Deal insight

Not just garnish: Parsley becomes one of the largest Midland Basin operators with $2.8 bn Double Eagle acquisition

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Report summary

Parsley Energy added significant inventory to its portfolio with the acquisition of Double Eagle Energy's Midland Basin assets for US$2.8 billion. The assets include 71 000 net acres with 23 drilled but uncompleted wells and 3.6 mboe/d of production. Coupled with last month's acquisition of nearly 18 000 net acres the company has nearly doubled its Midland Basin acreage in 2017. Parsley will fund the acquisition through the issuance of shares and senior notes. We value the acreage at over US$43 000/acre. This is a premium to the consideration paid and mostly due to Parsley's operational expertise in the region. Parsley is one of the premier operators in the Southern Fairway sub play with recent normalized IP rates 28% higher than the average. In its core operating area the company drills wells 25% cheaper than the average in the area. We estimate Parsley's ability to drill low cost wells adds over 25% of value (NPV10) compared to an average operator.

What's included

This report contains

  • Document

    Not just garnish: Parsley becomes one of the largest Midland Basin operators with $2.8 bn Double Eagle acquisition

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Table of contents

  • Executive summary
  • Transaction details
  • Upstream assets
  • Deal analysis
  • Upsides and risks
  • Strategic rationale
  • Oil & gas pricing and assumptions

Tables and charts

This report includes 11 images and tables including:

Images

  • Adjusted acreage pricing for recent Midland Basin M&A deals
  • Parsley's general Midland Basin position offset with top 10% of wells drilled*

Tables

  • Executive summary: Table 1
  • Upstream assets: Table 1
  • Deal analysis: Table 1
  • Deal analysis: Table 2
  • Deal analysis: Table 3
  • Deal analysis: Table 4
  • Oil & gas pricing and assumptions: Table 1
  • Oil & gas pricing and assumptions: Table 2
  • Oil & gas pricing and assumptions: Table 3

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