Parsley Energy Inc. (NYSE: PE) said Dec. 9 it has entered an agreement to purchase Midland Basin assets for $148.5 million and once again will sell equity in the company.
In an agreement with PCORE Exploration & Production LLC, a portfolio company of Natural Gas Partners, Parsley will acquire undeveloped acreage and producing oil and gas properties adjacent to its operating areas in Upton, Reagan and Glasscock counties, Texas.
As part of the deal, Parsley is set to gain 238 net horizontal drilling locations across 5,274 net surface acres in the company's core operating area. The company will have high average working interest of 87% and low average royalty burden of 20%.
For November, estimated net production was about 1,000 barrels of oil equivalent per day from three horizontal wells. The deal also includes one drilled horizontal well that is anticipated to be completed by the seller prior to the closing of the transaction, which is scheduled for early January.
The assets will be 100% operated at close with no obligation to develop for two years. Infrastructure is also in place to support ongoing horizontal drilling operations.
Parsley will sell shares for at least the third time in 2015 to fund its acquisition. The upsized offering includes shares owned by NGP X US Holdings LP, one of the company’s stockholders.
The company is selling 11.2 million shares of its Class A common stock plus about 1.1 million shares owned by its stockholder. Parsley and NGP have also granted the underwriters an option to purchase additional shares.
In September, Parsley sold about 15 million shares for net proceeds of $217 million. As of November, the company had $556 million in debt and $123 million in cash, or a 24% net-debt ratio and 2.3x net debt/EBITDA ratio, said Robert Du Bof, analyst with Oppenheimer & Co. Inc.
“With the revolver undrawn and recently upsized to $575 million from $500 million, liquidity stands at just under $700 million,” he said in a Nov. 4 report.
In February, Parsley also sold about 15 million shares in a private stock placement, adding roughly $224 million in net proceeds.
Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC are underwriters for Parsley’s recent equity offering.
Emily Moser can be reached at emoser@hartenergy.com, Darren Barbee can be reached at dbarbee@hartenergy.com.
Recommended Reading
Oil Rises After OPEC+ Extends Output Cuts
2024-03-04 - Rising geopolitical tensions due to the Israel-Hamas conflict and Houthi attacks on Red Sea shipping have supported oil prices in 2024, although concern about economic growth has weighed.
Oil Dips as Demand Outlook Remains Uncertain
2024-02-20 - Oil prices fell on Feb. 20 with an uncertain outlook for global demand knocking value off crude futures contracts.
What's Affecting Oil Prices This Week? (March 11, 2024)
2024-03-11 - Stratas Advisors expects oil prices to move higher in the middle of the year, but for the upcoming week, there is no impetus for prices to raise.
Global Oil Demand to Grow by 1.9 MMbbl/d in 2024, Says Wood Mac
2024-02-29 - Oil prices have found support this year from rising geopolitical tensions including attacks by the Iran-aligned Houthi group on Red Sea shipping.
What's Affecting Oil Prices This Week? (April 8, 2024)
2024-04-08 - Stratas Advisors says geopolitics are providing a boost for oil prices as conflicts escalate–and while crude oil and oil products continue to flow, the possibility of disruption is increasing.