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Parsley Energy (PE) Q3 2020 Earnings Call Transcript

By Motley Fool Transcribing – Oct 30, 2020 at 1:31AM

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PE earnings call for the period ending September 30, 2020.

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Parsley Energy (PE)
Q3 2020 Earnings Call
Oct 29, 2020, 10:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning, ladies and gentlemen. Welcome to Parsley Energy's third-quarter 2020 earnings call. My name is Sherry and I will be your operator today.[Operator Instructions] And now, I'm pleased to turn the call over to Kyle Rhodes, Parsley Energy's vice president of Investor Relations.

Kyle Rhodes -- Vice President, Investor Relations

Thank you, operator. And good morning, everyone. In this morning's call our president and CEO, Matt Gallagher will provide a short set of prepared remarks. As we noted in our press release yesterday, we will not be hosting a Q&A session on the call today.

Our remarks may contain forward-looking statements, so please see our earnings release for a discussion of these statements, and associated risks including the fact that actual results may differ materially from our expectations. We also make reference to non-GAAP measures, so please see the reconciliations in the earnings release. And now, I'll turn the call over to Matt.

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Matt Gallagher -- President and Chief Executive Officer

Thanks, Kyle. Good morning all, and thank you for joining us for our abbreviated third-quarter conference call. Now, we'll turn to operations. Overall, our team delivered another solid performance in the third quarter as steady execution has become par for the course.

After reactivating development activity with two rigs and two-fracs in July, we delivered a steady improvement in drilling and completion efficiency within each basin. Notably, in the Delaware Basin, we drilled our first two three-mile lateral wells in under 29 days each, which helped drive a new Company-record for Delaware drilling efficiency in 3Q20. Our team attributes these recent drilling efficiency gains to enhancements made to our remote operational command center during the activity shut down in May and June. As operational efficiency gains take hold, partially in delivery leading edge well costs below $850 per foot in the Delaware Basin, and remember, our numbers also include facility expense.

The efficient reactivation of modern development activity translated to a third-quarter capex of just $85 million. Oil production for the quarter averaged 111,000 barrels of oil per day, just above the midpoint of our third-quarter guidance range helping to drive positive quarterly free cash flow. Operational cost control was another highlight for this quarter. We have reduced corporate operating costs on a unit basis by 33% year over year with some line items reducing on an absolute basis, despite a larger operated well count in a larger production base.

This is the intentional result of a focused effort of all team members who have tackled integration with urgency, we plan to do our part in the next days as well. In line with our prior commentary, Parsley deployed two additional rigs in late October, bringing the current number of active operating rigs to four. The company expects to continue operating four rigs and one-to-two fracs spread for the remainder of 2020. To wrap things up.

In challenging macro conditions, the Parsley team blazed a trail through uncertain times, consistently delivered our action plan, and positioned the company to endure with relevance. The combination of Parsley and timing here create an organization that will thrive as we forge a new strong link at the low end of the global cost and emissions curve. With neighboring acreage position was located entirely in the low cost, high margin Permian Basin, the industrial logic of this transaction is sound. Furthermore, the Pioneer team shares our belief that a clear returns focused mindset is the best tool to compete for capital with a broader market.

Sustainable free cash flow and growing return on capital are now the investment prerequisites for the energy sector, and this combination strengthens those paths for our shareholders. Additionally, I have been at most confident with the combined organization will maintain a leadership role in advancing environmental sustainability efforts for our industry. We look forward to finishing strong with a stimulus integration and partnering with the Pioneer team as it cements its position as the premier independent E&P. Finally, I would like to personally thank every employee and alumni of Parsley energy for their role in the evolution of this company, from operating a few dozen vertical wells in 2008, to a global leadership position in E&P operations today.

Great job for the Parsley team. And thank you all.

Questions & Answers:


[Operator signoff]

Duration: 6 minutes

Call participants:

Kyle Rhodes -- Vice President, Investor Relations

Matt Gallagher -- President and Chief Executive Officer

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