EQUITY

Earnings per Share

Basic earnings per share ("EPS") measures the performance of an entity over the reporting period. Diluted earnings per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The Company uses the "if-converted" method to determine the potential dilutive effect of exchanges of outstanding PE Units (and corresponding shares of its outstanding Class B common stock, par value $0.01 per share ("Class B Common Stock") and the treasury stock method to determine the potential dilutive effect of vesting of its outstanding restricted stock and restricted stock units. For the three and nine months ended September 30, 2016 and the nine months ended September 30, 2015, Class B Common Stock and time-based restricted stock were not recognized in dilutive earnings per share calculations as they would have been antidilutive. For the three months ended September 30, 2015, Class B Common Stock was not recognized in dilutive earnings per share calculations as it would have been antidilutive.

The following table reflects the allocation of net income to common stockholders and EPS computations for the periods indicated based on a weighted average number of common stock outstanding for the period:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016			2015
Basic EPS (in thousands, except per share data)
Numerator:
Basic net (loss) income attributable to Parsley Energy, Inc. Stockholders	$	(2,706	)	$	909	$	(43,437	)	$	(35,244	)
Denominator:
Basic weighted average shares outstanding	173,241			109,218		156,018			106,212
Basic EPS attributable to Parsley Energy, Inc. Stockholders	$	(0.02	)	$	0.01	$	(0.28	)	$	(0.33	)
Diluted EPS
Numerator:
Net (loss) income attributable to Parsley Energy, Inc. Stockholders	(2,706		)	909		(43,437		)	(35,244		)
Diluted net (loss) income attributable to Parsley Energy, Inc. Stockholders	$	(2,706	)	$	909	$	(43,437	)	$	(35,244	)
Denominator:
Basic weighted average shares outstanding	173,241			109,218		156,018			106,212
Effect of dilutive securities:
Restricted Stock and Restricted Stock Units	—			374		—			—
Diluted weighted average shares outstanding ⁽¹⁾	173,241			109,592		156,018			106,212
Diluted EPS attributable to Parsley Energy, Inc. Stockholders	$	(0.02	)	$	0.01	$	(0.28	)	$	(0.33	)

⁽¹⁾

As of September 30, 2016 and 2015, there were 453,863 and 211,935 shares, respectively, related to performance-based restricted stock units that could be converted to common shares in the future based on predetermined performance and market goals. These units were not included in the computation of EPS for the three and nine months ended September 30, 2016 and 2015, respectively, because the performance and market conditions had not been met, assuming the end of the reporting period was the end of the contingency period.

Noncontrolling Interest

As a result of the exchange of PE Units (and corresponding shares of Class B Common Stock) for Class A Common Stock (discussed in Note 12—Related Party Transactions) on July 27, 2016, the Company’s ownership in Parsley LLC increased from 83.9% to 85.9% and the ownership of the other holders of PE Units’ (the "PE Unit Holders") in Parsley LLC decreased from 16.1% to 14.1%. Because the increase in the Company’s ownership interest in Parsley LLC did not result in a change of control, the transaction was accounted for as an equity transaction under ASC Topic 810, "Consolidation," which requires that any differences between the amount by which the carrying value of the Company’s basis in Parsley LLC and the fair value of the consideration received are recognized directly in equity and attributed to the controlling interest.

As a result of the Equity Offering, the Company’s ownership of Parsley LLC increased from 85.9% to 86.5% and the PE Unit Holders’ ownership of Parsley LLC decreased from 14.1% to 13.5%.

The Company has consolidated the financial position and results of operations of Parsley LLC and reflected that portion retained by the PE Unit Holders as a noncontrolling interest.

The following table summarizes the noncontrolling interest income (loss):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016			2015
	(In thousands)
Net income (loss) attributable to the noncontrolling interests of:
Parsley LLC	$	799	$	2,295		$	(11,643	)	$	(11,293	)
Pacesetter Drilling, LLC	266		(561		)	260			(558		)
Total net income (loss) attributable to noncontrolling interest	$	1,065	$	1,734		$	(11,383	)	$	(11,851	)