Parsley Buys Jagged Peak
Parsley buys Jagged Peak.
Parsley Energy buys Jagged Peak Energy for $2.27 billion.
The deal gives Parsley 267,000 net acres in the Permian, the biggest US oil production area and the second biggest for natural gas. 147,000 net acres in the Midland Basin and a highly contiguous 120,000 net acre footprint in the Delaware Basin. The all-stock transaction will give Parsley shareholders 77% and Jagged Peak shareholders 23% of the joint company.
Parsley and Jagged Peak have both seen a solid change for the better in recent Delaware Basin well costs. Sustained drilling and completion efficiency gains coupled with the supply chain advantages of optimized scale have accelerated this material reduction in overhead.
Matt Gallagher of Parsley said: The combination of Parsley and Jagged Peak is a natural fit. Jagged Peak's oily, high-margin asset base slots in nicely to our returns-focused development approach. Its acreage footprint and water infrastructure dovetail into our legacy Delaware Basin position. And its corporate culture aligns with our core values. In short, we now have a premier Delaware Basin business that rivals our foundational Midland Basin business. This transaction also creates tangible synergies that will enhance our corporate free cash flow profile and will be shared by the joint shareholder base. Ultimately, I am proud of the high level of execution Parsley has delivered throughout 2019, and I am excited by the prospects of what the combination of Parsley and Jagged Peak can deliver for shareholders in 2020.’
Jim Kleckner of Jagged Peak said: ‘The joint assets of Jagged Peak and Parsley Energy are a great fit that creates a stronger combined Permian company. The proforma company provides our shareholders with premier acreage in both the Midland and Delaware sub-basins while providing added scale, significant operational synergies, and free cash flow in this competitive environment. Our team has made tremendous progress to increase efficiencies as we evolved to pad development on our acreage position. We look forward to working with Parsley to make sure we provide an efficient changeover of asset-level institutional knowledge, so our shareholders and the shareholders of Parsley Energy can reap the maximized benefits of this transaction.’
S. Wil VanLoh, Jr. of Quantum Energy Partners said: ‘The inevitable consolidation in the Permian has started and Jagged Peak made a decisive move to team up with the right partner. Quantum has known Bryan, Matt, and the Parsley team for years, and has tremendous respect for the industry-leading execution capabilities and top-tier rock they own. The combination of the two companies will create a unique platform that will benefit from scale, capital allocation optionality, and peer-leading economics that we believe will represent one of the most compelling investment vehicles in the Permian. We look forward to partnering with the Parsley team as they mature into a Permian pure-play large cap. I would also like to thank every current and former employee of Jagged Peak for creating a great private equity success story and for positioning Jagged Peak's shareholders for continued value creation in a tough macro energy environment. It's been an honor being your partner.’
Tudor, Pickering, Holt & Co served as financial adviser to Parsley Energy. Kirkland & Ellis served as legal adviser.
Citigroup and RBC Capital Markets served as financial advisers to Jagged Peak. Vinson & Elkins served as legal adviser.
Parsley Energy buys Jagged Peak Energy for $2.27 billion.
The deal gives Parsley 267,000 net acres in the Permian, the biggest US oil production area and the second biggest for natural gas. 147,000 net acres in the Midland Basin and a highly contiguous 120,000 net acre footprint in the Delaware Basin. The all-stock transaction will give Parsley shareholders 77% and Jagged Peak shareholders 23% of the joint company.
Parsley and Jagged Peak have both seen a solid change for the better in recent Delaware Basin well costs. Sustained drilling and completion efficiency gains coupled with the supply chain advantages of optimized scale have accelerated this material reduction in overhead.
Matt Gallagher of Parsley said: The combination of Parsley and Jagged Peak is a natural fit. Jagged Peak's oily, high-margin asset base slots in nicely to our returns-focused development approach. Its acreage footprint and water infrastructure dovetail into our legacy Delaware Basin position. And its corporate culture aligns with our core values. In short, we now have a premier Delaware Basin business that rivals our foundational Midland Basin business. This transaction also creates tangible synergies that will enhance our corporate free cash flow profile and will be shared by the joint shareholder base. Ultimately, I am proud of the high level of execution Parsley has delivered throughout 2019, and I am excited by the prospects of what the combination of Parsley and Jagged Peak can deliver for shareholders in 2020.’
Jim Kleckner of Jagged Peak said: ‘The joint assets of Jagged Peak and Parsley Energy are a great fit that creates a stronger combined Permian company. The proforma company provides our shareholders with premier acreage in both the Midland and Delaware sub-basins while providing added scale, significant operational synergies, and free cash flow in this competitive environment. Our team has made tremendous progress to increase efficiencies as we evolved to pad development on our acreage position. We look forward to working with Parsley to make sure we provide an efficient changeover of asset-level institutional knowledge, so our shareholders and the shareholders of Parsley Energy can reap the maximized benefits of this transaction.’
S. Wil VanLoh, Jr. of Quantum Energy Partners said: ‘The inevitable consolidation in the Permian has started and Jagged Peak made a decisive move to team up with the right partner. Quantum has known Bryan, Matt, and the Parsley team for years, and has tremendous respect for the industry-leading execution capabilities and top-tier rock they own. The combination of the two companies will create a unique platform that will benefit from scale, capital allocation optionality, and peer-leading economics that we believe will represent one of the most compelling investment vehicles in the Permian. We look forward to partnering with the Parsley team as they mature into a Permian pure-play large cap. I would also like to thank every current and former employee of Jagged Peak for creating a great private equity success story and for positioning Jagged Peak's shareholders for continued value creation in a tough macro energy environment. It's been an honor being your partner.’
Tudor, Pickering, Holt & Co served as financial adviser to Parsley Energy. Kirkland & Ellis served as legal adviser.
Citigroup and RBC Capital Markets served as financial advisers to Jagged Peak. Vinson & Elkins served as legal adviser.
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