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PARSLEYENERGY.COM
INVESTOR PRESENTATION
3Q »2017
Q4 2019
Earnings Presentation
February 2020
2
Important Disclosures
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 “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “intend,” “potential,” “could,” “may,”
“foresee,” “plan,” “goal” 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 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 and Jagged Peak Energy Inc.’s (“Jagged Peak”) 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. References to Parsley’s estimated proved reserves as of 12/31/2019 and 12/31/2018
are derived from internal estimates audited by Netherland, Sewell & Associates, Inc. (“NSAI”). References to Jagged Peak’s estimated proved reserves as of 12/31/2019 are derived from the proved
reserve report of Ryder Scott Company, L.P. (“Ryder Scott”). In this presentation, proved reserves attributable to Parsley and Jagged Peak as of 12/31/2019 are estimated utilizing SEC reserve recognition
standards and pricing assumptions based on an unweighted average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For Parsley’s estimated oil and NGL volumes,
the average U.S. EIA WTI spot price of $55.85 per barrel is adjusted for quality, transportation fees, and market differentials. For Parsley’s estimated gas volumes, the average Waha spot price of $0.81
per MMBtu is adjusted for energy content, transportation fees, and market differentials. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by
production over the remaining lives of the properties are $53.97 per barrel of oil, $15.46 per barrel of NGL and $0.71 per Mcf of gas. For Jagged Peak’s oil and NGL volumes, the average WTI Cushing
spot price of $55.69 per barrel is adjusted for gravity, quality, local conditions, gathering and transportation fees, processing, and market differentials. For Jagged Peak’s gas volumes, the average Henry
Hub spot price of $2.58 per MMBtu is adjusted for gravity, quality, local conditions, gathering and transportation fees, processing, and market differentials. All prices are held constant throughout the lives
of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $52.41 per barrel of oil, $10.32 per barrel of NGLs and $0.28 per Mcf of gas.
The proved undeveloped reserves of Jagged Peak presented herein are based on Jagged Peak’s development plans and the reserve estimation methodologies of Ryder Scott. Because Parsley will
develop such proved undeveloped reserves in accordance with its own development plan and, in the future, will estimate proved undeveloped reserves in accordance with its own methodologies, the
estimates presented herein for Jagged Peak may not be representative of Parsley’s future reserve estimates with respect to these properties or the reserve estimates Parsley would have reported if it had
owned such properties as of December 31, 2019.
We have made no commitment to drill all of the drilling locations we identify. 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.
3
Parsley Energy Overview
► Published inaugural corporate responsibility
report, outlining commitment to ESG issues
► Increased quarterly dividend
► Generated free cash flow in 2H19(1)
► Materially improved capital efficiency YoY
► Lowered cost of debt with bond refinancing(2)
► Closed accretive Delaware Basin acquisition,
enhancing position as…
► Economies of scale and core inventory depth
► Elite return profile
► Advantaged operating margins
► Efficient and sustainable growth
► Financial flexibility with strong balance sheet
ANDREWS
MARTIN
ECTOR
LEA
WINKLER
WARD
CRANEREEVES
PECOS
UPTON
MIDLAND
GLASSCOCK
REAGAN
HOWARD
Delaware
Basin
Central
Basin
Platform
Midland
Basin
Recent Highlights
Premier Permian Pure-Play
NYSE Symbol: PE
Market Cap: $6,781 MM
Net Debt: $3,032 MM
Enterprise Value: $9,813 MM
Share Count: 413 MM
Market Snapshot(5)
CULBERSON
ANDREWS
GAINES
DAWSON
BORDEN
LOVING
(1) Free cash flow (outspend) is a non-GAAP financial measure and is defined as net cash provided by operating activities before transaction expenses related to the acquisition of Jagged Peak and changes in operating assets andliabilities, net of acquisitions, less accrual-based development capital expenditures. For a reconciliation of the non-GAAP financial measure of free cash flow (outspend) to the most directly comparable GAAP financial measure, see slide 23;(2) On 2/11/2020, Parsley Energy, LLC and Parsley Finance Corp. (the “Issuers”), subsidiaries of the Company, issued $400 million in aggregate principal amount of 4.125% senior unsecured notes due 2028 (the “2028 Notes Offering”).Utilizing net proceeds from the 2028 Notes Offering and borrowings under Parsley’s revolving credit facility, Parsley expects to redeem all of the issuers’ outstanding 6.250% senior unsecured notes due 2024 on 3/7/2020; (3) As of12/31/2019 pro forma for Jagged Peak acquisition closed 1/10/2020 and scheduled 2020 acreage expirations recorded in 4Q19; (4) ~7,800 net royalty acres are shown on a 100% NRI basis. If Parsley’s royalty ownership is standardized toa 12.5%, or 1/8th, royalty interest, Parsley’s net royalty acreage would equate to approximately 62,000 net royalty acres; (5) Market capitalization calculated using total share count of 413 MM shares (378 MM Class A shares plus 35 MMClass B shares) and closing price as of 2/18/2020. Net Debt is a non-GAAP financial measure defined as total debt less cash and cash equivalents as of 2/4/2020. For a reconciliation of the non-GAAP financial measure of net debt to themost directly comparable GAAP financial measure, see slide 24. Enterprise Value is calculated as market capitalization plus net debt, where market capitalization is calculated as share price times the sum of Class A shares and Class Bshares outstanding. Because non-controlling interest represents the portion of total book value of equity allocated to Class B shareholders, it is already represented in the enterprise value calculation by the inclusion of Class B shares in thecalculation of market capitalization, and should not be added separately as a component of enterprise value.
Parsley Acreage(2)
Net Leasehold Acreage: ~258,000 (97% Operated)
Midland Basin: ~148,000
Delaware Basin: ~110,000
Net Royalty Acreage: ~7,800
Standardized Royalty
Acreage (12.5% NRI): ~62,000(4)
Parsley Energy Acreage(3)
Defend and extend operational
efficiency gains
Increase footage drilled/completed per
rig/crew over FY18 levels
2019 footage drilled/completed per
rig/crew increased 16%/14% from
FY18 levels
Work with high-performing service
partners on pricing and contracting
Improve capital efficiency by
8-10%+ YoY(1)
Achieved 19% YoY improvement in
capital efficiency(1)
Hedge to protect cash flow and balance
sheet while retaining oil price upsideOutspend by less than $250 million in
any oil price environment(2)
Maintained high percentage of barrels
hedged to support cash flow
Sustain culture that promotes and
prioritizes community stewardship
Collaborate with Permian Strategic
Partnership (“PSP”); publish
Sustainability Report by year-end 2019
Published inaugural Corporate
Responsibility Report and established
Nominating, Environmental, Social &
Governance Board Committee
Rate of Return (“ROR”)-driven approach
to well selection
Improve capital efficiency by
8-10%+ YoY(1)
Achieved 19%+ YoY improvement in
capital efficiency(1)
Accelerate timeline to self-funded growthOutspend by less than $250 million in
any oil price environment(2)
FY19 outspend less than $100 million;
generated free cash flow in 2H19(2)
Further increase visibility on
management and shareholder alignment
Addition of corporate returns metric to
2019 incentive plan
Initiated quarterly dividend in 3Q19(3);
delivered 13%+ CROCI(4) in 2019
Leverage legacy water infrastructure
investments
Increase 3rd party water revenues
and/or explore strategic alternatives
Formed dedicated water team in 3Q19;
increased 3rd party water volumes over
50% from 1H19 to 2H19
Exercise patience on incremental crude
transport agreements
Deliver healthy long-term realized oil
prices while limiting minimum volume
commitments
Dependable flow assurance,
diversified pricing, and tight API gravity
range (41° average) translated to
favorable realized oil prices
4
Delivered on 2019 Action Plan
Discipline
Guiding Principles
Foresight
Stability
2019 Action Plan Accountability 2019 Year in Review
(1) Capital efficiency calculated as barrels of organic oil production added (Q41/Q40, adjusted for proved developed producing (“PDP”) oil base decline) per million dollars of development capital expenditures. Assumes 4Q18/4Q17 PDP oilbase decline of ~45% and 4Q19/4Q18 PDP oil base decline of ~43%. Adjusted for divestitures closed after 9/30/2018; (2) Free cash flow (outspend) is a non-GAAP financial measure and is defined as net cash provided by operating activitiesbefore transaction expenses related to the acquisition of Jagged Peak and changes in operating assets and liabilities, net of acquisitions, less accrual-based development capital expenditures. For a reconciliation of the non-GAAP measure offree cash flow (outspend) to the most directly comparable GAAP measure, see slide 23; (3) Announced 8/26/2019. Paid to all equity holders including Class A stockholders and PE unitholders/Class B stockholders; (4) Addition of cash returnon capital invested (“CROCI”) metric into 2019 incentive plan announced in definitive proxy statement for 2019 annual meeting (filed with SEC on 4/8/2019); CROCI is calculated by dividing the sum of cash flow from operations and after-taxinterest expense by the sum of average gross property, plant and equipment and average non-cash working capital. For a reconciliation of the non-GAAP financial measure of CROCI to the most directly comparable GAAP financial measure,see slide 25.
5
Setting the Course for a Resilient Future
► Parsley comprehensively delivered on its 2019 Action Plan
► Eclipsed key financial targets and progressed various ESG initiatives
Published inaugural Corporate Responsibility Report in December 2019
Collaborated with Permian Strategic Partnership on impactful community projects
Formed new ESG-focused employee committee
Operationalizing technology to enable 24/7 real-time surveillance and enhance virtual site visits
Commitment to reduce flaring on recently acquired Jagged Peak assets included in 2020 incentive plan
Prioritizing Community
Stewardship
► PSP - One of 19 companies
working with regional leaders to
address key challenges
► Commitment of more than $30
million in 2019 for identified
projects
Inaugural Corporate
Responsibility Report
View the report at:
www.ParsleyEnergy.com/CRR
► Expect to publish annually
ENVIRONMENTAL SOCIAL GOVERNANCE
ESG-focused Board and
Employee Committees
► Board committee: Nominating,
Environmental, Social, and
Governance Committee
Includes oversight of
environmental, climate, safety,
social and other corporate
responsibility matters
► Employee committee: Safety,
Sustainability, and Corporate
Responsibility Planning and
Disclosure Committee
Led by EVP-COO
Road Safety
Housing
Education
Healthcare
Workforce Development
Parsley
0.000
0.050
0.100
0.150
0.200
2018 2018 2019
Tota
l B
bls
Flu
id S
pill
ed /
MB
bls
Pro
duced
0
5
10
15
20
25
Industry Parsley
0%
5%
10%
15%
20%
2018 2018 2019 2019 YE20E
6
Committed to ESG Leadership
2018 GHG Emissions Intensity (mtCO2/MBoe)(7)
Total Fluid Spill Rate(1)
Industry(6)
(8)
► Conducted materiality assessment following the Global
Reporting Initiative (GRI) framework of topic
identification, stakeholder feedback, prioritization, and
senior leader validation
► Reported data includes metrics on emissions, flaring,
spills, and safety
► Improved significantly in recent years
62% reduction in Total Fluid Spill Rate (2016-2019)(1)
15% reduction in Flaring Intensity (2016-2019)(2)
5% reduction in GHG Emissions Intensity (2016-2018)
Permian pure-
play E&Ps lower
than broader
industry group
(4)
Flared Gas Volumes(5)
Committing to significant
flaring reduction on JAG
assets; included in 2020
incentive plan
Parsley
(1) Calculated as the total Bbls of fluid spilled divided by MBbls produced; (2) Calculated as MCF flared divided by MBOE production; (3) Source: Permian Basin Petroleum Association’s “2018 HSE Benchmarking Survey”; (4) Parsleyrecords all spills that leave the primary container (well, flowline, gathering line, truck or facility piping, vessels, tanks, etc.) regardless of volume. This includes spills that are reportable to a regulatory agency and non-reportable spills; (5)Represents the percentage of Permian gas production flared. Includes flared gas from completions, well testing, tank emissions, and gas shut-ins and curtailments; (6) Source: Rystad Energy. Reflects median of following companies:Admiral Permian Resources, APA, BP, BTA Oil Producers, Capitan Energy, CDEV, COP, CPE, CrownQuest, CRZO, CVX, CXO, Discovery Natural Resources, DVN, ECA, Endeavor Energy Resources, EOG, EPEG, FANG, Fasken Oiland Ranch, Hunt Oil, JAG, LPI, Mewbourne Oil Company, MRO, MTDR, NBL, OXY, PDC, PXD, QEP, RDS, Sable Permian Resources, SM, Surge Energy, WPX, XEC, and XOM; (7) Includes Scope 1 greenhouse gas (“GHG”) emissions;(8) Source: company reports. Companies include BP, COP, CVX, DVN, EOG, FANG, HES, MRO, NBL, OXY, and PXD.
Permian E&Ps(3)
YE20E Target:
2.5%
Parsley Jagged
PeakParsley
Capture tangible synergies from
JAG acquisition
Execute smooth integration and realize
at least $25 million of G&A savings
Sustain culture that promotes and
prioritizes environmental and
community stewardship
Reduce flaring on acquired JAG assets
to <5% by YE20; publication of second
annual Corporate Responsibility Report
Apply Rate of Return (“ROR”)-driven
approach to acquired JAG assets
Improve capital efficiency by
2-5%+ YoY(1)
Sustain and grow free cash flow while
budgeting at $50 WTI
Generate at least $200 million of free
cash flow at $50 WTI(2)
Further increase visibility on
management and shareholder
alignment
Grow return of capital program
Defend and extend operational
efficiency gains and integrate best
practices following JAG acquisition
Sustain improvement in footage
drilled/completed per rig/crew over
FY19 levels in Midland/Delaware
Apply increased scale advantage
across supply chain
Improve capital efficiency by
2-5%+ YoY(1)
Hedge to protect cash flow and balance
sheet while retaining oil price upside
Decrease leverage organically by
YE20 at $50 WTI
Continue to moderate PDP base oil
decline rateGrow return of capital program
7
Maintaining Urgency with 2020 Action Plan
Discipline
Guiding Principles
Provide Foundation…
Foresight
Stability
For an optimal
2020 Action Plan
And Accountability
will help achieve goals and…
Compelling
Long-Term Targets
Health, Safety,
& Environmental
Excellence
Efficient Capital
Allocation to Short-
Cycle, High-Return
Projects
Increasing
Free
Cash Flow
Growing
Return of
Capital
Program
(1) Capital efficiency calculated as barrels of organic oil production added (Q41/Q40, adjusted for PDP oil base decline) per million dollars of development capital expenditures. Assumes 4Q19/4Q18 PDP oil base decline of ~43% and4Q20/4Q19 PDP oil base decline of ~40%; (2) Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities before transaction expenses related to the acquisition of Jagged Peak andchanges in operating assets and liabilities, net of acquisitions, less accrual-based development capital expenditures; base case budget assumes $50 WTI oil price.
1-2%
4%
3-4%
8
Holding the Line on Capital Efficiency Gains
19%
5%
8%
6% Encouraging results validated shift in
approach
Optimized Completions
Confirmatory strong well results in
Martin, Midland, and Upton Counties
Shifting Activity Mix
Cycle time improvement, well design
tweaks, and reduced consumables costs
Capex Savings
Adding More Barrels of Oil for Fewer Development Dollars
► Bolstered 2019 capital efficiency by pushing capital spend below bottom of FY19 budget
► 2020 Action Plan is designed to protect capital efficiency gains and grow free cash flow(1)
Yo
Y C
ap
ita
l E
ffic
ien
cy Im
pro
ve
me
nt
(%)(
2)
(1) Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities before transaction expenses related to the acquisition of Jagged Peak Energy Inc. and changes in operating assets andliabilities, net of acquisitions, less accrual-based development capital expenditures; (2) Capital efficiency calculated as barrels of organic oil production added (Q41/Q40, adjusted for PDP oil base decline) per million dollars ofdevelopment capital expenditures. Assumes 4Q18/4Q17 PDP oil base decline of ~45%, 4Q19/4Q18 PDP oil base decline of ~43%, and 4Q20/4Q19 PDP oil base decline of ~40%.
2019 Year in Review
Delivered a step-change improvement in capital efficiency JAG transaction helps preserve and build upon capital efficiency gains
2020 Action Plan
1-2%
8-10%+
Initial 2019
Target:
2019 Actual:
The “New Normal”
► Scale benefits on JAG assets
► More local sand in Delaware
► Optimal project sizing (6-8 well projects)
► More efficient facilities spend
► Softer services environment
Capex Savings
► 4-5 rigs running on acquired JAG assets
► Slight activity increase in Martin, Midland,
and Upton Counties
Shifting Activity Mix
► Apply ROR-driven development approach
to JAG projects
Optimized Design
Opportunity for
Incremental
Improvement
2-5%+
2020 Target:
9
Maintaining Returns-Focused
Development Approach
Parsley Acreage
Rig Areas
Setting the Course with 2020 Outlook
MARTINHOWARD
GLASSCOCK
MIDLAND
UPTONREAGANCRANE
PECOS
REEVES
WARD
Central
Basin
Platform
Midland
Basin
Delaware
Basin
2020E Capex Breakdown
Midland Delaware TOTAL
Net Lateral Ft. POP’d (000’s) ~1,600’
x Basin Allocation ~65% ~35%
= Basin Net Lateral Ft. (000’s) ~1,000’ ~600’
x Basin DC&E ($/Ft) ~$900 ~$1,100
= Basin DC&E ($MM) ~$900 ~$660
Total DC&E ($MM) ~$1,560
Other ($MM)(4) ~$140
TOTAL CAPEX ($MM) ~$1,700
Continuing to budget at $50 WTI
Do not anticipate
Parsley capital to be
allocated to Big Tex
area in 2020
WINKLERLOVING
ANDREWS
ECTOR
CULBERSON
JEFF DAVIS
BORDEN
DAWSON
LEAEDDY
(1) Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities before transaction expenses related to the acquisition of Jagged Peak and changes in operating assets and liabilities, netof acquisitions, less accrual-based development capital expenditures; (2) Capital efficiency calculated as barrels of organic oil production added (Q41/Q40, adjusted for PDP oil base decline) per million dollars of development capitalexpenditures. Assumes 4Q20/4Q19 PDP oil base decline of ~40%; (3) Estimated annual production growth and capital expenditure reduction based on midpoints of 2020 guidance ranges, and includes the combination of Parsley andJagged Peak 2019 capital expenditure and oil production; (4) Other capital expenditures includes non-operated activity, water infrastructure, gas gathering infrastructure, and geological/geophysical.
► Enhanced free cash flow profile(1)
► Sustained capital efficiency(2)
► ROR steers capital allocation mix
Capex Budget:
► $1.6-$1.8B(3) (~15% YoY reduction)
Oil Production:
► 125-133 MBo/d(3) (~10% YoY growth)
Midland Basin
- East
Midland Basin
- West
Delaware Basin
400
600
800
1,000
1,200
1,400
2017 2018 2019
Stim
ula
ted L
ate
ral F
eet per
Opera
tional D
ay p
er
Cre
w
Delaware Midland
0
200
400
600
800
1,000
2017 2018 2019
Drille
d F
eet
per
Opera
tional D
ay
per
Rig
Delaware Midland
► Recalibrated both drilling and completion operations to a higher efficiency level in 2019
10
Defend and Extend Efficiency Gains
(1)
(1)
Drilling Efficiency Translated to More Footage with Less Equipment
Completion Efficiency Gains Preserved Operational Momentum into 2020
2019
Year in Review
Integration
Highlights
2020
Action Plan
2019
Year in Review
Integration
Highlights
2020
Action Plan
(1) Operational days measured as days equipment is active. Does not include mobilization or other idle time; (2) Request for quotation.
► Enhanced drilling efficiency through process
improvements and equipment upgrades
Enabled drop from 12 to 10 PE rigs by YE19
Shorter cycle times reduced well costs
► Smooth assimilation of JAG rigs into Parsley operations
► Optimized rig schedules across expanded footprint
► Apply scale advantage across expanded rig fleet
► Tighten efficiency feedback loop through larger
project developments
► Improved completion efficiency by significantly reducing
“non-pump time”
► Worked with high-performing service partners on pricing
Recently completed comprehensive RFQ(2)
► Fast-tracked collaboration on best practices to further
improve operational efficiency
► JAG’s recent service costs have benefitted from
Parsley scale advantages
► Increased regional sand usage in the Delaware Basin
► Maintain operational momentum and avoid friction costs
Four-to-five high-quality crews running in 2020
2019 Drilling: +16% efficiency from 2018 average
2019 Completions: +14% efficiency from 2018 average
► Tighter vertical density:
Stacked 3rd Bone Spring and
upper WCA wells (Coriander)
► Tighter horizontal density:
880’ horizontal spacing
(Venom, UTL “1.0”)
► More delineation: Multiple
WCB landing zones (Venom,
Coriander”)
► Jagged Peak utilized NPV-focused development approach in 2H19
Recent production results are in-line with Parsley’s risked expectations
Capital costs trending lower than Parsley’s initial expectations
► Shifting to ROR-focused approach on Parsley’s 2020 development program
Increasing proppant loading modestly from legacy JAG design
Widening distance between wellbores in all directions
Targeting only one landing zone in Wolfcamp B formation
Applying ROR-Focused Approach to
JAG Assets
JAG NPV-Focused Development Highlights
PECOSParsley Leasehold
JAG Recent Projects
Venom
REEVES
WARD
Delaware
Basin
Coriander
UTL “1.0”
Applying ROR-Focused Approach to JAG Assets
(1) Coriander project placed on production mid-August 2019; (2) Venom project placed on production mid-October 2019.
► Decrease vertical density:
Stagger 3rd Bone Spring and
upper WCA wells
► Widen horizontal density:
990’+ horizontal spacing
between wells
► Less delineation: Target one
WCB landing zone in
prospective areas
Project
Name
Project
Size
Lateral
Length
Current Per Well
Oil Rate
Coriander 6 wells ~8,500’ ~340 Bo/d after 180 days(1)
Venom 8 wells ~7,900’ ~430 Bo/d after 120 days(2)
UTL "1.0" 10 wells ~9,800’ Late March POP
11
“NPV-Focused”
JAG Pad Design
“ROR-Focused”
PE Pad Design
► Stock-for-stock, low-premium transaction ensured synergies accrue to all shareholders
Modest premium was materially below present value of estimated G&A synergies(1)
► Integration success aligns with go-forward incentive plan for all Parsley employees
JAG Synergy Scorecard Update
12
JAG Acquisition Commentary (October 2019)
General & Administrative
and Operational
► Austin-based company with a single management team
► G&A and operational synergies expected to be realized in
near term
~$25mm in 2020 and $40-50mm in 2021+
PV-10 of ~$250-$300 million(1)
Primary Synergy Remains on Track
Additional Synergies In Process
Water Infrastructure
Contiguous Acreage
Cost of Capital
Capital Efficiency Gains
Development Pace Flexibility
► Potential to expand ongoing Parsley water infrastructure-
related strategic initiatives
► Land synergies driven by extending laterals and eliminating
lease line buffers
► Accelerates progress toward investment grade credit profile
and helps facilitate opportunistic debt refinancing in the future
► Well cost savings based on applying Parsley cost metrics to
Jagged Peak inventory
► Expanded footprint and increased scale allows for schedule
optimization
► Enhances ability to return capital to shareholders
(1) PV-10 is defined as the present value of future cash flows utilizing a 10% discount rate. PV-10 range reflects estimated 10-year low and high end synergy total; (2) On 2/11/2020, the Issuers issued $400 million in aggregateprincipal amount of 4.125% senior unsecured notes due 2028. Utilizing net proceeds from the 2028 Notes Offering and borrowings under Parsley’s revolving credit facility, Parsley expects to redeem all of the Issuers’ outstanding6.250% senior unsecured notes due 2024 on 3/7/2020.
Integration Progress
► Expedient closing helps de-risk synergy capture
► Transition of operational staff concluded in 1Q20
Identified full-time need for ~20% of JAG employees
including field personnel
Denver office expected to close in 2Q20
► In Process
► Four to six wells expected to be drilled on adjacent
acreage during 2H20
► Running 15 rigs in 1Q20; plan to drop one rig in 2Q20
► Possess commercial flexibility to further moderate
activity if less equipment is needed
► Integration of JAG water infrastructure assets on track
► Refinanced $400mm of senior notes at 4.125%(2)
► Fitch initiated with Investment Grade credit rating of
BBB- (Feb 2020)
► S&P upgrade to BB (Jan 2020)
► Moody’s rating of Ba2 (Oct 2019)
2020 2021 2022 2023 2024 2025 2026 2027 2028
13
Strong, Flexible Financial Position
1H25
2H25
$1,100
$700$450
$650
Senior Notes ($MM)Revolving Credit Facility ($MM)
Maintains Healthy Leverage Profile with Ample Borrowing Capacity
► All-stock consideration in Jagged Peak acquisition keeps leverage profile healthy
Larger cash flow base and ample liquidity
Modest debt levels and no near-term maturities
► Increased scale and production levels accelerate path to an Investment Grade credit profile
Fitch Ratings recently initiated Investment Grade rating of BBB- with stable outlook
Recently refinanced $400MM of senior notes at 4.125% interest rate resulting in annual savings of nearly $9 million(1)
Weighted average coupon on remaining $2.3B of senior notes is 5.535%
► Strong pro forma hedge position, with a majority of 2020 oil production hedged
Favorable Debt Maturity Schedule
$500Committed
Amount: $1,000
Remaining
Borrowing
Base
$2,700
Net Amount Drawn(2): $332
Note: Debt outstanding as of 2/4/2020 pro forma for debt refinancing announced 2/6/2020; (1) On 2/11/2020, the Issuers issued $400 million in aggregate principal amount of 4.125% senior unsecured notes due 2028. Utilizing netproceeds from the 2028 Notes Offering and borrowings under Parsley’s revolving credit facility, Parsley expects to redeem all of the Issuers’ outstanding 6.250% senior unsecured notes due 2024 on 3/7/2020; (2) Parsley 2021 netamount drawn on revolving credit facility reflects $400MM drawn net of $68MM of cash on hand as of 2/4/2020.
Gross Amount Drawn: $400$400
Parsley 2019
Results2020 Guidance
Production
Net Oil Production (MBo/d) 86.8 125.0-133.0
Net Production (MBoe/d) 140.6 200.0-210.0
Capital Program
Total Development Expenditures ($MM) $1,373 $1,600 - $1,800
Drilling, Completion, & Equipment ($MM) $1,332 $1,500 - $1,650
Other ($MM)(1) $41 $100 - $150
Activity
Gross Operated Horizontal POPs (2) 145 ~180-190
Midland Basin (% of Total) 83% ~65%
Delaware Basin (% of Total) 17% ~35%
Average Lateral Length ~10,200' 9,500’ - 10,000'
Gross Operated Lateral Footage (000's) 1,480' 1,710' - 1,900'
Average Working Interest 95% ~90%
Units Costs
Lease Operating Expenses ($/Boe) $3.45 $3.50 - $4.50
Cash G&A ($/Boe) $2.57 $2.00 - $2.40
Production & Ad Valorem Taxes
(% of Total Revenue)6.4% 6% - 7%
-
15
30
45
60
75
90
105
120
135
150
0
2
4
6
8
10
12
14
16
18
20
Net O
il Pro
ductio
n (M
Bo/d
)Horizonta
l R
ig C
ount
Horizontal Rigs Quarterly Oil Production (MBo/d)
1Q20 Guidance
123-129 MBo/d
► Sustain and grow free cash flow(3) profile
Generate at least $200MM of free cash flow(3)
Grow return of capital to shareholders
► Preserve and build upon 2019 capital efficiency level(4)
► Maintain operational momentum and avoid friction costs
14-15 high-spec rigs; 4-5 high-performing completion crews
► Disciplined organic oil growth
~10% YoY at midpoint(5)
14
2020 Guidance Summary
Budgeting at $50 WTI with priorities including:
2020 Guidance Highlights
2014 2015 2016 2017 2018 2019 2020E
All guidance as of 2/19/2020; (1) Other capital expenditures includes non-operated activity, water infrastructure, gas gathering infrastructure, and geological/geophysical; (2) Wells placed on production. 2020 guidance includes wellsplaced on production by Jagged Peak between 1/1/2020 and 1/10/2020; (3) Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities before transaction expenses related to theacquisition of Jagged Peak and changes in operating assets and liabilities, net of acquisitions, less accrual-based development capital expenditures. Base case budget assumes $50 WTI oil price. The Company is unable to present areconciliation of forward-looking free cash flow because components of the calculation, including changes in working capital accounts, are inherently unpredictable. Additionally, estimating the most directly comparable GAAP measurewith the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort; (4) Capital efficiency calculated as barrels of organic oil production added(Q41/Q40, adjusted for PDP oil base decline) per million dollars of development capital expenditures. Assumes 4Q19/4Q18 PDP oil base decline of ~43% and 4Q20/4Q19 PDP oil base decline of ~40%; (5) Pro forma for Jagged Peakacquisition closed on 1/10/2020.
CLICK TO ADD TEXTSupplementary Slides
91 124
222
416
522
592
138
0
100
200
300
400
500
600
700
Pro
ved
Reserv
es (
MM
Bo
e)
Strong Growth in Proved Reserves
Consistently Efficient Reserve Growth
►Parsley YE19 total proved reserves up 14% YoY
(oil up 11% YoY)
YE19 PD reserves up 23% YoY (oil up 22% YoY)
(51)
+14%
16
Proved Reserves Summary(4)
(14) (3) +1
+139
► Parsley YE19 total proved reserves up 14% YoY
Three-year proved reserve CAGR of 39%
► Organic reserves replacement ratio of 243%(1)
► PD F&D of $10.88/Boe(2) supports top-tier recycle ratio of 2.7x(3)
► Jagged Peak acquisition included PD oil reserves of 63.3 MMBbls
JA
G(5
)
YE 2019Oil
(MMBbls)
Gas NGL
(MMBbls)
Total
(MMBoe)(Bcf)
PD 206.8 472.2 96.2 381.7
PUD 119.6 237.1 51.5 210.6
Total Proved 326.5 709.2 147.7 592.3
YE 2019Oil
(MMBbls)
Gas NGL
(MMBbls)
Total
(MMBoe)(Bcf)
PD 63.3 58.5 11.9 85.0
PUD 39.4 35.7 7.3 52.6
Total Proved 102.7 94.2 19.2 137.6
PE
(1) Organic reserves replacement ratio calculated as total 2019 reserve additions and revisions (technical and pricing) divided by total 2019 production. Excludes acquisitions and divestitures; (2) Proved Developed F&D (“PD F&D”) costis calculated as total 2019 capital expenditures (including Infrastructure and Other) divided by total 2019 proved developed reserves additions and revisions (technical and pricing). Excludes acquisitions and divestitures; (3) Recycleratio calculated as 4Q19 operating cash margin divided by PD F&D ($10.88/Boe). Oil and Gas PD F&D cost (excluding water handling infrastructure spend) was $10.67/Boe. For a reconciliation of the non-GAAP financial measure ofoperating cash margin to the most directly comparable GAAP financial measure, see slide 22; (4) Parsley reserve summary as of 12/31/2019 and audited by NSAI. Jagged Peak reserve summary as of 12/31/2019 and audited by RyderScott; (5) The proved undeveloped reserves of Jagged Peak are based on Jagged Peak’s development plans and Ryder Scott’s reserve estimation methodologies. Because Parsley will develop such proved undeveloped reserves inaccordance with its own development plan and, in the future, will estimate proved undeveloped reserves in accordance with its own methodologies, the estimates presented herein for Jagged Peak may not be representative of Parsley’sfuture reserve estimates with respect to these properties or the reserve estimates Parsley would have reported if it had owned such properties on 12/31/2019.
17
Hedge Position
► Methodical, consistent approach
► Protect cash flow stream in weaker oil
price environment
► Preserve meaningful upside exposure
in stronger oil price environment
► Align hedges with regional price
exposure
Hedge positions as of 2/19/2020. Prices represent the weighted average price of contracts scheduled for settlement during the period; (1) Parsley receives the swap price; (2) When the reference price (Midland, MEH, or Brent) is at orabove the call price, Parsley receives the call price. When the reference price is between the long put price and the short put price, Parsley receives the long put price. When the reference price is below the short put price, Parsleyreceives the reference price plus the difference between the short put price and the long put price; (3) Premium realizations represent net premiums paid (including deferred premiums), which are recognized as a loss in the period ofsettlement; (4) Swaps that fix the basis differentials representing the index prices at which Parsley sells its oil and gas produced in the Permian Basin less the WTI Cushing price.
Open Crude Oil Derivatives Positions
Open Natural Gas Derivatives Positions
Hedging Strategy
1Q20 2Q20 3Q20 4Q20
OPTION CONTRACTS
WAHA
Swaps - Waha (MMBtu/d)(1)
48,242 48,242 48,152 48,152
Swap Price ($/MMBtu) $1.08 $0.70 $0.90 $0.86
Total Option Contracts (MMBtu/d) 48,242 48,242 48,152 48,152
1Q20 2Q20 3Q20 4Q20
OPTION CONTRACTS
CUSHING
Swaps – Cushing (MBbls/d)(1)
11.0 11.0 11.0 11.0
Swap Price ($/Bbl) $57.87 $57.87 $57.87 $57.87
MIDLAND
Three Way Collars - Midland (MBbls/d)(2)
30.3 32.4 22.3 22.3
Short Call Price ($/Bbl) $68.04 $68.01 $65.67 $65.67
Long Put Price ($/Bbl) $56.54 $56.51 $55.27 $55.27
Short Put Price ($/Bbl) $46.54 $46.51 $45.27 $45.27
Swaps – Midland (MBbls/d)(1)
3.3 3.3
Swap Price ($/Bbl) $55.20 $55.20
MAGELLAN EAST HOUSTON ("MEH")
Three Way Collars - MEH (MBbls/d)(2)
50.1 52.2 46.8 46.8
Short Call Price ($/Bbl) $74.06 $73.80 $71.16 $71.16
Long Put Price ($/Bbl) $58.97 $58.93 $58.00 $58.00
Short Put Price ($/Bbl) $48.97 $48.93 $48.00 $48.00
Swaps – MEH (MBbls/d)(1)
4.2 4.2
Swap Price ($/Bbl) $56.30 $56.30
BRENT
Three Way Collars - Brent (MBbls/d)(2)
11.5 13.0 13.0
Short Call Price ($/Bbl) $74.29 $73.13 $73.13
Long Put Price ($/Bbl) $62.29 $62.25 $62.25
Short Put Price ($/Bbl) $52.29 $52.25 $52.25
Total Option Contracts (MBbls/d) 94.7 110.4 97.3 97.3
Premium Realization ($MM)(3)
($17.0) ($19.8) ($17.6) ($17.6)
BASIS SWAPS
Midland-Cushing Basis Swaps (MBbls/d)(4)
18.9 18.9 14.0 14.0
Basis Differential ($/Bbl) ($1.00) ($1.00) ($1.44) ($1.44)
0
5
10
15
20
25
30
35
Op
era
tor
Co
un
tDialed in to Permian Scale Sweet Spot
18
► Efficient allocation of capital within the Permian requires sufficient scale
► Parsley believes optimal scale both retains corporate agility and ensures a voice in service market
Voic
e in M
ark
et
Corp
ora
te A
gili
ty
Limited
Small-Scale Optimal Scale
Midstream: Sizable acreage position and growth visibility helped lock in
favorable terms with quality midstream partners
Procurement: Comprehensive RFQ(2) processes for certain key services
conducted every 3-6 months
Quality Control: High-performing crews facilitated step-change in completion
efficiency over the last 12-18 months
Parsley Real-World Examples
Development Approach: Shift to 2019 “ROR-Optimized” plan in late-2018
required corporate agility and cohesive interdisciplinary collaboration
Integration: Buildout of water infrastructure created a strategic asset
Activity Cadence: Absorbed downshift from 16 rigs to 11 rigs during 2019
without disruption
Mega-Scale
Preferred
Partners
Pricing Power
Operational
Continuity
Info Dataset /
Implementation
Mid/Downstream
Integration Need
Friction Costs
Limited/Volatile
Limited
Small / Rapid
Low-to-Moderate
High
Dynamic
Moderate-to-Strong
Strong
Moderate / Fast
Opportunistic
Moderate-to-Low
Smaller vendor pool
Strong
Strong
Large / Slow
Growing
Low
+
+
+
+
+
+/-
+/-
+/-
+/-
+
+
+
-
-
-
+/-
+
-
(1) DrillingInfo. Active horizontal drilling rigs in Midland and Delaware Basins as of 2/8/2020; (2) Request for quotation.
5 rigs or less 6-20 rigs 20+ rigs
Corporate Benefits from
Flexibility & Scale
Small-Scale Optimal Scale Mega-Scale
Measuring Permian Scale by Rig Count(1)
Parsley remains in the
sweet spot to realize
benefits of optimal scale
19
Extensive Set of Reinvestment
Opportunities
MARTIN
HOWARD
MIDLAND
GLASSCOCK
REAGAN
UPTON
REEVES
PECOS
Central
Basin
PlatformWARD
Development Inventory Drilled(1)
2019E Development Program(2)
Inventory Life at 2019E Pace(3)
ANDREWS
ECTOR
CRANE
Parsley Drill Spacing Unit (“DSU”)(1) Other Parsley Acreage
(~232,000 net acres)(2) (~26,000 net acres)(2)
DSU Development Inventory Drilled(3)
2019 DSU Development Program(3)
2020E Development Program(4)
Remaining DSU Inventory Life at 2020E Pace(4)(5)
HOWARD
Midland
Basin
Delaware
Basin
Publication Date: February 2020
Inventory Life: As of YE19
2020E Development Pace: ~1.8MM ft/yr
12-18 Years 20-35 Years
15-20 Years
Years
► Similar blueprint to 2019 development approach
Slight activity increase in Martin, Midland, and Upton
Counties (“Midland Basin – West”)
Combination of moderately upsized fracs and wider
spacing in acquired Delaware Basin assets
Wider spacing patterns in Howard, Glasscock, and
Reagan (“Midland Basin – East”)
Over a decade of running room in each drilling corridor at
2020 development patterns
2020 Action Plan
► Drilling/completion efficiency gains translated to increased
footage for less capital
Placed on production ~100,000 more lateral feet than
original budget (Martin/Midland, Glasscock, and Pecos)
► Improved inventory quality via acreage trades and targeted
organic leasehold transactions (Martin/Midland Counties)
2019 Year in Review
(1) Leasehold where Parsley can drill or propose drilling horizontal wells with lateral lengths equal to or greater than 1-mile; (2) As of 12/31/2019 pro forma for JAG acquisition closed 1/10/2020; (3) Development inventory includesoperated locations in Lower Spraberry, Wolfcamp A, Wolfcamp B, Wolfcamp C, and 3rd Bone Spring zones in defined DSUs. Darker shade of blue represents actual 2019 development program, including Jagged Peak development in theDelaware Basin; (4) Based on 2020E activity levels in each development area; (5) Bottom of inventory range represents development of inventory in defined DSUs utilizing increased proppant and wider spacing configuration, consistentwith 2020 development approach and is comprised of 26 million gross (23 million net) lateral feet in proven formations (Lower Spraberry, Wolfcamp A, Wolfcamp B, Wolfcamp C, and 3rd Bone Spring zones). Top of inventory rangerepresents full development inventory in defined DSUs and is comprised of 39 million gross (34 million net) lateral feet in proven formations. Remaining DSU inventory life ranges exclude footage completed through 12/31/2019.
Midland Basin - EastMidland Basin - West
Delaware Basin
Water Assets Overview
20
Water Assets – Parsley Water Company
Formed PWC in 3Q19 with focus on
enhancing capital efficiency:
► Higher Asset Utilization:
New storage level metering system
Improved forecasting and planning
Increased 3rd party water volumes in 2H19
Currently comprise <5% of total
► Lower Costs:
Evaluating more permanent power tie-ins
Establishing more efficient business
processes
Assessing recycling opportunities
► Increased Accountability:
New water-focused internal
management team
Internal segment reporting increases
performance management
Dedicated Internal Water Team
Focused on integrating JAG
water assets in 1H20
Parsley PE SWD
Jagged Peak JAG SWD
PE SWD Pipeline
JAG SWD Pipeline
Proposed SWD Pipeline
Midland
Basin
Delaware
BasinCentral
Basin
Platform
UPTON
REAGAN
GLASSCOCK
MIDLAND
MARTIN HOWARD
REEVES
PECOS
WARD
CRANE
WINKLER
ECTOR
Robust Water Infrastructure Network(1) PWC JAG
Active Saltwater Disposal Wells (SWDs) 40+ 10+
Permitted Disposal Capacity(2) (MMBbl/d): 1.5 0.3
Freshwater Storage Capacity (MMBbl): 65+ 10+
Frac Pits: 130+ 15+
Active Water Pipeline(3) (miles): 650+ 150+
(1) As of 12/31/2019; (2) Includes existing and permitted operated SWDs; (3) Includes fresh water and produced water pipelines.
0
4
8
12
16
20
0
40
80
120
160
200
Net
Oil
Pro
duction (
MB
o/d
)
Net S
tandard
ized R
oyalty
Acre
s (0
00's
)
Net Oil Production (MBo/d) Net Standardized Royalty Acres (000's)
► Minerals ownership enhances Parsley’s sustainable free cash flow profile(1)
Adds high margin production without any associated capex or operating expenses
Surface ownership can generate secondary cash flow stream, offering additional upside
High degree of Parsley operatorship improves visibility of development and cash flow timing
► Growing number of public mineral companies provides more valuation markers for asset class
Parsley Minerals Ownership
21
Building to Sustainable Free Cash Flow –
Minerals Ownership
(1) Free cash flow is a non-GAAP financial measure and is defined as net cash provided by operating activities before transaction expenses related to the acquisition of Jagged Peak Energy Inc. and changes in operating assets andliabilities, net of acquisitions, less accrual-based development capital expenditures; (2) Public filings. Peers include FLMN, MNRL, and VNOM; (3) Market capitalization for peers calculated using closing prices as of 2/14/2020 and is notpro forma for pending transactions; (4) 4Q19 oil production attributable to Parsley’s minerals ownership. Peer production period based on latest reported quarterly figures and is not pro forma for pending transactions; (5) Royaltyownership standardized to a 12.5%, or 1/8th, royalty interest and is not pro forma for pending transactions.
Market Cap(3)
Comparable Public Minerals Companies
Net Standardized Royalty Acreage: ~62,000(5)
Midland Basin: ~13,000(5)
Delaware Basin: ~49,000(5)
► 100% Permian exposure
► 87% Parsley-operated
Net Surface Acreage: ~43,000
Parsley Acreage
Parsley Minerals Ownership
Minerals Summary
MARTIN
ECTOR
WINKLER
WARD
CRANE
REEVESPECOS
UPTON
MIDLAND
GLASSCOCK
REAGAN
HOWARD
Delaware
Basin Central
Basin
Platform
Midland
Basin
(4) (5)
Permian
Pure-Play
Peer Exposure
to Permian
High Low
$3.7B $0.9B $0.4B
PE Minerals Peers(2)
22
Operating Cash Margin Reconciliation
Unaudited, in thousands
2019 2018
Net (loss) income attributable to Parsley Energy, Inc. stockholders ($36,369) $53,773
Net income attributable to noncontrolling interests 196 11,626
Other revenues (3,334) (3,768)
Depreciation, depletion and amortization 210,717 160,754
Stock-based compensation 5,209 4,757
Exploration and abandonment costs 65,157 142,622
Acquisition costs 7,616 165
Accretion of asset retirement obligations 394 348
Rig termination costs 13,250 —
Gain on sale of property (208) (16)
Other operating expense 5,225 9,082
Interest expense, net 33,463 32,880
Loss (gain) on derivatives 87,638 (93,115)
Change in TRA liability — 355
Interest income (191) (600)
Income tax expense 1,649 16,453
Other expenses 459 799
Operating cash margin $390,871 $336,115
Operating cash margin per Boe $29.06 $30.48
Average price per Boe, without realized derivatives $38.59 $40.91
Operating cash margin percentage 75% 75%
Three Months Ended December 31,
Note: Certain reclassifications to prior period amounts have been made to conform with current presentation.
23
Free Cash Flow (Outspend) Reconciliation
Unaudited, in thousands
Net cash provided by operating activities $615,882 $670,397 $1,286,279
Net change in operating assets and liabilities, net of acquisitions (15,556) (875) (16,431)
Transaction expenses related to the acquisition of Jagged Peak Energy Inc. - 7,413 7,413
Total discretionary cash flow $600,326 $676,935 $1,277,261
Development of oil and natural gas properties ($737,194) ($635,901) ($1,373,095)
(Additions) reductions to oil and natural gas properties - change in capital accruals (41,124) 41,300 176
Total accrual-based development capital expenditures ($778,318) ($594,601) ($1,372,919)
Free cash flow (outspend) ($177,992) $82,334 ($95,658)
Six Months Ended
June 30, 2019
Twelve Months Ended
December 31, 2019
Six Months Ended
December 31, 2019
24
Net Debt Reconciliation
Unaudited, in thousands2/4/2020
Revolving Credit Agreement due 2021 $400,000
6.250% senior unsecured notes due 2024 400,000
5.375% senior unsecured notes due 2025 650,000
5.250% senior unsecured notes due 2025 450,000
5.875% senior unsecured notes due 2026 500,000
5.625% senior unsecured notes due 2027 700,000
Total Debt $3,100,000
Less: Cash and cash equivalents 67,619
Net Debt $3,032,381
25
CROCI Reconciliation
Cash Return on Capital Invested (“CROCI”)
CROCI is calculated by dividing the sum of cash flow from operations and after-tax interest expense by the sum of average gross property, plant and
equipment and average non-cash working capital.
Unaudited, in thousands
Net cash provided by operating activities $1,286,279
After-tax interest expense (at 21% corporate tax rate) $105,576
Numerator $1,391,855
Total property, plant, equipment (net) $8,823,887 $9,324,467
Accumulated depreciation, depletion, amortization, and impairment (1,295,098) (2,117,963)
Total property, plant, equipment (gross) $10,118,985 $11,442,430
Non-cash working capital ($310,416) ($325,902)
Assets:
Accounts receivable - joint interest owners and other 39,564 48,785
Accounts receivable - oil, natural gas, and NGLs 136,209 192,216
Accounts receivable - related parties 94 183
Other current assets 10,332 8,818
Liabilities:
Accounts payable and accrued expenses 364,803 416,346
Revenue and severance taxes payable 127,265 154,556
Other current liab ilities 4,547 5,002
Denominator $10,462,549
2019 CROCI 13.3%
2018 2019
26
Additional Reserves Disclosures
Organic Reserves Replacement Ratio
Parsley uses the organic reserves replacement ratio as an indicator of the Company's ability to replace the reserves that it has developed and to increase its reserves over time. The organicreserves replacement ratio is calculated as total reserve additions and revisions (technical and pricing), divided by total production. The ratio calculation excludes acquisitions and divestitures.The ratio is not a representation of value creation and has a number of limitations that should be considered. For example, the ratio does not incorporate the costs or timing of developing futurereserves.
Proved Developed Finding and Development (“F&D”) Costs
Parsley uses proved developed F&D (“PD F&D”), oil and gas proved developed F&D, and drillbit F&D costs as an indicator of capital efficiency, in that it measures Parsley’s costs to add proved
developed reserves on a per Boe basis. Proved developed F&D is calculated as total 2019 capital expenditures (including Infrastructure and Other) divided by total 2019 proved developed
reserves additions and revisions (technical and pricing). Drillbit F&D is calculated as total 2019 capital expenditures (including Infrastructure and Other), divided by total 2019 reserves additions
and revisions (technical and pricing). Both calculations exclude acquisitions and divestitures and are subject to limitations, including the uncertainty of future costs to develop the company’s
reserves. Oil and gas PD F&D cost is calculated by dividing annual development capital expenditures by year-over-year proved developed producing and proved developed non-producing
reserve additions, and includes reclassifications and technical and pricing revisions, but excludes acquisitions and divestitures.
Recycle Ratio
Parsley uses recycle ratio as a measure of its capital efficiency based on its finding and development costs. Recycle ratio is calculated as operating cash margin divided by PD F&D.
