|Bid||0.00 x 2200|
|Ask||12.48 x 800|
|Day's Range||10.48 - 11.28|
|52 Week Range||3.92 - 20.80|
|Beta (5Y Monthly)||0.82|
|PE Ratio (TTM)||11.86|
|Earnings Date||Aug. 04, 2020 - Aug. 10, 2020|
|Forward Dividend & Yield||0.20 (2.02%)|
|Ex-Dividend Date||Jun. 08, 2020|
|1y Target Est||13.06|
The Zacks Analyst Blog Highlights: Diamondback Energy, Cimarex Energy, Pioneer Natural Resources, EOG Resources and Parsley Energy
The Zacks Analyst Blog Highlights: Halliburton, Baker Hughes, EOG Resources, Parsley Energy and Pioneer Natural Resources
(Bloomberg) -- Oil closed at the highest level since early March, buoyed by optimism that OPEC+ will rebalance the market. But the rally could turn on what happens at the alliance’s June meeting.The producer group reached a preliminary agreement Wednesday to extend historic output curbs for an extra month, with Saudi Arabia and Russia drawing a hard line on cheating, and insisting that countries make up for past non-compliance by deepening future cuts. Their stance injects some uncertainty into the market, which has rallied from historic lows but remains vulnerable to ongoing demand weakness and a persistent supply glut.In the U.S., the outlook for fuel consumption dimmed after U.S. government data showed that diesel demand fell to a 21-year low last week while inventories rose to the highest level since 2010. Gasoline supplies also swelled, suggesting consumption isn’t rebounding as quickly as initially thought. The builds in fuel stockpiles offset a larger-than-expected decline in crude inventories.Also read: Oil Traders Are Asking Why U.S. Inventory Math Doesn’t Add UpFutures in New York fluctuated between gains and losses amid the conflicting market signals. While West Texas Intermediate crude ended the session 1% higher, prices declined after the close.“We’re in wait-and-see mode,” said Michael Lynch, president of Strategic Energy & Economic Research Inc. The question now is not whether OPEC+ will extend cuts but by how much, he said. “If they extend until the end of the year, that will encourage optimism on the part of buyers.”Russia and Saudi Arabia, the de-facto leaders of OPEC+, are putting pressure on Iraq, Nigeria, Kazakhstan and Angola to make firm commitments they will improve compliance, and also to make up for past wrongs. The OPEC+ leaders are demanding the four countries compensate for non-compliance in May -- and potentially in June -- by cutting extra in July, August and September, according to the people familiar with the situation. That’s a painful prospect for those producers, already struggling with the budget impact of low prices.The ultimatum comes as higher prices have already spurred some U.S. producers to bring wells back online. EOG Resources Inc., America’s largest shale-focused producer, and Permian producer Parsley Energy Inc. both said they’re preparing to ramp up output just weeks after turning off the taps.The OPEC+ leaders expect to hold a meeting on June 10, according to people familiar with the matter. But negotiations continue with the aim of simply ratifying the accord at the virtual gathering, according to the people.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Parsley Energy (PE) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
(Bloomberg) -- As OPEC+ producers head toward a consensus on extending output curbs, oil’s rally is prompting some U.S. producers to open their taps once again.Futures settled at their highest since March 6 on Tuesday, the day the Saudi-Russian alliance broke down just as a global pandemic dimmed the outlook for demand. Oil’s rebound over the past month brings back concerns that Russia could again hesitate to extend output cuts, with rival shale producers signaling they are ready to re-open wells that were shut during the market’s collapse.Further evidence of that threat emerged this week, when U.S. driller Parsley Energy Inc. said it’s turning oil wells back on just weeks after shutting them off, illustrating the shale industry’s agility in responding to rising crude prices.Also read: Early Signs Show Shale Oil Production Bouncing Back With Prices“If everybody magically decides to turn the taps back on and lets the oil back to the surface, now you’ve got 1.5 million to 2 million barrels a day that needs to find a home,” said Stewart Glickman, an energy analyst at CFRA Research.On Tuesday, OPEC members were still wrangling over when to hold their next meeting, against what’s still an uncertain demand backdrop. For now, Russia and several other OPEC+ nations are said to favor extending their current output cuts by a month.It’s unclear if a month’s extension of curbs is enough for Saudi Arabia -- the biggest producer in the Organization of Petroleum Exporting Countries -- though the proposal is within the range of the kingdom’s own call for a one- to three-month elongation.“It will be a question of how much price gains do you really want with the risk of the return of U.S. shale oil?” said Olivier Jakob, managing director of Petromatrix GmbH.The industry-funded American Petroleum Institute reported that supplies in Cushing, Oklahoma, fell by 2.2 million barrels last week. That would mark the fourth straight weekly decline if U.S. government data confirms the draw on Wednesday. U.S. crude stockpiles fell 483,000 barrels, according to the report. North American oil production shut-ins peaked in May, and June curtailments should be “a fraction of the previously announced levels,” Bank of America analysts wrote in a Monday note.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Early signs of a shale rebound are becoming evident as crude prices emerge from their dramatic collapse earlier this year.EOG Resources Inc., America’s largest shale-focused producer, plans to “accelerate” output in the second half after shutting in about a quarter of its crude in May, exploration chief Ken Boedeker told an RBC Capital Markets conference Tuesday. Permian producer Parsley Energy Inc. is also turning wells back on just weeks after closing the taps, and producers in North Dakota’s Bakken formation are also easing the rate of shut-ins.Oil has steadily gained in the past month after virus-related lockdowns caused the price of West Texas Intermediate to collapse to minus $40 a barrel on April 20. While the U.S. benchmark is still about 40% below its January high point, it’s now above $35, which means some wells closed to save cash are now profitable again. Futures were up 2.9% to $36.47 at 1:45 p.m. in New York.“When oil gets back into the mid $30s, you’re covering your cash costs,” said Stewart Glickman, Energy Analyst at CFRA Research. “You’re closer to some break-even point. That’s enough to relax the shut-ins.”Still, the big question is whether bringing this output back will be enough to offset the lack of new drilling, which is essential to mitigate the industry’s dramatic decline rates. Led by shale, U.S. oil production has dropped about 13% from a record high of 13.1 million barrels a day in March.READ: Oil’s Sudden Rebound Is Exposing the Achilles’ Heel of ShaleEOG’s strategy “is to really accelerate our production into what we see as a price recovery in the second half of the year,” Boedeker said. The company, which began shutting wells in March and took 125,000 barrels a day off the market in May, recently reduced its hedge position, eliminating some protection against lower prices in a sign of confidence the price recovery will take hold.Parsley will restore the “vast majority” of the 26,000 barrels of daily output it turned off last month, it said in a slide deck for an investor presentation.” Meanwhile, shut-ins in the Bakken totaled 475,000 barrels a day as of May 28, about 7% less than a fortnight earlier.The number of frack crews working in shale fields is believed to have now bottomed at about 80 fleets, with “noticeably higher” completion work in the next three to six months, Daniel Cruise, founder of data provider Coras Research LLC, said last week in a report.Based on current budget tweaks announced by explorers, as many as 50 frack crews could still be added by the end of the year, with that number doubling if oil prices move closer to $40 a barrel, according to Coras.EOG’s optimism is due, in part, to the woes that lie ahead for the rest of the U.S. shale industry. Companies will struggle to find the money to drill new wells, meaning less oil over the short to medium term, Boedeker said.“We see very little capital flowing into the industry and we see higher declines from all the shale players throughout the rest of the year,” he said. “Starting to drill in the high $30s? I’m not sure I see that.”The data appears to support his view. Drill rigs carving new wells in the U.S. have dropped to the lowest in more than a decade and producers’ spending in the second quarter is expected to be 60% down on the first three months of the year, according to data provider Coras Research LLC.“We are not putting new capital to work,” Parsley Chief Executive Officer Matt Gallagher said by email. “Our drilling and frac operations remain suspended as we evaluate market fundamentals.”(Updates with analyst’s comment in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The big oil production curtailment in the U.S. shale patch continues as more companies announced on Monday output reductions to protect their balance sheets in the face of unsustainably low oil prices
(Bloomberg Opinion) -- Amid a historic oil crash, frackers are ditching rigs at a rapid pace. The number of operating horizontal rigs stood at 338 on Friday. That’s down more than half since February, though still above the trough in early 2016. So, churlish as it may seem, it must be asked: Why is anyone still drilling shale right now?Speaking on an earnings call a month after petitioning the Texas Railroad Commission to impose supply cuts, Matt Gallagher, CEO of Parsley Energy Inc., summed up the situation facing frackers:Currently, the world does not need more of our product, and we only get one chance to produce this precious resource for our stakeholders.The commission didn’t organize shut-ins of wells. So Parsley, taking its cue from prices instead, is just shutting in some of its own anyway. It has also suspended drilling and completing new wells.The economics of each well — and the companies that own them — differ enormously. But grab an envelope and imagine a well tapping one million barrels of oil equivalent, 75% of it crude oil, the rest natural gas. Benchmark prices: $30 oil and $2.50 gas, translating to, say, $27 and $2 at the wellhead. That implies total revenue from those resources of $23.3 million. Royalties and severance taxes take about $7 million of that; operating expenses and overhead take another $7 million(1). That leaves $9.3 million versus the $9 million spent drilling and completing the well upfront. Factor in time value of money, and that well is seriously underwater.Besides the back-of-crumpled-envelope quality of that calculation, there are other reasons a producer might keep drilling anyway. Rigs are often contracted for months at a time; for example, Helmerich & Payne Inc., a leading provider, reported roughly a third of its U.S. onshore rig fleet operated under fixed-term contracts at the end of March. Contracted pipeline space, too, must be paid for whether or not barrels flow through it. Taking a company’s activity down to zero is also traumatic for workers and, like a shut-in well, makes it harder to eventually crank back up. Hedges, meanwhile, shield against low spot prices and represent oil and gas contracted for delivery.Then again, hedges could be settled for cash; it’s not like anyone is screaming for more of the actual stuff these days. Rig and pipeline contracts can also be renegotiated (an order from the Texas Railroad Commission could have helped on that front, but still). And the difficulty of going into hibernation must be set against the implacable demands of low oil prices.On that note, another rationale for continuing to drill is an expectation of oil and gas prices recovering reasonably soon. Parsley and some other shale operators, such as Diamondback Energy Inc. (which is reducing but not suspending drilling), have indicated they could increase activity again if oil gets back above $30 a barrel (it was trading around $25 Monday morning). Because shale output is very front-loaded, movements in near-term prices matter a lot. For instance, using my basic example above, while the economics don’t work at flat $30 oil, assuming oil rises to $40 in year two and then $50 from year three would generate a low positive return. Those prices actually lag the consensus forecast, which averages $46 for 2021.On the other hand, that consensus stood at $58 only two months ago, so it’s fair to say expectations can change in the middle of an unprecedented oil shock. The current list of unknowns encompasses how quickly people resume something like normality even after lockdowns ease; whether Covid-19 inflicts a second wave; how long the glut of oil inventory building now lasts; and how quickly Saudi Arabia and Russia resume a market-share strategy.The rational thing to do is to wait for higher prices — indeed, conserving barrels, rather than pushing them into a glutted market, is a prerequisite for those higher prices. As EOG Resources Inc. said Friday, oil kept underground is “low-cost storage.”E&P companies carrying more debt (and there are more than a few) may be stuck on the treadmill. Covenants demand cash flow today even if that means destroying value over time. But this is a reminder of why the industry finds itself vulnerable in the first place: managing to production rather than value, and thereby dragging down prices by putting more sub-economic oil onto the market. The Saudi-Russian spat in early March was a warning the market won’t just absorb that from here on. Breaking the existing shale model, and redirecting cash away from wells toward creditors and shareholders, must be one outcome from all this.On that front, it’s worth noting the E&P sector now offers a higher dividend yield than the broader market for only the second time this decade.E&P stocks traded at a premium on yield because they weren’t valued on yield. Unlike the majors and refiners, frackers were owned for growth and a bet on oil prices. That rationale was fraying even before Covid-19, but is especially out of favor now. The yield spread to the market needs to widen, not just to compete against both other oil stocks and other sectors. It would also be a tangible sign of fewer dollars heading into drilling. Like Gallagher said, the world doesn’t need any more of the industry’s “product” right now. That includes investors.(1) Assumes royalties of 25% and severance taxes of 4.6% for oil and 7.5% for natural gas. G&A expenses of $2 per barrel of oil equivalent and $5 of other operating expenses.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
With me on the call are Matt Gallagher, President, and CEO; David Dell'Osso, Chief Operating Officer; Ryan Dalton, Chief Financial Officer; and Stephanie Reed, Senior Vice President of Corporate Development, Land and Midstream. During this call, we will refer to an investor presentation that can be found on our website, and our prepared remarks will begin with reference to slide three of that presentation.
Parsley Energy (PE) delivered earnings and revenue surprises of 16.00% and -4.22%, respectively, for the quarter ended March 2020. Do the numbers hold clues to what lies ahead for the stock?
Parsley Energy (NYSE:PE) shareholders are no doubt pleased to see that the share price has bounced 45% in the last...
(Bloomberg Opinion) -- The Texas Railroad Commission has been petitioned to go back in time.The commission just held a marathon hearing on whether it ought to do something it hasn’t done in almost 50 years: organize curbs on the state's oil output. I say “organize” because cuts are happening anyway; there’s simply no choice when the Covid-19 crisis has wiped out maybe a third of global oil demand. Several companies, including large frackers such as Pioneer Natural Resources Co., have called on the commission to “pro-ration” production to support oil prices.A recurring theme was “waste.” The person who raised it most often, outgoing commissioner Ryan Sitton, even parodied himself repeating the word in a video clip doing the rounds on social media.Clearly, this isn’t your grandfather’s oil market — a point reinforced by James Mann, attorney for the Texas Pipeline Association and formerly a commission employee in the 1970s. He observed that the folks familiar with the data-intensive work of apportioning quotas for thousands upon thousands of wells across the state were no longer contractually employed, so to speak:They’re all dead now. Everybody that knew how to do the arithmetic is gone.When I spoke with Mann the day after the hearing, he recounted other ways in which the world has changed. “Waste,” for example, meant actual waste when it was first used to justify pro-rationing. In the early 1930s, a swarm of wildcatters drawn by the gushing East Texas field sought to out-pump their neighbors, regardless of what the market could absorb. Plus ça change, as they say in Midland. Back then, though, “oil was coming out the ground with no place for it to go; they were putting it in dirt pits and leaky wooden tanks,” as Mann says. A lot of oil soaked into the ground or evaporated — waste in its very worst sense.That can’t happen today provided regulators do their job. If oil is running out of places to go, then futures prices will tell you ahead of time and wells will get shut in, with the weakest usually going first. Rather than a physical issue, “waste” today is a euphemism for lost money. As James Teague, co-CEO of Enterprise Products Partners LP, put it bluntly: “I think I’d define waste as inefficient producers continuing to produce at a time like this.”Speaking of which, much concern was expressed about the fate of smaller producers, in particular. There are over 2,900 producers that account for less than 10% of Texas’ output, according to Matt Gallagher, CEO of Parsley Energy Inc. This implies that, at best, they produce almost 1 million barrels of oil equivalent per day in aggregate but just a few hundred each on average. The vast majority of wells in Texas are dribblers rather than gushers:Bernstein Research estimates that when oil is at $25, a typical marginal well needs to produce 12 barrels a day just to break even, before counting any natural gas. Two-thirds of Texas’ wells produce less than 10 barrels a day equivalent, including gas, and benchmark West Texas Intermediate crude crashed below $13 on Monday morning. And low prices are only one problem; several small producers complained about getting shut out of pipelines, tanks and refineries altogether as those businesses prioritize bigger companies.The inescapable truth is that scale economies are vital in this business. Even before Covid-19 hit, the economic case for sinking money, water, labor and power into lifting maybe just one truckload of oil every other day from a backyard was hardly compelling.Yet the idea of bowing to that reality is anathema. Advocates argue shutting down these wells even temporarily could leave them unable to start up again, wasting the remaining oil and gas. But this presupposes the remainder has positive economic value, an increasingly dubious proposition in an oil market barreling toward peak demand. Factoring in the cost of decommissioning these wells only reinforces this math but, ironically, avoiding that cost also reinforces the desire to cling on.Pro-rationing would reinforce this further, especially if smaller producers were made exempt. It would mean more-efficient wells subsidizing higher-cost ones. Any number of factors may explain why there is such concern to preserve this part of the industry. Immediate impacts such as unpaid bills and layoffs often loom larger than considerations of long-term viability. Moreover, sheer numbers matter more than scale when it comes to one thing: Barrels don’t vote, people do. Zooming out, the state’s pro-rationing debate is a fractal, with the pattern repeating. Most obviously, OPEC+ tries to do the same thing at the global level, just as Texas used to. By holding cheaper barrels off the market, countries such as Saudi Arabia leave room for higher-cost ones, raising the price overall. OPEC+ does this for similar reasons. Like the small producers in Texas, countries such as Saudi Arabia and Russia have economic models that simply wouldn’t work too well if oil was priced like a regular commodity.Oil’s centrality to development over the past century made it indispensable, and demand both ubiquitous and inelastic. Combine that with the geographic concentration of resources, and the result is an edifice of political and economic structures built on the back of this miracle substance. The oil “market” is just different.But it is becoming less different. That’s the underlying reason for the commission’s virtual gathering this week. Covid-19 is like a fever dream of all the pressures that were bearing down on oil already. The last time Texas was pro-rationing, in the early 1970s, the conventional wisdom on resources and their fast-approaching exhaustion was captured in reports like “The Limits to Growth”. Such ideas supported both OPEC’s power and the notion it was better to ration oil supply and conserve resources — even under those Texas backyards — in the expectation prices would only rise in the future.Today, we know we won’t run out of oil. Mann makes the excellent point that the sheer “capability of oil production” holds prices down today rather than physical barrels being poured into bathtubs for want of a buyer. Capital markets have run out of patience with the industry’s current business model of high and often inefficient growth. There’s simply no economic justification for having thousands of operators with all their associated overhead. Meanwhile, the planet is running out of capacity to absorb oil’s emissions. Demand for oil remains high, but is no longer as inelastic as it was. That trend will intensify.It is striking that this enormous, vital market is now dominated by a shale industry that couldn’t pay a decent return even before Covid-19 showed up, and two sclerotic petro-states, Saudi Arabia and Russia, living off their foreign exchange reserves. These are the edifices built for a different time of dependable demand and managed supply.We are transitioning, painfully and chaotically, to a market with more competition, both between producers fighting for market share (and geopolitical influence) and between oil itself and encroaching rival energy sources. The edifices aren’t built for that and must reconfigure or fall. Like oil itself, the Texas Railroad Commission simply cannot deliver all that is being asked of it.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As oil prices plunge, Parsley Energy CEO Matt Gallagher tells Yahoo Finance the recent drop in crude has been an ‘unprecedented slide,’ equating the decline to a ‘train wreck in full speed.’
Tuesday’s Railroad Commission virtual meeting has ended with more questions than answers as the commissioners continue to debate whether the agency should curb production as coronavirus crushes demand
(Bloomberg Opinion) -- The long arc of the American dream of energy independence, having recently soared Icarus-like toward energy dominance, has finally crashed ignominiously into energy incoherence.Since early on in his term, President Donald Trump has boasted about U.S. fossil fuels giving him the whip hand. Yet there was a fatal flaw in his cunning plan: The domestic industries backing him weren’t quite up to the job. Coal policy has been one long exercise in white-boarding ways of forcing the market by fiat to take more of something it manifestly doesn’t want. With oil and gas, freedom fracks turned out to rest on the unconditional support of capital markets — and the latter now have some rather exacting conditions.Hence, this week’s spectacle of Trump calling on Russian President Vladimir Putin to ease up on his oil price war with Saudi Arabia. Meanwhile, Pioneer Natural Resources Co. and Parsley Energy Inc. have written to the Texas Railroad Commission seeking an OPEC-style coordinated cut in oil production in order to preserve “U.S. energy independence,” which they say was a result of “private enterprise and innovation.”There’s much to unpack there, but it’s crucial to take a moment to acknowledge one other development this week: Trump’s announcement of measures to gut the vehicle fuel-economy targets set by the previous administration.Allow me to summarize: America is now so energy dominant that its president seeks favors from an adversary to help bail out domestic oil producers, while simultaneously rolling back policies that would reduce U.S. dependence on oil. Think about another oil shock, the one in 1973 that scarred the baby boomers and sparked America’s independence fetish in the first place. That year, oil demand in the OECD countries outstripped their own supply by almost 27 million barrels a day. A decade later, that gap was just under 18 million a day. Where did those 8.9 million barrels a day go? Half of it was increased production as regions like the North Sea and Alaska really got going. But the other half was reduced demand; partly a function of recession but, more structurally, a concerted effort to stop using oil in power plants and make do with more efficient vehicles.Given the call to the Kremlin this week, let’s add a geopolitical layer to this. Somehow, the U.S. survived and prospered after Saudi Arabia, among others, effectively turned off the oil taps in the 1970s. The following decade, the Soviet Union collapsed partly because it couldn’t handle Saudi Arabia opening the oil taps. The U.S. did well because it used its “private enterprise and innovation” — to borrow Pioneer’s and Parsley’s phrase — to diversify its energy options. The Soviet Union, never particularly famous for those attributes, remained addicted to oil, albeit as a hopeless dealer unable to weather a price drop for what it was pushing.The frackers seeking political help are correct in observing that Covid-19 is an “extraordinary, unforeseeable crisis.” But just as Trump tries to give the coronavirus a Chinese passport to gloss over his administration’s shortcomings, the E&P industry seeks to blame its predicament entirely on external forces. Only last week, Scott Sheffield, Pioneer’s CEO, said in an interview with CNBC that the crash would leave only about 10 publicly traded U.S. oil producers with decent balance sheets versus dozens of “ghosts and zombies” carrying too much debt. That somehow didn’t make it into his letter on Monday, but it rather hints at an underlying problem in this business all of its own making. Here’s a stab at a new approach. First, admit that the Covid-19 demand shock won’t be offset by a coordinated supply cut even if you could arrange it. A supply cut is coming anyway as storage space fills and prices crater. It will be painful, and the government should help the workers and communities affected most by this ( not highly paid CEOs). Second, recognize that the supposed leverage over foreign powers provided by fracking has evaporated along with the industry’s access to the high-yield bond market. The industry will survive, but it will have to restructure and cool its jets.Finally, rather than debase America by horse-trading for an extra $5 on the price of oil (sorry, drivers, there are Texas’ electoral college votes to think about), how about using our technological edge to reduce dependence on oil in the first place? Then the country might be able to act with a bit more (what’s the word?) independence. Step one on that front: Don’t launch a war on efficiency standards that makes even some car manufacturers uneasy. Suggested slogan? “Energy intelligence” has a nice, if somewhat less macho, ring to it.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
To the annoyance of some shareholders, Parsley Energy (NYSE:PE) shares are down a considerable 70% in the last month...