INVESTOR PRESENTATION 2Q 2017s21.q4cdn.com/387064974/files/doc_presentations/... · In this...
Transcript of INVESTOR PRESENTATION 2Q 2017s21.q4cdn.com/387064974/files/doc_presentations/... · In this...
INVESTOR PRESENTATION
2Q 2017
Forward Looking Statements and Cautionary Statements
2
Forward-Looking Statements
The information in this presentation includes “forward-looking statements” that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs,
prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,”
“project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements
are based on Parsley Energy, Inc.’s (“Parsley Energy,” “Parsley,” or the “Company”) current expectations and assumptions about future events and are based on currently available information as to
the outcome and timing of future events. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of
which are beyond our control, incident to the exploration for and development, production, gathering and sale of oil and natural gas. These risks include, but are not limited to, commodity price
volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in
estimating reserves and in projecting future rates of production, the production potential of our undeveloped acreage, cash flow and access to capital, the timing of development expenditures and
the risk factors discussed in or referenced in our filings with the United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K and our subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this presentation. Except as otherwise required by applicable law, we disclaim
any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation.
Our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and
outcome of future drilling activity, which may be affected by significant commodity price declines or cost increases.
Industry and Market Data
This presentation has been prepared by Parsley and includes market data and other statistical information from third-party sources, including independent industry publications, government
publications or other published independent sources. Although Parsley believes these third-party sources are reliable as of their respective dates, Parsley has not independently verified the accuracy
or completeness of this information. Some data are also based on Parsley’s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described
above.
Oil & Gas Reserves
This presentation provides disclosure of Parsley’s proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable
certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions (using unweighted average 12-month first day of the month
prices), operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain,
regardless of whether deterministic or probabilistic methods are used for the estimation.
In this presentation, proved reserves attributable to Parsley as of 12/31/16 are estimated utilizing SEC reserve recognition standards and pricing assumptions based on SEC pricing, as adjusted for
market differentials, transportation fees, and quality, of $39.36 / Bbl crude, $2.23 / Mcf gas, and $15.03/ Bbl NGL. References to our estimated proved reserves as of 12/31/16 are derived from our
proved reserve report audited by Netherland, Sewell & Associates, Inc. (“NSAI”).
We may use the term “expected ultimate recoveries” (“EURs”) or other descriptions of volumes of reserves, which terms include quantities of oil and gas that may not meet the SEC’s definitions of
proved, probable and possible reserves, and which the SEC's guidelines strictly prohibit Parsley from including in filings with the SEC. Unless otherwise stated in this presentation, such estimates have
been prepared internally by our engineers and management without review by independent engineers. These estimates are by their nature more speculative than estimates of proved, probable and
possible reserves and accordingly are subject to substantially greater risk of being actually realized, particularly in areas or zones where there has been limited or no drilling history. We include these
estimates to demonstrate what we believe to be the potential for future drilling and production by the Company. Actual locations drilled and quantities that may be ultimately recovered from our
properties will differ substantially. In addition, we have made no commitment to drill all of the drilling locations. Ultimate recoveries will be dependent upon numerous factors including actual
encountered geological conditions, the impact of future oil and gas pricing, exploration and development costs, and our future drilling decisions and budgets based upon our future evaluation of risk,
returns and the availability of capital and, in many areas, the outcome of negotiation of drilling arrangements with holders of adjacent or fractional interest leases. Our estimates may change
significantly as development of our properties provides additional data and therefore actual quantities that may ultimately be recovered will likely differ from these estimates. Our related
expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells, the undertaking and outcome of future drilling activity and
activity that may be affected by significant commodity price declines or drilling cost increases.
Unless otherwise noted, Net Present Value (“NPV”) estimates are before taxes and assume the Company generated EUR and decline curve estimates based on Company drilling and completion costestimates that do not include facilities, land, seismic, general and administrative (“G&A”) or other corporate level costs.
High-margin growth
Production up 18% vs 1Q17
Portfolio optimization
Acreage trades added more than 500,000 net
lateral feet to horizontal drilling inventory
Resource capture
Delineation milestones
Midland Wolfcamp B: Downspacing validated
Midland Wolfcamp A: 2nd target confirmed
Midland Wolfcamp C: Record payout in sight
S. Delaware Wolfcamp: 3 targets verified
Productivity enhancement
Compressed stage completion design showing
productivity uplift
2Q17 Highlights
3
Market Snapshot
Premier Permian Position
NYSE Symbol: PE
Market Cap: $9,193 MM(1)
Net Debt: $997 MM(2)
Enterprise Value: $10,190 MM
Share Count: 314 MM
Permian Basin Net Leasehold Acreage: ~231,000
Midland Basin: ~179,000
Delaware Basin: ~52,000
Permian Basin Net Royalty Acreage: ~7,000
2Q17 Net Production: 64.7 MBoe/d
Note: All data as of end 2Q17 pro forma for subsequent acreage trades; (1) Calculated using 8/1/2017 closing price; (2) Net Debt is a non-GAAP financial measure that is defined as total debtless cash and cash equivalents.
Parsley Energy Leasehold
Multi-faceted Value Creation
ANDREWS
MARTIN
ECTOR
LEA
WINKLERLOVING
WARD
CRANE
REEVESPECOS
UPTON
MIDLAND
GLASSCOCK
REAGAN
HOWARD
Sustained Production Momentum
4
Strong production momentum despite intensive
delineation agenda
2Q17 daily net production up 18% versus 1Q17
and 81% year-over-year
Raising full-year and 4Q17E production
guidance
16% compound quarterly production growth
rate over thirteen quarters as a public
company(1)
(1) Parsley completed its initial public offering on May 29, 2014
Quarterly Production Trajectory
Production Guidance (Net MBoe/d)
65 - 7167 - 73
78 - 8880 - 90
2017E(Previous)
2017E(Updated)
4Q17E(Previous)
4Q17E(Updated)
9.2
64.7
80.0 - 90.0
0
20
40
60
80
100
MBoe/d
Net Production (MBoe/d)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Top-Tier Capital Efficiency
5
Source: SGS E&P Comp Sheets – Week Ending June 23, 2017. Companies include APA, APC, AR, BBG, CHK, CLR, CNX, COG, CPE, CRC, CRK, CRZO, CXO, DNR, ECA, ECR, EGN, EOG, EPE,EQT, FANG, GPOR, HES, HK, JONE, LPI, MRO, MTDR, MUR, NBL, NFX, NOG, OAS, OXY, PDCE, PE, PXD, QEP, REN, RICE, RRC, RSPP, SD, SGY, SM, SN, SRCI, SWN, UNT, WLL, WPX, WTI, XCO,and XEC. Operating margin based on 1Q17. Oily E&P Companies are defined as companies with oil accounting for 40% or more of 2016 production, and Gassy E&P Companies are defined ascompanies with oil accounting for less than 40% of 2016 production. (1) Based on 2016 data. Recycle ratio is equal to operating margin divided by PD F&D. PE recycle ratio includes actual 2016PD F&D/Boe of $8.04.
Rank in top 10% of E&P universe on key capital efficiency measures
Superior capital efficiency translates to value-adding-growth
Position at low end of cost curve incents differentiated growth profile
Recycle Ratio(1)
Oily E&P Companies Gassy E&P Companies
Parsley Energy
Operating Margin ($/Boe)
$0
$5
$10
$15
$20
$25
$30
$35
Parsley Energy
Oily E&P Companies Gassy E&P Companies
Accretive Acreage Trades
6
Recent acreage trades enhance development potential of core
operated footprint
Traded out of scattered non-operated properties with low
working interest (“WI”) into concentrated operated properties
with high WI
~25% average WI on acreage traded away
~85% average WI on acreage traded for
Recent trades added more than 500,000 net lateral feet to
horizontal drilling inventory, on top of 900,000 net lateral feet
previously added following Double Eagle (“DEEP”) acquisitions
Post-DEEP trades akin to adding ~5,600 premium net acres
with four target intervals(1)
Midland Basin Acreage Trades
Trade Spotlight – “Four Corners” Trade
Leasehold Acquired via Trade
Leasehold Traded Away
Parsley Energy Leasehold
Gained operatorship of core “Four
Corners” acreage block
Traded away 24 net non-operated
locations with 21% average WI
Added 56 net operated locations with
85% average WI
Effectively adds 31 net operated locations
near the front of Parsley’s drilling
inventory at no cost
Potential for subsequent fill-in trades to
further increase associated inventory
HOWARD
GLASSCOCK
REAGAN
UPTON
MIDLAND
MARTIN
(1) Assumes 32 wells per drilling spacing unit (DSU) and that 7,500’ stimulated lateral length wells correspond to a 960 acre DSU
Delineation Milestones
7
Parsley Energy Leasehold
GLASSCOCK
REAGAN
UPTON
MIDLAND
WARD
PECOS
REEVES
Midland Basin Delineation
Delaware Basin Delineation
Midland Basin Delineation Objectives
First Wolfcamp C well
First Upper Wolfcamp A well
330’ Downspacing in Upper/Lower Wolfcamp B
Compressed stage spacing test
Second Wolfcamp C well
1
2
3
4
5
2
3
45
Southern Delaware Basin Delineation Objectives
First Upper Wolfcamp A well
First Wolfcamp B well
1
2
21
1
Parsley Energy Leasehold
0
100
200
300
400
0
1,000
2,000
3,000
4,000
0 30 60 90 120 150
Cum
ula
tive P
roductio
n(M
Boe)
Daily P
roducti
on
(Boe/d
)
Days of Production
GlasscockNose
CBP
Wolfcamp C Play Fairway
Paige Wolfcamp C
MARTIN
MIDLAND
UPTON
HOWARD
GLASSCOCK
REAGAN1,200’
10 mi.
Strong Indications from Wolfcamp C Interval
8
First Wolfcamp C well (Taylor) still naturally flowing and
continues robust production trend with 215,000 barrels
of oil recovered through 150 days(1)
Projected payout within six months(2)
Second Wolfcamp C well (Paige) yet to reach peak-24 hr
rate but already producing more than 1,300 barrels of oil
per day during early flowback
Aggressively incorporating Wolfcamp C in development
program, with several wells in process or to be drilled by
year-end
Abundant inventory in Wolfcamp C play fairway,
characterized by favorable thermal maturity and
substantial thickness and reservoir pressure
Taylor Wolfcamp C Exceeding 1 MMBoe Type Curve by ~130%(3)
(1) Normalized for downtime; (2) Based on realized commodity prices; (3) 3-stream; Normalized for downtime; 1 MMBoe type curve normalized to Taylor lateral length (approx. 10,000’)
Wolfcamp C Fairway & Well Locations
200’400’
600’800’
1,000’1,200’
GROSS THICKNESS
Taylor Wolfcamp C
2017 Planned Wolfcamp C
900+ Wolfcamp C Locations in the Play Fairway
Increasing GOR
and decreasing
reservoir pressure
to south and east
(red arrows)
0%
25%
50%
75%
100%
125%
150%
0% 5% 10% 15% 20% 25% 30%
% N
PV
Incre
ase
vs.
660’
Spaced D
evelo
pm
ent
Per Well Cost Savings from660’ Spaced Development
Promising Results from Wolfcamp B Downspacing Pilot
9(1) Standard 660’ Development: 4 wells with area-average type curve; Downspaced development: 8 wells at 330’ spacing; $50 oil, $3/mcf gas, $20 NGL
Initial results from 8-well Wolfcamp B project at 330’
spacing support downspacing potential with projected
NPV uplift of 30%+ versus 660’ spaced development
Value uplift driven by favorable production rates and
cost savings
For the 7 wells that have achieved 30-day peak
rates, average IP30 of 960 Boe/d is 84% of offset
wells with 660’ spacing
Dual-pad project design incorporates baseline cost
savings of 5%, driven primarily by facilities and
infrastructure efficiencies
Analysis suggests less intensive frac design could
deliver comparable productivity at enhanced cost
savings, driving additional NPV uplift
Downspaced Test Results Suggest Value-Add Potential(1)
330’ Production
% of 660’
Downspaced Pad Design
5% cost reduction &
84% production of 660’ spacing1-Mile
Current Inventory
Inventory Upside
330’ Downspaced
Project
Wolfcamp B
Downspaced Wolfcamp B Pilot Gun Barrel
~230’
330’ Spacing
Second Wolfcamp A Landing Zone Confirmed
10
Encouraging results from first Upper / Lower
Wolfcamp A stack test, confirming a second
landing zone in the Wolfcamp A interval
Pad average production keeping pace with 1
MMBoe EUR type curve
Significant inventory upside pending additional
tests
Strong Production Trends from Upper / Lower WC A Stack Test
0
20
40
60
80
0 30 60 90
Cum
ula
tive P
roducti
on (
MBoe)(
1)
Days of Production
Wolfcamp A
Stacked
Well Average1-Mile
Current Inventory
Inventory Upside
Upper / Lower WC A
Stack Test
(Online)
2nd WC A Stack
Test Combined
with WC B Stack
(1Q18)
Wolfcamp A
Wolfcamp B
330’ Spacing
(1) 3-stream; Normalized to 7,000’ stimulated length and for downtime
Upcoming project tests two Wolfcamp A targets
stacked over two Wolfcamp B targets, showcasing
Parsley’s differentiated Wolfcamp thickness
800’
Stacked Upper / Lower Wolfcamp A Gun Barrel
0
20
40
60
80
100
0 30 60 90
Cum
ula
tive P
roducti
on (
MBoe)(
1)
Days of Production
Upper / Lower WC A Stagger Pad Well Average
Upper WC A / WC B Stack Pad Well Average
Three Productive Wolfcamp Targets in Pecos County
11
Positive results in two previously-untested
Wolfcamp flow units in Pecos County, one above
and one below traditional Lower Wolfcamp A
landing zone
Lower Wolfcamp A / Wolfcamp B pad with stack
configuration on pace with Pecos standalone
well average
Upper / Lower Wolfcamp A pad with stagger
configuration just 20% below Pecos standalone
average
Promising Results in Wolfcamp Zone Delineation Tests
PECOS
(1) 3-stream; Normalized to 7,000’ stimulated lateral and for downtime
Parsley Energy Leasehold
2017 Wells Planned or In Progress
Completed Horizontal Wells / Pads
Completed Vertical Wells1-Mile
Note: Current inventory count based on an average of two flow units across acreage
330’ Spacing
Upper
Wolfcamp A
Wolfcamp B
Lower
Wolfcamp A
200’
200’
Upper/Lower
WC A Stagger
Lower WC A / WC B
Stack
S. Delaware Wolfcamp A and B Gun Barrel
0
50
100
150
200
250
300
350
0 90 180 270 360 450 540 630 720
Cum
ula
tive P
roducti
on (
MBoe)(
2)
Days of Production
Midland S. Delaware
(1) 3-stream; Normalized for downtime; Average IP30s and IP30s per 1,000’ reflect unweighted average of well set; (2) Normalized to 7,000’ stimulated lateral and for downtime; (3) Wells achieving a 30-day IP since 1Q17 quarterly update
Robust Well Performance Trends
Midland Delaware
Wells 22 5
Average Lateral Length 7,730’ 7,090’
30-day IP (Boe/d) 1,245 1,056
30-day IP per 1,000’ (Boe/d) 165 154
% Oil 74% 78%
2Q17 Well Summary(1)(3)
Midland Basin Normalized IP30s Continue to Strengthen(1)
163 167 171180
165
0
50
100
150
200
2H15 1H16 2H16 1Q17 2Q17
IP30 p
er
1000' (B
oe/d
)
185*
* Excludes Downspaced Wolfcamp B Wells
Strong well performance despite high proportion of
delineation projects
The Morgan 25-26-4215H in Upton County set a new
company record for highest IP30 in the Wolfcamp A at
2,213 Boe/d
`12
0
25
50
75
100
125
150
175
0 30 60 90 120 150 180
Cum
ula
tive P
roducti
on (
Mboe)(
1)
Days of Production
Louis 4413H (Compressed Stages) Louis 4415H (Standard Design)
Significant Productivity Gain with Compressed Stage Design
13
Initial Wolfcamp B compressed stage test outperforming
direct offset with standard design by 20% with less than 5%
incremental cost
Reduced stage spacing from ~170’ to ~100’, increasing
number of total frac stages from ~30 to ~50
Parsley’s most prolific 1-mile Wolfcamp B well to date
Compelling early-time project economics
Design generated higher bottomhole pressures than
standard design, indicating increased fracture efficiency
and hydrocarbon recovery factor
Broad application could translate to portfolio-wide
productivity increase
Several additional compressed stage tests planned in 2H17
(1) 3-stream; Normalized to 7,000’ stimulated length and for downtime
Compressed Stage Test Outperforming Standard Design
+20% vs
Standard
Design
Standard
Design
Compressed
Stages
~170’ Stage Length
~100’~100’
5 clusters/stg
3 clusters/stg 3 clusters/stg
Compressed Stage Design Modification
$503
$997
$1,500 MM
Cash on hand First lien credit facility
Peer-leading(1) liquidity of $1.5 billion
provides ample flexibility to fund efficient
growth plan
Fully undrawn borrowing base of $1.4
billion, with company-elected commitment
of $1.0 billion
Favorable maturity schedule, with earliest
notes maturity in 2024
Strong Financial Position
14
Favorable Debt Maturity Schedule
$1,000
$650
$450
$1,400
$400
$1,100
2017 2018 2019 2020 2021 2022 2023 2024 2025
($M
M)
Borrowing Base Senior Notes
Committed
Amount
Borrowing
Base
1H25
2H25
Ample Liquidity
(2)
Liquidity vs. SMID-Cap Peers ($MM)(2)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
PE Peer 1 Peer 2 Peer 3 Peer 4 Peer 5
Cash on Hand Borrowing Base Availability
(1) Permian SMID-Cap peers include CPE, EGN, FANG, LPI, and RSPP. Calculated as availability on committed portion of borrowing base plus cash on hand. Peer data obtained from 1Q17
presentations and filings. Parsley data is as of end 2Q17. Parsley’s pro forma liquidity at 1Q16 was ~$1,600 MM, including ~$600 MM cash on hand; (2) Committed portion; net of letters of credit
on the Company’s fully undrawn revolver.
Proactive hedging program protects cash
flow and balance sheet
Over 70% of consensus oil volumes
hedged in 2018
Significantly more hedge protection
than peers in 2018
Heightened visibility facilitates
operational continuity and steady
execution
Substantial Oil Hedge Position
15
$0
$10
$20
$30
$40
$50
$60
$70
0
10
20
30
40
50
60
70
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
WT
I ($/B
bl)M
Bbls
/d
MBbls/d Hedged Weighted Average Long Put Price
Hedge positions as of 8/1/2017; (1) Source: Wells Fargo E&P: Mile High View dated June 23, 2017. Operators include APA, BBG, CLR, CRZO, CXO, DVN, EOG, EPE, FANG, JAG, LPI, MTDR, NFX,
OAS, PE, PXD, REN, RSPP, SRCI, WLL, WRD, and XOG. Includes operators with 2016 oil production greater than or equal to 40% of total production; (2) Excludes swaps
Oil Volumes Hedged
Estimated Percent of 2018 Oil Hedged(1)
(2)
0%
10%
20%
30%
40%
50%
60%
70%
80%Parsley Energy
5 operators with 0% hedged
Updated 2017 Guidance
16
Unit Costs
LOE ($/Boe) $3.50 - $4.50 $3.50 - $4.50
Cash G&A ($/Boe) $4.00 - $5.00 $4.00 - $5.00
Production & Ad Valorem Taxes
(% of Revenue)
6.0 - 7.0% 6.0 - 7.0%
Capital Program
Drilling & Completion ($MM) $840 - $960 $840 - $960
Infrastructure & Other ($MM) $160 - $190 $160 - $190
Total Development Expenditures ($MM) $1,000 - $1,150 $1,000 - $1,150
% Non-Operated 3 – 5% 3 – 5%
Activity
Gross Operated Horizontal Completions
Midland Basin
Delaware Basin
Average Lateral Length
130 – 150
95 – 105
35 – 45
~8,000’
120 – 140
95 – 105
25 – 35
~8,000’
Gross Operated Vertical Completions 5 - 10 5 - 10
Average Working Interest 85 – 95% 85 – 95%
Production
Annual Net Production (MBoe/d)
% Oil
4Q17 Net Production (MBoe/d)
2017E (Previous)
65 – 71
68 – 73%
78 – 88
2017E (Updated)
67 - 73
67 – 70%
80 - 90
Increasing FY17 and 4Q17 production guidance on stronger
well productivity
Adjusting product mix to reflect infusion of acquired
vertical production, improved plant efficiencies, increased
Wolfcamp C contribution, and broadly higher gas
recoveries
Shifting 10 Delaware completions to early 2018
Maintaining full-year capital budget
Accelerated spuds offset fewer completions
Quarterly Completion Cadence
Midland Basin Delaware Basin
Capital Allocation (% of 2017E capex) 65 – 70% 30 – 35%
2017E Capital Allocation
2227
30 - 40
40 - 50
1Q17 2Q17E 3Q17E 4Q17E
Gross Operated Horizontal Completions
Parsley Energy Investment Summary
17
Parsley Energy Leasehold
HOWARD
GLASSCOCK
REAGAN
UPTON
MIDLAND
MARTIN
ANDREWS
ECTOR
CRANE
WARD
PECOS
REEVES
LOVING WINKLER
GAINES DAWSON
MITCHELL
STERLING
IRION
Premier acreage
Proven execution
Strong financial position
Robust returns
Abundant resource upside
Capital efficient growth
Investment Highlights
18
SUPPLEMENTARY SLIDES
Expansive, High-quality Drilling Inventory
19
Horizontal Drilling Inventory(1)
(1) As of end 2Q17 pro forma for recently executed acreage trades; Location counts rounded to the nearest ten; (2) Assumes current annual ~130 completion run rate; (3) 16 wells per sectionreflects two landing zones (4) Reflects an average of two landing zones
Extensive inventory of premium drilling
locations provides visibility to years of high-
return production growth
Operate 93% of net inventory
12+ drilling years of long-lateral, high
working interest, operated inventory in
Development Zones(2)
Minimum 90% working interest
Minimum 7,500’ lateral length
Abundant inventory upside through
increased development density and new
target possibilities, including the Jo Mill and
Woodford intervals
Nearly 600 net Wolfcamp locations in the
Southern Delaware Basin with a low average
royalty burden of 15%
GROSS NETWELLS PER
SECTION
Development Zones
Midland Basin
Lower Spraberry 1,490 870 8
Wolfcamp A 1,850 1,060 8
Wolfcamp B 3,170 1,890 8 / 16(3)
Wolfcamp C 1,460 920 8
Delaware Basin
Wolfcamp 610 570 16(4)
Development Total 8,580 5,310
Delineation Zones
Midland Basin
Middle Spraberry 1,050 600 5 / 6
Cline 1,900 1,140 8
Atoka 1,450 870 8
Delaware Basin
2nd Bone Spring 160 150 4
3rd Bone Spring 160 150 4
Delineation Total 4,720 2,910
Total 13,300 8,220
Robust Well Economics
20
$40 WTI $60 WTI$50 WTI
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
0%
10%
20%
30%
40%
50%
$5.5 MMD&C
$6.0 MMD&C
$6.5 MMD&C
ROR NPV
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$5.5 MMD&C
$6.0 MMD&C
$6.5 MMD&C
ROR NPV
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
0%
20%
40%
60%
80%
100%
120%
140%
$5.5 MMD&C
$6.0 MMD&C
$6.5 MMD&C
ROR NPV
Current D&C Costs(1)
Type curve-implied returns are strong across oil price spectrum
Actual results are outpacing type curve, translating to even
stronger returns on development program
Midland Basin ROR and NPV Sensitivities
Note: Economics based on 1 MMBoe type curve; NGL price 40% of WTI; Gas $3/Mcf; (1) Based on 7,000’ stimulated lateral
Efficient Reserve Growth
21
YE16 proved reserves up 80% Y/Y (oil
up 85% Y/Y) despite writing off
remaining ~18 MMBoe of vertical PUD
reserves
Strong organic reserve replacement
ratio of approximately 680%(2)
PD F&D down 70% Y/Y to $8.04/Boe(3)
Strong Growth in Proved Reserves
Tota
l Pro
ved R
ese
rves
(MM
Boe)
Oil
(MMBbl)
Gas
(Bcf)
NGL
(MMBbl)
Total
(MMBoe)
PDP 59.3 121.8 23.7 103.3
PDNP 1.9 2.2 0.6 2.8
PUD 75.4 99.7 24.2 116.2
Total
Proved136.6 223.7 48.5 222.3
124
-14-4 -7
24
99
222
-50
0
50
100
150
200
250
YE15 Prod. Rev. Divest. Acq. Adds YE16
(1) Source: SGS E&P Comp Sheets – Week Ending June 23, 2017. Companies include APA, APC, AR, BBG, CDEV, CHK, CLR, COG, CPE, CRK, CRZO, CXO, DNR, DVN, ECA, ECR, EGN, EOG,
EPE, EQT, FANG, GPOR, HES, HK, JAG, JONE, LPI, MRO, MTDR, NBL, NFX, NOG, OAS, OXY, PDCE, PE, PXD, QEP, REN, RICE, RRC, RSPP, SD, SGY, SM, SN, SRCI, SWN, SWTF, UNT, WLL,
WPX, WTI, XCO, XEC, and XOG. Oily E&P Companies are defined as companies with 2016 percent oil of 40% or greater, and Gassy E&P Companies are defined as companies with 2016 percent
oil of less than 40%; (2) Organic reserve replacement ratio calculated as total 2016 reserves additions and revisions (technical and pricing) divided by total 2016 production; excludes
acquisitions and divestitures; (3) PD F&D calculated as total 2016 Capex (including Infrastructure and Other) divided by total 2016 proved developed reserves additions and revisions (technical
and pricing); excludes acquisitions and divestitures; (4) Reserve summary as of 12/31/2016 and audited by NSAI; Data for Parsley only; not pro forma for pending acquisitions
Proved Reserves Summary(4)
+80%
$0
$5
$10
$15
$20
$25
$30
$35
$40
PD F&D ($/Boe) Ranks Highly among Oily E&Ps(1)
Oily E&P Companies Gassy E&P Companies
Parsley Energy
Substantial Oil Hedge Position
22
Hedge positions as of 8/1/2017; (1) When the NYMEX price is above the put price, Parsley receives the NYMEX price. When the NYMEX price is between the put price and the short put price,
Parsley receives the 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 put price;
(2) Functions similarly to put spreads except that when the index price is at or above the call price, Parsley receives the call price; (3) Premium realizations represent net premiums paid
(including deferred premiums), which are recognized as income or loss in the period of settlement; (4) When the NYMEX price is above the call price, Parsley receives the call price. When the
NYMEX is below the put price, Parsley receives the put price. When the NYMEX price is between the call and put prices, Parsley receives the NYMEX price; (5) Parsley receives the strike price;
(6) Parsley receives the swap price
3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19
Put Spreads (MBbls/d)1 35.7 45.5 26.7 26.4 26.1 26.1 6.7 6.6
Put Price ($/Bbl) $51.23 $50.96 $52.81 $51.88 $50.00 $50.00 $50.00 $50.00
Short Put Price ($/Bbl) $41.14 $41.43 $41.88 $41.88 $40.00 $40.00 $40.00 $40.00
Three Way Collars (MBbls/d)2 21.7 28.0 31.0 31.0 8.3 8.2 8.2 8.2
Short Call Price ($/Bbl) $68.85 $70.79 $75.65 $75.65 $80.40 $80.40 $80.40 $80.40
Put Price ($/Bbl) $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00
Short Put Price ($/Bbl) $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00 $40.00
Premium Realization ($MM)3 ($12.5) ($14.6) ($16.1) ($14.5) ($13.7) ($13.7) ($4.2) ($4.2) ($1.5) ($1.5)
Collars (MBbls/d)4 4.0 4.0 3.0 3.0 3.0 3.0
Short Call Price ($/Bbl) $59.73 $59.98 $61.31 $61.31 $61.31 $61.31
Put Price ($/Bbl) $46.75 $46.75 $45.67 $45.67 $45.67 $45.67
Swaps (MBbls/d)5 0.5 0.5 0.5 0.5 0.5 0.5
Strike Price ($/Bbl) $55.00 $55.00 $55.00 $55.00 $55.00 $55.00
Total MBbls/d Hedged 40.2 50.0 51.8 57.9 60.6 60.6 15.0 14.8 8.2 8.2
Mid-Cush Basis Swaps (MBbls/d)6 16.7 16.7 4.5 4.5 4.5 4.5
Swap Price ($/Bbl) ($1.00) ($1.00) ($0.91) ($0.91) ($0.91) ($0.91)