Parsley cuts 2020 capex 40%, plans rig drop in coming weeks

Parsley Energy Inc., Austin, will cut its 2020 capital budget by 40% at the midpoint of previous guidance and will reduce its development pace over the next several weeks to four-to-six rigs and two-to-three frac spreads, given the drop in oil prices.

The company has reduced its 2020 budget to less than $1 billion from its previous guidance of $1.6-1.8 billion—assuming a $30-35/bbl WTI oil price for the remainder of the year.

During January and February, Parsley operated 15 development rigs and five frac spreads on average. On Mar. 9, the company reported a drop to three frac spreads and had approved plans to drop to 12 rigs as soon as practicable (OGJ Online, Mar. 9, 2020).

Additionally, all of Parsley's executive officers have elected to reduce their respective annual cash compensation by at least 50% compared to 2019.

The company will provide additional detail on revised 2020 guidance ranges with first quarter financial results.