Parsley Energy Inc. (NYSE: PE) has entered into agreements to acquire certain undeveloped acreage and producing oil and gas properties located adjacent to the company’s existing operating areas in the Southern Delaware and Midland basins for an aggregate purchase price of $359 million in cash.
Breaking down the acquisition, Stifel analysts noted that the $215 million Midland portion of the acquisition “is expected to add 8,711 net acres throughout Upton (2,700 net acres), Reagan (2,600), Midland (2,000), and Glasscock (1,400) counties, Texas (adding 257 unrisked horizontal drilling locations) and includes 1,100 boe/d currently producing from 77 vertical and two horizontal wells, as well as four horizontal DUCs and one horizontal well expected to be completed by closing (on or before 5/16/16).” By their calculations, Parsley paid approximately $20,000/acre, excluding $25 million for PDP ($25,000/flowing boe) and $15 million for the DUC inventory for the aggregate Midland acquisitions.
In the Southern Delaware, “Parsley added 14,197 net acres in Reeves and Ward counties, Texas, for $144 million ($9,000/acre, after backing out 1,200 Boe/d of production we valued at $22,000/flowing boe). The acquisition increases PE's Southern Delaware acreage footprint by 54%, adding an unrisked 70–140 net locations assuming development of a single Wolfcamp bench,” Stifel continued.
Related to the acquisitions, Parsley Energy has priced an underwritten, upsized public offering of 18,250,000 shares of Class A common stock for total gross proceeds of $390.6 million. The 18,250,000 share offering represents a 2,250,000 share upsize to the originally proposed 16,000,000 share offering. The underwriters have an option for 30 days to purchase up to an additional 2,737,500 shares of Class A common stock from the Company. The offering is expected to close on April 8.
Parsley intends to use the net proceeds of the offering to fund the aggregate purchase price for the acquisitions in the Southern Delaware and Midland basins. The remaining net proceeds will be used to fund a portion of the company’s capital program and for general corporate purposes, including future acquisitions. The offering is not conditioned on the consummation of the acquisitions.
Morgan Stanley & Co. LLC and Raymond James & Associates Inc. are acting as joint bookrunners for the offering.