Parsley Energy Overview

Transcription

1 INVESTOR PRESENTATION September 2016

2 Parsley Energy Overview Investment Summary Premier Acreage Position (2) Leading growth profile Robust returns Strategic acquirer Strong financial position Abundant upside 2Q16 Highlights Net production up 23% Q/Q and 60% Y/Y Net oil production up 25% Q/Q and 82% Y/Y Adjusted EBITDAX up 48% Q/Q and 52% Y/Y D&C costs down 8% Q/Q and 26% Y/Y LOE per Boe down 17% Q/Q and 52% Y/Y Cash G&A per Boe down 32% Q/Q and 28% Y/Y Market Snapshot NYSE Symbol: PE Market Cap: $7,088 MM (1) Net Debt: $691 MM (2) Enterprise Value: $7,779 MM Share Count: 207 MM (3) Midland Basin Net Leasehold Acreage: 90,306 (2) Delaware Basin Net Leasehold Acreage: 42,485 (2) 2Q16 Production: 35.7 MBoe/d (1) Based on 8/30/2016 closing price; (2) As of end 2Q16 pro forma for closing of S. Delaware minerals acquisition on 7/14/2016 and acquisition and equity and debt offerings closed 8/19/2016; (3) As of end of 2Q16 pro forma for equity offering closed 8/19/2016 2

3 Ongoing Production Momentum In August, raised midpoint of full-year 2016 production guidance by 4,000 Boe/d New guidance implies 68% year-over-year production growth at the midpoint, with oil production up 90% year-over-year 16% compound quarterly production growth rate over nine quarters as a public company (1) Updated 2016E Production ( MBoe/d) Previous 2016E Production ( MBoe/d) Rig Count Net Production (MBoe/d) Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Horizontal Rigs Vertical Rigs Quarterly Net Production (MBoe/d) 0 (1) Parsley completed its initial public offering on May 29,

4 Operating Cost Compression Operating Costs ($/Boe) $17.71 $2.68 $5.91 $9.12 $16.24 $1.75 $6.86 $ % Y/Y $13.08 $11.88 $1.90 $1.58 $10.62 $1.97 $4.41 $6.25 $4.28 $5.57 $5.25 $4.37 2Q15 3Q15 4Q15 1Q16 2Q16 LOE Cash G&A Production & Ad Valorem Taxes LOE per Boe down for 5 consecutive quarters Updated Unit Cost Guidance ($/Boe) LOE Cash G&A Cash G&A per Boe down 32% quarter-overquarter $ $6.50 $4.50 $5.25 $ $5.75 $ $5.00 Lowered 2016 LOE and cash G&A guidance ranges in August 2016E (Previous) 2016E (Updated) 2016E (Previous) 2016E (Updated) 4

5 Favorable Development Cost Trends Midland Basin Drilling & Completion Costs ($MM) (1) Continuing to drive down Midland Basin D&C costs $6.5 $6.0 $5.5 $5.2 $4.8 Substantial portion of cost savings attributable to streamlined drilling and completion processes Southern Delaware Cost Compression 2Q15 3Q15 4Q15 1Q16 2Q16 Southern Delaware Drilling & Completions Costs ($MM) (1) $8.0 1st Well $5.7 Current Costs Measured Depth (ft) 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Drilling Time Reduction Drilling Days 1st Well 2nd Well 3rd Well Rapid rate of change in S. Delaware well costs Cycle times compressing Expect convergence toward Midland D&C costs (1) Normalized for 7,000 completed lateral 5

6 Glasscock County Acquisition Overview $400 MM acquisition includes: 9,140 mostly contiguous net leasehold acres in Glasscock County 240 gross horizontal drilling locations in primary target intervals (Lower Spraberry, Wolfcamp A, and Wolfcamp B), with average lateral length of ~7,500 Mineral and overriding royalty interests translating to ~5% average increase in net revenue interest ( NRI ) Estimated net production of 270 Boe/d at acquisition announcement on August 15, saltwater disposal wells Scheduled to close on or before Oct 4,

7 Glasscock Acquisition Detail Royalty Interests (1) Mineral and overriding royalty interests increase NRI by approximately 5% on average Higher NRI translates to higher returns and NPV At strip prices: ROR increases by ~10% NPV increases by ~$0.8 MM ROR (%) 140% 120% 100% 80% 60% 40% 20% 0% Illustrative Rate of Return Uplift (2) Strip Prices $40 $45 $50 $55 $60 Oil Price Illustrative Net Present Value Uplift (2) $10 $8 NPV ($MM) $6 $4 $2 Strip Prices $0 $40 $45 $50 $55 $60 Oil Price (1) Assumptions relating to well results and costs are not to be representative of the results we will achieve and may differ materially therefrom; (2) NYMEX WTI and Henry Hub strip prices as of 7/21/2016; NGL price: 40% of WTI; $3/Mcf gas for flat pricing scenarios; Based on the Company s 1 MMBoe EUR type curve for 7,000 completed lateral; $4.8MM D&C; 90% WI (reflecting average acquired WI); NRI s shown are 8/8 th s; $7,500/month fixed LOE; $2.00/BO variable LOE; Estimated ROR and NPV are pre-tax and unhedged 7

8 Glasscock Acquisition - Favorable Geologic Attributes Wolfcamp Drill Depth Wolfcamp Thickness Geothermal Gradient Degrees Fahrenheit per 1,000 Depth Thickness Sweet Spot Drill Depth Sweet Spot Temperature Sweet Spot Degrees Fahrenheit per 1000 Depth Acquired Acreage Acquired acreage has comparable depth, thickness, and thermal maturity to Parsley s high-quality Upton and Reagan core acreage 8

9 Compelling Acquisitions Year-to-Date Acquired ~42,000 net leasehold acres in 1H16 for ~$17,000 per acre (1) Also acquired more than 5,000 net royalty acres Large, distributed acreage position supports future growth potential Year-to-Date Acquisition Summary Net Leasehold Acreage Net Royalty Acreage Estimated Acquired Production (Boe/d) (2) Purchase Price ($MM) Midland Basin 23, ~2,400 $774 Southern Delaware 17,726 4,847 ~1,480 $440 TOTAL 41,679 5,363 ~3,880 $1,214 (1) Adjusted for estimated PDP value but not for acquired wells in various stages of drilling and completion; (2) Estimated production at time of purchase agreement 9

10 Mineral and Surface Rights Enhance Asset Value Mineral rights acquisition closed in July 2016 Average NRI increases from 75% to 92.5% on affected acreage Running one rig for one year, higher NRI adds ~400 MBoe and ~$16 MM cash flow (1) with no additional cost Acquired surface rights on ~24,000 acres Estimate savings of at least $200 M per well on water sourcing and disposal Additional savings on pads, batteries, roads, rights-of-way, and other surface damages (1) Cash flow estimate based on NYMEX WTI and Henry Hub strip prices as of 7/21/2016 using NSAI-estimated average EUR for potential horizontal wells on Parsley acreage in S. Del. Basin 10

11 Favorable Initial Results on Acquired Reeves County Acreage First Parsley-completed well on recently acquired acreage in Reeves County on pace with strong Trees Ranch wells at the 60-day mark Strong offset Wolfcamp A wells suggest abundant resource potential on and around acquired acreage Cumulative Production (MBoe) (1) Southern Delaware Well Results Days of Production Trees Ranch Wells Ranger C H Strong Wolfcamp A Offsets in Reeves County (2) Well Name Operator Peak Month IP (Boe/d) (3) Lateral Length 1 Caribou 10-1H Patriot 1,433 4,787 2 W State 1202H Concho 1,835 5, W State 1204H Concho 1,925 5,730 4 Whiskey River H Jagged Peak 1,381 9,663 (1) Normalized to 7,000 completed lateral and for downtime of 24 hours or more; (2) Production results for selected wells not intended to be representative of potential production from wells we intend to drill in target acreage or of any particular location in such acreage; (3) Source: IHS or company data 11

12 Attractive Well Economics across Acreage Portfolio First-rate productivity and low costs yield attractive economics in both the Midland and Southern Delaware Basins Mineral rights produce significant uplift in already compelling returns and NPV Rate of Return (%) 140% 120% 100% 80% 60% 40% 20% 0% Wolfcamp Returns (1) Strip Prices $40 $45 $50 $55 $60 Oil Price Wolfcamp NPV (1) $16 $14 $12 NPV ($MM) $10 $8 $6 $4 $2 $0 $40 $45 $50 $55 $60 Oil Price Strip Prices (1) NYMEX WTI and Henry Hub strip prices as of 7/21/2016; NGL price: 40% of WTI; $3/Mcf gas for flat pricing scenarios; Midland Basin: based on 1 MMBoe EUR type curve for 7,000 completed lateral; $4.8MM D&C; 100% WI, 75% NRI; $7,500/month fixed LOE; $2.00/BO variable LOE; Southern Delaware: based on NSAI ~880 MBoe EUR type curve for 7,000 completed lateral; $5.7MM D&C; 100% WI; $7,500/month fixed LOE; $2.00/BO variable LOE; Estimated ROR and NPV are pre-tax and unhedged 12

13 Significant Inventory Upside Stacked Pay Potential in the Southern Delaware Basin Parsley well data, petrophysical analysis, and offset results point to four promising target intervals 94% average working interest across Southern Delaware acreage 2 nd Bone Spring 3 rd Bone Spring Gross / Net Hz Locations Assumed Wells per Section Average Lateral Length 140 / , / ,160 Close to 500 gross horizontal locations on high-nri minerals acreage Wolfcamp (2 Flow Units) 550 / (per flow unit) 830 / 781 7,190 Midland Basin Wolfcamp A/B Inventory Upside Wolfcamp A Upper Wolfcamp B Lower Wolfcamp B Current Inventory Inventory Upside Approx. 600 ft Current Inventory Spacing 660 Downspaced 330 A-UB-LB Stack Test (3Q16) 1-Mile Gun Barrel A-UB-LB Stack & Stagger Test (4Q16) Note: Spacing tests will be on different leases UB-LB Stack & Downspace Test (2017) Significant upside to existing 1,100+ Midland Basin Wolfcamp A and B horizontal locations with Upper Wolfcamp B target and downspacing potential Potential increase from 16 to 45 wells per section in the Wolfcamp A and B alone ~850 feet of Wolfcamp A and B combined gross thickness is thickest in Midland Basin core trend area; accommodates ~300 vertical spacing between landing zones 13

14 Strong Financial Position $734 MM of liquidity Fully undrawn borrowing base of $475 MM Favorable maturity schedule, with earliest notes maturity in 2022 Liquidity Summary ($MM) First lien borrowing base availability $475 Cash on hand $259 Total liquidity $734 Favorable Debt Maturity Schedule 600 $550 $ $400 ($MM) Borrowing Base Senior Notes Note: All data as of end 2Q16 pro forma for closing of S. Delaware minerals acquisition on 7/14/2016, for acquisition announced 8/15/16 and for equity ($271MM net proceeds) and debt ($200MM net proceeds) offerings closed 8/19/16 14

15 Substantial Hedge Position Well-hedged for next several quarters Structure of oil hedges retains full upside exposure to higher oil prices Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 OIL: Put Spreads (MBbls/d) (1) Put Price ($/Bbl) $45.17 $45.03 $45.88 $45.88 $52.85 $52.85 $52.50 Short Put Price ($/Bbl) $32.87 $32.78 $34.14 $34.14 $41.46 $41.46 $40.00 Premium Realization ($ M M ) (2) (4.9) (4.9) (7.2) (7.2) (2.9) Mid-Cush Basis Swaps (MBbls/d) Swap Price ($/Bbl) ($0.87) ($0.87) ($1.00) ($1.00) ($1.05) ($1.05) - NATURAL GAS: (3) Three Way Collars (MMBtu/d) Call Price ($/MMBtu) - - $4.02 $4.02 $4.02 $ Put Price ($/MMBtu) - - $2.75 $2.75 $2.75 $ Short Put Price ($/MMBtu) - - $2.36 $2.36 $2.36 $ $75 20 $60 MBbls/d $45 $30 WTI ($/Bbl) 5 $15 0 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 MBbls/d Hedged Weighted Average Long Put Price (1) When NYMEX price is above put price, Parsley receives the NYMEX price. When NYMEX price is between the put price and the short put price, Parsley receives the put price. When 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) Premium realizations represent net premiums collected (from rolled down positions) or paid (including deferred premiums), which are recognized as income or loss in the period of settlement; (3) Functions similarly to put spreads except that when index price is at or above the call price, Parsley receives the call price $0 15

16 2016 Guidance Production Previous Updated 8/3/2016 Completing 15 more horizontal wells on just $50 MM capex increase (1) Production (MBoe/d) % Oil % % Gross Horizontal Completions 21% Increase at Midpoints Capital Program Drilling & Completion ($MM) $355 - $395 $395 - $435 Infrastructure & Other ($MM) $55 - $65 $65 - $75 Total Development Expenditures ($MM) $410 - $460 $460 - $ Activity Gross Horizontal Completions Midland Basin Delaware Basin Average Lateral Length ~7, ~7, E (Previous) 2016E (Updated) Capital Expenditures ($MM) 11% Increase at Midpoints Gross Vertical Completions Average Working Interest % % $410 - $460 $460 - $510 Unit Costs LOE ($/Boe) $ $6.50 $ $5.25 Cash G&A ($/Boe) $ $5.75 $ $5.00 Production & Ad Valorem Taxes (% of Revenue) 6.5% - 7.5% 6.5% - 7.5% 2016E (Previous) 2016E (Updated) (1) Based on the mid-point of guidance range 16

17 Positioned for Leading Production Growth Production CAGR Sensitivity Horizontal Rig Count % 30% Potential Production CAGR (1) Rig / Year +2 Rigs / Year +3 Rigs / Year Parsley has sufficient inventory depth, acreage footprint, and operational capacity to increase rig count High average working interest and net revenue interest translate to strong production contribution per rig (1) 2016 production based on midpoint of guidance range 17

18 Investment Highlights Leading Growth Profile Expect 68% year-over-year production growth based on midpoint of 2016 guidance 16% compound quarterly production growth rate over nine quarters as a public company World-class Returns Wolfcamp wells generate ROR of ~60%-90% and NPV of ~$7 MM-$12 MM at strip prices (1) Growing horizontal production base drives higher oil percentage and lower operating costs per Boe Strategic Acquirer Acquired ~42,000 net leasehold acres in 1H16 for ~$17,000 per acre (2) Acquired mineral rights in S. Delaware Basin boost Parsley s average NRI to 92.5% on affected acreage $734 MM of liquidity (3) Strong Financial Position Net Debt / Annualized Adjusted EBITDAX of 2.1x (3,4) Substantial hedge position in place Abundant Upside Ongoing delineation of multiple target formations in the Midland Basin Scratching the surface of significant resource potential in the Southern Delaware Basin (1) See slide 12 for associated assumptions; (2) Adjusted for estimated PDP value but not for acquired wells in various stages of drilling and completion; (3) As of end 2Q16 pro forma for closing of S. Delaware minerals acquisition on 7/14/2016 and acquisition and equity and debt offerings closed 8/19/2016; (4) Net leverage ratio based on annualized adjusted 2Q16 EBITDAX 18

19 Investment Highlights APPENDIX 19

20 Glasscock Acquisition Detail - Leasehold GLASSCOCK 11,672 gross (9,140 net) leasehold acres in Glasscock County Estimated current net production of 270 Boe/d from 67 vertical wells Mostly contiguous acreage accommodates long-lateral development High average working interest of 92% on identified drilling locations MIDLAND 99% held by production Existing facilities and infrastructure facilitate ongoing development Significant Inventory Additions (1) 432 gross (397 net) horizontal drilling locations 215 net locations in priority target intervals (Lower Spraberry, Wolfcamp A, and Wolfcamp B), with average lateral length of 7, net locations in secondary target intervals (Middle Spraberry, Wolfcamp C, and Cline), with average lateral length of 6,950 Approximately 90% of locations in Core area Target Interval Gross / Net Hz Locations Average Lateral Length Middle Spraberry 80 / 72 7,500 Lower Spraberry 80 / 72 7,500 Wolfcamp A 80 / 72 7,500 Wolfcamp B 80 / 72 7,500 Wolfcamp C 56 / 55 6,600 Cline 56 / 55 6, / 397 (1) Based on internal estimates assuming 660 between-well spacing in each target interval 20

21 Glasscock Acquisition - Strong Offset Results (1) Parsley s Dwight Gooden AH, completed in the Wolfcamp A, is outpacing the Company s 1 MMBoe type curve by 10% after almost 90 days of production, with an 82% oil-cut Encouraging results from other operators in the Lower Spraberry, Wolfcamp A, and Wolfcamp B intervals Cumulative Production (MBoe) (2) First Parsley Horizontal Well in Glasscock Dwight Gooden AH Days of Production Strong Offset Wells Near Acquisition Acreage Well Name Bench Operator Peak Month IP (Boe/d) (3) Lateral Length 1 Dwight Gooden AH WC A Parsley 1,161 (4) 5,890 2 Saxon B-1101WA WC A Diamondback 1,173 7,229 3 Saxon B-1101WB WC B Diamondback 1,118 7,651 4 Saxon A-1101LS L Spraberry Diamondback 1,086 7,279 5 Riley B WA WC A Diamondback 1,233 7,173 6 Calverley 1H WC A RSP Permian 1,757 (4) 9,968 7 Calverley 2H WC B RSP Permian 1,877 (4) 9,830 8 Woody 4-1H WC A RSP Permian 946 (4) 4,954 9 Woody 4-2H WC B RSP Permian 1,027 (4) 4,954 MIDLAND GLASSCOCK 1 8,9 2,3,4 6,7 5 (1) Production results for selected wells not intended to be representative of potential production from wells we intend to drill in target acreage or of any particular location in such acreage; (2) Normalized to 7,000 completed lateral and for downtime of 24 hours or more; (3) Source: IHS or operator presentations; 2-stream; (4) Peak 30-day 3-stream 21

22 Glasscock Acquisition - Ample Thickness Across Acreage A A 6,500 GLASSCOCK Middle Spraberry 7,500 Lower Spraberry A Wolfcamp A A 8,500 Wolfcamp B MIDLAND 9,500 Wolfcamp C TVD Cline Favorable log characteristics from areas with strong offset wells correlate to acquired acreage 22

23 Pads Support Improved Costs and Productivity Cost and Efficiencies Estimated Project Economics: 3-Well Pad vs. 3 Single Wells (1) Estimate $1 MM savings for three-well pad versus three single wells 2-day reduction in spud-to-spud time versus single wells 33% increase in frac stages per day versus single wells Increase in Project Rate of Return +12% +10% +8% +6% +4% +2% +0% +0% +5% +10% +15% +$6 +$5 +$4 +$3 +$2 +$1 +$0 Increase in Project NPV ($MM) Increase in Well Performance Upton Core Wolfcamp A Wells Pad Productivity Case Study: Upton Core Wolfcamp A % 205 IP30 on Upton Core Wolfcamp A pad wells up 18% versus analogous single wells IP30 per 1,000 (Boe/d) Wolfcamp A wells completed in tandem with Wolfcamp B wells set two new company records: Hirsch E 4201H: 284 Boe/d per 1,000 IP30 Atkins H: ~130,000 Boe 90-day cumulative production 150 Single Wells Pad Wells Zipper frac induced stress shadowing enhancing well productivity (1) Assumes $1 MM capital savings vs. single wells plus 10% reduction in LOE for three years due to centralized compression 23

24 Prepared for Southern Delaware Rig Ramp Marketing Ample options for immediate gas and oil takeaway with nearby Waha Gas Hub and high-capacity oil transmission lines 60 MMcf/d Gas Plant 200 MMcf/d Gas Plant 150 MBo/d Oil Transfer Line Infrastructure Potential water supply and disposal in place with buildout ongoing Existing processing and transmission infrastructure provides electricity hubs from which to build out power grid Surface Ownership Estimate at least $200 M per-well savings on water sourcing and disposal Additional savings on pads, batteries, roads, rights-of-way, and other surface damages 60 MMcf/d Gas Plant (expected by YE16) 120 MMcf/d Gas Plant (Waha Hub) 160 MBo/d Oil Transfer Line 24

25 Selected Operating Data Parsley Energy, Inc. Selected Operating Data (Unaudited) Three Months Ended June 30, March 31, June 30, Net production volumes: Oil (MBbls) 2,157 1,731 1,183 Natural gas (MMcf) 3,154 2,944 2,698 NGLs (MBbls) Total (Mboe) (1) 3,249 2,647 2,025 Average net daily production (Boe/d) 35,703 29,088 22,249 Average sales prices (2) : Oil, without realized derivatives (per Bbl) $42.25 $30.06 $53.61 Oil, with realized derivatives (per Bbl) Natural gas, without realized derivatives (per Mcf) Natural gas, with realized derivatives (per Mcf) NGLs (per Bbl) Total, without realized derivatives (per Boe) $32.72 $23.52 $38.45 Total, with realized derivatives (per Boe) $36.20 $34.42 $42.86 Average costs (per Boe): Lease operating expenses $4.37 $5.25 $9.12 Production and ad valorem taxes $1.97 $1.58 $2.68 Depreciation, depletion and amortization $17.23 $18.66 $21.93 General and administrative expenses (including stock-based compensation) $5.33 $7.29 $6.95 General and administrative expenses (cash based) $4.28 $6.25 $5.91 (1) One Boe is equal to six Mcf of natural gas or one Bbl of oil or NGLs based on an approximate energy equivalency. This is an energy content correlation and does not reflect a value or price relationship between the commodities; (2) Average prices shown in the table include transportation and gathering costs and reflect prices both before and after the effects of the Company s realized commodity hedging transactions. The Company s calculation of such effects includes both realized gains and losses on cash settlements for commodity derivative transactions and premiums paid or received on options that settled during the period 25

26 Adjusted EBITDAX Parsley Energy, Inc. Adjusted EBITDAX (Unaudited, in thousands) Three Months Ended June 30, Six Months Ended June 30, Adjusted EBITDAX reconciliation to net loss: Net loss attributable to Parsley Energy, Inc. stockholders $ (21,377) $ (19,129) $ (40,731) $ (36,153) Net loss attributable to noncontrolling interests (6,111) (7,051) (12,448) (13,585) Depreciation, depletion and amortization 55,988 44, ,372 81,788 Exploration costs 8,978 1,515 9,666 4,734 Acquisition costs Loss (gain) on sale of property 469 (1,031) 119 (1,031) Accretion of asset retirement obligations Stock based compensation 3,391 2,112 6,150 3,753 Interest expense, net 12,199 11,099 23,393 22,940 Income tax benefit (10,918) (10,216) (20,486) (15,690) Rig termination costs 3,870 8,970 Derivative loss 27,304 17,733 25,216 10,591 Net settlements on derivative instruments 747 8,071 19,187 21,267 Net premium realization on options that settled during the period 10,551 2,181 20,965 2,045 Adjusted EBITDAX $ 81,922 $ 53,782 $ 137,274 $ 90,099 Note: Certain reclassifications to prior period amounts have been made to conform with current presentation 26

27 Forward Looking Statements and Cautionary Statements 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 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. Reconciliation of Non-GAAP Financial Measures Adjusted EBITDAX and adjusted net income or loss are financial measures that are not presented in accordance with generally accepted accounting principles in the United States ( GAAP ). Reconciliations of these non-gaap financial measures can be found in our Annual Report on Form 10-K and in the appendix to this presentation. 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 the 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 12/31/15 are estimated utilizing SEC reserve recognition standards and pricing assumptions based on SEC pricing of $46.79 / Bbl crude, $2.501 / MMBtu gas, and adjusted realized pricing of $46.54 / Bbl crude, $16.42 / Bbl NGL, and $2.531 / Mcf residue gas. References to our estimated proved reserves as of 12/31/15 are derived from our proved reserve report prepared 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 cost estimates that do not include facilities, land, seismic, general and administrative ( G&A ) or other corporate level costs.