Wunderlich On Parsley Energy: 'Right Time, Right Place, Right Moves'

Wunderlich analysts Irene Haas and Vedran Vuk have initiated coverage on Parsley Energy Inc PE with a Buy rating pointing out that it's the right time and right place to move. The analysts have also kept a price target of $32 on the stock.

The brokerage highlighted four key points supporting their thesis. The first one was that Parsley Energy started drilling vertical wells in 2009. Secondly, the company has growth both organically and through acquisition after its IPO in May 2014. The third key point is "cracking the code" in the southernmost Delaware Basin. The fourth and final key point is that the company tasted a successful horizontal well in Southern Delaware Basin.

Related Link: Parsley Energy Acquisition Of Mineral Rights In Southern Delaware Basin For $280.5M

The two analysts stated, "Since year-end 2013, it grew its footprint in the Permian from 98,656 net acres to over 120,000 net acres. The company has been successful in growing production and reserves, both organically and by acquisition. We are impressed by how the company has managed to grow through this downturn while keeping a very strong balance sheet."

The brokerage pointed out that with Midland Basin assets mostly in development mode, every eye would be on the Trees Ranch prospect in the Southern Delaware Basin where Parsley Energy is a first mover on the Wolfcamp Play in Pecos and Reeves counties, Texas.

Wunderlich explained that its NAV estimate could be broken down into proved reserves of 124 mmboe at year-end 2015 at $3 per share, probable reserves of $28 per share, and possible resource of $5 per share.

At time of writing, Parsley Energy was up 1.23 percent at $26.29.