A good grounding

3 August 2017 By

Parsley Energy is the latest Texas driller to report sharply higher oil output yet see its stock fall. Companies’ growing efficiency drives global oil prices and has won multiples far higher than Google’s and Facebook’s. But in a commodity business, investors want profits too.

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Austin, Texas-based Parsley Energy on Aug. 2 reported net income of $40.7 million in the second quarter, compared with a loss of $21.4 million in the same period of 2016. Revenue doubled, to $213.7 million. Earnings adjusted for non-cash and exceptional items, which the company considers the best gauge of its continuing performance, were 5 cents a share in the quarter, below the consensus estimate of 11 cents according to analysts surveyed by Thomson Reuters I/B/E/S.

Production averaged 64,725 barrels of oil equivalent a day in the period, up 18 percent from the first quarter and 81 percent from the same period a year earlier. The company raised production guidance for all of 2017 by 3 percent, to a range of 67,000 to 73,000 barrels of oil equivalent a day. The company’s shares were down more than 8 percent in morning trading, at $25.

After the market closed on Aug. 1, U.S. shale producer Pioneer Natural Resources posted a better-than-expected profit of 21 cents a share, compared with the Thomson Reuters I/B/E/S estimate of 11 cents. The company, one of the largest drillers in the Permian Basin, said it would trim its 2017 capital budget by $100 million to save money at a time of weak oil prices. Its stock, which fell nearly 11 percent on Aug. 2, was down about 4 percent in morning trading on Aug. 3.

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