly Report on Form 10-Q, upon availability, for the three months ended March 31, 2018.
(2)
“Adjusted EBITDAX” and “adjusted net income” are not presented in accordance with generally accepted accounting principles in the United States (“GAAP”). For definitions and reconciliations of the non-GAAP financial measures of adjusted EBITDAX and adjusted net income to GAAP financial measures, please see the tables and associated commentary below under Reconciliation of Non-GAAP Financial Measures.
(3)
“Operating cash margin” as used in this release represents the Company’s average sales price (without realized derivatives) per Boe less lease operating expense per Boe, transportation and processing costs per Boe, production and ad valorem taxes per Boe, and cash based general and administrative expense per Boe (exclusive of stock-based compensation), each of which reflects the adoption of ASC 606. Sales price and cost components referenced in the calculation of operating cash margin can be found in “Selected Operating Data” in the accompanying financial tables.
(4)
Fully undrawn revolver balance is net of letters of credit.

3

Parsley Energy, Inc. and Subsidiaries
Selected Operating Data
(Unaudited)
 
Three Months Ended
 
March 31, 2018
 
December 31, 2017
 
March 31, 2017
Net production volumes:
 
 
 
 
 
Oil (MBbls)
5,341

 
4,737

 
3,394

Natural gas (MMcf) (1)
8,556

 
7,221

 
4,419

Natural gas liquids (MBbls) (1)
1,643

 
1,449

 
800

Total (MBoe)
8,410

 
7,390

 
4,931

Average daily net production (Boe/d)
93,444

 
80,327

 
54,789

Average sales prices (2) :
 
 
 
 
 
Oil, without realized derivatives (per Bbl)
$
61.99

 
$
53.95

 
$
50.01

Oil, with realized derivatives (per Bbl)
$
58.32

 
$
50.88

 
$
48.52

Natural gas, without realized derivatives (per Mcf)
$
2.04

 
$
2.15

 
$
2.82

Natural gas, with realized derivatives (per Mcf)
$
2.06

 
$
2.13

 
$
2.80

NGLs (per Bbl)
$
24.72

 
$
26.84

 
$
21.77

Total, without realized derivatives (per Boe)
$
46.27

 
$
41.94

 
$
40.48

Total, with realized derivatives (per Boe)
$
43.97

 
$
39.96

 
$
39.44

Average costs (per Boe) (3) :
 
 
 
 
 
Lease operating expenses
$
3.43

 
$
3.44

 
$
3.57

Transportation and processing costs
$
0.75

 
$
—

 
$
—

Production and ad valorem taxes
$
2.88

 
$
3.01

 
$
2.26

Depreciation, depletion and amortization
$
14.41

 
$
14.23

 
$
13.99

General and administrative expenses (including stock-based compensation)
$
4.16

 
$
4.72

 
$
4.88

General and administrative expenses (cash based)
$
3.56

 
$
4.04

 
$
4.02

 
 
 
(1)
Natural gas and NGLs volumes for the three months ended March 31, 2018 reflect adjustments associated with Parsley’s adoption of ASC 606, effective January 1, 2018.
(2)
Average prices shown in the table reflect prices both before and after the effects of our realized commodity hedging transactions. Our calculations of such effects include both realized gains and losses on cash settlements for commodity derivative transactions and premiums paid or received on options that settled during the period. Realized oil prices are net of transportation costs. Realized prices for certain gas and NGLs volumes are net of transportation, gathering, and processing costs as stipulated by ASC 606. For more information, please see associated commentary below under Supplemental Information and/or the Company’s Quarterly Report on Form 10-Q, upon availability, for the three months ended March 31, 2018.
(3)
Average costs per Boe for the three months ended March 31, 2018 reflect adjustments associated with Parsley’s adoption of ASC 606, effective January 1, 2018.
 


4


Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except for per share data) (1)  
 
Three Months Ended March 31,
 
2018
 
2017
REVENUES
 
 
 
Oil sales
$
331,103

 
$
169,745

Natural gas sales (2)
17,424

 
12,467

Natural gas liquids sales (2)
40,620

 
17,413

Other
3,594

 
1,233

Total revenues
392,741

 
200,858

OPERATING EXPENSES
 
 
 
Lease operating expenses
28,832

 
17,627

Transportation and processing costs (2)
6,267

 
—

Production and ad valorem taxes
24,186

 
11,162

Depreciation, depletion and amortization
121,199

 
68,970

General and administrative expenses (including stock-based compensation)
34,995

 
24,042

Exploration and abandonment costs
5,411

 
2,763

Acquisition costs
4

 
1,344

Accretion of asset retirement obligations
354

 
136

Other operating expenses
2,175

 
2,283

Total operating expenses
223,423

 
128,327

OPERATING INCOME (LOSS)
169,318

 
72,531

OTHER INCOME (EXPENSE)
 
 
 
Interest expense, net
(31,968
)
 
(19,336
)
Loss on sale of property
(111
)
 
—

Loss on early extinguishment of debt
—

 
(3,891
)
(Loss) gain on derivatives
(10,793
)
 
24,616

Change in TRA liability
(82
)
 
(20,549
)
Interest income
2,123

 
2,371

Other income
301

 
950

Total other expense, net
(40,530
)
 
(15,839
)
INCOME BEFORE INCOME TAXES
128,788

 
56,692

INCOME TAX EXPENSE
(23,325
)
 
(18,402
)
NET INCOME
105,463

 
38,290

LESS: NET INCOME ATTRIBUTABLE TO
   NONCONTROLLING INTERESTS
(22,573
)
 
(8,848
)
NET INCOME ATTRIBUTABLE TO
PARSLEY ENERGY, INC. STOCKHOLDERS
$
82,890

 
$
29,442

 
 
 
 
Net income per common share:
 
 
 
Basic
$
0.32

 
$
0.13

Diluted
$
0.32

 
$
0.13

Weighted average common shares outstanding:
 
 
 
Basic
260,654

 
220,674

Diluted
261,639

 
221,697

 
 
 
(1)
Certain reclassifications and adjustments to prior period amounts have been made to conform with current presentation.
(2)
Natural gas and NGLs sales and transportation and processing costs for the three months ended March 31, 2018 reflect adjustments associated with Parsley’s adoption of ASC 606, effective January 1, 2018.

5


Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
 
March 31, 2018
 
December 31, 2017
 
(In thousands)
ASSETS
 
 
 
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
350,762

 
$
554,189

Short-term investments
149,345

 
149,283

Accounts receivable:
 
 
 
Joint interest owners and other
49,221

 
42,174

Oil, natural gas and NGLs
159,314

 
123,147

Related parties
311

 
388

Short-term derivative instruments, net
34,563

 
41,957

Assets held for sale
—

 
1,790

Other current assets
6,530

 
6,558

Total current assets
750,046

 
919,486

PROPERTY, PLANT AND EQUIPMENT
 
 
 
Oil and natural gas properties, successful efforts method
8,964,262

 
8,551,314

Accumulated depreciation, depletion and impairment
(938,629
)
 
(822,459
)
Total oil and natural gas properties, net
8,025,633

 
7,728,855

Other property, plant and equipment, net
131,691

 
106,587

Total property, plant and equipment, net
8,157,324

 
7,835,442

NONCURRENT ASSETS
 
 
 
Assets held for sale, net
—

 
14,985

Long-term derivative instruments, net
25,150

 
15,732

Other noncurrent assets
8,128

 
7,553

Total noncurrent assets
33,278

 
38,270

TOTAL ASSETS
$
8,940,648

 
$
8,793,198

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
CURRENT LIABILITIES
 
 
 
Accounts payable and accrued expenses
$
415,283

 
$
407,698

Revenue and severance taxes payable
124,974

 
109,917

Current portion of long-term debt
2,388

 
2,352

Short-term derivative instruments, net
74,675

 
84,919

Current portion of asset retirement obligations
7,308

 
7,203

Total current liabilities
624,628

 
612,089

NONCURRENT LIABILITIES
 
 
 
Liabilities related to assets held for sale
—

 
405

Long-term debt
2,179,996

 
2,179,525

Asset retirement obligations
20,476

 
19,967

Deferred tax liability
55,730

 
21,403

Payable pursuant to tax receivable agreement
62,681

 
58,479

Long-term derivative instruments, net
27,487

 
20,624

Total noncurrent liabilities
2,346,370

 
2,300,403

COMMITMENTS AND CONTINGENCIES
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding
—

 
—

Common stock
 
 
 
Class A, $0.01 par value, 600,000,000 shares authorized, 268,550,575 shares issued and 268,112,160 shares outstanding at March 31, 2018 and 252,419,601 shares issued and 252,260,300 shares outstanding at December 31, 2017
2,686

 
2,524

Class B, $0.01 par value, 125,000,000 shares authorized, 48,731,731 and 62,128,157 shares issued and outstanding
at March 31, 2018 and December 31, 2017
487

 
622

Additional paid in capital
4,911,682

 
4,666,365

Retained earnings
126,409

 
43,519

Treasury stock, at cost, 438,415 shares and 159,301 shares at March 31, 2018 and December 31, 2017
(7,200
)
 
(735
)
Total stockholders' equity
5,034,064

 
4,712,295

Noncontrolling interest
935,586

 
1,168,411

Total equity
5,969,650

 
5,880,706

TOTAL LIABILITIES AND EQUITY
$
8,940,648

 
$
8,793,198



6

Parsley Energy, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 
Three Months Ended March 31,
 
2018
 
2017
 
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
105,463

 
$
38,290

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
121,199

 
68,970

Accretion of asset retirement obligations
354

 
136

Loss on sale of property
111

 
—

Loss on early extinguishment of debt
—

 
3,891

Amortization and write off of deferred loan origination costs
1,189

 
783

Amortization of bond premium
(129
)
 
(129
)
Stock-based compensation
5,069

 
4,209

Deferred income tax expense
23,325

 
18,402

Change in TRA liability
82

 
20,549

Loss (gain) on derivatives
10,793

 
(24,616
)
Net cash paid for derivative settlements
(1,903
)
 
(1,188
)
Net cash paid for option premiums
(13,506
)
 
(16,291
)
Net premiums paid on options that settled during the period
(16,526
)
 
(4,854
)
Other
5,215

 
118

Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable
(43,214
)
 
(7,025
)
Accounts receivable—related parties
77

 
103

Other current assets
20,361

 
(85,460
)
Other noncurrent assets
(635
)
 
(902
)
Accounts payable and accrued expenses
(5,427
)
 
17,676

Revenue and severance taxes payable
15,057

 
9,363

Net cash provided by operating activities
226,955

 
42,025

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Development of oil and natural gas properties
(411,073
)
 
(161,003
)
Acquisitions of oil and natural gas properties
(27,447
)
 
(589,286
)
Additions to other property and equipment
(28,248
)
 
(10,628
)
Proceeds from sales and exchanges of oil and natural gas properties
43,228

 
—

Other
349

 
—

Net cash used in investing activities
(423,191
)
 
(760,917
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Borrowings under long-term debt
—

 
451,500

Payments on long-term debt
(694
)
 
(66,328
)
Debt issuance costs
(32
)
 
(6,280
)
Proceeds from issuance of common stock, net
—

 
2,123,486

Repurchase of common stock
(6,465
)
 
(112
)
Net cash (used in) provided by financing activities
(7,191
)
 
2,502,266

Net (decrease) increase in cash, cash equivalents and restricted cash
(203,427
)
 
1,783,374

Cash, cash equivalents and restricted cash at beginning of period
554,189

 
136,669

Cash, cash equivalents and restricted cash at end of period
$
350,762

 
$
1,920,043

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid for interest
$
29,455

 
$
2,463

Cash paid for income taxes
$
—

 
$
200

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
 
 
 
Asset retirement obligations incurred, including changes in estimate
$
359

 
$
3,501

Additions to oil and natural gas properties - change in capital accruals
$
13,013

 
$
27,463

Additions to other property and equipment funded by capital lease borrowings
$
491

 
$
881


7

Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDAX
Adjusted EBITDAX is not a measure of net income as determined by GAAP. Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDAX as net income (loss) before depreciation, depletion and amortization, exploration and abandonment costs, net interest expense, income tax expense (benefit), change in Tax Receivable Agreement (“TRA”) liability, stock-based compensation, acquisition costs, (gain) loss on sale of property, asset retirement obligation accretion expense, loss on early extinguishment of debt, inventory write down, (gain) loss on derivatives, net settlements on derivative instruments, net premium realizations on options that settled during the period.
Management believes Adjusted EBITDAX is useful because it allows the Company to more effectively evaluate its operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company excludes the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of the Company’s operating performance. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. The Company’s computations of Adjusted EBITDAX may not be comparable to other similarly titled measure of other companies. The Company believes that Adjusted EBITDAX is a widely followed measure of operating performance.
The following table presents a reconciliation of Adjusted EBITDAX to the GAAP financial measure of net (loss) income for each of the periods indicated.
Parsley Energy, Inc. and Subsidiaries
Adjusted EBITDAX
(Unaudited, in thousands) (1)
 
Three Months Ended March 31,
 
2018
 
2017
Adjusted EBITDAX reconciliation to net income:
 
 
 
Net income attributable to Parsley Energy, Inc. stockholders
$
82,890

 
$
29,442

Net income attributable to noncontrolling interests
22,573

 
8,848

Depreciation, depletion and amortization
121,199

 
68,970

Exploration and abandonment costs
5,411

 
2,763

Interest expense, net
29,845

 
16,965

Income tax expense
23,325

 
18,402

EBITDAX
285,243

 
145,390

Change in TRA liability
82

 
20,549

Stock-based compensation
5,069

 
4,209

Acquisition costs
4

 
1,344

Loss on sale of property
111

 
—

Accretion of asset retirement obligations
354

 
136

Loss on early extinguishment of debt
—

 
3,891

Inventory write down
61

 
—

Loss (gain) on derivatives
10,793

 
(24,616
)
Net settlements on derivative instruments
(2,873
)
 
(301
)
Net premium realization on options that settled during the period
(16,526
)
 
(4,854
)
Adjusted EBITDAX
$
282,318

 
$
145,748

 
 
 
(1)
Certain reclassifications to prior period amounts have been made to conform with current presentation.

8

Adjusted Net Income
Adjusted net income is not a measure of net income determined in accordance with GAAP. Adjusted net income is a supplemental non-GAAP performance measure used by management to evaluate financial performance, prior to non-cash gains or losses on derivatives, net cash received for derivative settlements, net premiums received on options that settled during the period, (gain) loss on sale of property, exploration and abandonment costs, acquisition costs, loss on early extinguishment of debt, and change in TRA liability, while adjusting for noncontrolling interest and the associated changes in estimated income tax. Management believes adjusted net income is useful because it may enhance investors’ ability to assess Parsley’s historical and future financial performance. Adjusted net income should not be considered an alternative to, or more meaningful than, consolidated net income, operating income, or any other measure of financial performance presented in accordance with GAAP. The following table presents a reconciliation of the non-GAAP financial measure of adjusted net income to the GAAP financial measure of net income (loss).
Parsley Energy, Inc. and Subsidiaries
Adjusted Net Income and Net Income Per Share
(Unaudited, in thousands, except per share data)
 
Three Months Ended March 31,
 
2018
 
2017
Net income - as reported
$
82,890

 
$
29,442

 
 
 
 
Adjustments:
 
 
 
Loss (gain) on derivatives
10,793

 
(24,616
)
Net settlements on derivative instruments
(2,873
)
 
(301
)
Net premium realization on options that settled during the period
(16,526
)
 
(4,854
)
Loss on sale of property
111

 
—

Exploration and abandonment costs
5,411

 
2,763

Acquisition costs
4

 
1,344

Loss on early extinguishment of debt
—

 
3,891

Change in TRA liability
82

 
20,549

Noncontrolling interest
647

 
—

Change in estimated income tax
522

 
5,950

Adjusted net income
$
81,061

 
$
34,168

 
 
 
 
Net income per diluted share - as reported (1)
$
0.32

 
$
0.13

 
 
 
 
Adjustments:
 
 
 
Loss (gain) on derivatives
$
0.04

 
$
(0.11
)
Net settlements on derivative instruments
(0.01
)
 
—

Net premium realization on options that settled during the period
(0.06
)
 
(0.02
)
Loss on sale of property
—

 
—

Exploration and abandonment costs
0.02

 
0.01

Acquisition costs
—

 
0.01

Loss on early extinguishment of debt
—

 
0.01

Change in TRA liability
—

 
0.09

Noncontrolling interest
—

 
—

Change in estimated income tax
—

 
0.03

Adjusted net income per diluted share (2)
$
0.31

 
$
0.15

 
 
 
 
Basic weighted average shares outstanding - as reported (1)
260,654

 
220,674

Effect of dilutive securities:
 
 
 
Restricted Stock and Restricted Stock Units
985

 
1,023

Diluted weighted average shares outstanding - as reported (1)
261,639

 
221,697

 
 
 
 
Effect of dilutive securities:
 
 
 
Class B Common Stock
—

 
—

Restricted Stock and Restricted Stock Units
—

 
—

Diluted weighted average shares outstanding for adjusted net income (2)
261,639

 
221,697

 
 
 
(1)
For the three months ended March 31, 2018 and 2017, the number of weighted average diluted shares used to calculate actual net income per share is based on the fact that, under the “if converted” and treasury stock methods, Class B Common Stock was not recognized because it would have been antidilutive.
(2)
For purposes of calculating adjusted net income per diluted share for the three months ended March 31, 2018 and 2017, Class B Common Stock and restricted stock and restricted stock units were not recognized because they would have been antidilutive using the treasury stock method.


9

Supplemental Information

Impact of ASC 606 Adoption
Parsley adopted ASC 606 effective January 1, 2018 using the modified retrospective approach. As a result, we changed our accounting policy for revenue recognition, which resulted in the following adjustments:
 
Three Months Ended March 31, 2018
 
ASC 605
 
Adjustment
 
ASC 606
Production revenues (in thousands):
 
 
 
 
 
Oil sales
$
331,103

 
$
—

 
$
331,103

Natural gas sales
15,586

 
1,838

 
17,424

Natural gas liquids sales
36,191

 
4,429

 
40,620

Total production revenues
382,880

 
6,267

 
389,147

Operating expenses
 
 
 
 
 
Transportation and processing costs
—

 
6,267

 
6,267

Production revenues less transportation and processing costs
$
382,880


$
—

 
$
382,880

 
 
 
 
 
 
Net income attributable to Parsley, Inc. stockholders (in thousands)
$
82,890

 
$
—

 
$
82,890

 
 
 
 
 
 
Production:
 
 
 
 
 
Oil (MBbls)
5,341

 
—

 
5,341

Natural gas (MMcf)
7,982

 
574

 
8,556

Natural gas liquids (MBbls)
1,464

 
179

 
1,643

Total (MBoe)
8,083

 
327

 
8,410

 
 
 
 
 
 
Average daily production volume:
 
 
 
 
 
Oil (Bbls)
59,344

 
—

 
59,344

Natural gas (Mcf)
88,689

 
6,378

 
95,067

Natural gas liquids (Bbls)
16,267

 
1,989

 
18,256

Total (Boe)
89,811

 
3,633

 
93,444

 
 
 
 
 
 
Certain unit costs (per Boe):
 
 
 
 
 
Lease operating expenses
$
3.57

 
$
(0.14
)
 
$
3.43

Transportation and processing costs
$
—

 
$
0.75

 
$
0.75

Production and ad valorem taxes
$
2.99

 
$
(0.11
)
 
$
2.88

Depreciation, depletion and amortization
$
14.99

 
$
(0.58
)
 
$
14.41

General and administrative expenses (including stock-based compensation)
$
4.33

 
$
(0.17
)
 
$
4.16

General and administrative expenses (cash based)
$
3.70

 
$
(0.14
)
 
$
3.56

Changes to natural gas and NGLs sales were made in accordance with the control model defined in ASC 606. Under the new control model, we are required to identify and separately analyze each contract associated with revenues to determine the appropriate accounting application.
As a result of this analysis, we modified our accounting and presentation of natural gas and NGLs sales, and transportation and processing costs under certain marketing agreements. For additional information related to our adoption of ASC 606, please refer to Note 2—Summary of Accounting Policies—Impact of ASC 606 Adoption in our consolidated financial statements contained in our Quarterly Report on Form 10-Q, upon availability, for the three months ended March 31, 2018.





10

Open Derivatives Positions

Parsley Energy, Inc. and Subsidiaries
Open Crude Oil Derivatives Positions (1)  
 
2Q18
 
3Q18
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
4Q19
Put Spreads (MBbls/d) (2)
11.5

 
34.2

 
37.5

 
20.6

 
20.3

 
11.4

 
11.4

Long Put Price ($/Bbl)
$
52.50

 
$
49.64

 
$
49.67

 
$
54.32

 
$
54.32

 
$
55.71

 
$
55.71

Short Put Price ($/Bbl)
$
42.50

 
$
39.64

 
$
39.67

 
$
44.32

 
$
44.32

 
$
45.71

 
$
45.71

Three Way Collars (MBbls/d) (3)
49.5

 
31.0

 
31.0

 
8.3

 
8.2

 
9.8

 
9.8

Short Call Price ($/Bbl)
$
68.11

 
$
75.65

 
$
75.65

 
$
80.40

 
$
80.40

 
$
80.33

 
$
80.33

Long Put Price ($/Bbl)
$
50.00

 
$
50.00

 
$
50.00

 
$
50.00

 
$
50.00

 
$
50.83

 
$
50.83

Short Put Price ($/Bbl)
$
40.00

 
$
40.00

 
$
40.00

 
$
40.00

 
$
40.00

 
$
40.83

 
$
40.83

Premium Realization ($ MM) (4)
$
(16.5
)
 
$
(17.9
)
 
$
(19.1
)
 
$
(8.4
)
 
$
(8.4
)
 
$
(5.5
)
 
$
(5.5
)
Collars (MBbls/d) (5)
3.0

 
3.0

 
3.0

 
 
 
 
 
 
 
 
Short Call Price ($/Bbl)
$
61.31

 
$
61.31

 
$
61.31

 
 
 
 
 
 
 
 
Long Put Price ($/Bbl)
$
45.67

 
$
45.67

 
$
45.67

 
 
 
 
 
 
 
 
Total MBbls/d Hedged
64.0

 
68.2

 
71.5

 
28.9

 
28.6

 
21.2

 
21.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mid-Cush Basis Swaps (MBbls/d) (6)
11.4

 
11.3

 
11.3

 
 
 
 
 
 
 
 
Swap Price ($/Bbl)
$
(0.86
)
 
$
(0.86
)
 
$
(0.86
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rollfactor Swaps (MBbl/d) (7)
15.0

 
15.0

 
15.0

 
 
 
 
 
 
 
 
Swap Price ($/Bbl)
$
0.60

 
$
0.60

 
$
0.60

 
 
 
 
 
 
 
 


Parsley Energy, Inc. and Subsidiaries
Open Natural Gas Derivatives Positions (1)  
 
2Q18
 
3Q18
 
4Q18
Three Way Collars (MMBtu/d) (3)
8,152

 
8,152

 
8,152

Short Call Price ($/MMBtu)
$
3.60

 
$
3.60

 
$
3.60

Long Put Price ($/MMBtu)
$
3.00

 
$
3.00

 
$
3.00

Short Put Price ($/MMBtu)
$
2.75

 
$
2.75

 
$
2.75

Total MMBtu/d Hedged
8,152

 
8,152

 
8,152










 
 
 
(1)
As of 5/2/2018. Prices represent the weighted average price of contracts scheduled for settlement during the period.
(2)
When the NYMEX price is above the long put price, Parsley receives the NYMEX price. When the NYMEX price is between the long put price and the short put price, Parsley receives the long put price. When the NYMEX price is below the short put price, Parsley receives the NYMEX price plus the difference between the short put price and the long put price.
(3)
Functions similarly to put spreads except that when the index price is at or above the call price, Parsley receives the call price.
(4)
Premium realizations represent net premiums paid (including deferred premiums), which are recognized as income or loss in the period of settlement.
(5)
When the NYMEX price is above the call price, Parsley receives the call price. When the NYMEX price is below the long put price, Parsley receives the long put price. When the NYMEX price is between the short call and long put prices, Parsley receives the NYMEX price.
(6)
Parsley receives the swap price.
(7)
These positions hedge the timing risk associated with Parsley’s physical sales. Parsley generally sells crude oil for the delivery month at a sales price based on the average NYMEX price during that month, plus an adjustment calculated as a spread between the weighted average prices of the delivery month, the next month, and the following month during the period when the delivery month is the first month.

11