Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Equity

EQUITY

Earnings per Share

Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted EPS measures the performance of an entity over the reporting period while giving effect to all potentially dilutive shares of common stock 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 the Company’s 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 each of the three months ended March 31, 2020 and 2019, Class B common stock, restricted stock and restricted stock units were not recognized in dilutive EPS calculations as the effect would have been antidilutive.

The following table reflects the allocation of net loss 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 March 31,
	2020		2019
Basic EPS (in thousands, except per share data)
Numerator:
Basic net loss attributable to Parsley Energy, Inc. Stockholders	$	(3,366,400)	$	(24,064)
Denominator:
Basic weighted average shares outstanding	366,064		278,794
Basic EPS attributable to Parsley Energy, Inc. Stockholders	$	(9.20)	$	(0.09)
Diluted EPS
Numerator:
Net loss attributable to Parsley Energy, Inc. Stockholders	(3,366,400)		(24,064)
Diluted net loss attributable to Parsley Energy, Inc. Stockholders	$	(3,366,400)	$	(24,064)
Denominator:
Basic weighted average shares outstanding	366,064		278,794
Effect of dilutive securities:
Time-Based Restricted Stock and Time-Based Restricted Stock Units	—		—
Diluted weighted average shares outstanding(1)	366,064		278,794
Diluted EPS attributable to Parsley Energy, Inc. Stockholders	$	(9.20)	$	(0.09)

(1)  As of March 31, 2020, there were 452,007 outstanding shares of performance-based restricted stock (“PSAs) and 799,166 outstanding performance-based restricted stock units (“PSUs”). As of March 31, 2019, there were 836,221 outstanding PSAs and 376,166 outstanding PSUs. PSAs and PSUs could vest in the future

based on predetermined performance goals. These awards were not included in the computation of EPS for either the three months ended March 31, 2020 or 2019 because the performance conditions of these awards have not been satisfied assuming the end of the reporting period was the end of the contingency period.

Dividends

In 2019, the Company’s board of directors initiated the Company’s quarterly dividend program, payable on issued and outstanding shares of Class A common stock, and, in its capacity as the managing member of Parsley LLC, a corresponding distribution from Parsley LLC to holders of PE Units (each, a “PE Unitholder”). As described in these condensed consolidated financial statements, as the context requires, dividends paid to holders of Class A common stock and distributions paid to PE Unitholders (other than the Company) may be referred to collectively as “dividends.”

Dividends declared are recorded as a reduction of retained earnings, to the extent that retained earnings were available at the beginning of the reporting period, with any excess recorded as a reduction in paid capital. Dividends paid to PE Unitholders (other than the Company) are treated as a partnership distribution from Parsley LLC and are recorded as a reduction in noncontrolling interests.

The following table sets forth information with respect to cash dividends and distributions declared by the Company’s board of directors during the three months ended March 31, 2020, on its own behalf and in its capacity as the managing member of Parsley LLC, on issued and outstanding shares of Class A common stock and PE Units:

Declaration Date	Record Date	Payment Date	Dividend/Distribution Amount(1)		Total Dividend/Distribution Payment(2) (in thousands)
January 23, 2020	March 10, 2020	March 20, 2020	$	0.05	$	20,603

(1)  Per share of Class A common stock and per PE Unit. The portion of the Parsley LLC distribution attributable to PE Units held by the Company was used to fund the quarterly dividend on issued and outstanding shares of Class A common stock.

(2)  Reflects total cash dividend and distribution payments made to holders of Class A common stock and PE Unitholders (other than the Company) as of the applicable record date.

Noncontrolling Interests

During the three months ended March 31, 2020, certain PE Unitholders exercised their rights to exchange PE Units under the Parsley LLC Agreement, collectively electing to exchange 273,036 PE Units (and a corresponding number of shares of Class B common stock) for 273,036 shares of Class A common stock. In each case, the Company exercised its call right under the Parsley LLC Agreement, electing to issue Class A common stock directly to each of the exchanging PE Unitholders in satisfaction of their elections.

As a result of the issuance of Class A common stock to former Jagged Peak stockholders in connection with the consummation of the Jagged Peak Acquisition (and the subsequent merger of Jackal Merger Sub A, LLC, a wholly owned subsidiary of Parsley LLC and the successor by merger to Jagged Peak, with and into Parsley LLC in exchange for a number of PE Units equal to the number of shares of Class A common stock issued or distributed to former Jagged Peak stockholders) and exchanges of PE Units (and corresponding shares of Class B common stock) for shares of Class A common stock during the three months ended March 31, 2020, the Company’s ownership in Parsley LLC increased from 88.8% to 91.5% and the ownership of the PE Unitholders (other than the Company) in Parsley LLC decreased from 11.2% to 8.5%.

Because these changes in the Company’s ownership interest in Parsley LLC did not result in a change of control, the transactions were accounted for as equity transactions under ASC Topic 810, Consolidation, which requires that any differences between 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. The Company has consolidated the financial position and results of operations of Parsley LLC and records noncontrolling interests for the economic interests in Parsley LLC held by PE Unitholders (other than the Company.)

The following table summarizes the net income (loss) attributable to noncontrolling interests (in thousands):

	Three Months Ended March 31,
	2020		2019
Net income (loss) attributable to the noncontrolling interests of:
Parsley LLC	$	(369,696)	$	(3,941)
Pacesetter Drilling, LLC	—		2
Total net loss attributable to noncontrolling interests	$	(369,696)	$	(3,939)