Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2020

ACQUISITIONS AND DIVESTITURES

Acquisitions

Acquisition of Leasehold

During the three months ended March 31, 2020 and 2019, respectively, the Company incurred costs of $7.4 million and $13.8 million related to the purchase of leasehold acreage. During the three months ended March 31, 2020 and 2019, respectively, the Company reflected $5.4 million and $11.7 million as part of costs not subject to depletion and $2.0 million and $2.1 million as part of costs subject to depletion within its oil and natural gas properties.

During each of the three months ended March 31, 2020 and 2019, the Company exchanged certain leasehold acreage and oil and natural gas properties with third parties, with no gain or loss recognized.

Jagged Peak Acquisition

In addition to the above-described acquisition of leasehold acreage, during the three months ended March 31, 2020, the Company acquired Jagged Peak for total consideration of $1.8 billion, consisting of shares of Class A common stock. The Jagged Peak Acquisition was accounted for using the acquisition method under ASC Topic 805, Business Combinations, which requires all assets acquired and liabilities assumed in the Jagged Peak Acquisition to be recorded at fair values at the effective time of the acquisition. The Company reflected $1.5 billion of the total consideration paid as part of its cost subject to depletion and $1.5 billion as unproved leasehold costs within its oil and natural gas properties for the three months ended March 31, 2020.

The Company is in the process of identifying and determining the fair values of the assets acquired and liabilities assumed, and as a result, the estimates for fair value are subject to change. The Company anticipates certain changes, including, but not limited to, adjustments to working capital that are expected to be finalized prior to the measurement period's expiration. The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed as a result of the Jagged Peak Acquisition (in thousands):


Cash	$	53,347
Accounts receivable	76,141
Derivative assets	11,644
Other current assets	534
Proved oil and natural gas properties	1,538,808
Unproved oil and natural gas properties	1,505,521
Other property, plant and equipment	20,003
Operating lease right-of-use assets	11,090
Total assets acquired	3,217,088
Accounts payable and accrued expenses	146,874
Derivative liabilities	27,907
Operating lease liabilities	11,525
Deferred tax liabilities, net	367,340
Long-term debt	884,435
Asset retirement obligations	2,808
Total liabilities assumed	1,440,889
Estimated fair value of net assets acquired	$	1,776,199

The Company has included in its condensed consolidated statements of operations for the three months ended March 31, 2020 revenues of $107.7 million and a net loss of $750.2 million for the period of January 10, 2020 to March 31, 2020 from the properties acquired in the Jagged Peak Acquisition.

The Jagged Peak Acquisition was deemed material for purposes of the following pro forma disclosures. The Jagged Peak Acquisition was not included in the Company's consolidated and combined results until January 10, 2020, the closing date of the Jagged Peak Acquisition. The following unaudited pro forma financial information for the three months ended March 31, 2020 and 2019 represents the results of the Company's consolidated operations as if the Jagged Peak Acquisition had occurred on January 1, 2019. This information is based on historical results of operations, adjusted for certain estimated accounting adjustments, and certain assumptions that the Company believes are reasonable, and does not purport to show the Company's actual results of operations if the transaction would have occurred on January 1, 2019, nor is it necessarily indicative of future results. The financial information is derived from the Company's unaudited condensed consolidated financial statements for the three months ended March 31, 2020 and 2019 and Jagged Peak’s unaudited interim financial statements from January 1, 2019 to January 10, 2020.


	Three Months Ended March 31,
(in thousands, except for per share data)	2020		2019
Revenues	$	577,026	$	557,266
Operating (loss) income	(4,832,897)		168,132
Net loss	(3,766,948)		(108,078)
Net loss attributable to Parsley Energy, Inc.	(3,397,991)		(96,504)
Net loss per common share
Basic	$	(9.05)	$	(0.26)
Diluted	$	(9.05)	$	(0.26)

Divestitures

During the three months ended March 31, 2019, the Company closed sales of certain leasehold acreage for proceeds of $17.5 million. Upon closing these sales, the Company recognized no gain or loss in accordance with the guidance for partial sales of oil and natural gas properties under ASC Topic 932, Extractive Activities—Oil and Gas. There was no such activity during the three months ended March 31, 2020.