Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTSThe Company has evaluated subsequent events through the date these condensed consolidated financial statements were issued. The Company determined there were no events, other than as described below, that required disclosure or recognition in these condensed consolidated financial statements.

Dividends

On May 4, 2020, the Company’s board of directors declared a cash dividend of $0.05 per share of Class A common stock, and, in its capacity as the managing member of Parsley LLC, a corresponding distribution of $0.05 per PE Unit, payable on June 19, 2020 to holders of Class A common stock and PE Unitholders of record as of June 9, 2020. The portion of the Parsley LLC distribution attributable to PE Units held by the Company will be used to fund the quarterly dividend on issued and outstanding shares of Class A common stock. For additional information regarding Parsley LLC’s distribution of cash for the payment of dividends, see Note 9—Equity—Dividends.

Ninth Amendment to Revolving Credit Agreement

On April 27, 2020, the Company, Parsley LLC, each of the guarantors thereto, Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, entered into the Ninth Amendment to the

Revolving Credit Agreement. The Ninth Amendment, among other things, modified the terms of the Revolving Credit Agreement to (i) increase the aggregate elected borrowing base commitments from $1.0 billion to $1.075 billion, (ii) reaffirm the borrowing base at $2.7 billion, (iii) extend the maturity date from October 28, 2021 to October 28, 2023, (iv) increase the letters of credit commitments from $30.0 million to $60.0 million, (v) increase the applicable margins for borrowings under the Revolving Credit Agreement to a range of (a) 2.00% to 3.00% for LIBOR based borrowings and (b) 1.00% to 2.00% for alternative base rate based borrowings, with the specific applicable margins determined by reference to borrowing base utilization, (vi) add provisions to facilitate the transition from the use of LIBOR as a benchmark rate for borrowings upon the occurrence of certain events, (vii) add, at times only when the aggregate elected borrowing base commitments are greater than 75% of the borrowing base then in effect and the consolidated cash balance is in excess of $150.0 million, a mandatory prepayment of such excess amount, (viii) add an additional financial covenant of a maximum secured leverage ratio of not more than 2.50 to 1.00 as of the last day of any fiscal quarter for the four fiscal quarters ending on such date, (ix) require a semi-annual scheduled redetermination to occur on or about October 15, 2020, and (x) amend certain other negative covenants, schedules and annexes to the Revolving Credit Agreement.

Termination of Drilling Rig Contracts

As discussed in Note 1—Organization and Nature of Operations—Recent Events, the Company has reduced planned development activity. During the second quarter of 2020, the Company terminated third-party agreements associated with certain drilling rigs. As a result of these terminations, during 2020, the Company will pay approximately $15.2 million of one-time rig termination costs, which will reduce Operating lease assets by approximately $53.0 million.