Parsley Energy Acquires Jagged Peak Energy in All-Stock Transaction

Updated 1 year 8 months ago

In October 2019, Parsley Energy and Jagged Peak Energy announced they have entered into an agreement under which Parsley will acquire Jagged Peak in an all-stock transaction valued at approximately $2.27 billion, including Jagged Peak's net debt of approximately 625 million. Jagged Peak shareholders will receive a fixed exchange ratio of 0.447 shares of Parsley stock for each share in Jagged Peak.

Jagged Peak was formed in 2013 by Quantum Energy Partners and completed a public offering in 2017. The combination is expected to generate a cost savings of $25 million in the first year and $40-50 million in future years. Parsley estimates its current average drilling, completion and equipment cost in the Delaware Basin are $1,100-1,150 per lateral foot. Parsley believes the acquisition will translate to well cost savings of at least 100 per lateral foot across Jagged Peak's remaining inventory in the Delaware Basin. Jagged Peak has invested nearly $90 million developing significant fresh and produced water infrastructure across its acreage position.

The transaction has been unanimously approved by each company's board of directors and is expected to close 1Q 2020. Following the close of the transaction, Parsley shareholders will own approximately 77% of the combined company, and Jagged Peak shareholders will own approximately 23%. Quantum Energy Partners which owns approximately 68% of the voting shares of Jagged Peak, has committed to vote in favor of the transaction. RBC Capital Markets served as financial advisor to Jagged Peak.

The deal closed in January 2020 with more than 99.5% of Parsley shareholders voting in favor of the acquisition. In connection with closing, Quantum founder S. Wil VanLoh and Jagged Peak CEO Jim Kleckner were added to the board of directors.