Permian pure-play Parsley Energy Inc. said it will increase its development activity in a portion of the Midland sub-basin in 2019, as it reaffirmed plans to reduce capital expenditures (capex) and still grow production.

The Austin, TX-based independent said plans for 2019 include focusing on the northern part of Midland County, TX, where it turned 14 wells into production over the last six months and saw encouraging results. Three of the wells targeted the Lower Spraberry, Wolfcamp A and B intervals were drilled with 2.5-mile laterals and recorded production of about 1,900 boe/d (82% oil) after more than 50 days online; the company said the wells had not yet reached anticipated peak 30-day production rates.

Parsley plans to boost its capital efficiency by 8-10% and accelerate its progress to self-funded growth. To do that, overall activity would be reduced, it it plans to increase its use of proppant in its completions by 10-15% year/year, monitor peer results and stagger its drilling configuration in portions of the Wolfcamp B.

The company also reiterated plans to reduce capex to $1.35-1.55 billion from about $1.76 billion in 2018. Production still expected to increase by 20% year/year to 124,000-134,000 boe/d. Parsley also left unchanged its plans to run a 12-rig drilling program with three to four completion crews.Net oil production of 75,500-78,000 b/d is forecast in 1Q2019.

"This budget was designed to ensure Parsley takes another major step forward on our path to self-funded growth this year in any commodity price environment, while continuing to build upon hard-earned operational efficiency gain," CEO Matt Gallagher said during a quarterly earnings call Friday.

"We now expect to turn the corner to sustainable free cash flow during 4Q2019 at an oil price in the low-$50s. And oil prices higher than that would simply expand the free cash flow profile and accelerate shareholder-friendly return initiatives. We have the core inventory debt in the right zip codes, which allow us to adapt, and we have the short-cycle projects that allow us to be nimble."

The company reported average net production of 119,848 boe/d in 4Q2018, up 49% from the year-ago quarter. For the full-year, net production averaged 109,416 boe/d in 2018, up 61% from 2017. 

Oil production averaged 77,033 b/d in 4Q2018, 50% higher year/year, with full-year oil production averaging 69,500 b/d. The company spud 38 and placed 43 gross operated horizontal wells into production in 4Q2018. Of those 43, 37 were in the Midland while the remainder was in the Permian's Delaware sub-basin.

Parsley reported net income of $53.8 million (19 cents/share) from $49.9 million (16 cents) in the year-ago quarter. For the full year, net income totaled $369.1 million ($1.35/share), compared with $106.8 million in 2017. Revenues totaled $454.9 million in 4Q2018, up from $311.5 million. Annual revenues totaled $1.83 billion in 2018, up from $967 million in 2017.