Austin’s Parsley Energy is following a growing trend among oil and gas producers – cutting their capital budgets while hiking payouts to shareholders.
The moves are intended to instill conservative fiscal restraint while also wooing Wall Street investors with rising dividend payments.
Parsley is in the process of buying Denver-based Jagged Peak Energy for $1.65 billion in order to expand its position in the still-booming Permian Basin. The budget and dividend decisions are meant to help rein in the spending after making the big acquisition of Jagged Peak.
Parsley said it will reduce the top end of its 2020 capital spending from $1.9 billion – as announced in October – down to $1.8 billion. Parsley’s dividend will rise from 3 cents per share to 5 cents to share.
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Parsley, which went public in 2014, just launched a dividend program last year.
“We remain committed to an enhanced free cash flow profile in 2020, and, importantly, we have reinforced this commitment with a meaningful increase to our regular dividend program,” said Parsley Chief Executive Matt Gallagher.
“Integration of our Jagged Peak acquisition has our urgent focus and I am proud of our teams’ collective dedication and efforts out of the gate,” he added. “Ultimately, though, ‘well done’ is better than ‘well said’. We look forward to delivering on our 2020 objectives in the coming quarters.”
