What happened

After nearly doubling over the past year, Parsley Energy's (NYSE:PE) stock took a step back last month, falling by double digits. Driving the decline was the announcement of its largest acquisition to date, along with less-than-stellar fourth-quarter results. However, while the stock was down last month, the company expects big things in 2017.

So what

Parsley Energy's stock had been humming along until the company announced that it had agreed to pay $2.8 billion for privately held Double Eagle Energy Permian. It was the company's largest deal to date, adding 71,000 net acres to its portfolio. However, at roughly $40,000 per acre, the company paid a hefty premium to bolster its position in the Permian. For perspective, less than a year ago, the company completed three Permian deals for between $10,000 and $25,000 per acre.

An oil pump at sunset

Image source: Getty Images.

Rising acreage prices are causing Permian peers concern that the market is getting too hot. For example, Concho Resources (NYSE:CXO) recently said that it was having difficulty finding a good value in Permian land deals. That's saying a lot for a company that completed several deals over the past year, including paying $1.625 billion for 40,000 net acres last August, or more than $40,000 per acre. However, with recent deals in the mid-$40,000s per acre, and up to as high as $58,500 per acre, buyers like Concho are growing cautious, which suggests land values might be topping out.

Meanwhile, another weight on Parsley Energy's stock last month was its fourth-quarter results. While the company earned an adjusted $11.8 million, or $0.06 per share, that was $0.01 per share less than analysts were expecting. That said, the quarter was strong overall, with output up 5% versus the prior quarter, and 79% year over year, while lease operating expenses were down 14% sequentially.

Parsley Energy expects to continue growing at a rapid rate in 2017, thanks in part to its needle-moving acquisition of Double Eagle. Overall, the company sees its production rising 62% to 78% this year, making it one of the fastest-growing oil producers in the country. Further, with the potential for Permian land prices to come down, Parsley could scoop up more acreage this year and accelerate that growth rate further.

Now what

Parsley Energy has amassed a sizable acreage position in the core of the lowest-cost shale play in the country, allowing the company to deliver exceptional production growth for years to come. While the market has baked some of that growth into its stock price, the company remains a compelling oil growth stock to consider owning for the long term. And thanks to its February swoon, it's cheaper than it has been.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.