AUSTIN, Texas, Jan. 10, 2020 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," or "Parsley Energy") today announced that it has completed its acquisition of Jagged Peak Energy Inc. (NYSE: JAG) ("Jagged Peak"). The acquisition was previously approved by Parsley shareholders at a special meeting held on January 9, 2020, where more than 99.5% of the votes cast by Parsley stockholders were voted in favor of the proposal to issue Parsley common stock to the holders of Jagged Peak common stock as consideration for the acquisition.

Acquisition Details

At the effective time of the acquisition, each share of Jagged Peak common stock was converted into the right to receive 0.447 shares of Parsley Class A common stock. As a result of the transaction, Jagged Peak common stock will no longer be listed for trading on NYSE, and Jagged Peak will suspend its reporting obligations under the Securities Exchange Act of 1934.

In connection with the closing of the transaction, Parsley announced the appointment of S. Wil VanLoh, Jr. and Jim Kleckner to its Board of Directors. Mr. VanLoh is the Founder and Chief Executive Officer of Quantum Energy Partners and formerly served as a Jagged Peak director. Mr. Kleckner was formerly President and Chief Executive Officer of Jagged Peak and also served as a Jagged Peak director.

Management Commentary

"We first publicly announced our proposed combination with Jagged Peak less than ninety days ago," said Matt Gallagher, Parsley's President and CEO. "This collective expediency to closing allows our team to hit the ground running on these complementary, high margin assets and start capturing tangible synergies that will enhance value for our combined shareholder base. Execution will continue to speak louder than words, and our integration efforts will retain the sense of urgency and accountability that defined our successful 2019 action plan. Ultimately, we expect that the culmination of this hard work will be a more capital efficient enterprise with more free cash flow. Finally, I am excited to formally welcome Wil and Jim to our Board. I believe the Company and our shareholders will be well served by their sound financial acumen, considerable experience, and extensive network of industry contacts."

About Parsley Energy, Inc.

Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration, and production of unconventional oil and natural gas properties in the Permian Basin. For more information, visit Parsley's website at www.parsleyenergy.com.

Cautionary Statements Regarding Forward Looking Statements

The foregoing contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included in this press release that address activities, events or developments that Parsley expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements contained in this press release specifically include statements relating to benefits of the acquisition of Jagged Peak. The words "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "could," "may," "foresee," "plan," "will," "guidance," "outlook," "goal" or other similar expressions that convey the uncertainty of future events or outcomes are intended to identify forward-looking statements, which generally are not historical in nature. However, the absence of these words does not mean that the statements are not forward-looking. These statements are based on certain assumptions and analyses made by Parsley based on management's experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although Parsley believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Parsley's control, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the risk factors discussed or referenced in Parsley's most recent Annual Report on Form 10-K and other filings with the SEC. Any forward-looking statement speaks only as of the date on which such statement is made, and Parsley undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

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SOURCE Parsley Energy, Inc.

DENVER, Nov. 7, 2019 /PRNewswire/ -- Jagged Peak Energy Inc. (NYSE: JAG) ("Jagged Peak" or the "Company") today announced financial and operating results for the third quarter ended September 30, 2019.

Third Quarter Results

During the third quarter of 2019, the Company turned online 17 gross operated wells and reported average daily oil production for the quarter of 30.0 MBbls per day, at the midpoint of the Company's previously announced guidance range of 29.4 – 30.6 MBbls per day. Total equivalent production averaged 39.3 MBoe per day for the third quarter. Third quarter production mix was comprised of 76% oil, 13% NGLs, and 11% natural gas, and is unchanged from the prior quarter.

For the third quarter of 2019, the Company reported net income of $30.6 million, or $0.14 per diluted common share. Net loss for the third quarter of 2018 was $26.6 million, or $0.12 per diluted common share. Adjusted net income (a non-GAAP measure) for the third quarter of 2019, was $21.9 million, or $0.10 per diluted common share, compared to $39.3 million, or $0.18 per diluted common share for the same period in 2018. Adjusted net income (a non-GAAP measure) eliminates certain non-cash and non-recurring items such as certain equity-based compensation, non-cash mark-to-market gains or losses on derivatives and impairment expense, further adjusted for any associated changes in estimated income tax expense. Adjusted EBITDAX (a non-GAAP measure) for the third quarter of 2019 was $108.2 million, a decrease of $10.4 million from the third quarter of 2018.

Please reference the reconciliations of these non-GAAP measures to the most directly comparable GAAP measures at the end of this release.

Revenue for the third quarter of 2019 was $150.1 million, compared to $155.4 million in the third quarter of 2018. The decrease in revenue for the third quarter of 2019 compared to the same period in 2018 was primarily due to an 11% decrease in unhedged realized pricing on a per Boe basis. Average realized prices for the third quarter of 2019 are included in the table below.

Capital expenditures for DC&E activities were $162.6 million for the three months ended September 30, 2019. Operated and non-operated activity during the quarter included drilling 19 gross (15.8 net) and completing 25 gross (18.3 net) wells. A portion of the capital spent during the third quarter relates to 20 gross (19.6 net) operated wells that were in various stages of being drilled or completed at September 30, 2019. Including capital expenditures for infrastructure of $4.5 million, and leasehold acquisition costs of $17.7 million, total capital expenditures for the quarter were $184.8 million.

The table below provides a comparative breakout of the Company's capital expenditures for the periods indicated:

The Company continues to drive down its DC&E costs through continued efficiency gains. DC&E costs averaged approximately $1,160 per lateral foot in the third quarter of 2019. Year-to-date the Company has averaged approximately $1,200 per lateral foot, compared to its full-year 2019 goal of $1,250 per lateral foot.

Operational Updates

In the Company's Whiskey River asset, the Company brought online its Coriander project. This project was the Company's first six-well co-development project. The average lateral length of these wells was 8,535 feet and had an average DC&E per lateral foot cost of approximately $1,090. These wells were brought online in late August and produced a pad-average peak IP-30 of 102 Boe per day per 1,000 foot (84% oil).

In mid-October, the Company brought online its second co-development project, the Venom project which consisted of eight wells in the Whiskey River area. The average lateral length of these wells was 7,900 feet and had an average DC&E per lateral foot cost of approximately $1,220. Given the timing of the wells being brought online, meaningful production information is not yet available.

Guidance Update

Due to the definitive merger agreement with Parsley Energy, Inc. ("Parsley"), Jagged Peak has discontinued providing guidance and long-term outlook information regarding its results of operations and does not intend to update the previously issued guidance and long-term outlook information, including the guidance provided in the Company's August 8, 2019 press release announcing its second quarter 2019 financial and operating results (the "second quarter earnings release"). Accordingly, investors are cautioned not to rely on historical forward-looking statements regarding guidance and long-term outlook information, including any such information provided in the second quarter earnings release, as those forward-looking statements were the estimates of management only as of the date provided, have not and will not be updated and were subject to the specific risks and uncertainties that accompanied such forward-looking statements.

Financial Update

At the end of the third quarter of 2019, the Company had $215.0 million drawn on its revolving credit facility and $10.6 million of cash on the balance sheet, resulting in total liquidity of $335.6 million. Net debt to LTM adjusted EBITDAX (a non-GAAP measure) was 1.7x as of the end of the third quarter. Due to the definitive merger agreement with Parsley, the Company has received a waiver from its bank group to postpone its Fall borrowing base redetermination.

Since the hedging update on August 8, 2019, the Company has added to its 2020 WTI swaps, which are now at 20,000 Bbls per day of oil. These additions are included in the commodity hedges schedule at the end of this release.

Conference Call

Jagged Peak will host a short conference call and webcast to discuss its third quarter 2019 financial and operating results on November 8, 2019 at 9:00 am MT (11:00 am ET). This call will not include a Q&A session. The call will be webcast and accessible via the Investor Relations section of the Company's website at www.jaggedpeakenergy.com. Dial-in information for this call is included below:

Non-GAAP Financial Measures

Adjusted EBITDAX

Adjusted EBITDAX is a non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDAX as net income (loss) before interest expense, net of capitalized interest, depletion, depreciation, amortization and accretion expense, impairment of oil and natural gas properties, exploration expenses, equity-based compensation expense, income taxes, contract termination fees, gains or losses on sales of assets, and net gains or losses on derivatives less net cash from/for derivative settlements. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historical costs of depreciable assets and exploration expenses, none of which are components of Adjusted EBITDAX. Our computation of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

Management believes Adjusted EBITDAX is useful because it allows investors to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book value of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance.

Adjusted Net Income

Adjusted net income is a non-GAAP performance measure used by management to evaluate financial performance, prior to non-cash market-to-market gains or losses on derivatives, impairment expense, exploratory dry hole costs, gain or loss on the sale of property, certain one-time or unusual items, such as certain equity-based compensation, contract termination fees, and the associated changes in estimated income tax. Management believes adjusted net income is useful because it may enhance investors' ability to assess historical and future financial performance. Adjusted net income should not be considered an alternative to net income, operating income, or any other measure of financial performance presented in accordance with GAAP or as an indicator of our operating performance.

Net Debt to LTM Adjusted EBITDAX

Net debt to LTM adjusted EBITDAX is a non-GAAP measure, which is defined as the face value of the Company's long-term debt, including its senior unsecured notes and amounts drawn on its credit facility, less cash and cash equivalents at quarter end, divided by the Company's last twelve month adjusted EBITDAX, as defined above.

No Offer or Solicitation

This release includes information related to a proposed business combination transaction (the "Transaction") between Jagged Peak and Parsley. This release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the Transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this release in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Important Additional Information

In connection with the Transaction, Parsley has filed with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that will include a joint proxy statement of Jagged Peak and Parsley and a prospectus of Parsley. The Transaction will be submitted to Jagged Peak's stockholders and Parsley's stockholders for their consideration. Jagged Peak and Parsley may also file other documents with the SEC regarding the Transaction. The definitive joint proxy statement/prospectus will be sent to the stockholders of Parsley and Jagged Peak. This release is not a substitute for the registration statement and joint proxy statement/prospectus that will be filed with the SEC or any other documents that Parsley or Jagged Peak may file with the SEC or send to stockholders of Parsley or Jagged Peak in connection with the Transaction. INVESTORS AND SECURITY HOLDERS OF JAGGED PEAK AND PARSLEY ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.

Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and all other documents filed or that will be filed with the SEC by Parsley or Jagged Peak through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Jagged Peak will be made available free of charge on Jagged Peak's website at http://www.jaggedpeakenergy.com, under the heading "SEC Filings," or by directing a request to Investor Relations, Jagged Peak Energy Inc., 1401 Lawrence Street, Suite 1800, Denver, CO 80202, Tel. No. (720) 215-3754. Copies of documents filed with the SEC by Parsley will be made available free of charge on Parsley's website at http://www.parsleyenergy.com/investors or by directing a request to Investor Relations, Parsley Energy, Inc., 303 Colorado Street, Suite 3000, Austin, TX 78701, Tel. No. (512) 505-5199.

Participants in the Solicitation

Parsley, Jagged Peak and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect to the Transaction.

Information regarding Jagged Peak's directors and executive officers is contained in the proxy statement for Jagged Peak's 2019 Annual Meeting of Stockholders filed with the SEC on April 10, 2019, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing Jagged Peak's website at http://www.jaggedpeakenergy.com. Information regarding Parsley's executive officers and directors is contained in the proxy statement for the Parsley's 2019 Annual Meeting of Stockholders filed with the SEC on April 8, 2019 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this release at the SEC's website at www.sec.gov or by accessing the Parsley's website at http://www.parsleyenergy.com/investors.

Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the Transaction by reading the joint proxy statement/prospectus regarding the Transaction when it becomes available. You may obtain free copies of this release as described above.

Forward-Looking Statements and Cautionary Statements

The foregoing contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included in this release that address activities, events or developments that Parsley or Jagged Peak expects, believes or anticipates will or may occur in the future are forward-looking statements. Words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "create," "intend," "could," "may," "foresee," "plan," "will," "guidance," "look," "outlook," "goal," "future," "assume," "forecast," "build," "focus," "work," "continue" or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the Transaction, pro forma descriptions of the combined company and its operations, integration and transition plans, synergies, opportunities and anticipated future performance. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this release. These include the expected timing and likelihood of completion of the Transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the Transaction that could reduce anticipated benefits or cause the parties to abandon the Transaction, the ability to successfully integrate the businesses, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the possibility that stockholders of Parsley may not approve the issuance of new shares of common stock in the Transaction or that stockholders of Jagged Peak may not approve the merger agreement, the risk that the parties may not be able to satisfy the conditions to the Transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the Transaction, the risk that any announcements relating to the Transaction could have adverse effects on the market price of Parsley's common stock or Jagged Peak's common stock, the risk that the Transaction and its announcement could have an adverse effect on the ability of Parsley and Jagged Peak to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally, the risk the pending Transaction could distract management of both entities and they will incur substantial costs, the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve synergies or it may take longer than expected to achieve those synergies and other important factors that could cause actual results to differ materially from those projected. All such factors are difficult to predict and are beyond Parsley's or Jagged Peak's control, including those detailed in Parsley's annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on its website at http://www.parsleyenergy.com/investors and on the SEC's website at http://www.sec.gov, and those detailed in Jagged Peak's annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on Jagged Peak's website at http://www.jaggedpeakenergy.com and on the SEC's website at http://www.sec.gov. All forward-looking statements are based on assumptions that Parsley or Jagged Peak believe to be reasonable but that may not prove to be accurate. Any forward-looking statement speaks only as of the date on which such statement is made, and Parsley and Jagged Peak undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

About Jagged Peak Energy Inc.

Jagged Peak Energy Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the southern Delaware Basin, a sub-basin of the Permian Basin of West Texas.

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SOURCE Jagged Peak Energy Inc.

DENVER, Oct. 25, 2019 /PRNewswire/ -- Jagged Peak Energy Inc. (NYSE: JAG) (the "Company") today announced that it plans to release its third quarter 2019 earnings and operational update after market close on November 7, 2019, and will host a conference call to discuss those results and updates on November 8, 2019 at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time). This call will not include a Q&A session.

To join the live call, please dial 1-877-823-8605 (1-647-689-5644 international) with the conference ID 9192955. The call will be webcast live and accessible on the Investor Relations section of the Company's website at www.jaggedpeakenergy.com.

A telephone replay of the call will be available through November 15, 2019 by dialing 1-800-585-8367 (1-416-621-4642 international) with the conference ID 9192955. Additionally, a replay will be available on the Company's website approximately two hours after the conference call. 

About Jagged Peak Energy Inc.

Jagged Peak Energy Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the Southern Delaware Basin, a sub-basin of the Permian Basin of West Texas.  For more information, visit our website at www.jaggedpeakenergy.com.

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SOURCE Jagged Peak Energy Inc.

NEW YORK, Oct. 14, 2019 /PRNewswire/ -- Bragar Eagel & Squire, P.C. is investigating potential claims against the board of directors of Jagged Peak Energy Inc. (NYSE: JAG) on behalf of Jagged Peak shareholders concerning the proposed merger with Parsely Energy, Inc.

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Pursuant to the proposed transaction, announced on October 14, 2019 and valued at $2.27 billion, Jagged Peak shareholders will receive 0.447 shares of Parsely common stock for each share of Jagged Peak common stock owned. The investigation focuses on whether Jagged Peak and its board of directors violated the federal securities laws and/or breached their fiduciary duties to the Company's shareholders by failing to conduct a fair process and whether and by how much the proposed transaction undervalues the Company.

If you own Jagged Peak shares, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Alexandra Raymond by email at investigations@bespc.com, or by telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.

Bragar Eagel & Squire, P.C. is a New York-based law firm concentrating in commercial and securities litigation. For additional information concerning our investigation of Jagged Peak please go to https://bespc.com/jag-2/. For additional information about Bragar Eagel & Squire, P.C. please go to www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.

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SOURCE Bragar Eagel & Squire, P.C.

SAN DIEGO, Oct. 14, 2019 /PRNewswire/ -- Shareholder rights law firm Johnson Fistel, LLP has launched an investigation into whether the board members of Jagged Peak Energy Inc. (NYSE: JAG) ("Jagged") breached their fiduciary duties in connection with the proposed sale of the Company to Parsley Energy, Inc. (NYSE: PE) ("Parsley").

On October 14, 2019, Jagged announced that it had signed a definitive merger agreement with Parsley. Under the terms of the agreement, Jagged shareholders will receive a fixed exchange ratio of 0.447 shares of Parsley Class A common stock for each share of Jagged common stock they own; this represents $7.59 per Jagged share based on Parsley's closing price on October 11, 2019.

The investigation concerns whether the Jagged board failed to satisfy its duties to the Company shareholders, including whether the board adequately pursued alternatives to the acquisition and whether the board obtained the best price possible for Jagged shares of common stock. Nationally recognized Johnson Fistel is investigating whether the proposed deal represents adequate consideration, especially given one Wall Street analyst has a $14.00 price target on the stock. The 52-week high for Jagged was $14.26. 

If you are a shareholder of Jagged and believe the proposed buyout price is too low or you're interested in learning more about the investigation or your legal rights and remedies, please contact lead analyst Jim Baker (jimb@johnsonfistel.com) at 619-814-4471. If emailing, please include a phone number.

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About Johnson Fistel, LLP:
Johnson Fistel, LLP is a nationally recognized shareholder rights law firm with offices in California, New York, and Georgia. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits. For more information about the firm and its attorneys, please visit https://www.johnsonfistel.com. Attorney advertising. Past results do not guarantee future outcomes.

Contact:
Johnson Fistel, LLP
Jim Baker, 619-814-4471
jimb@johnsonfistel.com

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SOURCE Johnson Fistel, LLP

AUSTIN, Texas and DENVER, Oct. 14, 2019 /PRNewswire/ -- Parsley Energy, Inc. (NYSE: PE) ("Parsley," or "Parsley Energy") and Jagged Peak Energy Inc. (NYSE: JAG) ("Jagged Peak") today announced they have entered into a definitive merger 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 as of June 30, 2019. Under the terms of the agreement, Jagged Peak shareholders will receive a fixed exchange ratio of 0.447 shares of Parsley Class A common stock for each share of Jagged Peak common stock they own. This represents $7.59 per Jagged Peak share based on Parsley's closing price on October 11, 2019, and a premium of 1.5% compared to Jagged Peak's 30-day volume weighted average price and 11.2% compared to Jagged Peak's closing price on October 11, 2019.

The transaction, which is expected to close in the first quarter of 2020, has been unanimously approved by each company's board of directors. Following the close of the transaction, Parsley shareholders will own approximately 77% of the combined company, and Jagged Peak shareholders will own approximately 23% of the combined company, in each case on a fully diluted basis. The all-stock transaction is intended to be tax-free to Jagged Peak shareholders.

Key Transaction Highlights

• Complementary, High-Margin Delaware Basin Footprint: Parsley possesses an institutional familiarity with Jagged Peak's Delaware Basin assets, with the majority of the acreage directly offsetting Parsley's legacy position. Furthermore, Jagged Peak's high-margin, oil-weighted asset base will integrate smoothly into Parsley's near-term development program. On a pro forma basis, Parsley will have approximately 267,000 net acres in the Permian, comprised of 147,000 net acres in the Midland Basin and a highly contiguous 120,000 net acre footprint in the Delaware Basin.
• Accretive on Key Metrics: Parsley expects the low-premium transaction to be immediately accretive to key metrics in 2020, including: cash flow per share, free cash flow per share, cash return on capital invested, and net asset value.
• Corporate Cost Optimization Accrues to Shareholders: The combination is expected to generate cash general and administrative ("G&A") savings of approximately $25 million in the first year and $40-50 million of annual savings thereafter, translating to a net present value of $250-300 million. Parsley expects this synergy to facilitate margin expansion and enhance corporate free cash flow.⁽¹⁾
• Additional Synergies Clearly Identified: In addition to G&A savings, Parsley has identified further synergies that are anticipated to be realized over time:
• Capital Efficiency Gains: Parsley and Jagged Peak have seen material improvements in recent Delaware Basin well costs. Sustained drilling and completion efficiency improvements coupled with the supply chain advantages of optimized scale have facilitated a material reduction in Parsley's Delaware Basin well costs during 2019. Parsley estimates its current average drilling, completion and equipment cost in the Delaware Basin are $1,100-$1,150 per lateral foot. Parsley believes applying its scale advantages and employing collaborative best practices can translate to well cost savings of at least $100 per lateral foot across Jagged Peak's remaining inventory in the Delaware Basin.
• Overlapping Acreage: The combination of Parsley's and Jagged Peak's acreage positions will create a highly contiguous, interlocking footprint in the Delaware Basin that allows for a more optimized lease geometry with additional extended lateral wells. Additionally, the close proximity of Jagged Peak's acreage supports additional operational efficiencies.
• Expansive Company-Owned Water Infrastructure Network: Jagged Peak has invested nearly $90 million developing significant fresh and produced water infrastructure across its acreage position, which is located nearby Parsley's existing water assets. Integration of Jagged Peak's water infrastructure network increases corporate flexibility and operational scale.
• Cost of Capital Advantages: Parsley believes this transaction can accelerate progress toward an investment grade credit profile, which could help facilitate opportunistic debt refinancing in the future.
• Maintains Strong Balance Sheet: An all-stock transaction ensures the combined company will retain a strong balance sheet with a pro forma net leverage ratio of 1.6x LTM adjusted earnings before interest, income taxes, depreciation, depletion, amortization, and exploration expense. Parsley expects to maintain its dividend per share at current levels in the near term, with the anticipated free cash flow enhancements from this transaction expected to support increased return of capital in the future. Finally, both Parsley and Jagged Peak recently added to their respective 2020 hedge positions, and a majority of the combined company's expected 2020 oil production is subject to hedge protection. For details on Parsley and Jagged Peak's respective hedge positions, please see the presentation posted to each company's website that supplements the information in this release.

Management Commentary

"The combination of Parsley and Jagged Peak is a natural fit," said Matt Gallagher, Parsley's President and CEO. "Jagged Peak's oily, high-margin asset base slots in nicely to our returns-focused development approach, its acreage footprint and water infrastructure dovetails into our legacy Delaware Basin position, and its corporate culture aligns with our core values. In short, we now have a premier Delaware Basin business that rivals our foundational Midland Basin business. This transaction also creates tangible synergies that will enhance our corporate free cash flow profile and will be shared by the combined shareholder base. Ultimately, I am proud of the high level of execution Parsley has delivered throughout 2019, and I am excited by the prospects of what the combination of Parsley and Jagged Peak can deliver for shareholders in 2020."

Jim Kleckner, President and Chief Executive Officer of Jagged Peak, commented, "The combined assets of Jagged Peak and Parsley Energy are a great fit that create a stronger combined Permian company. The pro-forma company provides our shareholders with premier acreage in both the Midland and Delaware sub-basins, while providing additional scale, significant operational synergies, and free cash flow in this competitive environment. Our team has made tremendous progress to increase efficiencies as we evolved to pad development on our acreage position. We look forward to working closely with Parsley to ensure that we provide an efficient changeover of asset-level institutional knowledge, so our shareholders and the shareholders of Parsley Energy can reap the maximized benefits of this transaction."

S. Wil VanLoh, Jr., a Jagged Peak director and the Founder and Chief Executive Officer of Quantum Energy Partners, Jagged Peak's controlling shareholder, commented, "The inevitable consolidation in the Permian has started and Jagged Peak made a decisive move to team up with the right partner. Quantum has known Bryan, Matt and the Parsley team for many years and has tremendous respect for the industry-leading execution capabilities and top-tier rock they possess. The combination of the two companies will create a unique platform that will benefit from scale, capital allocation optionality, and peer-leading economics (IRRs, oil-weighting and netback margins) that we believe will represent one of the most compelling investment vehicles in the Permian. We look forward to partnering with the Parsley team as they mature into a Permian pure-play large cap. I would also like to thank every current and former employee of Jagged Peak for creating a great private equity success story and for positioning Jagged Peak's shareholders for continued value creation in a very tough macro energy environment. It's been an honor being your partner."

Third Quarter Operational Update

Activity Overview

For the third quarter of 2019, Parsley expects net oil production of 91.2-91.7 MBo per day, translating to 5-6% quarter-over-quarter growth. During 3Q19, Parsley placed on production 35 gross operated horizontal wells with an average working interest of approximately 95% and an average completed lateral length of approximately 10,000 feet. Parsley expects to report third quarter capital expenditures of approximately $315-325 million. Third quarter development spending decreased relative to second quarter spending, driven by lower well costs, fewer net completions, and quarter-over-quarter decreases in facilities and infrastructure spending.

Preliminary Pro Forma 2020 Outlook

• Parsley remains committed to a growing free cash flow profile that returns capital to shareholders. Parsley continues to use a $50 WTI oil price assumption for its baseline capital budget in 2020.
• Parsley estimates that capital expenditures of $1.6-$1.9 billion will translate to oil production of 126-134 MBo per day in 2020, representing healthy year-over-year production growth. Both production and capital expenditure range estimates assume a full-year of contribution from Jagged Peak.
• Parsley plans to deploy 15 development rigs and four-to-five frac spreads on average in 2020. Parsley anticipates five of its development rigs will operate in the Delaware Basin, where Parsley has seen a material reduction in well costs in 2019.

Governance and Leadership

The boards of directors at both Parsley and Jagged Peak have unanimously approved the transaction, and recommended that their respective shareholder groups approve the transaction.

Upon closing, Parsley's board of directors will be expanded to eleven directors to include two members from the current Jagged Peak board of directors. The combined company will be led by Parsley's executive management team and will remain headquartered in Austin, Texas.

Timing and Approvals

The transaction, which is expected to close during the first quarter of 2020, is subject to customary closing conditions and regulatory approvals, including the approval of Parsley and Jagged Peak shareholders. Jagged Peak's controlling shareholder, Quantum Energy Partners, which owns approximately 68 percent of the outstanding voting shares of Jagged Peak, has committed to vote its shares in favor of the transaction.

Advisors

Tudor, Pickering, Holt & Co is serving as exclusive financial advisor to Parsley Energy, and Kirkland & Ellis LLP is serving as Parsley's legal counsel. Citi and RBC Capital Markets, LLC are serving as financial advisors to Jagged Peak and Vinson & Elkins L.L.P. is serving as Jagged Peak's legal counsel.

Conference Call Information

Parsley Energy will host a conference call and webcast on Monday, October 14 at 9:00 a.m. Eastern Time (8:00 a.m. Central Time, 7:00 a.m. Mountain Time). Participants should call 877-709-8150 (United States/Canada) or 201-689-8354 (International) ten minutes before the scheduled time and request the Parsley Energy conference call. A telephone replay will be available through October 21 by dialing 877-660-6853 (United States/Canada) or 201-612-7415 (International). Conference ID: 13695703. A live broadcast will also be available on the internet at www.parsleyenergy.com under the "Investors-Events & Presentations" section of the Parsley website and at www.jaggedpeakenergy.com under the "News" section of the Jagged Peak website. Each company has also posted a presentation to its website that supplements the information in this release.

About Parsley Energy, Inc.

Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration, and production of unconventional oil and natural gas properties in the Permian Basin. For more information, visit the Company's website at www.parsleyenergy.com.

About Jagged Peak Energy, Inc.

Jagged Peak Energy Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the southern Delaware Basin, a sub-basin of the Permian Basin of West Texas.

No Offer or Solicitation

Communications in this news release do not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities or a solicitation of any vote or approval with respect to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Additional Information for Shareholders

In connection with the proposed transaction, Parsley and Jagged Peak intend to file materials with the Securities and Exchange Commission ("SEC"), including a Registration Statement on Form S-4 of Parsley (the "Registration Statement") that will include a joint proxy statement/prospectus of Parsley and Jagged Peak. After the Registration Statement is declared effective by the SEC, Parsley and Jagged Peak intend to mail a definitive proxy statement/prospectus to the shareholders of Parsley and the shareholders of Jagged Peak. This news release is not a substitute for the joint proxy statement/prospectus or the Registration Statement or for any other document that Parsley or Jagged Peak may file with the SEC and send to Parsley's shareholders and/or Jagged Peak's shareholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF PARSLEY AND JAGGED PEAK ARE URGED TO CAREFULLY AND THOROUGHLY READ THE JOINT PROXY STATEMENT AND THE REGISTRATION STATEMENT/PROSPECTUS, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED BY PARSLEY AND JAGGED PEAK WITH THE SEC, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PARSLEY, JAGGED PEAK, THE PROPOSED TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.

Investors will be able to obtain free copies of the Registration Statement and joint proxy statement/prospectus, as each may be amended from time to time, and other relevant documents filed by Parsley and Jagged Peak with the SEC (when they become available) through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by Parsley will be available free of charge from Parsley's website at www.parsleyenergy.com under the "Investors" tab or by contacting Parsley's Investor Relations Department at (512) 505-5199 or IR@parsleyenergy.com. Copies of documents filed with the SEC by Jagged Peak will be available free of charge from Jagged Peak's website at www.jaggedpeakenergy.com under the "Investor Relations" tab or by contacting Jagged Peak's Investor Relations Department at (720) 215-3754 or jedwards@jaggedpeakenergy.com.

Participants in the Proxy Solicitation

Parsley, Jagged Peak and their respective directors and certain of their executive officers and other members of management and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from Parsley's shareholders and Jagged Peak's shareholders in connection with the proposed transaction. Information regarding the executive officers and directors of Parsley is included in its definitive proxy statement for its 2019 annual meeting filed with the SEC on April 8, 2019. Information regarding the executive officers and directors of Jagged Peak is included in its definitive proxy statement for its 2019 annual meeting filed with the SEC on April 10, 2019. Additional information regarding the persons who may be deemed participants and their direct and indirect interests, by security holdings or otherwise, will be set forth in the Registration Statement and joint proxy statement/prospectus and other materials when they are filed with the SEC in connection with the proposed transaction. Free copies of these documents may be obtained as described in the paragraphs above.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this news release concerning the proposed transaction, including any statements regarding the expected timetable for completing the proposed transaction, the results, effects, benefits and synergies of the proposed transaction, future opportunities for the combined company, future financial performance and condition, guidance and any other statements regarding Parsley's or Jagged Peak's future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are "forward-looking" statements based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words "anticipate," "believe," "ensure," "expect," "if," "intend," "estimate," "probable," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "would," "potential," "may," "might," "anticipate," "likely" "plan," "positioned," "strategy," and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding Parsley and Jagged Peak's plans and expectations with respect to the proposed transaction and the anticipated impact of the proposed transaction on the combined company's results of operations, financial position, growth opportunities and competitive position. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, the possibility that shareholders of Parsley may not approve the issuance of new shares of Parsley Class A common stock in the transaction or that shareholders of Jagged Peak may not approve the merger agreement; the risk that a condition to closing of the proposed transaction may not be satisfied, that either party may terminate the merger agreement or that the closing of the proposed transaction might be delayed or not occur at all; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction; the diversion of management time on transaction-related issues; the ultimate timing, outcome and results of integrating the operations of Parsley and Jagged Peak; the effects of the business combination of Parsley and Jagged Peak, including the combined company's future financial condition, results of operations, strategy and plans; the ability of the combined company to realize anticipated synergies in the timeframe expected or at all; changes in capital markets and the ability of the combined company to finance operations in the manner expected; regulatory approval of the transaction; the effects of commodity prices; the risks of oil and gas activities; and the fact that operating costs and business disruption may be greater than expected following the public announcement or consummation of the proposed transaction. Expectations regarding business outlook, including changes in revenue, pricing, capital expenditures, cash flow generation, strategies for our operations, oil and natural gas market conditions, legal, economic and regulatory conditions, and environmental matters are only forecasts regarding these matters.

Additional factors that could cause results to differ materially from those described above can be found in Parsley's Annual Report on Form 10-K for the year ended December 31, 2018 and in its subsequently filed Quarterly Reports on Form 10-Q, each of which is on file with the SEC and available from Parsley's website at www.parsleyenergy.com under the "Investors" tab, and in other documents Parsley files with the SEC, and in Jagged Peak's Annual Report on Form 10-K for the year ended December 31, 2018 and in its subsequently filed Quarterly Reports on Form 10-Q, each of which is on file with the SEC and available from Jagged Peak's website at www.jaggedpeakenergy.com under the "Investor Relations" tab, and in other documents Jagged Peak files with the SEC.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Neither Parsley nor Jagged Peak assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

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SOURCE Parsley Energy, Inc.

DENVER, Aug. 8, 2019 /PRNewswire/ -- Jagged Peak Energy Inc. (NYSE: JAG) ("Jagged Peak" or the "Company") today announced financial and operating results for the second quarter ended June 30, 2019.

Jim Kleckner, President and Chief Executive Officer, commented, "I am pleased with our Company's execution and performance through the first half of the year, with our DC&E costs down significantly from 2018. We continue to be intently focused on creating additional value through further reductions of these DC&E costs and preserving our high operating margins. Leveraging these efficiency gains will remain an important part of our business as we move to development projects in 2019 and 2020. During the quarter, we started operations on the six-well Coriander pad. The wells have been drilled and the completions are progressing on schedule to deliver first production in the next few weeks. Also during the quarter, we turned online two wells in the Big Tex area and have seen encouraging initial results. While it's too early to make a full assessment of these results, we remain cautiously optimistic on the future optionality of our Big Tex area."

Second Quarter Results

During the second quarter of 2019, the Company turned online 11 gross operated wells and reported average daily oil production for the quarter of 29.1 MBbls per day, at the upper end of the Company's previously announced guidance range of 27.8 – 29.2 MBbls per day. Total equivalent production averaged 38.3 MBoe per day for the second quarter, slightly above the upper end of the Company's previously announced guidance range of 36.6 – 38.0 MBoe per day. Second quarter production mix was comprised of 76% oil, 13% NGLs, and 11% natural gas, and is essentially unchanged from the prior quarter.

For the second quarter of 2019, the Company reported net income of $41.9 million, or $0.20 per diluted common share. Net income for the second quarter of 2018 was $45.1 million, or $0.21 per diluted common share. Adjusted net income (a non-GAAP measure) for the second quarter of 2019, was $21.3 million, or $0.10 per diluted common share, compared to $43.3 million, or $0.20 per diluted common share for the same period in 2018. Adjusted net income (a non-GAAP measure) eliminates certain non-cash and non-recurring items such as certain equity-based compensation, non-cash mark-to-market gains or losses on derivatives and impairment expense, further adjusted for any associated changes in estimated income tax expense. Adjusted EBITDAX (a non-GAAP measure) for the second quarter of 2019 was $101.7 million, a decrease of $16.9 million from the second quarter of 2018.

Please reference the reconciliations of these non-GAAP measures to the most directly comparable GAAP measures at the end of this release.

Revenue for the second quarter of 2019 was $146.8 million, compared to $158.7 million in the second quarter of 2018. The decrease in revenue for the second quarter of 2019 compared to the same period in 2018 was primarily due to a 16% decrease in unhedged realized pricing on a per Boe basis. Natural gas pricing during the quarter was weak as daily spot pricing at Waha, the Company's primary pricing point, averaged approximately $0.01/Mcf for the quarter. After differentials, processing, and transportation fees were applied, the net realized price for natural gas sales for the quarter was negative $0.87 per Mcf. Despite negative realized pricing for natural gas, the Company continued to gather and process its gas to capture economics from NGL volumes and minimize flare volumes. Average realized prices for the second quarter of 2019 are included in the table below.

The table below provides a summary of the Company's second quarter and first half 2019 actual results in comparison to its previously provided guidance ranges.

The Company's lease operating expense ("LOE") per Boe for the quarter trended above the upper end of the annual guided range, primarily due to increased costs associated with artificial lift, including additional workover expenses and electric power. The Company now expects many of these increased costs to persist throughout the remainder of the year and has revised its guidance range, which are reflected in the "Updated 2019 Capital, Production, and Operating Guidance" section below.

Capital expenditures for DC&E activities were $152.0 million for the three months ended June 30, 2019. Activity during the quarter included drilling 13 and completing 11 gross (10.4 net) operated wells. A portion of the capital spent during the second quarter relates to 17 gross (16.2 net) operated wells that were in various stages of being drilled or completed at June 30, 2019, three of which were turned online during the first week of July. Including capital expenditures for infrastructure of $15.5 million, which account for approximately two thirds of the expected annual investment and activity, and leasehold acquisition costs of $3.2 million, total capital expenditures for the quarter were $170.7 million.

The table below provides a comparative breakout of the Company's capital expenditures for the periods indicated:

The Company continues to drive down its DC&E costs through continued efficiency gains and improvements to its supply chain and strategic sourcing of materials including sand, tubular goods, and cement. These improvements have resulted in a further reduction of the Company's total DC&E costs, which averaged $1,250 per lateral foot in the second quarter of 2019 and approximately $1,270 per lateral foot year-to-date. The Company remains on track to meet its full-year 2019 goal of $1,250 per lateral foot. The Company is tightly focused on further enhancing operational efficiencies and reducing total well costs.

Operational Updates

In the Company's Whiskey River asset, the Company finished drilling its Coriander project. This project is the Company's first six-well co-development project spaced at 1,320 feet, and has recently commenced completions operations. Drilling operations for Coriander averaged approximately 860 feet per day, compared to the 2019 average of approximately 830 feet per day. Completion operations for Coriander started in mid-July and are currently on schedule with two frac crews completing the six wells. The Company expects the project to finish completions and be turned online in late-August, at which point the Company plans to finish drilling and begin completions activity on its Venom project, an eight-well multi-horizon development in the northern portion of Whiskey River.

During the quarter, the Company turned online its first Wolfcamp A well in the central fairway of its Big Tex acreage. Early results from this well, the State Big Tex South 7673-8 11-H, are encouraging, with a two-stream peak IP30 of 104 Boe per 1,000 lateral feet and 90-day cumulative production of approximately 7,500 Boe per 1,000 feet. This compares favorably to the average of the Company's Big Tex wells, which have had average two-stream peak IP30 of approximately 88 Boe per day and 90-day cumulative production of 6,300 Boe per 1,000 feet. The well is currently on artificial lift and continues to show a robust production profile after 130 days of production, with the most recent seven-day average oil production of 1,077 Bbls per day. The Company is drilling and completing two additional Wolfcamp A wells in this fairway in 2019, the first of which is in the early stages of flowing back and the second is currently completing.

The Company also turned online a successful well in its Southeastern Big Tex position during the quarter, that targeted the Woodford formation. This well, the Chimera 3601-142 61H, has an approximate 6,400 foot lateral and was placed entirely in-zone. The early time data of this well has been encouraging, with a two-stream peak IP30 of 294 Boe per 1,000 lateral feet (50% oil). As the production data of this well is preliminary, the Company will continue to monitor and evaluate the performance of this well, and its other 2019 Big Tex wells to inform capital allocation decisions for Big Tex in 2020.

Updated 2019 Capital, Production, and Operating Guidance

For the remainder of the year, the Company plans to continue running five drilling rigs and between one and two completion crews, which are expected to complete between 13-15 wells in each of the remaining quarters of 2019. Development capital guidance is being affirmed at a midpoint of $635 million. For production, the Company is affirming its fourth quarter and full-year guidance ranges and providing guidance for the third quarter. The Company is expecting its oil production to grow sequentially in the third quarter by approximately 3% and then grow by approximately 15% in the fourth quarter as volumes from the Coriander and Venom projects are expected to be turned online in the second half of the third quarter and the beginning of the fourth quarter, respectively.  From a cost perspective, the Company is raising the midpoint of its LOE guidance by $0.25 per Boe to account for additional artificial lift costs, and is decreasing its annual G&A guidance by $7.5 million, at the midpoint. The Company has also increased the production and ad valorem tax guidance by 0.5% as a percentage of revenue, due in part to decreased per unit revenues from natural gas and NGLs.  As these three changes are netting, they are expected to have a neutral to slightly positive impact to the Company's top-tier adjusted EBITDAX margin. Adjusted EBITDAX margin is a non-GAAP metric. Please reference the reconciliations of this non-GAAP measures to the most directly comparable GAAP measure, Net Income, at the end of this release. The table below provides an updated summary of the Company's capital, production, and operating guidance for the third quarter and full-year 2019.

Financial Update

At the end of the second quarter of 2019, the Company had $150.0 million drawn on its revolving credit facility and $24.8 million of cash on the balance sheet, resulting in total liquidity of $414.8 million. Net debt to LTM adjusted EBITDAX (a non-GAAP measure) was 1.5x as of the end of the second quarter. The Company's current capital program is expected to keep the Company's leverage ratio, as measured by net debt to LTM adjusted EBITDAX, under 2.0x in a $50 per Bbl WTI environment. Please reference the reconciliation of this non-GAAP measure to the most directly comparable GAAP measure at the end of this release.

Since the hedging update on May 9, 2019, the Company has added to its 2020 WTI swaps, which are now at 17,000 Bbls per day of oil for 2020. These additions are included in the commodity hedges schedule at the end of this release.

Conference Call

Jagged Peak will host a conference call and webcast to discuss its second quarter 2019 financial and operating results on August 9, 2019 at 9:00 am MT (11:00 am ET). The call will be webcast and accessible via the Investor Relations section of the Company's website at www.jaggedpeakenergy.com. Dial-in information for this call is included below:

Upcoming Investor Events

The Company will be participating in the following upcoming investor events:

Forward Looking Statements

This news release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than historical facts, that address activities that Jagged Peak assumes, plans, expects, believes, intends or anticipates (and other similar expressions), will, should or may occur in the future are forward-looking statements. Forward-looking statements are based on management's current beliefs, based on currently available information, as to the outcome and timing of future events. Forward-looking statements in this release include, among other things, guidance estimates including all statements under the heading "Updated 2019 Capital, Production, and Operating Guidance"; the Company's ability to enhance operational efficiencies and reduce total well costs; the Company's expected allocation of capital expenditures; the Company's expected completion of certain wells and the timing of such completions; the Company's expected number of drilling rigs, completions crews, and number of well completions for the remainder of 2019, early results of Big Tex delineation wells, and the Company's expectation that it will continue to keep its leverage ratio under 2.0x in a $50 per Bbl WTI environment during 2019. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of Jagged Peak. General risk factors include the availability, proximity and capacity of gathering, processing and transportation facilities; the volatility and level of oil, natural gas, and NGL prices, including any impact on the Company's asset carrying values or reserves arising from price declines; uncertainties inherent in projecting future rates of production or other results from drilling and completion activities; the imprecise nature of estimating oil and gas reserves; uncertainties inherent in projecting future drilling and completion activities, costs or results; the availability of drilling, completion, and operating equipment and services; the risks associated with the Company's commodity price risk management strategy; impact of environmental events, governmental and other third-party responses to such events and Jagged Peak's ability to adequately insure against such events; and other such matters discussed in the "Risk Factors" section of Jagged Peak's 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2019, as such risk factors may be updated from time to time in the Company's other periodic reports filed with the Securities and Exchange Commission, which can be obtained free of charge on the Securities and Exchange Commission's web site at http://www.sec.gov. The forward-looking statements contained in this release speak as of the date of this announcement. Although Jagged Peak may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by applicable securities laws.

Non-GAAP Financial Measures

Adjusted EBITDAX

Adjusted EBITDAX is a non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDAX as net income (loss) before interest expense, net of capitalized interest, depletion, depreciation, amortization and accretion expense, impairment of oil and natural gas properties, exploration expenses, equity-based compensation expense, income taxes, contract termination fees, gains or losses on sales of assets, and net gains or losses on derivatives less net cash from/for derivative settlements. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historical costs of depreciable assets and exploration expenses, none of which are components of Adjusted EBITDAX. Our computation of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

Management believes Adjusted EBITDAX is useful because it allows investors to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book value of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance.

Adjusted Net Income

Adjusted net income is a non-GAAP performance measure used by management to evaluate financial performance, prior to non-cash market-to-market gains or losses on derivatives, impairment expense, exploratory dry hole costs, gain or loss on the sale of property, certain one-time or unusual items, such as certain equity-based compensation, contract termination fees, and the associated changes in estimated income tax. Management believes adjusted net income is useful because it may enhance investors' ability to assess historical and future financial performance. Adjusted net income should not be considered an alternative to net income, operating income, or any other measure of financial performance presented in accordance with GAAP or as an indicator of our operating performance.

Net Debt to LTM Adjusted EBITDAX

Net debt to LTM adjusted EBITDAX is a non-GAAP measure, which is defined as the face value of the Company's long-term debt, including its senior unsecured notes and amounts drawn on its credit facility, less cash and cash equivalents at quarter end, divided by the Company's last twelve month adjusted EBITDAX, as defined above.

About Jagged Peak Energy Inc.

Jagged Peak Energy Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the southern Delaware Basin, a sub-basin of the Permian Basin of West Texas.